By KATIE HOOS
Following unmet financial promises, rounds of massive layoffs and Chapter 11 filings, hyperlocal online news outlets in Westchester have suffered a string of failures, leaving proponents to ponder their profitability.
Hundreds of Patch employees were laid off shortly after AOL sold the majority of the company to Hale Global last month, leaving many to question whether Patch has any news value left.
As a prized media market, Westchester County has seen its fair share of hyperlocal news coverage, which zeros-in on the needs and happenings within a particular geographic community. By the end of 2011, Westchester County had three hyperlocal online outlets competing for dominance within an already saturated market: The AOL-owned Patch, Main Street Connect—now known as the Daily Voice—and the Cablevision-funded Newsday.
Just two years later, Newsday Westchester is dead while Patch and the Daily Voice are battling major staffing cuts, leaving them shells of their former selves after they originally burst onto the scene with high expectations of success, but now struggle to stay afloat amidst low advertising sales and high expenditures.
Jerry McKinstry, who spent more than 15 years as a professional journalist and previous Newsday Westchester editor, said hyperlocal online news sources are struggling because their business models are failing. “Producing quality news is not cheap,” McKinstry, a senior account executive with public relations firm Thompson and Bender, said. “The value of the online reader to advertising companies is getting less valuable.”
Daily Voice filed for Chapter 11 protection last year. The company is now turning its efforts toward a weekly print publication for Westchester and Fairfield counties.
On Jan. 29, hundreds of Patch employees were laid off just two weeks after AOL sold its majority stake in the hyperlocal news network to Hale Global, a technology investment firm.
Jim Romenesko, an online media reporter who runs an independent news blog, estimates upwards of 70 percent of staffers were eliminated.
The AOL sale of Patch comes after years of struggling web traffic, minimal ad sales and hundreds of millions of dollars invested into the sinking project, forcing AOL Chief Executive Officer Tim Armstrong, who co-founded the site in 2007, to make the decision to abandon ship. AOL announced the company sold the majority of Patch to Hale Global on Jan. 15 with hopes of turning the site around, saying Patch will be redesigned to include locally-themed content posted by contributors and local businesses.
Soon after the handover, Hale and AOL decided to cut Patch staff by nearly two-thirds, delivering the news to employees in a morning conference call from AOL Chief Operating Officer Leigh Zarelli Lewis.
The most recent cuts follow a round of 500 Patch employee lay-offs in August 2013. The New York-based AOL also closed 150 of its 900 Patch sites around the country at that time.
Uncertain of Patch’s future, Romenesko said, “The barebones staff makes me question what kind of content they’re going to have on the site. It’ll be a whole different product because they’ll no longer have people on streets actually doing reporting.”
Romenesko said Patch has evolved into cookie-cutter sites and, according to sources at Patch, editorial staff felt the shift was out of their control and the cookie-cutter formula came from upper management.
But concerns over the online models’ content grew quickly with many sensing Patch and Daily Voice were never able to live up to the goal as go-to sources for hyperlocal news.
Douglas French, former Rye City mayor, attributed the failure of Patch and other hyperlocal online media to a lack of in-depth reporting.
“I think anyone who read the stories could tell right away it was not a local story,” said French, a Republican who took office in 2010, just months after Patch launched its Rye site. “They’re trying to be local and trying to do it in an inexpensive way, but to be local, you have to walk the streets.”
French said hyperlocal online media sources, including Patch, neglected the major components of a community in their coverage: government, schools and community point of view.
“Online services go half way,” he said. “They do a cursory overview of what the issues are and interject their own point of view in article, losing their factual credibility.”
New Rochelle Councilman Louis Trangucci, a Republican, said Patch was never willing to address important issues in New Rochelle head-on.
“They’re not covering what I feel were issues that pertained to real, everyday problems for the people; political aspects, taxes, schools,” Trangucci said. “They don’t want to talk about a political cause because they don’t want it to affect who they support politically.”
The short-lived Westchester Newsday, which launched online coverage of Westchester and Rockland counties on April 30, 2012, closed just over a year later in June 2013, due to “economic considerations,” according to its parent company, Cablevision.
Funded through customer subscriptions, the site offered access to subscribers for a weekly fee of $5. Subscribers to the Newsday print edition, which covers Long Island and New York, received the site for free. Newsday still currently operates a Long Island specific website, and Cablevision continues to oversee News 12 television stations around the region as well as the New York City daily newspaper, am New York.
Another hyperlocal site burdened by financial stress, the Daily Voice—introduced in 2010 and backed by a plethora of investors like Saks Chief Executive Officer Steve Sadove and philanthropist George Soros—has struggled to turn a profit.
Finding its niche in neighborhood media, the Daily Voice launched 52 online websites across Massachusetts, Connecticut and New York over a span of two years.
However, the rapid expansion caught up to the news site. In March 2012, in an attempt to keep investors interested in the company’s potential profitability, Daily Voice Chief Executive Officer Carll Tucker discontinued all 11 Massachusetts sites and eliminated the entire Massachusetts news staff. He also promised investors other major cutbacks in spending. The news operation trudged on, operating 41 sites in Westchester and Connecticut’s Fairfield counties, but mounting legal fees associated with a class action lawsuit filed in September 2012 by former Daily Voice reporters, who claimed they were not paid for overtime hours, led the Daily Voice to file for Chapter 11 bankruptcy protection in April 2013.
The Chapter 11 protection frees up company finances, allowing them to continue production. With the legal fees behind him and a new business model underway, which Tucker described as “having expenses less than revenues,” Tucker seemed optimistic when discussing the Daily Voice’s future with the Mamaroneck Review.
“The site sees 40,000 unique visitors a day and 500,000 to 550,000 unique visitors per month,” Tucker said. “We’re, by far, the largest local news source.”
The company, with a staff of 34 employees, will launch weekly countywide print newspapers in Westchester and Fairfield counties beginning March 13 in addition to the existing websites, providing readers with a broader news perspective than just the hyperlocal model.
“We started a little after Patch and there were two companies in the county trying to figure out how to publish community news online [in a scalable way],” Tucker said. “Patch did it their way and failed. We did it our way and succeeded.”
But some would argue that success.
John Hofstetter, a former Democratic Village of Mamaroneck trustee, said hyperlocal sites are struggling due to the lack of resources and reporters covering the streets.
“I think part of it is, with an online newspaper, you have to know your market and you have to hire people who are local and know the ins-and-outs of the area they’re reporting on,” Hofsetter said. “This requires financial investment in good reporters and people who know the area, while online sites owned by larger conglomerates, like Patch, are concerned with turning a quarterly profit.”
Not only do online hyperlocal news sites have to contend with advertising sales revenue, quality content sourcing and the presence of other hyperlocal competitors, but they must also compete with print media, which presents a different set of challenges.
According to a study by the Pew Research Center on the current state of hyperlocal media, hyperlocal news enthusiasts—defined as those who follow local news closely whether or not something important is happening—prefer to get their news in print form if they are over the age of 40, as opposed to younger readers, who prefer online media. The survey also states that local news enthusiasts are most likely to be over the age of 65.
McKinstry asserts that the demographics of hyperlocal newsreaders might contribute to the failure of hyperlocal sites.
“Those who are reading news and have an appetite for it are the older generations,” he said. “I don’t know if anyone’s figured out how to tap into the next generation of readers online; how to capture the older readers online. People who read print are very loyal to it.”
Fred Groser, Newsday’s former publisher, could not be reached for comment as of
press time.
Contact: katie@hometwn.com