A little more than a year ago, the main newspaper for the Walla Walla Valley in Washington state, the Union-Bulletin, considered a major change in its website design. A controversial part of that redesign involved creating a paywall — giving full access to stories only if you were a paying subscriber.

But for a small-market newspaper, the decision might be the right one.

“We were looking for a way to increase online revenue and at the same time decrease the drop in circulation,” said Carlos Virgen, the Union-Bulletin’s online services manager. “Our attempts at increasing online revenue solely through advertising have been very slow. And as a small operation, we felt we’d be in a position to switch strategies if we discovered that the payment system wasn’t working.”

The Union-Bulletin, which publishes six days a week and has a circulation around 16,000, doesn’t look like it will change its online revenue strategy any time soon. Virgen said that the paper was in discussions with publishers at Arkansas Democrat Gazette, Lewiston Tribune and the Post Register about implementing a payment plan.

The site’s redesign coincided with implementing a paywall.

“As far as I know, we did not hear any concerns from local business regarding our change in strategy,” Virgen said about business relationships with the paper. “In fact, due to our payment and registration system, we now have some updated demographic information that we can share with advertisers. And the new site layout adds considerable value to some of our ads.”

That’s good news for businesses, but finding an audience that is willing to pay — even at roughly half the price of a print subscription — for online content. Still, the Union-Bulletin hasn’t seen much backfire from the paywall.

“It has affected our traffic less than I expected,” Virgen said. “Compared to the same time last year, we have seen some drop overall, but I think our traffic last year was a bit inflated because of some extreme winter weather that the area experienced.”

Virgen also noted recent success in that the Union-Bulletin has matched year’s traffic over the last few days, something “that bodes well for us.”

And after roughly a year, Virgen, who’s been with the Union-Bulletin since September 2006, said that he “would cautiously say it has been a success.”

“We had an idea on what to expect for online-only and overall registered users based on data from some of the newspapers we consulted with,” he said. “And the negative feedback from the community has been minimal.”

Part of the positive feedback from Union-Bulletin readers comes as a result of the coverage that no other publication is doing in the Valley. Virgen said that the “big newspaper,” the Tri-City Herald, occasionally reports on the Walla Walla community, but the Union-Bulletin
provides daily and more in-depth coverage.

“We definitely feel that there is no one reporting on the Walla Walla Valley as well or as comprehensively as we are,” Virgen said. “Whereas the Tri-City Herald often files stories based on press releases or on U-B stories, we actually have reporters out in the community, which I think makes a big difference in the minds of our readers. So, we felt that the community greatly values our journalism and would find the nominal fee acceptable.”

But with the increasing presence of citizen journalism and new media strategies such as blogs, Twitter and Facebook, the Union-Bulletin is monitoring and working to improve its online reporting. It recently launched Serra Media’s Newsgarden platform as another weapon in the fight for audience.

“I am aware that there is more coverage of the community outside of what we do,” Virgen said. “More so than when I first started, so it is definitely something I keep my on.”

The Union-Bulletin still offers free content on their website like blogs, video and special features. For more information on the newspaper’s relaunch, visit the Union-Bulletin’s website.

Jay Huerbin is a journalism major at the University of Pittsburgh and intern at Serra Media. You can read more from Jay on his blog and follow him at @jayhuerbin.

Scott presented this morning at the Interactive Local Media conference in Los Angeles during a session called “Mapping Out Local Revenue and Services.”

In addition to previewing a new design to the TownLuxe UI that we’ll be launching soon, Scott offered suggestions for growing an active user community (instead of a passive one). She says active users help spread the word and she aims for the 80/20 rule where 20% of users do 80% of the sharing/promotion.

During the Q&A, Scott previewed other technology that we’ll be building out for BargainBabeLA in the near future, including the integration of social media posts by geography and mobile applications for users to view and contribute deals by location.

It has been six months since we launched BargainBabeLA and it continues to show promise. Geoff Donaker, COO of Yelp, told the conference yesterday how it took 18 months for Yelp to gain critical mass in its first location (San Francisco). It’s exciting to think about where Scott and BargainBabe will be a year from now.

And if you follow the local online business segment at all, there are a couple of bedrock beliefs that power much of the discussions in this space:

1. There is still tons of opportunity to connect local businesses to local consumers through digital publishing and marketing

2. Google is the 10,000-pound gorilla and you’re probably better see it as a partner, not a competitor, if you want to have a future

I’m at the Interactive Local Media conference in Los Angeles through Friday, analyzing the state of local business marketing online. (One of Serra Media’s partners, Julia Scott of BargainBabeLA.com, will be presenting on Friday, too.)

I’ll be posting updates to Twitter and you can find the conference stream by searching the hashtag #ILM09. If the morning sessions are any indication, there will be loads of good information presented here.

Already this morning, we heard about data that says that still only 42% of local businesses have a website, only 7% advertise online and only 14% have claimed their free profile page on Google. Clearly, there is opportunity here to connect buyers and sellers online. (And don’t even get us started on mobile.)

A number of companies are raising capital and funding business models to try to crack this nut. I’ll be looking for a few of the more interesting ones to profile here. On the radar from this morning are Kenshoo and Palore.

Kenshoo’s CEO asked for a show of hands this morning on how many people had heard of his company. A small smattering of hands went up. Which begs the 64,000 question: if Google can only get 14% of local businesses to interact with it for free, how will these new-age companies break through?

- Mark Briggs

The Sacramento Press today announced the most recent version, called SLOAN for Sacramento Local Online Ad Network. It’s an ambitious effort, which should be no surprise coming from a start-up news site that has made a lot of progress in a relatively short time. The site counts some 700 contributors to its news machine and will soon have 18 partners to leverage when selling ads.

“We’ve been working really hard on this,” Ben Ilfeld, co-founder and COO, told me last week. “Hyperlocal ad networks have been talked about at conferences, and in the blogosphere, for some time. We wanted to tap into advertisers like auto dealers or Indian casinos and having a network will make that easier.

“Our goal to support people doing interesting and good hyperlocal journalism.”

Upon launch (in mid-January) SLOAN will include The Rancho Cordova Post, Gold River Online, Elk Grove Online, SacMix, The Sac Rag, MyFolsom.com and The Tomato Pages Network.

The SacPress staff will be the only ones selling into the network and Adify will supply the technology, so each will take cut of the action. But Ilfeld said publishers in the network will still receive 60% of the revenue, which is a pretty good deal if you ask me.

“We want to put together enough unique users to challenge the other news outlets, and eventually, maybe even the (Sacramento) Bee,” Ilfeld added.

- Mark Briggs

So come help us build interactive digital platforms for local publishers, independent journalism start-ups and university journalism programs.

Serra Media is looking for smart people who are enthusiastic about local content, collaborative publishing and the future of digital content.

If that’s you, check out the details on Serra Media’s Internship Program and apply today.

RELATED:

• My international hyperlocal experience
• The importance of a community manager
• New report: How to build a user community online
• New in town? Let hyperlocal sites, Twitter and iPhone apps be your guide

- Mark Briggs

This was my last week on Serra Media’s Fall Internship Program. I joined that in the end of September - an opportunity to have an ‘international experience’ with a propose I’ve been working some years with and which became more popular recently: hyperlocal news.

In this program, we are four community cultivators – from Seattle (WA), Portland (OR), Los Angeles (CA) and, yes, Porto Alegre (RS), Brazil. The position’s goal: we should “grow a meaningful, constructive community of Web users through outreach, participation and creativity”.

I was curious about how is working with another audience, who has different culture and ways for accessing internet and digital tools. On my daily job, here in Brazil, I edit a supplement and a blog about the neighbourhood where I grow up. Everything could be so different from I’m used to do. I’ve never been in USA or Canada – for while -, but I’ve picked up news for four cities/regions in these countries for nine weeks.

Actually it isn’t so different. Hyperlocal news can be similar anywhere: weekend markets, traffic interruptions, festivals, city hall decisions, interesting people. Example: last Thursday, there’s a storm in Porto Alegre, and some bloggers sent me photos, published on Blog do ZH Zona Sul early afternoon. At night, I checked The Bellingham Herald’s Newsgarden and found out a report submitted by a user: That Blows, with photos of a Vintage Ford Truck crushed by a tree fall. Stormy weather caused damages in both cities.

As community cultivators, we identified who is blogging about that city and share their posts in Newsgarden – and, of course, I invited them to add more contributions there in the future. As here, sometimes people invited me to visit their places (“Oh, thanks, but I live out of the city…“).

Both cases, in Brazil and in US, one of the main challenges is the audience’s engagement. I haven’t created an amazing formule to this question during the internship – if someone has it, let me know (some tips in the post Social Tools and Hard Work Drive Local Audiences, Serra Media Blog) -, but I’m glad to finish the task with some result: the number of views increased in all these sites since this internship began. Now I can face another hyperlocal experience.

The highlight for me was seeing the founder and editor of West Seattle Blog, Tracy Record, positioned on stage next to MSNBC.com president Charlie Tillinghast. Two years ago, who would have believed that a neighborhood news site would warrant the same consideration as one of the giants in the online news world. (And the event planners did plenty of due diligence in finding and screening speakers, interviewing more than 20 people – including me – to fill four spots.)

The conversation was mostly entertaining and occasionally informative for someone who follows the disruption of news media by technology, but probably more informative to the general audience. Todd Bishop of TechFlash did a masterful job moderating, keeping the conversation flowing while challenging the panelists with more than just softball questions. The most interesting points included:

• Patricia Lee Smith of the Seattle Times repeating time and again that she didn’t have an audience problem, just a revenue problem, and that she needed technology to solve it. She rattled off a host of statistics to illustrate how viable print remains as a medium for advertisers (including the U.S. pre-print business is nearly $6.7 billion a year and up 30% and accounts for 90% of coupons redeemed in-market.)
• Tillinghast reported that MSNBC.com had a record revenue year and profits missed projections by only 1%. “We’re making plenty of money,” he said. Which begged the question (that didn’t get asked): how is MSNBC.com monetizing its audience better than seattletimes.com? Is it the strength of a national brand/audience or simply the lack of a legacy business to support?
• Record said her operation continues to grow and is looking to bring on more people to assist in the growth. So, again, revenue apparently isn’t a problem for a hyperlocal operation – if done right. Which is why big companies like Fisher are jumping into the fray, hoping to tap into some of that marketplace, a strategy Smith didn’t think was too promising. “Where’s the money?” she repeatedly asked when queried about hyperlocal opportunities.
• And even though her business is doing fine, Record didn’t think her operation should be attempted at scale by big companies, either. She cited a letter someone forwarded her from a town on the East Coast that’s the location of a new Patch.com site as an example of how a company like AOL (Patch.com’s owner) is missing the point: the letter told the resident that the new Patch editor couldn’t wait to “learn all about your community.” That’s much different than Record’s model, which grew out of already knowing all about the community.
• Bishop asked Tillinghast about the future plans for hyperlocal aggregator Everyblock, a website and team MSNBC.com recently acquired. Contrary to popular assumption, Tillinghast said Everyblock, which was launched with a $1.1 million Knight News Challenge grant, may not be integrated into the flagship MSNBC.com site but rather grown as an independent entity.

Since the audience allegedly included several investors, Bishop joked at the beginning that if the panelists, which also included 1Cast’s Anthony Bontrager, wanted to form a joint venture, they probably wouldn’t get out of the room without at least a little angel money. Mirroring the recent trend with these discussion, there is more optimism than hand-wringing, which is refreshing. After all, as I’ve often said, the news business isn’t dying, it’s just changing.

- Mark Briggs

Among the highlights is the ChicagoNow project by the Tribune which counts 120 blogs as part of the network. Here’s more:

ChicagoNow bloggers are paid $5 per 1,000 local page views, according to Adee, who said they focus their bloggers on Facebook and Twitter and encourage them to comment on other ChicagoNow blogs. About every month or so the site hosts a party so everyone can meet the new bloggers.

Cory Bergman of Next Door Media said “that about 80% of their stories come from their neighbors and what they post in the blogs’ forums, comments, e-mail, Facebook and Twitter.” He also made it clear that personal commitment outweighs technical brilliance in the local market, saying:

Hyperlocal is a lot of work. There’s no magic formula. We’ve invested a lot of time in covering stories, attending community meetings and introducing ourselves to just about everyone. It’s about people and relationships and trust, not just code. It takes patience, which is (a) rare quality these days.

The Austin-American Statesman and WCCO-TV in Minneapolis were also featured. The key takeaway is that no matter your strategy or software, be it Wordpress, Twitter, Facebook (or yes, even Newsgarden), it takes manual effort to build engaged local audiences. That’s not the message resource-constrained local news operations want to hear — they’d prefer some magical software, for sure — but once you know that it will take a lot of work, the sooner you can start doing the work.

- Mark Briggs

While there were plenty of other highlights from the day (Jenn Clark from Team Obama and BaconSalt co-founder Dave Lefkow as keynoters, for example), Sack’s 10 Lessons Learned was the most blogable. So here you go …

10. 5 years to create anything of value: While the overnight success stories get all the headlines and buzz, it generally takes a long time to build a company that has any value.

9. Focus on the first market longer than you think: Sack offered several real-world examples of startups trying to sell his Founder’s Co-op investors on new market opportunities. Every time his response is to continue to focus on the existing market until you truly dominate it.

8. Beware of shiny objects distraction: Most entrepreneurs know all about this. It’s a running joke at Serra Media, in a good way. We have exposed our tendency to get distracted by new opportunities and now openly mock one another to get ourselves back on track.

7. Avoid the rush to nowhere: Markets don’t change as fast as hype suggests they do. Don’t get yourself in a rush to where “everyone” says the market is going because, all too often, it will be a rush to nowhere.

6. Competition doesn’t kill companies: Early stage companies get killed by internal conflict, not external competition.

5. The customer has the answer: Sack suggested Outcome-Driven Innovation as an interesting and potentially important method to do product development.

4. Two numbers to focus on: Customer acquisition cost and Lifetime Value (LTV) of each customer. If you’re not tracking them, start.

3. GFA: Be, or get, aggressive. Amid a stream of (well-placed) F-bombs, Sack delivered some really sage advice. Thinking you’re aggressive and actually being agressive are two very different things. Plow through, be frugal and don’t wait for someone else to make it happen.

2. KISS: Yes, Keep It Simple Stupid. See No. 7, 8, 9 as for reference.

1. Time and money don’t matter (as much as you think): Factors like time and capital really aren’t as constricting as you think. For support, Andy showed a video from Tina Seelig at Stanford that I’ve blogged about before. I’m a big fan of her concept of not framing problems too tightly. It really is the best lesson an entrepreneur can learn.

A recent article in Wired magazine called the company “The Answer Factory” and detailed its formula for combining algorithms and cheap labor to produce an incredibly scalable – and profitable – content engine. A sample:

The process is automatic, random, and endless, a Stirling engine fueled by the world’s unceasing desire to know how to grow avocado trees from pits or how to throw an Atlanta Braves-themed birthday party. It is a database of human needs, and if you haven’t stumbled on a Demand video or article yet, you soon will. By next summer, according to founder and CEO Richard Rosenblatt, Demand will be publishing 1 million items a month, the equivalent of four English-language Wikipedias a year.

I saw Rosenblatt speak at an entrepreneurial conference at UCLA earlier this year. I was impressed by his “go big or go home” approach to web content. It flew in the face of common assumptions that dominate the newspaper and journalism conferences I had been frequenting. He wouldn’t accept the idea that advertising couldn’t pay for content. But, as the Wired article states, it’s a matter of driving the cost of producing the content down instead of the price charged for advertising up, which is what most other publishers focus on.

In an era overwhelmed by FlickrYouTubeWikipedia-BloggerFacebookTwitter-borne logorrhea, it’s hard to argue that the world needs another massive online content company. But what Demand has realized is that the Internet gets only half of the simplest economic formula right: It has the supply part down but ignores demand. Give a million monkeys a million WordPress accounts and you still might never get a seven-point tutorial on how to keep wasps away from a swimming pool. Yet that’s what people want to know.

Journalists first feared the algorithms behind Google News. But Demand’s operation takes “human replacement” to a whole new level.

That’s not to say there isn’t any room for humans in Demand’s process. They just aren’t worth very much. … The humans also couldn’t produce ideas at the scale of the algorithm. On a recent day, Demand Studios had nearly 62,000 freelance assignments ready to be filled; coming up with that many ideas takes more than a white board and a conference room jammed with editors. And to Demand, scale is essential. One outside search engine marketer estimates that Demand earns a mere 15 to 60 cents per ad clicked. It takes millions of clicks to build a real business out of that.

Can this work on a local – or hyerplocal – level? The 62,000 assignments available to Demand’s freelancers on a given day have to be broad in scope to attract the highest amount of ads. But the algorithms and formula do produce local insight: apparently Dallas is where the most people are looking for information on how to donate a car.

The lesson to be learned here is to not allow long-held assumptions about marketplaces to cloud your approaches. You can solve existing problems with new thinking. Just don’t frame the problem so tightly.

- Mark Briggs