Problems for Hyperlocal Sites Outside.In, TBD.com

AOL’s hyperlocal news network, Patch, has acquired Outside.in, a hyperlocal news aggregator. This is another rung in the ladder of AOL’s CEO Tim Armstrong’s quest to reinvent the company as a source of online news and content.

Financial terms of the Outside.In deal have not been released, but Business Insider reported the purchase sum to be less than $10 million. That’s more than $4 million less than the funding Outside.In has received from such sources as Union Square Ventures, Milestone Venture Partners, the New York City Investment Fund, Marc Andreesen, Esther Dyson, John Seeley Brown, John Borthwick, and George Crowley. Since Outside.In’s traffic has been declining over the past six months — only 317,000 unique visitors in January according to comScore — it is assumed that Patch will incorporate the site’s technology into other sites rather than keeping the original website intact.

Outside.In is not the only struggling business focused on hyperlocal content that is making headlines lately. TBD.com, a community news site based in Washington, D.C., with 23 in-house journalists and a network of 129 community bloggers, is having its own set of issues. The site attracted 1.5 million unique users in January, but did not generate enough advertising revenue to cover its costs. As with most hyperlocal sites more targeted content and, therefore, a limited audience, the pool of potential advertisers decreases.

When it first launched, the site was praised by many in the industry. GigaOm‘s Mathew Ingram writes:

Among other things, it looked like the site could help to pave the way for other smart, locally-focused media experiments, and provide a kind of antidote to the institutionalized approach that AOL’s Patch is taking to local journalism.

TBD.com is not shutting down entirely, but is downsizing its staff and refocusing its content to the arts and entertainment niches. Most industry insiders are attempting to analyze what went wrong with TBD.com, and many wonder if it’s a sign that hyperlocal sites in general are doomed to fail.

Journal Register Company CEO John Paton finds fault with the site owner, Allbritton Communications, rather than the content focus, however. Paton writes on his blog, Digital First, “It can’t pretend to have seriously tried the hyperlocal business space after a six-month experiment it derailed half-way in.”

TBD.com’s former arts and entertainment editor, Andrew Beaujon, seems to agree. Beaujon said, “The idea when we started was that we were really going to be rethinking local news. We were told that [Allbritton] was in this for three to five years. Fair enough if we’re not making money, but no one would’ve come if they had known we had a six-month chance.” Beaujon is one of the laid-off employees, despite the fact that TBD.com’s arts content will continue, presumably because it is the only section generating substantial advertising revenue.

Regardless of where the blame lies, this high-profile failure offers lessons for future hyperlocal ventures. On Lost Remote, speaker Shelly Palmer reminds us, “There is no such thing as hyperlocal; it should be hyperpersonal.”

Source: “Confirmed: AOL’s Patch Buys Hyperlocal News Site Outside.In,” TechCrunch, 03/04/11
Source: “Hyperlocal pioneer TBD.com downsizes after just six months,” Journalism.co.uk, 02/24/11
Source: “Hyper-Local News Doomed, or Did TBD Just Get Sandbagged?,” GigaOm, 02/25/11
Source: “Hyperlocal News Can’t Be Monetized And Other Lies You Heard This Week About TBD.com,” Digital First, 02/24/11
Source: :AOL Buys Outside.In, Less Than $10 Million,”
Business Insider, 03/04/11
Source: “Shelly Palmer: Innovate or ‘sunset’ your company,” Lost Remote, 03/03/11
Image by Cassandra Jowett/cassandrajowett, used under its Creative Commons license.

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