Monday, May 10, 2010

Main Street Connect looks to expand; to launch first community news sites outside NYC DMA later this year

The online community news business is exploding thanks to publishers who believe they are filling a massive void in the market.  Driven by both investment backed commercial entities, as well as individual journalists and community activists, these sites are attempting to prove that there is money to be made, while at the same time serving their communities by replacing the print newspapers shuttered by large newspaper chains.
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In addition to AOL-backed Patch, which now has news sites in five states, and Southern California based U.S. Local News Network, a wide array of independent local news sites have launched -- the Ann Arbor Chronicle, have now been around for almost two years, for instance. (The Chronicle was profiled here back in February.)  AOL is said to be committing $50 million to facilitate its rapid expansion, proving that there are those that are willing to commit big dollars to reach the reader of local community news.

One company that is quickly expanding in its core region is Main Street Connect (MSC).  Founded by Carll Tucker, MSC currently has four live local news sites -- all serving communities in Fairfield County, Connecticut, part of the New York City DMA.



From community newspaper owner to Main Street Connect

Tucker was the former editor and publisher of Trader Publications, which included The Patent Trader and The Putnam Trader, and other weekly newspapers. In 1999 he sold out to Gannett, and clearly Tucker was not happy with the way things turned out. "It took them three years to kill it, and five years to put it down in a mercy killing," Tucker complained. "It's because they don't understand the community news business. They've never sung songs at Rotary, they don't put their arms around the local business leaders, they're not at the PTOs or the youth soccer games -- they're not invested in community in the way that you have to be to understand what community news is."

So earlier this year Tucker launched the first of a series of community news sites that he believes will fill the void created by the demise of the local print newspaper.

"When the newspapers all started to meltdown, and either vanish or become moribund, the question obviously that came into my head was: well, what's going to replace the 3,000 community newspapers that are going to go out of business?" Tucker told me last week.

Backed by an impressive list of names such as current board members Peter A. Georgescu, Chairman Emeritus of Young & Rubicam Inc., and Stephen I. Sadove, Chief Executive Officer of Saks, Inc., Main Street Connect was established. Also on board are John Falcone, formerly SVP Mobile Network at SmartReply, who serves as President, COO, and Jane Bryant Quinn, the personal finance columnist, who is Tucker's wife, and is listed as Editorial Director.

The new company is currently the owner/operator of a series of local news sites for Connecticut communities that include The Daily Norwalk, The Daily Darien and The Daily Fairfield, The Daily Westport (all currently live). Sites for Wilton, New Canaan, Weston, and Easton will go live soon, and by the end of the year Tucker promises his own network of sites will spread south to Westchester, Putnam and Dutchess counties in New York.
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Three of MSC's community websites.


Like Patch, the Main Street Connect formula is to link sites, each site identically designed., within what Tucker believes is a unique, robust content management system.

What differentiates the MSC sites in appearance, however, is the amount of local advertising that can be found on each of them -- unlike Patch sites, MSC sites appear to be better monetized. Tucker said that MSC sites does not sell regular online display advertising, per se, but something Tucker calls "annual visibility packages".

Comparing Patch sites which are established by an individual editor, assisted by the editors from surrounding Patch news sites, or the regional editor, the MSC sites appear better staffed. Nonetheless, a comparison of the staffs of all four live MSC sites reveals that each are identical.

Dorian Benkoil, founder of Teeming Media, a digital media business and editorial consulting company, says that the company's websites are doing extremely well growing traffic. "In a community of 25,000 English speaking homes in Norwalk, we're up to about 14,000 monthly uniques," Benkoil said.

"The loyalty stats are also really impressive, even though we are ramping up as quickly as we are -- growing thousands per week -- we're getting better than 55 percent repeat visits. Among these repeat visits, 70 percent of them -- between 68 and 70 percent -- are coming at least twice a day," said Benkoil.

As MSC continues to grow its own series of community news sites, it will interesting to monitor their success as both MSC and Patch are competing with each other in several markets: today both maintain sites for Darien, Westport and Fairfield, and both overlap in New Canaan and Wilton, as well.



The Inkblot Strategy

So where does Main Street Connect go from here? Tucker told me that the first of its inkblots -- a collection of community websites, contiguous and interrelated -- will launch in August. The way these new clusters will be organized and maintained is where there is a bit of confusion -- at least in my own mind.

In an article that appeared on the BusinessJournalism.org website, the reporter Linda Austin wrote that Tucker said the new sites would be "franchises" and that the owners would be expected to invest in the sites. "It will offer franchises to start community news Web sites. He said that franchisees would have to invest $25,000-50,000 and, within 18 months, should have $250,000-500,000 in cash flow," Austin wrote on March 21 of this year.

One month later Tucker authored a column for the Owners Only blog on bnet.com in which he repeated the formula.

"About 20 people around the country have contacted me, wanting to know more. I’ve pushed a few people down the road a bit, seeing if they might be interested in a franchise when we get everything flowing smoothly. The basic model would have franchisees generally investing $25,000 to $50,000 in startup costs for local sites. After 18 months, they should be realizing $250,000 or more in annual cash flow. Each franchise will pay my company 17 percent of revenue," Tucker's column states.

But when asked directly if this was a franchise model, and if franchisees would be required to invest, Tucker told me straight out "no".

The first Main Street Connect websites outside the New York DMA will be launched by the end of summer -- this time launched by "affiliates" as Tucker prefers to call them. These affiliates will be required to do three things, Tucker said: report local news, sell local advertising, cultivate community relations.

I asked Tucker why would someone need MSC, couldn't they do that themselves?

"When we were starting out I got that question a lot, and I fumbled a little with the answer," Tucker told me. "I said 'you don't need us you can do it yourself'. In fact, there are no profitable community news sites, one-off community news sites in the country. If there are some that make a little money, they don't make a good living."

What Tucker hopes will set the MSC affiliated websites off from the competition is the content management system the affiliates get access to, as well as sales force manager and the training the company will provide.



It will be impossible to judge the wisdom of Main Street Connect's model until the first new sites appear later this year. Comparing Patch sites to MSC, though, it is clear that Tucker's sites shows the power of leadership and community involvement. Anyone who has themselves sold local advertising, or written a local profile, knows how things work when there are no agencies, no formal presentations to be made.

On the other hand, the Patch model is based on ramping up local sites in a hurry and then networking them to make the network attractive to national advertisers. By launching each site with a local editor, Patch is able to launch sites quickly -- but does this method lessen the quality of local news coverage, local advertising and community relations?

The MSC model also incorporates a national ad strategy. As Tucker recalled, saying that while he was in the Middle East on vacation he thought up the idea for Main Street Connect, then told it to fellow traveler Peter Georgescu, who said he should pursue it.

"What he (Georgescu) saw in the idea, which I did not see, because that's not my vantage point, was that if you could create high-quality, profitable community news sites around the country, and then knit them into a network, you would have a channel of the most desirable consumer in America, the mainstream mom," Tucker said.

So, the end, both Patch and MSC will be attempting to build national networks through the creation of community news sites, but MSC hopes that the winner in this battle will be the company that can train their affiliates to provide better local news coverage while developing closer and more intimate relations with their communities.

Update: Typo corrected in quote by Dorian Benkoil.

3 Comments:

Carll said...

Hey Doug, Thanks for the thoughtful piece. To clarifiy the (understandable) confusion: We are an affiliate model not a franchise model. What's the difference? Mostly legal distinctions. My first idea was to do this as a franchise, but the franchise laws are complicated, onerous, and (frankly) bewildering. Our lawyers explained how the affiliate model would provide MSC and its affiliates pretty much all the benefits and protections that are contained in a franchise agreement, without many of the complications and risks. The discussion here gets kind of arcane, but, in sum, the affiliate model works better for all.

We do not charge the affiliate (or, in the earlier version, franchisee) anything up front. The amounts quoted ($25K-$50K) were for costs the affiliate would incur before reaching positive cash flow. Most of these costs are personnel (writers, salespeople). MSC, in return for providing an affiliate everything required to launch a successful MSC site -- including all the training, monitoring and mentoring necessary to build the affiliate's skills -- receives 17% of the total billings. Assuming our sites perform as we expect, it's a great deal -- low capital commitment, strong income stream, and the satisfaction of serving as "the Digital Town Green" for one's own community.

The eight sites in Fairfield County share an editorial team of 11 f/t, plus p/t contributors. Most of the team contribute to multiple sites. That's why there's duplication of staff listings in the masthead.

Hope this helps clarify what we're up to. The surest way to understand our mission is to visit any of our sites (www.thedailynorwalk.com, for example). Our goal is to produce local news sites as precious to their readers and valuable to their owners as the best community newspapers of yore. Those interested in learning more should visit our corporate website (www.mainstreetconnect.us) or contact me (ctucker@mainstreetconnect.us). The digital future has arrived: our dream is to make it flourish.

Thanks again, Carll

Test Account said...

I'm glad Carll responded to clarify these points. I'll also say that I think I said "impressive" not "impression".

Douglas Hebbard said...

I assume the above comment is from Dorian Benkoil. And yes, indeed, there was a typo in the quote which has now been corrected.