Knapp, who I had the pleasure of working with at the Poynter Institute in Jan., has gone from freelance to Facebook to founder. It’s a compelling example of a news entrepreneur identifying a need and working hard to fill it. For example, the need to cover local elections with urgency that digital journalism allows – and demands. From the News Frontier piece:

Even though Knapp began posting just a few months ago, she’s already made a name for the site with a couple of scoops. She broke the story of a Republican challenger in the Princeton mayoral campaign. “It was literally like my second post,” she says. Knapp kept her edge through the primaries: “None of the other papers had the results right away.”

Another great piece of this story is Knapp’s involvement with the New Jersey Hyperlocal News Association which provides support and networking for the state’s local news startups. I can picture a day when most states have such an organization, culminating in the annual hyperlocal news association conference. (Not that anyone needs another conference to go to, of course.)

Read the entire Planet Princeton profile at the News Frontier site.

You can listen the podcast here. My segment starts at around 12:00. (Unfortunately we didn’t have time to discuss other hyperlocal business developments.)

I’m excited to be part of this ground-breaking effort. The original idea goes back several years when Cory Bergman was at King. Its realization was made possible by the persistence of a bunch of great people from the TV station, Belo and the newspaper over the past several months.

There are two reasons it’s exciting to me: 1) if all goes as well, we will be giving hyperlocal bloggers and other independent publishers another piece of the business model pie; and 2) it’s a good collaboration between two competitive local media companies. It’s the kind of innovation that we’ve all been talking about and hoping for.

As a part of the planning process for a local site I’m soon launching, I’ve been knocking around some ideas on Google Wave with some friends on how to set up some revenue streams for a website. Yes I know what you’re thinking– it’s going to be one of those ‘monetization’ posts. But stick with me here. I’m pretty sure that there’s at least one idea here that you might not have heard before.

Geo-targeted advertising

My apologies, because you’ve undoubtedly heard this one before. ‘Geo-targeting’ is a big buzz word for 2010 and we probably won’t know for a few years whether it’s the silver bullet many people expect it to be. I can’t help but think that news sites who only sell ads site-wide without looking at the user’s IP are not really trying. Ideally, of course, you want to show different ads based on location. If bloggers can implement this kind of a strategy using common solutions like WordPress and Drupal, there’s no reason why a news site can’t do the same. Those of you shackled by legacy CMSs, message me your address on Twitter so I can send you sympathy cards.

Some specifics to take away: Drupal-heads out there can give the Ad GeoIP module a try, while WordPress users might look into this geo-targeting script (although I have to admit that I haven’t tested the latter). The rest of you check out this post on Programmable Web, or perhaps go have a discussion with your programmers.

Sell ads against specific tags or categories

For local websites, this could means selling ads against content tags corresponding to a geographical location. For example, if the New York Times had a ‘Manhattan’ tag, maybe businesses in that area would buy ads against that content. In a way this is also geo-targeted advertising, just of a different sort.

Stack Overflow is one site that’s giving this a try. Granted they probably have Jedi programmers on the case, but that’s no reason not to try it ourselves. Theoretically it could be done with Drupal by restricting an ad block to show up only on a specific tag page. This isn’t very elegant however, so I’d love to hear if anyone has a better suggestion.

Using content to pimp your services

No, not those kind of services (although pimpin’ is certainly one way to make your site turn a profit). What I meant was, try use your content as a means of publicizing media services that you can provide. Sacramento Press are smartly doing social media consulting (it’s not their primary gig, so it’s excusable!) and NewsPepper.com is doing event coverage.

Seriously, why not try this avenue rather than beating your head against the content monetization wall?

Spotlight sponsors as community supporters

If yours is a community information website, don’t be afraid to take advantage of the fact that you’re serving the local area. Similarly, any sponsor that supports your efforts is indirectly supporting that community as well. Be sure to publicly thank them for doing so, and encourage other potential advertisers to throw their support behind you as well. The Batavian is a good example of a local site that has successfully brought in local sponsors, and has appropriately thanked them in plain view on their ‘sponsors’ page.

They could take it one step further by pointing this out on their ‘advertise’ page as well, saying something like ‘Show some love for the community by supporting the Batavian‘. Businesses generally don’t allow you to tug at their heartstrings, but if you’re lucky you’ll find at least one exception.

While none of these ideas alone are likely to solve all your problems, I’d speculate that a local news site that implements all four should be a little more capable of financially supporting itself. If you have any ideas to add to this, I’d really love to hear ‘em.

Rick Martin is a Tokyo-based freelance writer. Read more from Rick at www.1rick.com/blog and follow him on Twitter at @1rick.

Last week’s Interactive Local Media conference in Los Angeles featured two-and-a-half days of presentations and hallway conversations focused on connecting local businesses with local audiences while making money. “Monetizing the local opportunity” was the title of the conference, which is exactly the problem that so many “future of journalism” pessimists and pundits have suggested can’t be solved, leading to another tired discussion of pay walls and non-profit fundraising.

The overall takeaway from last week’s conference, since it was echoed by so many speakers and attendees, was best summed up by Brian Buchwald, Executive VP, Local Integrated Media and NBC Everywhere:

“Local online is a highly immature space.”

In going back through my notes from last week’s conference, I found several nuggets of interest. Taken together, they paint a fairly decent – and optimistic – picture of the state of local online. For more, see Lost Remote, Local Onliner and, for the most comprehensive roundup, the Kelsey blog.

Highlights from the 2009 Interactive Local Media conference (after the jump):

• Google’s Chris LaSala says the rule for local is 80/50: consumers spend 80% of their $$ w/in 50-mile radius of home and 96% of spending done offline. People research local products, services and businesses online, then physically visit brick-and-mortar stores to spend their money.
• Kelsey’s ad projections are down in 2010 but expected to bounce back to $144.4 billion in 2014 (compared to $155.3 billion in 2008).
• Newspaper companies, again, were conspicuous by their absence at this conference. They need to get out of their echo chamber. Why go to a newspaper conference to learn about digital when you could go to a digital conference focused on local media?
• ESPN, NPR and MSNBC.com pushing harder into local, mostly because of the opportunity created by newspapers’ retrenchment. Will ESPN become the new sports page? Will NPR become the new local news and public affairs page? Will MSNBC.com (and MSN) fill the need for everything else local?
• ESPN’s Jim Pastor said this opportunity probably doesn’t scale down to smaller markets. Costs to deploy will be similar, but revenue potential is not. (Side note: Pastor says ESPN is seeing podcasting really taking off.)
• Buchwald says NBC Local’s audience is exploding: 29 million pageviews per month in 2008 vs. 179 million in 2009. (Smart: They took down the call letters and smiling anchor faces that are such a staple on most local TV news sites.)
• Village Voice Media is doing some interesting things. Its structure has 3 primary segments: print, digital and “street” which does events and social media. President Scott Tobias said: “print is not dead for us. Village Voice wasn’t bloated like the daily newspapers. The web is an extension for what we’ve done for 25-plus years.”
• Even though the prevailing wisdom is that SMBs (small- and medium-sized businesses) won’t create or update their own listings (aka self-service advertising), Google still sees opportunity if the products can be improved. Just 14% of local businesses have claimed their profile page on Google, yet some 5,000 businesses create a business page on Facebook every day.
• Reputation management is a growing segment of this market. SMBLive and Marchex both demo’d a web radar/dashboard for review streams so local businesses can keep track of what consumers are saying about them on a vast array of sites.
• Patience is a virtue when building a local audience. Yelp COO Geoff Donaker said it takes 18-36 months for a new Yelp site to reach critical mass with reviews, even with staff “on the street” in every Yelp market. Yelp has nearly doubled its audience in the past year to about 11 million uniques per month.
• The display ad opportunity (think banner ads) has yet to take off for local. Aaron Finn of AdReady noted that there are roughly 1.4 million businesses participating in search whereas there are only 44,000 businesses participating in display. “Display will be bigger than search in 5 years,” he predicted.
• Mobile, of course, is still a hot topic. Google is moving fast, integrating its maps service with the local business center (having mailed out 100,000 window stickers the week before) and is moving integrate the entire experience on a mobile device.
• Some interesting mobile companies that presented included GeoDelic, Aloqa, adaffix and Parking Data Ventures. (Snark: As I posted on Twitter, after seeing a dozen new companies with cool demos, I couldn’t escape feeling like I was watching Lycos, Excite and Geocities in 1997.)
• Outside.In CEO Mark Josephson predicted that the “Ecosystem model” will win the future for local online. Facebook’s “director of monetization” Tim Kendall echoed that sentiment, saying he doesn’t think facebook.com will be the primary destination in 3-5 years for the Facebook audience. It will be part of the ecosystem.

While we’re just getting started here, some urgency is required. News enterprises, large and small, need to gear up their “local online” strategy, seizing the opportunity to cash in while connecting local businesses with local consumers. Before it’s too late.

BIA/Kelsey analysts believe the “massive shift from traditional media to digital media” will continue with some companies “falling off the cliff.” While the current winner in local online is search, “geotargeted display, video, mobile, e-mail and reputation management” will challenge in the near future.

How big the ledge on that cliff is – and how far the fall – will vary by company and website. But if you work for a local news organization that isn’t serving local businesses with innovative digital solutions, better buckle up.

The bad news? An entire industry of companies you’ve never heard of (including some giants you have) are laser-focused on connecting local businesses with local consumers and most of them don’t care if a publisher is in the middle of that transaction.

That’s my halftime analysis from the Interactive Local Media conference in Los Angeles. (I’m posting updates to Twitter and you can find the conference stream by searching the hashtag #ILM09.)

Publishers see opportunities, too, of course. NPR and ESPN are moving quickly on locally staffed “franchise” sites. MSNBC.com and CNN are focusing on getting local, too – down to the neighborhood level. The concept is not new: create content that draws an audience, then sell ads around it.

“Our model is to create high quality, high context, in-market ad inventory,” Outside.In CEO Mark Josephson said during a session today. “Local content is a proxy for local ad inventory and there is a fundamental shift that is creating huge opportunities.”

Josephson’s company is one that is trying to assist publishers. But there are so many more companies at this conference, from business directories to search engine marketing firms, that are direct-to-advertiser plays. They do everything from placing location-based mobile ads to tracking social media conversations and buying Google ads for small businesses. And don’t forget about the big G, of course, or MSN, Yelp, Facebook, etc.

If you’re a traditionalist and want to see legacy news media survive, it’s not pretty. Even the Yahoo Newspaper Consortium, which includes TV and radio, has apparently only booked $83 million in ads this year, which isn’t going to save an industry (newspaper) that used to book some $40 billion. (And my outside impression is that Yahoo is getting the most benefit here, boasting about 100,000 local sales reps thanks to the partnership.)

If you’re a forward-thinker and an optimist, it’s exciting. Independent journalism startups have a bevy of potential partners to help them with the advertising side of the business. Sure, these third-party vendors will get a cut, but it might be less than you’d pay to staff up an ad sales team. And any percentage of zero is …

Additionally, there are publisher models worth following. Scott Tobias of Village Voice Media talked about a thriving local media business that includes three important segments: print, digital and street. The street team is a guerrilla marketing effort that can promote Village Voice events (online and offline) or do street-level marketing for big brands.

“Print is not dead for us,” Tobias said. “Village Voice wasn’t bloated like a lot of the metro dailies. And the Web is just an extension for what we’ve been doing for 25-plus years.”

The power of local brands still works, of course. Cory Bergman (MSNBC.com, Next Door Media, Lost Remote), Mike Orren (Pegasus News) and I were talking last night about how few of the companies here have any presence on main street. Local businesses have heard of Google, of course, but Yodle? Methinks not. Yet they claim to have 7,000 customers.

Yesterday, Howard Owens responded to one of Twitter updates with a prediction that “localpreneurs” will win this space in the end. If a local publisher can create, or in the case of newspapers – resuscitate, a recognized local brand, then local businesses are still an open opportunity.

After all, the one big recurring theme throughout all the sessions is that we’re still in the early days of all this. As Jim Pastor of ESPN said: “Anyone who tells you they know what local online looks like 1, 2, or 5 years from now is fooling themselves.”

And by “local online,” I’m referring specifically to the opportunity for marketing local businesses, not publishing local journalism. Although, as we’ve learned during the almost-completed decade, the latter will have trouble surviving without the former.

I’m at the Interactive Local Media conference in Los Angeles through Friday, analyzing the state of local business marketing online.

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 me started on mobile.)

The question I’ll be seeking to answer is: will the local business marketing opportunity support new forms of journalism? The last time I attended a Kelsey conference, I bemoaned the fact barely a handful of newspaper companies sent representatives. Now, I’m not wondering where the legacy media companies are today, but where the independent journalism startups will fit into this landscape as they flourish in the future.

Many of the companies here are disintermediating the traditional publishing model. They work directly with local businesses to improve performance on Google, perform email marketing and mobile services. Some work to help publishers with directory listings and other products and services.

Newspapers funded their journalism for decades by connecting local buyers and sellers. If the next generation of journalism models succeed, they will have to compete with – or partner with – the innovative companies and concepts that will be presented at this conference during the next 48 hours. I’ll keep you posted.

Expect to see more of this in the coming months: indepdent local news and information sites banding together to form a local/regional advertising network.

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.

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.

In Portland, Ore., the landscape is already crowded with stalwarts Willamette Week and the Portland Tribune and upstarts Portland Sentinel and Portland Mercury battling against the Oregonian and the local TV stations for the local news audience.

Enter ThePortlander. Somehow, without marketing or promotion, it’s catching on, and catching the attention of the big boys.

Jeremiah Kastner and Jeff Martens have no experience in journalism. While the site has been around for some time, a retooled version has struck a chord recently with a growing local audience.Kastner implemented a clean, modern design in less than a week (try that at a news company) and launched it earlier this summer.

Like any good entrepreneurial endeavor, the motivation stemmed from personal frustration. Rule No. 1, after all, in starting a business is to fix your own problem.

“We were really getting frustrated with the local news options,” said Kastner, whom I first met at Digital Journalism Camp Portland in August. “We are the demo we’re going after. We are tech savvy which means we don’t read printed newspapers – it’s just not gonna happen. But we represent a huge demo rising up. We don’t fall into the typical daily newspaper readership, but we don’t go for the alternative press either.”

Think about it: The average age for a reader of the Oregonian or a viewer of local TV news is probably pushing 60. The average age for alternative weeklies, with their focus on bars and live music, is closer to 20. That’s a pretty wide gap for a new publisher to attack.

“It’s  like a newspaper, but it’s not,” Kastner said of ThePortlander. “Nothing locally caters to Generation X or Y. I looked at what the Portland Mercury and Willamette Week were doing and said, ‘they can do it, why can’t I?’”

Kastner, who says he “know just enough about coding to be dangerous,” retooled a WordPress theme to get the look he wanted a couple months ago. Now he and Martens aggregate links to local news stories and post original content as time allows. They are recruiting local bloggers (10 have signed up so far) and looking for college journalism students as interns to help the operation grow.

They have already struck are negotiating a partnership deal with the Oregon Entrepreneurs Network and are in talks with the Oregonian about a potential collaboration, too. while it takes 12-15 hours a day to keep the site updated (it’s almost 50% original content, 50% cross-posted), the goal is to grow advertising revenues to support 6-8 people.

Technical innovations include an automatic process that posts links to new content on dozens of social networks. And ThePortlander released a functioning Facebook application last week, too.

“Here we are, no experience in journalism and we’re building a news site that is starting to rock the boat in Portland,” Kastner said. “When I look at big newspaper sites, it amazes me they’re having such a big problem.”

Granted, ThePortlander has a way to go catch up to the alternative weeklies, not to mention the big players in town. But there early success suggests there is still room in most cities and towns for new entries in the digital news landscape.

Expect to see similar flowers blossom in the coming months and years.

NOTE: The post was updated to reflect the new ratio of original vs. aggregated content (now 50/50), the number of community bloggers who have signed up (now 10), and the fact that the OEN partnership is still in discussion.

If you have ideas, questions or observations, I invite you add them in the comments.

Here is an excerpt of what I received …

You clearly have a better grasp of current conditions or at least strong enough faith in your vision of it to take the leap into a new venture.

We’ve been producing newspapers from for a very long time. We recently went to a Drupal platform and this has taken place against the rise of news blogs.

We have outside.in attached to our sites but quite honestly I don’t see how it helps us in any way.
It still boils down to one salesperson, selling an ad to a local business. That equation (despite attempts to get around it) seems likely to stay. Sales is a personal process not an automated affair. If that’s a given then it has to be worth it to the salesperson and the publisher. In the case of blogs, they are the same people.

So..it begs the question, “How is a two person operation a sustainable business model when if serious illness or an accident happens the business is essentially on hold”?

The CPM or CPC figures are at such a low level that it has driven publishers of conventional media to offer huge commissions…but even that does not work since the pricing is so low that even a major sales effort does not result in a level of income that would support someone.

The blog owners can get away with working 15 and 18 hour days but you can’t pay an employee to do that.

Isn’t this a process of (as DEVO famously put it) DE-Evolution…or if you prefer “Creative Destruction” that is seeing the old model crumble while a new model based on a fractionalized set of providers emerge?

The fact is that the overwhelming majority of the audience doesn’t really give a damn about being “sourced” … It’s typically about 5% that choose to comment or contribute. Most people have better things to do.

So I have to question all these “models” that suggest that a local restaurant only draws from a 10 block radius, or that an insurance office can benefit from the tiny square banner ad that appears adjacent to a big white space on a blog.

I believe the idea of local news blogs is highly dependent on a series of factors that are not present in most places. They require:
1. A geographically isolated enough area that is large enough for coverage but too small for big media
2. A large enough local advertising base not dominated by chain stores
3. The financial wherewithal to hang on through the first two years as an audience is built
4. The ability to work 12 to 18 hours a day
5. The use of a police and fire scanner to cover breaking local news
6. Knowledge of and proficiency with blogging software
7. The establishment of good relationships with local law enforcement, politicians, and the business community
8. A weak or lacking local news competitor
9. A tipping point event that draws attention to them such as a weather emergency

Your thoughts?

Below is the response I sent via email. If you have thoughts, questions or observations, I invite you add them in the comments.

I’m sure I am operating with more “faith” than “grasp” in terms of a vision at this point. But I do see opportunity in all the disruption. Unfortunately there is going to be a period of chaos before we clearly see what the next model will be.

As far as advertising sales, I think you have to recognize what Google has done with self-serve advertising before you declare sales cannot be an automated affair. Billions of dollars worth of advertising illustrate the new market reality. While few content publishers have been able to scale up a self-serve system to their liking, a new model that combines self-serve software with some minor sales effort (phone calls and emails instead of presentations and mock-ups) is starting to emerge. Call it a “publisher assist” model, it’s more scalable than the old model and more personal than software alone.

There is certainly some “creative destruction” at play here. Some online communities have a much higher participation rate than others. Some much higher than the 5% you cite. Here’s an excerpt from my new book about one success:

In Bakersfield, the Californian newspaper jumped in early, launching the first “citizen journalism” project at a U.S. newspaper (Northwest Voice) in 2004 and local social network (Bakotopia) in 2005. The results, propelled by persistent and creative marketing, are impressive. By 2009, the Californian’s online community included 30,000 user profiles, 29,000 friend connections, 1,000 blogs written by “readers.” (All this in a community of about 330,000 people.) The news company deployed a local niche strategy with 11 online brands and six of those have a corresponding print publication.

But, as you rightly point out, it takes some work to build. While a small blogging team working 15-18 hours a day is not a scalable model, those that have built a readership have proven there is demand for local (or hyperlocal) news and information. The next challenge is finding a business model that is sustainable. I think this is a better problem to try to solve than the inverse; if there were no audience for local news and information.

Your list of criteria appears heavily colored by the more famous models like the West Seattle Blog. I think points 1, 2, 5, 6, 7, and 8 are repeatable in most areas that have any population at all. (The first point, especially, can be met in many locations that have a big media outlet since so many are struggling to build or maintain a loyal digital audience.) The financial wherewithal and ability to work 12 to 18 hours a day are more difficult to repeat, which is why you see projects like Patch.com expanding as a franchise and new businesses like the San Diego News Network securing venture funding to make it happen.

If (when?) more cities and towns lose their daily newspapers, more opportunity will emerge. As advertising evolves into something viable online – or on a mobile device – the business model to pay for news gathering and publishing will become more clear. But even without a newspaper closing or the discovery of a new form of digital advertising, there are too many content publishers making it work every day in the U.S. (see political, sports, technology and mommy blogs) to dismiss the current opportunity.