In a guest post for the Online Journalism Blog, Shane Redlick shares his experiences of launching two hyperlocal startups – one, launched 5 years ago, based on a traditional advertising model. The second – launched this year – seeking to innovate with a broker-based model and crowdsourcing technologies.

2005: Opinion 250 News

In 2005, myself along with 2 partners launched the hyperlocal startup Opinion 250 News in Prince George, British Columbia (Canada). Myself and my company performed technical development, admin and financial tasks, while the other 2 partners (long time media industry people/semi-retired) did all the reporting and managed a small team of topical/weekly writers.

All content is original for local news. We had a lot going for us and we managed to make some good gains in the first year. To date the company is profitable and can pay modest salaries for those involved. But it has taken the better of 4 years to reach that point.

The effect we were having locally was significant (read comments to story here, for instance). The biggest challenge for us was building monthly ad revenue.

We did not sell on CPC or CPM basis. It was a flat monthly cost. We had a couple of people selling the ads and we had quite a bit of local good will and resulting support via ads. Even with a lot going for us however, this was a big challenge. In fact in the first month, when we launched, we’d sold nearly $10,000 CAD (monthly recurring) in ads.

2007: An alternative method for journalists to drive revenue

In 2007, while reflecting on the first couple of years along with suggestions to provide sites in other cities, I set about brainstorming ideas on how to provide a platform to specifically equip journalists in their cities to do what we were doing at Opinion 250. However, with a difference.

From experience, I knew that the challenge to sell ads (or possibly subscriptions) was big and that a lone journalist striking out on their own had the odds highly stacked against them of building a profitable news business.

So, in addition to providing a turn-key technical platform, purpose built for local news businesses, we wanted to develop an alternative method for those journalists to drive revenue.

What we came up with (after many discussions, challenges and adjustments) is the Locally Informed Marketplace. We thought that rather than engaging in selling, we’d find a way to leverage the journalist’s biggest asset, which is their readers and following. An active community of people reading and engaging in discussion via comments, etc could be asked to engage in a 3rd type of activity, in a form of ‘Local Crowdsourcing’.

We’ve applied principles that Jeff Howe has discussed in his book along with examples found at the likes of innocentive.com and 99designs.com, adapted and applied in a local way.

Readers now engage other readers directly to help them 1) solve challenges (ask questions/get answers) a type of local knowledge sharing and 2) get jobs done (post mini-tenders and get people bidding on jobs).

Journalists as a result, earn revenue by charging listing fees for both the challenges and jobs.

Finally, and without getting into too much detail, all three areas of the platform: News, Information (local wiki) and Marketplace are tied together with a form of website currency called “Credits” those credits are either earned (by readers posting stories that become very popular) or purchased with real currency.

More background about us, along with our Manifesto can be found at http://locallyinformed.com/about. The first local site was launched at http://northnews.co.nz

2010: The biggest challenge

Easily our biggest challenge has been in developing the local crowdsourcing marketplace.

Applying the crowdsourcing principles at a local level in this way has never been tried. It’s our answer to the question of how local news can move beyond selling advertisements or subscriptions.

This is a big challenge that a lot of smart people are working on. So, to say we’ve found a solution is a big claim and a big challenge to prove.

We’ve asked a lot of questions of some smart people, which has seemed to be the best way to help shape our ideas. For example, the Marketplace was originally going to be a type of ‘web store for rent’ for local businesses. What we’ve now developed as the Marketplace blows the socks off of that.

We’ve also learned how much time it takes to develop such a platform. We’ve been 1 ½ years full time development to get to this point. A further year prior to that was spent developing the initial ideas and securing series A investment.

Next, we plan to engage one-on-one with the journalists who begin to start using the Locally Informed platform. There’s still much to learn and to develop and it’s now time for the feedback of those first few brave journalists to shape its direction forward.

While everybody in journalism is wondering how the future of media looks like, entrepreneurs try to shape it. They develop new products and services that maybe could be the next big thing in journalism. OJB asks those entrepreneurs three simple questions in a series of interviews. First up: Shafqat Islam from NewsCred.

For everyone who has never heard of NewsCred: it’s an online platform that aggregates articles from lots of media – newspapers, magazines, blogs. NewsCred users can build a personalised online newspaper by selecting media and topics they want to read from and about.

The platform says it collects “all the world’s credible news, in one place”. It’s up to users to decide which news is credible and which isn’t. They can vote those articles down if they think it contains false facts or bias. A negative vote on a article doesn’t only influence the article but also the reporter that wrote it and the medium that published it. Based on the all the votes for a certain medium or journalist NewsCred ranks the credibility of media and journalists. And of course that ranking influences how prominent news is brought in the personalised newspapers.

How did you came up with the idea for your startup?

“Before we had any idea Iraj Islam and I always talked about the press. We were discussing biased articles that came across or false facts in the media. Soon we realised all our friends had lots of issues with the media transparency just like we had. We wondered if there was something like a online track record about media and journalists. A platform that would give insights into biased stories and false facts published by media and journalists. We found out that such a platform didn’t exist yet. So we decided to build NewsCred to introduce that level of accountability.”

“Initially we wanted to build a platform that collects data about those biased story and false facts and we would then analyse this data. The platform would present the user all kinds of graph and charts so they could see which source is credible and which isn’t. But soon we found out that it’s very hard to judge which source is credible and which not – just based on numbers. Even if you have all kinds of data. That is when NewsCred morphed into the what it is nowadays: a platform where readers can voice their opinion and join in discussions about the credibility of news media.

What did you learn news startups and about media?

“That it’s very hard to scale a business. Just doing a consumer website isn’t enough to monetize NewsCred. We ask ourselves the same question as newspapers and news websites do: how do I make money out of this consumer website? Advertisements just aren’t enough.”

“We think we’ve found a way to monetize NewsCred. I can’t say much about it yet, but it comes down to using our underlying technology to help other web publishers improve their websites, acquire new users and increase their user engagement.”

“I’ve also found out that nobody has the answers to the defining questions about the state and future of the media. To find those answers we all have to work together. Startups, evangelists, pioneers, critics, news corporations – they all have to work together.”

What is the future of journalism?

“I believe that openness will be very important for the future of journalism. News corporations should start to experiment with sharing their data, building platforms and API’s. Google showed us that  you can be open and still build a profitable company.”

“I’m very optimistic. I don’t think newspaper organisations will go away. Sure, newspapers will disappear – within 2, 3 or maybe 5 years newspapers are really gone. But the core competence of newspaper organisations isn’t the newspaper itself. It’s the typical kind of journalism they produce. And there are tremendous opportunities for them online to present the same kind of journalism but then via a different medium.”

Want to be the next news startup featured in this series? Send an e-mail to paul [AT] paulvereijken [.] nl.

This month’s Carnival of Journalism looks forward to new media developments in the coming year. Here are my no doubt misguided and naive predictions:

2009 will not be the year of the mobile web

Every year we make end of year predictions that the coming year will finally see the mobile web hit the mainstream. In many ways, it already has. But any expectations of there being some significant spread in 2009 will be scuppered by the credit crunch: users will be increasingly reluctant to spend money on a smart phone as the purse strings tighten. We’re not all going to be carrying around iPhones.

On the plus side, as a result of that slowdown we can expect mobile service providers to become more competitive in their data rates and packages, so that those who do have smart phones will have more reason to take out a mobile web package.

We can also expect to see increasing numbers of retailers offering free wifi to attract customers, as Pret A Manger have done, or government investment in wifi clouds to stimulate growth. So those who do access the web on the move – not just mobile phones but laptops and ipods – could start to do so more.

2009 will not be the year of the semantic web

The semantic web holds enormous promise for journalism, but it’s still early days and even the best products are far from mass market. I don’t expect that to change any time soon. However…

In 2009 Google will look more vulnerable than ever

Google has been fiddling with its successful formula, trying to keep users within its verticals and getting greedy for user data. It is weakest on local search and semantic search and both those areas should see a lot of development in 2009. In 2010, however, Google will probably simply buy the best competitors.

2009 will see social media getting lean – and mean

Social media startups who do not want to join Pownce on the scrapheap will stop developing extra features, trim others, and focus on their core business. Oh, and they’ll be under increasing pressure to actually start coming up with business models too, which means more advertising (if they can sell it), more e-commerce, and less stuff for free. All of which will mean less innovation, fewer users and startups without deep pockets joining Pownce on the scrapheap.

2009 will see a lot of thinking and little action

All those redundant journalists, publishers, developers, and estate agents will have plenty of time to reflect on how their industries are changing, to play around with online tools, meet people online and offline, and come up with ideas on where to go next.

They’ll be doing this in an environment where funds are beginning to appear that enable them to act on those. In the UK at least there is £1billion from NESTA, £50m from 4iP, £1m from the Scottish government and various other pots of money aimed at maintaining economic growth.

So by 2010, when the bids have been put in, funds released, and pilots completed, we should see some very interesting new media indeed.