Patch takes on the ‘hood’

Case study by Tim Dawson.

When Alex Trebek, the host of US tv show Jeopardy fell chasing a burglar last week he gave one of their biggest stories of the year.  The San Francisco site of the national hyperlocal news network got the story.  News of the silver-haired 71 year old taking up chase and then snapping his Achilles tendon made newspapers across the States, most of whom credited Patch.

Scanning the cuttings over the past few months, it is curious, however, that the 800 or so sites that make up the Patch network have not broken more big stories.  With rumours that revenue from Patch is unimpressive, it begs the question, is the multi-million dollars that are being invested in Patch annually money well-spent on the part of owners AOL?

Patch was formed in 2007 by Tim Armstrong, who had been an ad executive at Google.  He was inspired by his frustration that he could not find volunteer opportunities in his area.  His local paper rejected his suggestion of a hyper-local news site, so he set about creating one himself.  In 2009 he sold the company to AOL for around $7m, and in the process Armstrong became AOL’s chief executive.

Today the company employs hundreds of local editors, each running a community-specific site.  They earn between $38,000 and $45,000 for which they are expected to file around five stories a day from home.  A report in the New York Times, however, suggested that at the start of 2011, each story was averaging only 100 views a day.   A story that clocked up 500 views was considered a ‘wild success’.  One ratings agency puts Patch’s annual unique visitors at three million – a significant rise on the previous year, however.

The quality of the sites is variable.  Some carry genuinely meaty stories.  Others read like they have been filled in a hurry to make up the numbers.  Most sites are based on relatively prosperous towns, rather than major urban areas, the idea being that these will be more attractive to advertisers. 

Bill Lynch, the editor in chief of the Sonoma Index-Tribune, a biweekly paper in California, told The New York Times that he doubted whether many people in his town had even heard of Patch. 

In 2010 AOL is understood to have invested $50m in Patch and it has yet to release figures showing revenue.  The Observer recently reported, however, that: “leaked accounts from California show early struggles availing very little, if not almost no, (revenue)”.

Perhaps if a few more celebrities suffer injuries in sight of Patch reporters, the sites will start to generate the attention and critical mass that it needs.  Until then, the jury remains out on the economics of nationally co-ordinated hyperlocal sites.