Patch Fail Raises Questions About Business Model

business model

If you run a website as part of your business, figuring out a revenue model for the content you publish is probably a big priority.

Content marketing is certainly a powerful way to promote. But creating a business model to sell that content as a product or service can be a bit trickier.

The recent failure of Internet behemoth AOL to make Patch, a network of hyperlocal news sites, profitable after years of investment only underscores that challenge.

Hyperlocal Should be Hyper Small

One of the major stumbling blocks AOL faced while trying to make Patch a success was its overhead.

Denise Civiletti, editor and publisher of RiverheadLOCAL.com, covering local news in Long Island, NY, told Ad Age recently hyperlocal sites can be hyper profitable. But they must stay small and keep their costs low.

It’s hard to say how profitable an individual Patch site needs to be. But Civiletti insists her site’s six figure sales revenue is plenty to support herself and the only other employee, her sales rep husband.

Premium Content is Another Option

Another possibility is to charge visitors directly for some or all of the content published on your site.

Twitter co-founder Biz Stone proposed recently that larger sites like Facebook begin offering premium services. Those services could offer an alternative to advertising for people who wish to share and consume content on a site’s pages. Not everybody thinks that’s a great idea.

But Scott Fox, who launched his first ClickMillionaires forum in 2009 publishing content for lifestyle entrepreneurs, says he has run a successful subscription service for years.

Fox says the key is to regularly publish content users feel is worth the money. It’s also important to have a compelling difference between paid and any free content you offer, he says.

“Just look at your cell phone or cable bill to imagine how nice that recurring income is for those companies,” Fox explains. “I recommend that entrepreneurs try to build recurring revenues into their new online businesses, too.”

Failure Questions Photo via Shutterstock

3 Comments ▼

Shawn Hessinger - Editor


Shawn Hessinger Shawn Hessinger is the Editor for Small Business Trends. He is a journalist and social media networker with more than a decade of experience in the traditional newspaper business before moving to the digital world. He was the former community manager of BizSugar and the former community editor at AllAnalytics, a site dedicated to professionals in the business intelligence and analytics community.

3 Reactions

  1. I think one of the major challenges for an operation like Patch is trying to be everywhere. They have the whole Chicago metropolitan area covered and I have to believe that some of those markets will never be profitable.

    The reasons will vary. There are other hyperlocal operations that have become firmly established in a particular community. There may be a local website that is run as a labor of love at such a low cost that a normal business could never compete effectively. There may be insufficient economic activity to support a news-gathering and publishing enterprise within the locality.

  2. Going hyperlocal is a nice option if you’re on a tight budget. It allows you to take a significant number of customers while working in a less competitive area. But I still think the wider you go, the more money you can make. The only problem with that is the competition.

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