I think the only people who would disagree are those at least maginally connected to the New York VC bubble, where the cocktail chatter is always about "scale." It’s never about building a sustainable business model.
Lucas Grindley put up a very smart post, comparing the SUNY/Times approach to a get-rich-quick-scheme. I think he’s dead on.
Why would anyone build a site targeted toward a small group of people and then worry about whether it can "scale" to serve a large group? That smacks of a confused business strategy. A hyperlocal business must first be able to make money by standing on its own — even if it never becomes a franchise.
That’s real scalability. Quite frankly, it’s dumb to start any business that can’t break a profit unless it rapidly expands. I’d be leery of anyone pitching such an idea, which isn’t much sounder in strategy than a Ponzi scheme.
Lucas also writes:
There is no shortcut to online success. Media companies look at their competitors from the technology world and see only what exists now, conveniently overlooking the immense effort and sacrifice it took the founders of Facebook or MySpace to attain.
Unfortunately, newspapers continue to look for the quick fix. Reality check: There isn’t one. It takes hard work to create new business, and the fact is, most businesses fail. I think Lucas is on to something — these VC-backed "scalable" local news sites are really just a ploy to huckster some money, not build a sustainable business model.
The question VC’s should be asking is, "is it sustainable?" Not, "Is it scalable."
Nathan Walls also takes a smart look at the issue and concludes:
Maybe there is a way to abstract a platform and aggregate neighborhood sites, but, just as mountains have their own weather, neighborhoods are unique and not taking the time to dive into them and understand them is a mistake. The large, monolithic approach is not the workable one. There’s no rule saying there must be a way to build and sustain a larger business out of “hyperlocal” content.
Finally, in comments, Jane Stevens points us to Brownstoner.com, a Brooklyn-based independent news site that will now face some SUNY-backed competition.
In looking at Brownstoner, it struck me what the SUNY-Times sites are, it turns out, are socialistic efforts. Brownstoner is now facing competition from a government backed agency (SUNY) using essentially free labor. How is that a fair competitive situation?
Government should let free enterprise thrive, not try to kill it.