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Viewing report
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Independent City Sites Gain Steam - A New Threat to Old Media
Borrell Associates Inc, Dec 2005
Borrell Associates examines how independent city sites gain steam posing a new threat to old media.
As they battle off the search engines and classified Web sites, traditional media face a new crop of competitors right in their own back yards. Independent local Web sites have gained steam, rejecting the popular business model of loading up a site with news, weather, sports and classified listings. Their strategy of offering simple Web sites that focus on entertainment and recreation has many of them generating revenues well into six-figures.
Feverish growth in online advertising has spawned a new crop of local Web site competitors. They are elbowing in on territory that traditional local media properties have been trying to stake out for the past decade, but they are using a decidedly different model. These competitors couldn't care less about local news headlines, obituaries and Doppler weather reports. They shun the drudgery of repackaging local news and information, and instead focus almost exclusively on fun and interesting things to do around town. While local media home pages in San Francisco lead their pages with crime news and updates from Iraq, SanFrancisco.com leads with nightlife, dining and attractions.
The strategy is beginning to pay off. Many independent local sites are reporting revenues well into six figures, with respectable margins. About 20 owners of City.com URLs banded together recently to form their own trade association.
A flurry of acquisitions has begun as well. LocalMatters.com recently secured a $20 million investment that it will use in part to buy AreaGuides.net, a large network of city guides. Boulevards New Media, a network of 90 city sites, paid $500,000 for a City.com URL. And a Las Vegas newspaper publisher offered $12 million for LasVegas.com.
Independent sites tend to have a fraction of the traffic and revenue of competitors who are financed and promoted by traditional-media outlets, but the underdogs offer an interesting lesson: Keep it simple, keep it upbeat, and don't forget the out-of-market traffic. They are focusing on sites that win attention from locals and travelers alike, and are tapping ad revenues from some of the largest spenders on interactive advertising: hotels, casinos, airlines, real estate agents, resorts and restaurants.
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