New Business Models for News Report, August 16, 2009

8/14/2019 New Business Models for News Report, August 16, 2009

1/205

New Business Modelsfor News

Project Update

Presented at Aspen Institute FOCASAugust 16-19, 2009

Funded by the John S. and James L. Knight Foundation


2/205

New Business Models for News

Project Update

Presented at Aspen Institute FOCAS August 16-19, 2009

Introduction by Stephen B. Shepard

Dean, City University of New York Graduate School of Journalism

_______________

Were delighted to be presenting our work at the Aspen Institute, and Id like to

thank Walter Isaacson and Charlie Firestone for hosting us. Were also verygrateful to the Knight Foundation for their financial support, encouragement, andfriendship since we started the CUNY Graduate School of Journalism four yearsago. So thank you to Alberto Ibarguren, Eric Newton, and Gary Kebbel.

We set out to do something daunting: create new business models for news.You will see a brief overview of the results thus far. We have a lot more detail,which we hope you will dive into over the next three days.

We hope to inform the discussion about the future of news with businessspecifics experience, facts, figures, research, and analysis. We hope to

demonstrate that there is a sustainable future for news.

Were presenting one set of possibilities. Clearly, there are many others. Webelieve it vital to build and experiment with these new models and share widelyour experience and best practices.

Our work is all being done in the open at our site, newsinnovation.com. We hopeto draw out the ideas of many of you here at Aspen and we invite you to visit oursite in the weeks and months ahead to review and contribute to our work.

As for the new business models we are presenting here at Aspen:

We are assuming that the last major daily in a top-25 market is gone. Let me beclear: We are not suggesting that this is what should happen. But we are trying toanswer the question we often hear asked: What will become of local journalism ifnewspapers can no longer perform their civic function in a community?

Our answer: We believe that an ecosystem of many players will rise. Please notethat we are agnostic as to ownership: these players could be legacy companies


3/205

or startups. We are merely trying to describe their roles, envision a sustainablefuture for them, and describe how journalism in a metro area may work.

To build that future no matter who builds it we must forthrightly address thenew realities of media and work with them to imagine a new future for journalism.

And then we must build it.

_______________

About the CUNY Graduate School of Journalism

The CUNY Graduate School of Journalism opened in August, 2006, the firstpublicly supported graduate school of journalism in the Northeastern U.S. Its

three-semester program leading to the M.A. degree in journalism stresses theconvergence of media formats, offers subject concentrations in five specialties,and provides all students with paid summer internships, thanks to a generousgrant from the Knight Foundation. The new Class of 2010 has 85 students, asmart, motivated, and diverse group. Please see: www.journalism.cuny.edu.

The School is headed by founding Dean Stephen B. Shepard, who was editor-in-chief of BusinessWeek for more than 20 years. Dean Shepard was also a senioreditor at Newsweek, editor of Saturday Review, and president of the AmericanSociety of Magazine Editors.


4/205

New Business Models for News

Project Update

CONTENTS

About the Project . 1

New Business Models . 7

Hyperlocal and Ecosystem Framework Model 8

The New News Organization Model . 29

The Not-for-Profit News Organization Model .. 71

Revenue Opportunities ... 78

Survey of Hyperlocal Websites .. 86

Survey Results: For-Profit Websites . 95

Survey Results: Not-for-Profit Websites .. 110

Website Directory: Survey Participants 121

News Innovators on the Frontline . 135

Reporting, Research and Opinion 170

New Ad Networks and Alliances .. 188

Shaping the Future: Reports and Studies 192

Acknowledgments 197


5/205

CUNY Graduate School of Journalism Project Website: newsinnovation.com

1

About the Project


6/205


2

The New Business Models for News Projectat the City University of New York Graduate School of Journalism

Center for Journalistic Innovation.

The New Business Models for News Project at CUNY funded by the KnightFoundation for the Aspen Institute FOCAS meeting, with additional funding from theMcCormick, and MacArthur foundations is exploring how journalism can be sustainedin the internet economy. The discussion around this future has lacked specifics and so wehave been gathering data on business experience, working with startups and incumbents,and building models to explore how news can be supported.

At Aspen, we are presenting the alpha version of the first phase of this work,concentrating on the ecosystem we believe will emerge in a top-25 metro market after thedaily paper has ceased publication. The question has been asked, what will happen tojournalism in a city when the paper leaves? We put forward some possible answers. We

believe that these newspapers will not be replaced by new-fangled versions ofthemselves: new papers from single companies. No one product or company willdominate the news in these markets any longer. Instead, many players operating undermany motives, models, and means including incumbents will fill the void in a newecosystem of news. The transition will not be smooth, but we hope that in this chaos wewill see a market demand for reporting emerge. How the market can meet that demand isthe primary question we are investigating.

So what will this ecosystem look like? How can it operate? What are the economics tosupport it?

At CUNYs New Business Models for News Project, we are examining possible andoptimal business models to support four players:

the hyperlocal (town or neighborhood) and interest-based blog or site; the new news organization (a successor to the newspaper newsroom, covering the

metro area but operating at a different scale with different roles); publicly supported journalism (by individuals and charities); and the ecosystems framework that supports and adds value to many of these

players (for example, with ad networks, ad sales, technology platforms, andtraining).

Hyperlocal

Today, there are hyperlocal blogs operating in towns and neighborhoods across America.Many are run by former professional journalists or new entrepreneurs with no business and certainly no sales experience. They aim to cover their neighborhoods and many


7/205


3

are doing good work, serving and attracting substantial audiences. If it can be shown thatsuch businesses will support journalism and journalists, will more join their ranks toserve more towns? If we demonstrate that a hyperlocal blog in a town could generate$100,000 to $300,000 or more a year in revenue, would this motivate laid-off reportersand journalism students to start them and serve more towns and topics?

How could their businesses be optimized? What if they could sell advertising that serveslocal merchants better including helping these businesses with their presence on theweb and on Google and Yelp? What if they could sell advertising serving local merchantsin neighboring towns and sites? What if they were able to get a piece of the regionaladvertising pie that will be redivided when the paper leaves? What if they could get ashare of other revenue streams, such as ecommerce? Finally, what if these hyperlocaljournalists didnt have to sell? What if the ecosystem supported independent businesspeople call them citizen sales forces able to serve a new population of localmerchants and bring value to these hyperlocal bloggers, enabling them to concentrate onserving their communities? These are the questions we are asking.

The New News Organization

Now lets turn our attention to the new news organization. When we at CUNY held aconference in new business models for news last October, members of the group chargedwith reimagining the newsroom started their discussion not with the size of the currentnewsroom, imagining how to save its existing structure. Instead, they forecast plausiblerevenue for a metro-wide news service and then estimated how much staff it couldsupport: about 30 people. Recently, we spoke with the editor of a metro paper who saidthat of the 300 people in his newsroom, about 50 produced original journalism (versus

print production and commodity content). We are not suggesting that 30 people can dothe work of 300 even with efficiencies brought by the internet and we emphasizethat these 30 must work with networks of hundreds, possibly thousands more in thecommunity. In effect, these 30 professional journalists would organize and train networksof independent journalists and citizens to cover key aspects of community life, fromeducation, housing, and sports to government, business, and crime. They would alsoaggregate and curate coverage of the community from other sources and possibly link tostate, national, and international coverage of news relevant to the metro area. In any case,we envision a new, metro-wide news organization that operates at a smaller scale and wethen ask how large its audience and revenue could be.

What could this new news organizations product and service be and how could it relateto the ecosystem? It must provide original and unique reporting. It also needs to workcollaboratively with the community the ecosystem and so it may organize thosepeople and even train them. It will curate the best of the ecosystem and the world to add


8/205


4

value. It likely will not only produce articles but will reveal its process in blogs,aggregators, wikis, Twitter and RSS feeds, email, podcasts, and new tools yet to beinvented so working in this organization will require new media skills.

What will it take to support such a staff how much audience, market penetration,

traffic, advertising, and other revenue? (We assume this new news organization will be afor-profit enterprise; it need not be, but we believe this is the higher bar to pass todemonstrate the sustainability of such journalism.) What roles would the journalists inthis new newsroom perform: reporting, community-organizing, curating, vetting,training? To be efficient, the staff must reduce production tasks technology will helpthem and they should specialize and not replicate commodity content available a linkaway.

It is our hope that this news organization and the hyperlocal sites working with it will be motivated and supported to provide the beat, watchdog, and investigativejournalism their community needs, not only because its necessary but also because such

work brings them value: attention, distribution via the conversation, branding,Googlejuice, audience, and ultimately profit. Note well that this work can come not onlyfrom each organization individually but from networks of organizations workingtogether, collaborating and crowdsourcing journalistic effort.

Publicly Supported Journalism

The New Business Models for News Project also asks how publicly supported journalismcould contribute to the ecosystem. We are examining the levels of contribution currentlysupporting both local journalism (such as National Public Radio affiliates) and civic

needs. We will talk with new entrants, such as Spot.US (a platform to enable individualsto pledge support to individual journalists to create specific reporting), ProPublica, andHuffingtonPost. We will ask how much resource might be available to support localjournalism and at what level by examining how much is given to journalistic effortlocally today (to NPR outlets, primarily) and how much foundation-giving exists in amarket (note also that the Knight Foundation has initiated matching grants to encouragecommunity foundations to support journalistic work). We also will speculate about howsuch efforts could collaborate with existing players, such as public-radio radio and TVstations to get management, promotion, education, even space (Frontline executiveproducer David Fanning is proposing just such an organization).

The Ecosystems FrameworkFinally, we are creating models to describe the work of the framework that we believe isnecessary to support and add value to this ecosystem. Someone needs to help these local


9/205


5

sites provide better and more valuable service to their advertisers not just banner andbutton advertising but agency-like help with their online presence; greater value willyield greater revenue. If someone creates the means for neighboring local sites to selladvertising into each other, expanding the reach of their own local merchants, then allwill benefit: Every dinghy rises with the tide. If there is an easy way for metro-wide

advertisers to buy into a quality alliance of local sites, then they all would receiverevenue they could not otherwise have realized. If this entity also enables ecommerce ona large scale, all can again receive more revenue. If this entity can coordinate evennational buys witness the rise of womens blog networks such as BlogHer and Glam then there is yet another source of revenue.

For the sake of this project, we envision this infrastructure curation of sites, creationof alliances, provision of technology, and training coming from a single, separateentity; this, we believe, will make it easier to understand these roles. But at all levels ofthe ecosystem, we are agnostic as to ownership and structure. The framework could beprovided by a legacy news organization, a metro startup, a new national organization, or

various players. Similarly, the new news organization could be a successor to the legacynewspaper or a startup. Hyperlocal sites could be operated by sole proprietors or legacynews companies or startups. Publicly supported journalism could come from ad hoccrowdsourced networks or from cooperatives put together by local NPR affiliates. Wewill not prescribe ownership but instead will attempt to lay out functions and the businessmodels that can support them.

Note that we are assuming no print products in this exercise because we are trying toexamine the business potential and sustainability of online, local journalism. It is possiblethat various players still could produce print products, at least in the transition to a purelydigital future, because there may still be demand from readers and advertisers (who still

will pay higher rates for print), and because there is still revenue to be had in having adistribution mechanism for FSIs (free-standing inserts: coupons and circulars).

Revenue Opportunities

In addition, the New Business Models for News Project is cataloguing revenueopportunities: new advertising models, paid models, ecommerce.

* * *

To accomplish this work in the first phase for presentation at the Aspen Institute FOCASmeeting in August CUNY brought together a team that includes a principal investigator(Prof. Jeff Jarvis), a director (Peter Hauck), a business analyst (Jennifer McFadden),


10/205


6

business consultants (Jeff Mignon and Nancy Wang), journalism graduates of the school,students from the Zicklin School of Business Field Center for Entrepreneurship atCUNYs Baruch College, and advisors (including Star-Ledger editor Jim Willse). Inaddition, we are grateful to receive data and advice from Borrell Associates, Nielsen, andothers.

The team has surveyed more than 100 bloggers and is performing in-depth interviewswith many of them to gather their experience and needs. We are interviewing merchantsin two towns in New Jersey and one neighborhood in Brooklyn to better understand howthis large population of advertisers many of whom did not use newspapers becausethey were too big, expensive, and inefficient can be served online. We are workingclosely with a number of companies in this space, including The New York Times, Patch,Prism, GrowthSpur, Outside.in, and others to learn from their analyses and examine theroles they could play in the news ecosystem.

Our goal in this first phase is to describe a scenario and models for a journalistic ecology

and economy in which local journalism may not only survive but prosper and grow. Insubsequent work when funded the New Business Models for News Project plans toexamine national content exchanges, new models for foreign coverage, and other modelsto sustain journalism in the future. Under the auspices of the Graduate School ofJournalisms Center for Journalistic Innovation, we also are offering incubation servicesto some startups working in this arena.

The Tow Foundation has awarded a $3 million challenge grant to the Center forJournalistic Innovation. The work of the Centers New Business Models for News Projectis supported by grants from the Knight, McCormick, and MacArthur foundations. TheCarnegie Corporation is supporting related investigation of hyperlocal coverage

(including organizing, equipping, supporting, and training community members to takepart in reporting).

-Jeff Jarvis, Professor, CUNY Graduate School of Journalism


11/205


7

New Business Models

We have created original business models for a Hyperlocal Website,a New News Organization and the Ecosystem Framework. In

addition, we have developed a model for a Not-for-Profit newsorganization that is based on an assumed level of community andfoundation support in a Top-25 metro area.

To view and analyze all the models, please go tonewsinnovation.com/models. The models have been openlypublished and are freely available for use by anyone. Thespreadsheets can be copied and customized by inserting differentvalues and assumptions. We encourage all interested parties to do soand to share their results on newsinnovation.com.


12/205


13/205


9

MASTERASSUMPTIONS:FRAMEWORK&HYPERLOCALBLOGS Year1 Year2 Year3

OverallMetrowideMarket

Total#ofAdults18+(Metrowide) 5,000,000 5,000,000 5,000,000

%ofthesewhoareonlineusers 80% 80% 80%

Total#ofAdults18+/Online(Metrowide) 4,000,000 4,000,000 4,000,000Submarkets

CoverageAreaLargeBlog(Population=60K)

%ofTotalLivinginLarge(Population=60K) 54% 54% 54%

Total#ofPeoplelivinginLargeSubmarkets 2,700,000 2,700,000 2,700,000

#ofareaswithPopulation=60k/totalarea 45 45 45

CoverageAreaMediumBlog(Population=35K)




CoverageAreaSmallBlog(Population=20K)

%ofTotalLivinginLarge(Population=20K) 10% 10% 10%Total#ofPeoplelivinginLargeSubmarkets 500,000 500,000 500,000


UniqueVisitors&PageViewsLargeHyperlocalBlog

%ofthesewhoareLargeBlogusers 35% 49% 60%

BeginningUV

EndingUV 945,000 1,323,000 1,620,000

PageViews/User/Mo. 12 12 12

TotalMonthlyPVsLargeHyperlocalBlog(AllBlogs) 11,340,000 15,876,000 19,440,000

TotalMonthlyPVs/LargeBlog 252,000 317,520 388,800

UniqueVisitors&PageViewsMediumHyperlocalBlog

%ofthesewhoareMediumBlogusers 35% 49% 60%

BeginningUV

EndingUV 630,000 882,000 1,080,000


TotalMonthlyPVsMediumHyperlocalBlogs(AllBlogs) 7,560,000 10,584,000 12,960,000

TotalMonthlyPVs/MediumBlog 145,385 235,200 288,000

UniqueVisitors&PageViewsSmallHyperlocalBlog

%ofthesewhoareSmallBlogusers 35% 49% 60%

BeginningUV

EndingUV 175,000 245,000 300,000


TotalMonthlyPVsSmallHyperlocalBlogs(AllBlogs) 2,100,000 2,940,000 3,600,000

TotalMonthlyPVs/SmallBlog 63,636 89,091 109,091


14/205


10

MASTERASSUMPTIONS:FRAMEWORK&HYPERLOCALBLOGS(CONT.)

RevenueAssumptions

#ofAdPositions/Page

AvailsPer

Page Av.STR

#ofSold

Units/Page

LargeHyperlocal/VerticalBlog 12 55% 7

MediumHyperlocalBlog 12 55% 7

SmallHyperlocalBlog 12 55% 7

FrameworkRevShare Year1 Year2 Year3

LocalBannerAds(DirectSales) 15% 15% 15%

**Theseareadssoldbythe

Bloggerandserved,managed

bytheFramework

LocalAdNetworkAds 20% 20% 20%

**Thesearelocaladnetwork

salessoldbybloggers,and

served,managedby

Framework

MetroAdNetworkAds 15% 15% 15%

**TheseareMetrowidead

networkadssoldbytheNNOsalesteamandserved,

managedbyFramework

NationalAdNetworkAds 20% 20% 20%

**Thesearenationaladssold

byFrameworkandtargeted

locally

OutsourcedSales Year1 Year2 Year3

LocalBannerAds

CommissionOutsourcedAdSales 20% 20% 20%

**Thesearetheadssoldbythe

Blogger

%SoldbyOutsideAdSales 100% 100% 100%

%ofTotalRevenuesgoingtoOutsideAdSalespeople 0% 0% 0%

LocalNetworkAds



Blogger


%ofTotalRevenuesgoingtoOutsideAd

Salespeople 6% 7% 7%

MetrowideNetworkAds



NNO


%ofTotalRevenuesgoingtoOutsideAd

Salespeople 80% 80% 75%


15/205


11


BannerAdInventory

LargeHL/VerticalBlog Year1 Year2 Year3

DirectLocalBannerAdsas%ofTot.Avail.Impressions 60% 50% 45%LocalAdNetworkBannerAdsas%ofTotalAv.Imp. 5% 7% 10%

MetroNetworkAdsas%ofTotalAv.Imp. 35% 40% 40%

NationalNetworkAdsas%ofTotalAv.Imp. 0% 3% 5%

MediumHyperlocal Year1 Year2 Year3

DirectLocalBannerAdsas%ofTot.Avail.Impressions 60% 50% 45%

LocalAdNetworkBannerAdsas%ofTotalAv.Imp. 5% 7% 10%


NationalBannerAdsas%ofTotalAv.Imp. 0% 3% 5%

SmallHyperlocal Year1 Year2 Year3

DirectLocalBannerAdsas%ofTot.Avail.Impressions 60% 50% 45%



NationalBannerAdsas%ofTotalAv.Imp. 0% 0% 0%

ContextualAds(Google,e.g.)

#ofAdsperPage 3 3 3

CPC $0.20 $0.20 $0.20

CTR 0.36% 0.36% 0.36%

AverageCPM Year1 Year2 Year3

LocalBannerAd(EffectiveCPM)

LargeBlog $12.00 $12.00 $12.00

MediumBlog $12.00 $12.00 $12.00

SmallBlog $12.00 $12.00 $12.00

LocalAdNetworkCPM $7.50 $7.50 $7.50

MetrowideAdNetworkCPM $12.00 $12.00 $12.00

NationalAdNetworkCPM $5.00 $5.00 $5.00

Squarefootage/person 100 100 100Cost/Sq.Ft. $20 $20 $20


16/205


12


AdditionalAssumptions

Total#ofCompaniesintheGeographicArea 300,000 300,000 300,000 Averagemonthlybuy 250 250 250

Average#ofcompanies 1,218 2,950 6,552

**ThisfigurecomesfromA

monthlyrevenueall

blogs/avmonthlybuy

%ofTotalCompaniesintheGeographicArea 0.41% 0.98% 2.18%

Total#ofBlogsbeingserved 31 55 99

Average#ofcompanies/blog 40 53 66


17/205


13

FRAMEWORK:ASSUMPTIONS

FrameworkPartnerAssumptions

Year1

Siteclass Beginning

Value

Year1 Year2 Year3

Total#ofPartnerSites(GeographicArea=5M) LargeHyperlocal/VerticalBlog 7 12 22

MediumHyperlocalBlog 6 10 18

SmallHyperlocalBlog 5 9 15

Total#ofPartnerSites(GeographicArea=5M) 18 31 55

MonthlyPVs/Blog

LargeHyperlocal/VerticalBlog 252,000 317,520 388,8

MediumHyperlocalBlog 145,385 235,200 288,0

SmallHyperlocalBlog 63,636 89,091 109,0

MonthlyPVsAllBlogs 5,053,180 12,529,650 27,552,7

TotalAverageMonthlyRevenue(AllBlogs)

LargeHyperlocal/VerticalBlog $181,839 $400,978 $860,6

MediumHyperlocalBlog $89,920 $254,589 $546,4

SmallHyperlocalBlog $32,799 $81,833 $231,0

TotalAverageMonthlyRevenue(AllBlogs) $304,559 $737,401 $1,638,0

TotalAnnualRevenue(AllBlogsAdvertisingOnly) $3,654,702 $8,848,812 $19,656,6

TotalAverageMonthlyRevenue(AllBlogs)

LargeHyperlocal/VerticalBlog $15,188 $18,650 $22,2

MediumHyperlocalBlog $8,762 $13,814 $16,5

SmallHyperlocalBlog $3,835 $5,329 $8,3

GrowthRatesPartnerBlogs

Year1 Year2 Year3

MonthlyGrowthRateforthe#ofPartnerSites

MonthlyGrowthRates/LargeBlogs 5% 5% 5%

MonthlyGrowthRates/MediumBlogs 5% 5% 5%

MonthlyGrowthRates/SmallBlogs 5% 5% 5%

CitizenAdSalesTrainingConferences Year1 Year2 Year3

#ofAttendees 50 100 150

Fees $99.00

CitizenAdSalesTrainingWebinars Year1 Year2 Year3 %ofTotalPopulation 0.01% 0.01% 0.01%

#ofAttendees 500 500 500

Fees $29.99


18/205


14

FRAMEWORK:ASSUMPTIONS(CONT.)

ExpenseAssumptions

DevelopmentCosts $200,000*AssumesdevelopmentontopofOpenXplatform,

AnnualGrowthRates Year1 Year2 Year3

ProductDevelopmentCosts 10% 10%

Travel/Miscellaneous 50% 50%

MarketingandPromotion 35% 35%

TechnologyCosts N/A 25%

Rent&Utilities

ConferenceCosts 50%*Asapercentageofconferencerevenues(assumesamarginof5

CapexperEmployee $1,500


19/205


15

FRAMEWORK:INCOMESTATEMENT

Revenues

Year1 Year2 Year3

GrossRevenues $502,969 $1,382,296 $3,081,441

AdvertisingRevenues

LocalBannerAds $268,818 $692,640 $1,370,809LocalAdNetworkAds $18,668 $80,808 $337,015

MetroAdNetworkAds $195,538 $558,650 $1,268,394

NationalAdNetworkAds $ $25,302 $75,378

CitizenAdSalesTraining

Conferences $4,950 $9,900 $14,850

Webinars $14,995 $14,995 $14,995

RevenuebeforeOperatingExpenses $502,969 $1,382,296 $3,081,441

Expenses

Year1 Year2 Year3

SG&A

Salaries $510,400 $1,023,816 $1,533,204

Marketing&Promotion $20,000 $27,000 $36,450

Conferencecosts $2,475 $4,950 $7,425

TechnologyCosts $150,000 $25,000 $31,250

ProductDevelopment $50,000 $25,000 $27,500

LegalFees $35,000 $15,000 $15,000

PatentFees $25,000 $5,000 $5,000

AccountingCosts $6,000 $6,000 $6,000

Rent&Utilities $12,000 $26,000 $40,000

LicensingCosts $10,000 $10,000 $10,000

Travel/Misc $10,000 $15,000 $20,000

TotalExpenses $830,875 $1,182,766 $1,731,829

Expense/RevenueMargin 165% 86% 56%

OperatingIncome $(327,906) $199,530 $1,349,612

OperatingIncomeMargin (65.2%) 14.4% 43.8%

InvestingIncome $ $ $

CapitalExpenses $9,000 $19,500 $30,000

EarningsBeforeTaxes $(327,906) $199,530 $1,349,612

IncomeTaxes@40% $(131,162) $79,812 $539,845

Earnings $(196,744) $119,718 $809,767

NetMargin 39% 9% 26%


20/205


16

FRAMEWORK:SALARIES

STAFFING

Assumptions Year2

Year3

CompensationAnnual

Increase 4% 4%

HEADCOUNT SALARIES ANNUALSALARYCOSTS

Year

1

Year

2

Year

3 Base Year1 Year2 Year3 Year1 Year2 Year3

Pres./CEO 1 1 1 $90,000 $90,000 $93,600 $97,344 $90,000 $93,600 $97

VP/CFO 0 1 1 $85,000 $85,000 $88,400 $91,936 $ $88,400 $96

VP/CTO 1 1 1 $80,000 $80,000 $83,200 $86,528 $80,000 $83,200 $95

VP,Sales 1 1 1 $80,000 $80,000 $83,200 $86,528 $80,000 $83,200 $95

Director,Operations 1 1 1 $75,000 $75,000 $78,000 $81,120 $75,000 $78,000 $81

Director,Product

Development 1 1 1 $75,000 $75,000 $78,000 $81,120 $75,000 $75,000 $75

Director,Sales

Training 0 1 1 $70,000 $70,000 $72,800 $75,712 $ $72,800 $75

AssistantDirector,

SalesTraining 0 2 5 $65,000 $65,000 $67,600 $70,304 $ $135,200 $351

CustomerSupport 0 2 4 $45,000 $45,000 $46,800 $48,672 $ $90,000 $180

Payroll/Tech

Support/OtherAdmin 1 2 4 $40,000 $40,000 $41,600 $43,264 $40,000 $83,200 $173

SubTotal 6 13 20 $440,000 $882,600 $1,321

PayrollTaxes(9%of

Salaries) $39,600 $79,434 $118

Benefits(7%of

Salaries) $30,800 $61,782 $92

TOTALSalary+

Benefits $510,400 $1,023,816 $1,533


21/205


17

HYPERLOCALBLOGS:MARKETWIDEASSUMPTIONS

Year1 Year2 Year3

OverallMetrowideMarket

Total#ofAdults18+(Metrowide) 5,000,000 5,000,000 5,000,000

%ofthesewhoareonlineusers 80% 80% 80%Total#ofAdults18+/Online(Metrowide) 4,000,000 4,000,000 4,000,000

Submarkets

CoverageAreaLargeBlog(Population=60K)




CoverageAreaMediumBlog(Population=35K)



#ofareaswithPopulation=35k/totalarea 52 52 52CoverageAreaSmallBlog(Population=20K)


Total#ofPeoplelivinginLargeSubmarkets 500,000 500,000 500,000



22/205


18

LARGEHYPERLOCALBLOG:REVENUEASSUMPTIONS

UniqueVisitors&PageViews


BeginningUV

EndingUV 21,000 29,400 36,000

PageViews/User/Mo. 12 12 12TotalMonthlyPVs 252,000 352,800 432,000

Total#ofAdsUnitsPerPage 6.6 6.6 6.6

TotalImpressions(AllAdTypes) 1,663,200 2,328,480 2,851,200

SellThroughRate(overall) 105% 100% 100%


LocalBannerAd(EffectiveCPM) $12.00 $12.00 $12.00




AvailableBannerAdInventory




SitewideSellThroughRate 105% 100% 100%


#ofAdsperPage 3 3 3

CPC $0.20 $0.20 $0.20

CTR 0.36% 0.36% 0.36%

Services

AverageNumberofMonthlyAdvertisers/Site(Metrowide) 40 53 66

%ofMonthlyAdvertisersServicedbyBlogger 20% 20% 20%

NumberofLocalCompaniesbeingServiced/Month 8 11 13

FlatFeeforServices $20.00 $20.00 $20.00

MonthlyServicesRevenues $158 $213 $264

Ecommerce

Monthly$perConvertedUser $3.50 $3.50 $3.50

UserConversionrate 0.50% 0.50% 0.50%

Events

%ofBloggerswhoHoldEvents 25% 25% 15%

#ofBloggersHoldingEvents 3 5 6

#ofEvents/Year 44 44 44

#ofTicketsSold/Event $15.00 $15.00 $15.00

TotalAnnualEventRevenuePerBlog $660.00 $660.00 $660.00


23/205


19

(cont.)

LocalNetworkAdSalesCommissions

TotalAnnualLocalNetworkSales $116,392 $404,040 $1,685,076

CommissionforSalesintoMetro 20% 20% 20%

%ofTotalInventorysoldbyblogger 3% 3% 3%

AnnualCommissions/Blogger$698 $2,424 $10,110

LARGEHYPERLOCALBLOG:EXPENSEASSUMPTIONS

LocalBannerAdsRevShare Year1 Year2 Year3

FrameworkRevShare 15% 15% 15%

TotalRevShareLocalBannerAds 15% 15% 15%

LocalAdNetworkRevShare&Commission Year1 Year2 Year3

CommissionBloggers 20% 20% 20%

%SoldbyLarge&MediumBloggers 100% 100% 100%

FrameworkRevShare 20% 20% 20%TotalRevShare+Commissions 40% 40% 40%

MetroAdNetworkRevShare&Commission Year1 Year2 Year3

CommissionNewNewsOrganization 20% 20% 20%

%SoldbyNewNewsOrganization 100% 100% 100%


TotalRevShare+Commissions 35% 35% 35%

NationalAdNetworkRevShare&Commission Year1 Year2 Year3

CommissionFramework 20% 20% 20%

%SoldbyFramework 100% 100% 100%FrameworkRevShare 20% 20% 20%



ProductDevelopmentCosts 10% 10% 10%

Travel/Miscellaneous 50% 50% 50%

MarketingandPromotion 35% 35% 35%

TechnologyCosts N/A 25% 25%

Rent&Utilities 10% 10% 10%

CapexperEmployee $1,000 $1,000 $1,000

Rent

Squarefootage/person 100 100 100

Cost/Sq.Ft. $10 $10 $10


24/205


20

LARGEHYPERLOCALBLOG:INCOMESTATEMENT

Revenues

Year1 Year2 Year3

GrossRevenues $129,543 $273,796 $327,584

AdvertisingRevenues LocalBannerAds $82,626 $149,572 $163,442

LocalAdNetworkAds $2,804 $9,238 $16,024

MetroAdNetworkAds $34,022 $91,503 $111,098

NationalAdNetworkAds $ $1,760 $3,561

ContextualAdRevenue $4,079 $9,598 $11,654

AffiliatedServices $1,899 $2,561 $3,168

Ecommerce/AffiliateRev $2,754 $6,480 $7,868

Events $660 $660 $660

Commissions/Salesintoothersites $698 $2,424 $10,110

RevenuebeforeOperatingExpenses $129,543 $273,796 $327,584

Expenses

Year1 Year2 Year3

SG&A

Salaries(IncludingOwner/Operator) $63,800 $214,600 $232,653



LegalFees $3,000 $1,000 $1,000


Rent&Utilities $2,000 $4,000 $5,000

Travel/Misc $5,000 $5,000 $7,500

TotalExpenses $96,300 $239,600 $261,153


OperatingIncome $33,243 $34,196 $66,432

OperatingIncomeMargin 25.7% 12.5% 20.3%


CapitalExpenses $ $1,000 $1,000

EarningsBeforeTaxes $33,243 $34,196 $66,432

IncomeTaxes@40% $13,297 $13,678 $26,573

Earnings(AccruetoOwner/Operator) $19,946 $20,517 $39,859



25/205


21

MEDIUMHYPERLOCALBLOG:REVENUEASSUMPTIONS



BeginningUV

EndingUV 12,115 16,962 20,769



TotalImpressions(AllAdTypes) 959,538 1,343,354 1,644,923







AvailableBannerAdInventory






#ofAdsperPage 3 3 3

CPC $0.20 $0.20 $0.20

CTR 0.36% 0.36% 0.36%

Services






Ecommerce



Events

%ofBloggerswhoHoldEvents 25.00% 25.00% 25.00%

#ofBloggersHoldingEvents 3 5 8

#ofEvents/Year 15 25


TotalAnnualEventRevenuePerBlog $ $225.00 $375.00


26/205


22

(cont.)



CommissionforSalesintoMetro20% 20% 20%

%ofTotalInventorysoldbyblogger 0.75% 0.75% 0.75%

AnnualCommissions/Blogger $175 $606 $2,528

MEDIUMHYPERLOCALBLOG:EXPENSEASSUMPTIONS
















%SoldbyFramework 100% 100% 100%









CapexperEmployee $500 $500 $500

Rent


Cost/Sq.Ft. $ $8 $8


27/205


23

MEDIUMHYPERLOCALBLOG:INCOMESTATEMENT

Revenues

Year1 Year2 Year3

GrossRevenues $64,376 $127,746 $160,540


LocalAdNetworkAds $1,502 $4,413 $8,136


NationalAdNetworkAds $ $841 $1,808

ContextualAdRevenue $2,185 $4,585 $5,917

AffiliatedServices $1,425 $1,921 $2,376

Ecommerce/AffiliateRev $ $ $

Events $ $225 $375

Commissions/Salesintoothersites $175 $606 $2,528


Expenses

Year1 Year2 Year3

SG&A




LegalFees $1,000 $1,000 $1,000


Rent&Utilities $ $2,250 $2,625

Travel/Misc $1,000 $2,500 $2,500

TotalExpenses $53,920 $105,313 $128,884





CapitalExpenses $500 $1,500 $1,750


IncomeTaxes@40% $4,182 $8,973 $12,662




28/205


24

SMALLHYPERLOCALBLOG:REVENUEASSUMPTIONS



BeginningUV

EndingUV 5,303 7,424 9,091



TotalImpressions(AllAdTypes) 420,000 588,000 720,000







AvailableBannerAdInventory DirectLocalBannerAdsas%ofTot.Avail.Impressions 60% 50% 45%






#ofAdsperPage 3 3 3

CPC $0.20 $0.20 $0.20

CTR 0.36% 0.36% 0.36%

Services






Ecommerce



Events

%ofBloggerswhoHoldEvents 0.00% 0.00% 0.00%

#ofBloggersHoldingEvents

#ofEvents/Year 15


TotalAnnualEventRevenuePerBlog $ $ $225.00


29/205


25

(cont.)



CommissionforSalesintoMetro20% 20% 20%

%ofTotalInventorysoldbyblogger 0.00% 0.00% 0.00%

AnnualCommissions/Blogger $ $ $

SMALLHYPERLOCALBLOG:EXPENSEASSUMPTIONS
















%SoldbyFramework 100% 100% 100%









CapexperEmployee $500 $500 $500

Rent


Cost/Sq.Ft. $ $ $


30/205


26

SMALLHYPERLOCALBLOG:INCOMESTATEMENT

Revenues

Year1 Year2 Year3

GrossRevenues $30,721 $62,225 $95,623


LocalAdNetworkAds $658 $1,932 $14,245


NationalAdNetworkAds $ $ $

ContextualAdRevenue $956 $2,007 $2,590

AffiliatedServices $475 $640 $792

Ecommerce/AffiliateRev $2,768 $5,807 $7,494

Events $ $ $225

Commissions/Salesintoothersites $ $ $


Expenses

Year1 Year2 Year3

SG&A


Marketing&Promotion $500 $750 $1,000


LegalFees $1,000 $1,000 $1,000


Rent&Utilities $ $ $

Travel/Misc $1,000 $1,000 $1,000

TotalExpenses $27,380 $53,151 $69,330





CapitalExpenses $500 $1,000 $1,250


IncomeTaxes@40% $1,336 $3,630 $10,517


NetMargin 7% 9% 16%


31/205


27

HYPERLOCALBLOGS:SALARIESLarge Blog

Assumptions

Year

2

Year

3

CompensationAnnualIncrease 2% 2%

AnnualComp.Increase

(Owner/Editor) 25% 15%


Year1 Year2 Year3 Base Year1 Year2 Year3 Year1 Year2 Year3

Owner/Editor 1 1 1 $55,000 $55,000 $68,750 $79,063 $55,000 $68,750 $79,063

StaffWriter(F/T) 0 1 1 $45,000 $45,000 $56,250 $45,000 $ $56,250 $45,000

StaffWriter(P/T) 0 1 2 $15,000 $ $15,000 $15,300 $ $15,000 $30,600

Sales 1 1 1 $45,000 $ $45,000 $45,900 $ $45,000 $45,900

SubTotal 2 4 5 $55,000 $185,000 $200,563

PayrollTaxes(9%ofSalaries) $4,950 $16,650 $18,051

Benefits(7%ofSalaries)** $3,850 $12,950 $14,039

TOTALSalary+Benefits $63,800 $214,600 $232,653

Medium Blog

Assumptions

Year

2

Year

3


AnnualComp.Increase




Owner/Editor 1 1 1 $37,000 $37,000 $46,250 $57,813 $37,000 $46,250 $57,813

StaffWriter(P/T) 0 1 1.5 $15,000 $15,000 $15,300 $15,606 $ $15,300 $23,409

Sales(P/T) 0 1 1 $20,000 $20,000 $20,400 $20,808 $ $20,400 $20,808

SubTotal 1 3 3.5 $37,000 $81,950 $102,030PayrollTaxes(9%ofSalaries) $3,330 $7,376 $9,183

Benefits(7%ofSalaries)** $2,590 $3,238 $4,047


**Owner/Editoristheonlyemployeereceivinghealthcarebenefits

Small Blog

Assumptions

Year

2

Year

3


AnnualComp.Increase




Owner/Editor 1 1 1 $18,000 $18,000 $21,600 $23,760 $18,000 $21,600 $23,760

StaffWriter(P/T)/Sales 0 1 1.5 $17,500 $17,500 $20,125 $21,131 $ $20,125 $31,697


32/205


28

(cont.)

SubTotal 1 2 2.5 $18,000 $41,725 $55,457

PayrollTaxes(9%ofSalaries) $1,620 $3,755 $4,991

Benefits(7%ofSalaries) $1,260 $2,921 $3,882



33/205


29

New News Organization Model

For purposes of this project, we have assumed a sample metromarket of 5 million people.


34/205


30

NEWNEWSORGANIZATION:INCOMESTATEMENT

REVENUE Year1 Year2 Year3 Notes

Advertising

OnlineAdRevenues $1,988,495 $5,787,423 $9,972,956

SalesCommissionsonMetrowideAdNetworkSales $260,718 $744,867 $1,691,192

Subtotal $2,249,213 $6,532,290 $11,664,148

BtoCservices

SMSalerts $17,753 $49,708 $95,866 year1launch

Special/Themedissues $416,000 $416,000 $416,000 year1launch

Events $165,000 $275,000 $330,000 year1launch

Localcouponservice $75,000 $75,000 $75,000 year1launch

Donationsystemforwatchdogjournalism $25,200 $29,400 $36,400 year1launch

Twittercoupons $7,316 $29,263 $109,737 year1launch

Listingsalesoflocalbusinesses $0 $177,530 $397,979year2launch Ticketsforlocalevents/entertainment $0 $33,833 $35,525 year2launch

Localwebsitesfortargetedmarkets/communities $0 $843,531 $3,560,479 year2launch

SeriesofiPhoneapps $0 $49,750 $74,625 year2launch

Localshoppingcomparisonapp

$0 $0 $0 Highcostofdatacollection

Subtotal $706,269 $1,979,016 $5,131,611

BtoBservices

Listingsalesfromlocalbusinesses $928,400 $1,108,400 $1,198,400 year1launch

Events $742,500 $990,000 $1,237,500 year1launch

Marketplace $325,145 $358,309 $410,203 year1launch

Sitebuilder

$0 $0 $0 Don'tdoduetostrong

competition

Traininginsales&marketingforlocalbusinesses $0 $264,000 $480,000 year2launch

Onlinesubscriptiontoweeklyenewsletters $0 $120,000 $180,000 year2launch

Businessesforsaleandfunding$0 $0 $0 Notincludedin

thismodel

Emailcampaignservice$0 $0 $0 Notincludedin

thismodel

Subtotal $1,996,045 $2,840,709 $3,506,103

Total $4,951,526 $11,352,016 $20,301,862


35/205


31

NEWNEWSORGANIZATION:INCOMESTATEMENT(CONT.)EXPENSES

MainWebsite $4,587,500 $5,380,900 $6,203,706

BtoCservices

SMSalerts $5,000 $0 $0

Special/Themedissues $258,800 $254,300 $254,810Events $130,000 $186,000 $219,320

Localcouponservice $8,000 $3,000 $3,000

Donationsystemforwatchdogjournalism $2,000 $0 $0

Twittercoupons $0 $0 $0

Listingsalesoflocalbusinesses $0 $69,388 $66,675

Ticketsforlocalevents/entertainment $0 $5,000 $0

Localwebsitesfortargetedmarkets/communities $0 $1,135,541 $2,743,617

SeriesofiPhoneapps $0 $35,000 $10,000

Localshoppingcomparisonapp $0 $0 $0

Subtotal $403,800 $1,688,229 $3,297,422

BtoBservices Listingsalesfromlocalbusinesses $103,495 $169,145 $241,948

Events $223,000 $284,000 $347,270

Marketplace $215,000 $168,100 $171,262

Sitebuilder $0 $0 $0

Traininginsales&marketingforlocalbusinesses $0 $196,450 $174,850

Onlinesubscriptiontoweeklyenewsletters $0 $41,000 $54,000

Businessesforsaleandfunding $0 $0 $0

Emailcampaignservice $0 $0 $0

Subtotal $541,495 $858,695 $989,330

Total $5,532,795 $7,927,824 $10,490,458


OperatingIncome(EBITDA) $(581,269) $3,424,192 $9,811,404

OperatingIncomeMargin 12% 30% 48%

CumulativeEBITDA $2,842,923 $12,654,327


CapitalExpense $60,000 $70,500 $81,000

EarningsBeforeTaxes $(581,269) $3,424,192 $9,811,404

IncomeTaxes@40% $(232,508) $1,369,677 $3,924,562

Earnings $(348,761) $2,054,515 $5,886,842



36/205


32

NEWNEWSORGANIZATION:ASSUMPTIONSONLINEADREVENUE

ASSUMPTIONS Year1 Year2 Year3 Source

Market

No.ofadults(18+) 5,000,000 5,000,000 5,000,000

%ofonlineusers 80% 80% 80%

Internetworldstats.com:USaverageis

72.5%;soinmetrocities,theassumptionisthatit'shigher

%ofusersvisitingsite 24% 49% 73%

Averageof4standardmarketsize;

reducedbecauseanewbrand;see"UV

calc"tab

http://www.boston.com/business/globe

rticles/2007/11/06/online_figures/

Traffic

BeginningUV 0

EndingUV 975,439 1,950,877 2,926,316

Pageviews/month 12 12 12

See"UVcalc"tabshavedbyalittleove

1/3tobeconservative

DisplayAds No.ofadsperpage 3 3 3

CPM(displayads) $12.00 $12.00 $12.00 NAA;AdPerfect;Centro

Inventorysold 50% 55% 60%

LocalRemnantAds

CPM $4.50 $4.50 $4.50 NAA;AdPerfect;Centro


NationalRemnantAds

CPM $0.95 $0.95 $0.95 NAA;AdPerfect;Centro


ContextualAds

No.ofadsperpage 3 3 3

CPC $0.20 $0.20 $0.20 NAA;AdPerfect;Centro

CTR 0.36% 0.36% 0.36% NAA;AdPerfect;Centro

Sponsorship

Averagesponsorshipfee/

week $1,500 $1,575 $1,654

Numberofsponsorships/

week 5 8 10

Numberofsponsorships/

year 52 52 52

%ofsponsorshipinventorysold 50% 60% 70%

Metrowideadnetwork

%commissionforNNO 20% 20% 20%


37/205


33

NEWNEWSORGANIZATION:EXPENSESMAINSITE

ExpensesMainSite

Startup Year1 Year2 Year3

Startup

Webservicedevelopment $300,000

Startupcost/person $40,000 Wagesandbenefits

EditorialStaff $2,535,000 $3,082,950 $3,651,804

Management&Admin $487,500 $497,250 $507,195

Development $292,500 $298,350 $304,317

SUBTOTAL $3,315,000 $3,878,550 $4,463,316

Other

CitizenJournalismNetwork $400,000 $400,000 $400,000

SUBTOTAL $400,000 $400,000 $400,000

S,G&A Marketing&SalesStaff $585,000 $795,600 $1,014,390

Marketing $25,000 $25,000 $25,000

Rent&Utilities $100,000 $117,500 $135,000

Hosting&TechEquipment $100,000 $100,000 $100,000

Travel&Misc $62,500 $64,250 $66,000

SUBTOTAL $872,500 $1,102,350 $1,340,390

TOTALEXPENSES $4,587,500 $5,380,900 $6,203,706

ASSUMPTIONS Year1 Year2 Year3

Startup Webservicedevelopment $300,000

Startupcost/person 1,000

CitizenJournalismNetwork

Budget/person $1,000 $1,000 $1,000

Numberofpersons 400 400 400

Marketing $25,000 $25,000 $25,000

Rent&Utilities

Squarefootage/person 100 100 100 Cost/sqft $25 $25 $25

Hosting&TechEquipment $100,000 $100,000 $100,000

Travel&Misc 10% 10% 10%


38/205


34

NEWNEWSORGANIZATION:BTOCSERVICESREVENUE

BTOCSERVICES:REVENUE Year1 Year2 Year3 Notes







Listingsalesoflocalbusinesses $ $177,530 $397,979 year2launch

Ticketsforlocalevents/entertainment $ $33,833 $35,525 year2launch

Localwebsitesfortargetedmarkets/

communities $ $843,531 $3,560,479 year2launch

SeriesofiPhoneapps $ $49,750 $74,625 year2launch

Localshoppingcomparisonapp $ $ $ Highcostofdatacollectio

TOTALREVENUE $706,269 $1,979,016 $5,131,611


39/205


35

NEWNEWSORGANIZATION:BTOCSERVICESREVENUEASSUMPTIONS

SMSALERTS

(mobilerevenueopportunitiesfornewsalertsviathecellphone)

commissiononalertsfromcarrier

ASSUMPTIONS

Year1 Year2 Year3

%ofUV 0.5% 0.7% 0.9%

NumberofUV 4,877 13,656 26,337

Numberofalerts/UV/mth 4 4 4

Carrierchargetocustomer $0.07 $0.07 $0.07

Typically,costis$.10$.15;wereducedbeca

thecostislowerformonthlyplansubscrib

(couldgoaslowas$.01)

Commission/alerttoNNO 25% 25% 25%

Year1 Year2 Year3

SMSalerts $17,753 $49,708 $95,866

SPECIAL/THEMEDISSUES

(monthlyprintversion;freedistributionisthroughkiosks,stores,hotels;exampleislocalschoolguide,localtouristguide,etc.)

advertisingfrombusinesses

ASSUMPTIONS

Year1 Year2 Year3

Numberofthemes 4 4 4

Numberofcopies/theme 50,000 50,000 50,0

Numberofpages(52=40%adpages) 52 52

%adpages 40% 40% 4

Averagecost/fullpage $5,000 $5,000 $5,0

Year1 Year2 Year3

Special/Themedissues $416,000 $416,000 $416,0


40/205


36

NEWNEWSORGANIZATION:BTOCSERVICESREVENUEASSUMPTIONS(Continued)

EVENTS

(organizationofthemedevents,likerealestate,carsales,etc.)

ticketsalestoevents sponsorshipfromlocalbusinesses

ASSUMPTIONS

Year1 Year2 Year3

Numberofadultsinmarket 5,000,000 5,000,000 5,000,0

%ofadultsintargetmarket/event 1% 1%

Numberofadultsintargetmarket 50,000 50,000 50,0

%ofadultswhogotoanevent 6% 6%

Numberofadultswhogotoanevent 3,000 3,000 3,0

Numberofevents 3 5

Numberofbusinessesforsponsorship/event 50 50

Averageprice/ticket/person $10 $10

Averageboothfee/event/business $500 $500 $

Year1 Year2 Year3

Events $165,000 $275,000 $330,0

Ticketsales $90,000 $150,000 $180,0 Revenuefrombusinesses $75,000 $125,000 $150,0

DONATIONSYSTEMFORWATCHDOGJOURNALISM

(askcitizensfordonationsforspecifictopics)

donationsfromcitizenstocoverspecifictopics(spot.usmodel)

ASSUMPTIONS

Year1 Year2 Year3

Averagenumberofarticles 36 42 52

Averagedonation/article $700 $700 $700

Figurefrom

spot.us

Year1 Year2 Year3

Donationsystemforwatchdogjournalism $25,200 $29,400 $36,400


41/205


37


LOCALCOUPONSERVICE

(couponsfromlocalbusinessesthroughonlineandmobile)

onetimeflatfeetobusinessestouploadacoupon/discount annualsubscriptionfeetobusinessestouploadunlimitedcoupons/discounts

ASSUMPTIONS

Year1 Year2 Year3

Numberofbusinessesinlocalmarket 300,000 300,000 300,00

%ofbusinessesonetimeupload 0.1% 0.1% 0.1%

%ofbusinessesannualsub 0.03% 0.03% 0.03%

Averagefeeforonetimeupload $50 $50 $5

Averagenumberofuploads/business 2 2

Averageannualsub $500 $500 $50

Year1 Year2 Year3


Onetimeuploads $30,000 $30,000 $30,00

Annualsubs $45,000 $45,000 $45,00

TWITTERCOUPONS

(businesseshaveaccesstopostdealTweetstoNNOTwitterfollowers)

pricepercouponposted

ASSUMPTIONS

Year1 Year2 Year3

%ofUVthataretwitterfollowers 0.10% 0.10% 0.10%

Numberoftwitterfollowers 975 1,951 2,92

Couponprice(byfollower)/coupon $0.25 $0.25 $0.2


%ofbusinessesbuyingcouponspace 0.01% 0.02% 0.05%

Numberofbusinessesbuyingcouponspace 30 60 15

Year1 Year2 Year3

Twittercoupons $7,316 $29,263 $109,73


42/205


38

NEWNEWSORGANIZATION:BTOCSERVICESREVENUEASSUMPTIONS

(Continued)LISTINGSALESOFLOCALBUSINESSES

(forexample,listofallconsumergoodscompaniesinthestate,listofalldoctorofficesbycounty,listofallelementaryschools

bycounty,listofallsportsclubsbycounty,listofallnannies/childcarebycounty,listofallcardealersbycounty,etc.)

freefortheHTMLteaserwiththefirst10addresses

onetimeflatfeepaymenttodownloadPDFfile

onetimeflatfeepaymenttodownloadexcelfile

annualsubscriptiontodownloadunlimitedfiles

ASSUMPTIONS

Year1 Year2 Year3

Numberofnewlistingtitles 2 1

Numberofrecurringlistingtitles 2

Totallistingtitles 2 3

Averagenumberofaddresses/listing 300 300

%ofUVtopurchasealisting 0.05% 0.05%

Numberofsales(downloads)/listing 975 1,463

%ofsalesexcelfile 30% 30%

%ofsalesPDFfile 60% 60%

%ofsalesannualsubforunlimitedfiles 10% 10%

Averageprice/exceladdress $0.60 $0.60

Averageprice/PDFaddress $0.20 $0.20

Annualsubprice $20.00 $20.00

Year1 Year2 Year3

Listingsalesoflocalbusinesses $177,530 $397,979


43/205


39


TICKETSFORLOCALEVENTS/ENTERTAINMENT

(ideaistobecentral/gotoplaceforalllocalevents)

commissiononeachticketsoldthroughthesite

ASSUMPTIONS

Year1 Year2 Year3

5% Proxy:Ticketmastersalesin2008 $1,450,000,000 $1,522,500,000

17%growth;but

wereducedto

5%tobe

conservative

Revenue/American $4.83 $5.08

Numberofadultsinlocalmarket 5,000,000 5,000,000

LocalProxy:sales $24,166,667 $25,375,000

%ofsalesthroughNNO 2% 2% Commission% 7% 7%

Year1 Year2 Year3

Ticketsforlocalevents/entertainment $33,833 $35,525

SERIESOFIPHONEAPPS

(sportsappsforthelocalteams)

purchaseoftheapp

ASSUMPTIONS

Year1 Year2 Year3

Numberofadultsinmarket 5,000,000 5,000,000

%ofadultsinterestedinsports 50% 50%

%ofadultspurchasingapplaunchinyr2 1% 0.5%

Numberofadultspurchasingapplaunchinyr2 25,000 12,500

%ofadultspurchasingapplaunchinyr3 1%

Numberofadultspurchasingapplaunch

yr3 25,000

Numberofapps 1 2

Priceofapp $1.99 $1.99

Year1 Year2 Year3

SeriesofiPhoneapps $49,750 $74,625


44/205


40


LOCALWEBSITESBASEDONTARGETEDMARKETS/COMMUNITIES

(i.e.Moms,Seniors,EthnicGroups,Sports/Passions)

advertising

commissiononservices/leadgeneration

ASSUMPTIONS

Year1 Year2 Year3

TRAFFIC

Numberofsites 1 2

Numberofadultsinmarket 5,000,000 5,000,000

%ofadults/targetmarket 30% 30%

%oftargetmarketasUV 40% 55%

EndingUV 600,000 825,000

Pageviews/month 4 6

DisplayAds

No.ofadsperpage 3 3

CPM(displayads) $12.00 $12.00 NAA;AdPerfect;Centro

Inventorysold 50% 55%

LocalRemnantAds

CPM $4.50 $4.50 NAA;AdPerfect;Centro


NationalRemnantAds

CPM $0.95 $0.95 NAA;AdPerfect;Centro


ContextualAds

No.ofadsperpage 3 3

CPC $0.20 $0.20 NAA;AdPerfect;Centro

CTR 0.36% 0.36% NAA;AdPerfect;Centro

Sponsorship

Averagesponsorshipfee/week $1,500 $1,575

Numberofsponsorships/week 5 8

Numberofsponsorships/year 52 52 %ofsponsorshipinventorysold 50% 60%

Year1 Year2 Year3

Localwebsitesbasedontargetedmarkets/communities $843,531 $3,560,479


45/205


41

NEWNEWSORGANIZATION:BTOCSERVICESEXPENSES

BTOCSERVICES:EXPENSES Year1 Year2 Year3 Notes

SMSalerts $5,000 $ $ year1launch




Donationsystemforwatchdogjournalism $2,000 $ $ year1launch

Twittercoupons $ $ $ year1launch


Ticketsforlocalevents/entertainment $ $5,000 $ year2launch


communities $ $1,135,541 $2,743,617 year2launch


Localshoppingcomparisonapp $ $ $

Highcostofdata

collection

TOTALEXPENSES $403,800 $1,688,229 $3,297,422


46/205


42

NEWNEWSORGANIZATION:BTOCSERVICESEXPENSESASSUMPTIONS

SMSALERTS




Startupcost $5,000

Topaypersontoput

thedealinplace

Ongoingcosts

Year1 Year2 Year3

SMSalerts $5,000 $ $

SPECIAL/THEMEDISSUES (monthlyprintversion;freedistributionisthroughkiosks,stores,hotels;exampleislocalschoolguide,localtouristguide,etc.)


ASSUMPTIONS

Year1 Year2 Year3

Startupcost $5,000

Foreditorialanddesig

concept,andadvertisi

strategy/materials

Projectmanager $25,000 $25,500 $26,010

Salescommissiononly(%ofadrevenue) 30% 30% 30%

Salescommission/issue $31,200 $31,200 $31,200

Prepress/issue $6,000 $6,000 $6,000

Designcost;mostofth

copyistheaggregation

content;othereditoria

costscoveredbyproje

managerwhoisalsoa

journalist

Printing(52pages)/issue $15,000 $15,000 $15,000

Distribution/issue $5,000 $5,000 $5,000

Avg100copies/locati

=500locations;drop

every15min;16peop

$10/hr+

gas/truck/organization$25/hr

Year1 Year2 Year3

Special/Themedissues $258,800 $254,300 $254,810


47/205


43


(Continued)

EVENTS

(organizationofthemedevents,likerealestate,carsales,etc.) ticketsalestoevents

sponsorshipfromlocalbusinesses

ASSUMPTIONS

Year1 Year2 Year3

Startupcost $5,000 $5,000 $5,000

Projectmanager $50,000 $51,000 $52,020

5% Spacerental/event $10,000 $10,500 $11,025

5% Spacestaffbudget/event $10,000 $10,500 $11,025

Salescommissiononly(%ofsponsor

revenue) 20% 20% 20%

Salescommission/event $5,000 $5,000 $5,000

Year1 Year2 Year3

Events $130,000 $186,000 $219,320

LOCALCOUPONSERVICE


onetimeflatfeetobusinessestouploadacoupon/discount

annualsubscriptionfeetobusinessestouploadunlimitedcoupons/discounts

ASSUMPTIONS

Year1 Year2 Year3

Startupcost $8,000

Development $ $3,000 $3,000

Year1 Year2 Year3



48/205


44


(Continued)


(askcitizensfordonationsforspecifictopics) donationsfromcitizenstocoverspecifictopics(spot.usmodel)

ASSUMPTIONS

Year1 Year2 Year3

Startupcost $2,000

Ongoingcosts $ $ $

Year1 Year2 Year3

Donationsystemforwatchdogjournalism $2,000 $ $

TWITTERCOUPONS



ASSUMPTIONS

Year1 Year2 Year3

Startupandongoingcosts Minimalcoststostartandmaintain

Year1 Year2 Year3

Twittercoupons $ $ $


49/205


45

NEWNEWSORGANIZATION:BTOCSERVICESEXPENSESASSUMPTIONS(Continued)

LISTINGSALESOFLOCALBUSINESSES

(forexample,listofallconsumergoodscompaniesinthestate,listofalldoctorofficesbycounty,listofall

elementaryschoolsbycounty,listofallsportsclubsbycounty,listofallnannies/childcarebycounty,listofallcardealersbycounty,etc.)





ASSUMPTIONS

Year1 Year2 Year3

Startupcost $4,000

Numberofaddressespurchased 4,000 4,000

Purchasecost/address $0.25 $0.25

Staff $64,388 $65,675

Year1 Year2 Year3

Listingsalesoflocalbusinesses $69,388 $66,675




ASSUMPTIONS

Year1 Year2 Year3 Startupcost $5,000

Ongoingcosts $ $

Year1 Year2 Year3

Ticketsforlocalevents/entertainment $ $5,000 $

SERIESOFIPHONEAPPS


purchaseoftheapp

ASSUMPTIONS

Year1 Year2 Year3 Startupcost $35,000 $10,000

Year1 Year2 Year3

SeriesofiPhoneapps $35,000 $10,000


50/205


46

NEWNEWSORGANIZATION:BTOCSERVICESEXPENSESASSUMPTIONS(Continued)



advertising

commissiononservices/leadgeneration ASSUMPTIONS

Year1 Year2 Year3

Startupcost $80,000 $80,000

Team:Manager,editorial,sales,development $893,520 $2,088,083

Salescommission% 10% 10%

Salescommission/sitelaunchiny2 $47,580 $142,223

Salescommission/sitelaunchiny3 $ $47,580

SalescommissionTOTAL $47,580 $189,803

Citizenjournalismnetwork

Produce50%of

content

%ofPV/site 50% 50%

Adrevenuesharing%/site 25% 25%

Incometothecitizenjournalists/sitelaunchinyr2 $45,966 $161,840

Incometothecitizenjournalists/sitelaunchinyr3 $ $45,966

IncometothecitizenjournalistsTOTAL $45,966 $207,807

Marketingbudget $25,000 $50,000

Rent&Utilities

Usingsameassumptionsasin

mainsite

Rent&Utilites/sitelaunchinyr2 $27,250 $64,500

Rent&Utilites/sitelaunchinyr3 $ $27,250

Rent&UtilitesTOTAL $27,250 $91,750

Hosting $10,000 $20,000

Travel&Misc $6,225 $16,175

Usingsame

assumptionsasin

mainsite

Year1 Year2 Year3

Localwebsitesbasedontargetedmarkets/

communities $ $1,135,541 $2,743,617


51/205


47

NEWNEWSORGANIZATION:BTOCBYSERVICE

BTOCSERVICES:PROFIT Year1 Year2 Year3 Notes








Ticketsforlocalevents/entertainment $ $28,833 $35,525 year2launch


communities $ $(292,010) $816,862 year2launch


Localshoppingcomparisonapp $ $ $ Highcostofdatacollection

TOTAL $302,469 $290,787 $1,834,189


52/205


48

NEWNEWSORGANIZATION:BTOCBYSERVICEASSUMPTIONS

SMSALERTS




Revenue $17,753 $49,708 $95,866

Expenses $5,000 $ $

TOTAL $12,753 $49,708 $95,866

SPECIAL/THEMEDISSUES

(monthlyprintversion;freedistributionisthroughkiosks,stores,hotels;exampleislocal

schoolguide,localtouristguide,etc.)



Revenue $416,000 $416,000 $416,000

Expenses $258,800 $254,300 $254,810

TOTAL $157,200 $161,700 $161,190

EVENTS

(organizationofthemedevents,likerealestate,carsales,etc.)

ticketsalestoevents

sponsorshipfromlocalbusinesses


Revenue $165,000 $275,000 $330,000

Expenses $130,000 $186,000 $219,320

TOTAL $35,000 $89,000 $110,680

LOCALCOUPONSERVICE


onetimeflatfeetobusinessestouploadacoupon/discount

annualsubscriptionfeetobusinessestouploadunlimitedcoupons/

discounts


Revenue $75,000 $75,000 $75,000

Expenses $8,000 $3,000 $3,000

TOTAL $67,000 $72,000 $72,000


53/205


49

NEWNEWSORGANIZATION:BTOCBYSERVICEASSUMPTIONS(Continued)


(askcitizensfordonationsforspecifictopics)

donationsfromcitizenstocoverspecifictopics(spot.usmodel)


Revenue $25,200 $29,400 $36,400

Expenses $2,000 $ $

TOTAL $23,200 $29,400 $36,400

TWITTERCOUPONS




Revenue $7,316 $29,263 $109,737

Expenses $ $ $

TOTAL $7,316 $29,263 $109,737

LISTINGSALESOFLOCALBUSINESSES:DON'TTHINKTHATTHEREISASUBSTANTIVEBUSINESSDUETOFIERCECOMPETITION

(YP.COM)

(forexample,listofallconsumergoodscompaniesinthestate,listofalldoctorofficesbycounty,listofallelementaryschools

bycounty,listofallsportsclubsbycounty,listofallnannies/childcarebycounty,listofallcardealersbycounty,etc.)






Revenue $ $177,530 $397,979

Expenses $ $69,388 $66,675

TOTAL $ $108,142 $331,304


54/205


50

NEWNEWSORGANIZATION:BTOCBYSERVICEASSUMPTIONS(Continued)





Revenue $ $33,833 $35,525

Expenses $ $5,000 $

TOTAL $ $28,833 $35,525



advertising

commissiononservices/leadgeneration


Revenue $ $843,531 $3,560,479

Expenses $ $1,135,541 $2,743,617

TOTAL $ $(292,010) $816,862

SERIESOFIPHONEAPPS


purchaseoftheapp


Revenue $ $49,750 $74,625

Expenses $ $35,000 $10,000

TOTAL $ $14,750 $64,625


55/205


51

NEWNEWSORGANIZATION:BTOBSERVICESREVENUE

BTOBSERVICES:REVENUE Year1 Year2 Year3 Notes

Listingsalesfromlocalbusinesses $928,400 $1,108,400 $1,198,400 year1launch

Conferences $742,500 $990,000 $1,237,500 year1launch

Marketplace $325,145 $358,309 $410,203 year1launch

Sitebuilder $ $ $

Don'tdoduetostrong

competition

Traininginsales&marketingforlocal

businesses $ $264,000 $480,000 year2launch

Onlinesubscriptiontoweeklyenewsletters $ $120,000 $180,000 year2launch

Businessesforsaleandfunding $ $ $ Notincludedinthismode

Emailcampaignservice $ $ $ Notincludedinthismode

TOTALREVENUE $1,996,045 $2,840,709 $3,506,103


56/205


52

NEWNEWSORGANIZATION:BTOBSERVICESREVENUEASSUMPTIONS

GENERALASSUMPTIONS

Year1 Year2 Year3


LISTINGSALESFROMLOCALBUSINESSES

(forexample,listoftheI/Tbuyersofthelargest500companiesinthestate,listofthesecurity

managersofthelargest500companiesinthestate,listofthesupplymanagersofthelargest500

companiesinthestate,etc.)





printtitleswithtoplists

ASSUMPTIONS

Year1 Year2 Year3

Numberofnewlistingtitles 6 3 3

Numberofrecurringlistingtitles 5 6

Totallistingtitles 6 8 9

Averagenumberofaddresses/listing 200 200 200


%ofbusinessesthatbuyalisting 0.5% 0.5% 0.5%

Numberofbusinessesthatbuyalisting 1,500 1,500 1,500

%ofsalesPDFfile 60% 60% 60%

%ofsalesexcelfile 30% 30% 30%

%ofsalesannualsubforunlimitedfiles 10% 10% 10%

Averageprice/PDFaddress $0.20 $0.20 $0.20

Averageprice/exceladdress $0.60 $0.60 $0.60

Annualsubprice $20.00 $20.00 $20.00

Numberofprinttitles 1 1 1

Numberofcopies/title 10,000 10,000 10,000

%ofcopiessold 30% 30% 30%

Pricepercopy $125 $125 $125

Numberoftotalpages 52 52 52

%ofadpages 20% 20% 20%

Averagecost/fullpage $1,000 $1,000 $1,000

Year1 Year2 Year3

Listingsalesfromlocalbusinesses $928,400 $1,108,400 $1,198,400

Onlinesales $543,000 $723,000 $813,000

Printsales $385,400 $385,400 $385,400


57/205


53


(Continued)

CONFERENCES

(organizationofthemedconferences,likerealestateconferences,carsalesconferences,financialservicesconferences,seniorsconferences,healthcareconferences)

ticketsalestoentertheconferences

boothfeeforlocalbusiness

feeforlocalbusinessestopresentattheconference

ASSUMPTIONS

Year1 Year2 Year3


%ofbusinessesintargetmarket/

conference 5% 5% 5% %ofbusinessestogotoaconference 4% 4% 4%

Numberofbusinessesthatgotoa

conference 600 600 600

%ofbusinessesparticipatingina

conference 3% 3% 3%

Numberofbusinessesparticipatingina

conference 450 450 450

%ofbusinessesparticipatingthatpresent 0.10% 0.10% 0.1%

Numberofbusinessparticipatingthat

present 15 15 15

Numberofevents 3 4 5

Averageprice/ticket/conf/business $50 $50 $50

Averagenumberofpeople/business 2 2 2

Averageboothfee/conf/business $400 $400 $400

Averagefee/businesstopresent $500 $500 $500

Year1 Year2 Year3

Conferences $742,500 $990,000 $1,237,500

Businessesattending $180,000 $240,000 $300,000

Businessesparticipating $562,500 $750,000 $937,500


58/205


54

NEWNEWSORGANIZATION:BTOBSERVICESREVENUEASSUMPTIONS(Continued)

MARKETPLACE

(onlineplacewherebusinessessubmitRFPsandotherbusinessesrespondtoandbidonthe

RFPs)

freetosubmitRFPsupto3RFPs(after3,onetimeflatfeepaymenttopaypersubmission;

annualsubscriptiontosubmitunlimitedRFPs)

respondto/bidonRFPsonetimepaymenttorespondtoaspecificRFP;annualsubscription

torespondto/bidonunlimitedRFPs)

NOTE:willalsobeabletofindthelocalgovernmentRFPs(localandstate)

ASSUMPTIONS

Year1 Year2 Year3

SUBSCRIPTIONS


%ofbusinessessubmitRFPs(>3) 0.05% 0.05% 0.05%

NumberofbusinessessubmitRFPs(>3) 150 150 150

%ofbusinessessubmittingonetime 50% 50% 50%

Numberofbusinessessubmittingone

time 75 75 75

%ofbusinessessubmittingannualsub 50% 50% 50%

Numberofbusinessessubmittingannual

sub 75 75 75

%ofbusinessesrespondingtoRFP 1% 1% 1%

Numberofbusinessesresponding 3,000 3,000 3,000

%ofbusinessesrespondingonetime 50% 50% 50%

Numberofbusinessesrespondonetime 1,500 1,500 1,500

%ofbusinessesrespondingannualsub 50% 50% 50%

Numberofbusinessesrespondannualsub 1,500 1,500 1,500

Averagenumberofsubmissions/business 5 5 5

Averagefee/submission $20 $20 $20

Annualsubfeeforsubmissions $100 $100 $100

Averagenumberofresponses/business 5 5 5

Averagefee/response $20 $20 $20

Annualsubfeeforresponses $100 $100 $100


59/205


55

NEWNEWSORGANIZATION:BTOBSERVICESREVENUEASSUMPTIONS(Continued)

ADVERTISING

%ofUV 2% 2% 2%

NumberofPV/UV 4 6 8 CPM $20 $20 $20

Year1 Year2 Year3

Marketplace $325,145 $358,309 $410,203

Subscriptions $315,000 $315,000 $315,000

Advertising $10,145 $43,309 $95,203

TRAININGINSALES&MARKETINGFORLOCALBUSINESSES

onlinetutorialsfee/tutorial

traininginpersononetimeflatfeetoattendtrainingsession

whitelabelsystemforonlinetraining

ASSUMPTIONS

Year1 Year2 Year3

ATLOCALNNO

Numberofbusinessesinlocalmarket 300,000 300,000

%ofbusinessesfortrainingonlinetutorials 0.2% 0.2%

Numberofbusinessesonlinetutorials 600 600

%ofbusinessesfortraininginperson 0.1% 0.1%

Numberofbusinessesinperson 300 300

Averagenumberoftutorialstaken 3 3

Averagefee/onlinetutorials $45 $45

Averagenumberoftrainingsattended 1 1

Averagefee/training $450 $450

WHITELABELSYSTEMFORONLINETRAINING

Numberofclients 8 18

Fee/month $1,000 $1,000

%Revenuerealizationinyearforstartupyear 50%

Year1 Year2 Year3

Traininginsales&marketingforlocalbusinesses $264,000 $480,000

Onlinetutorials $81,000 $81,000

Inpersontrainingsessions $135,000 $135,000

Whitelabelsystem $48,000 $264,000


60/205


56


(Continued)

ONLINESUBSCRIPTIONTOWEEKLYENEWSLETTERS

(onlypossibleifthelocalareahasamajorindustryorindustries;createindustrynewsletter) annualsubscriptionfornewsletter(s)

ASSUMPTIONS

Year1 Year2 Year3

Numberofnewenewsletterservices 2 1

Numberofrecurringenewssvcs 2

Totalenewsletterservices 2 3

Numberofbusinessesinlocalmarket 300,000 300,000

%ofbusinessesintargetindustry 5% 5% Numberofbusinessesintargetindustry 15,000 15,000

%ofbusinessessubscribing 2% 2%

Numberofbusinessessubscribing/industry 300 300

Averagesub/newsletter $200 $200

Year1 Year2 Year3

Onlinesubscriptiontoweeklyenewsletters $120,000 $180,000

EMAILCAMPAIGNSERVICE

(servicetohelplocalbusinessessendanemailcampaignforpromotionpurposesessentiallya

digitaldirectmarketingcampaign)

upfrontsetupfee(whichincludesprovidingresults)

priceperemail

ASSUMPTIONS

Year1 Year2 Year3

Numberofbusinessesinlocalmarket 300,000

%ofbusinessesforemailcampaign 5%

Averagenumberoftimesforcampaign 2

Averagenumberofemails/campaign 300 Averagefee/email

New Business Models for News Report, August 16, 2009

Documents