I have to add a link to Mike Fourcher’s incredibly insightful take on the problems facing hyperlocal news producers, though I want to give it more thought later.

Fourcher ran a local news Web site in the extremely competitive Chicago suburbs for three years, before shutting it down recently, and his thoughts are valuable because he spent so much time in the weeds, so he understands all of the nuances of trying to win both readers and advertisers.

First, I should mention that I spent five years with Patch, launching their first 10 sites and starting 85 sites in New Jersey that get 2 million unique visitors per month. But we were still nowhere close to breaking even. While my successors have a serious chance of reaching profitability for most of their sites this year, it won’t be easy, and pushing beyond the break-even mark will be an even greater challenge. I know firsthand the frustrations.

I think Fourcher’s most meaningful insights involve advertisers. He lists 21 “lessons learned” and I think numbers 2, 8, 15, 16 and 17 are the most important. Number 8 is probably the least understood and most profound challenge facing local journalists — their community simply does not need them. As he notes, the smart local businesses, the ones you hope will recognize how you can help them grow their businesses, realize that they can use blogs and social media to build their own cadre of local fans, without paying you for advertising. Fourcher states it well:

The original business model for news, back in Ben Franklin’s day, was to create handbills that people would read because it had interesting material on it. Local businesses liked handbills because it enabled them to get their sales message out to local consumers. That model, modified by the subscriber system, essentially stayed strong for two hundred years.

Direct mail and electronic media dented the newspaper model, but neither could challenge the ubiquitous demand for news shared by every consumer. But then, the cost effectiveness of creating direct connections between businesses and consumers through the internet has obliterated most of the “consumer aggregation” news organizations used to provide to businesses.

I found many local businesses in CSJ’s coverage area with email or social media lists of thousands of local consumers. One martini bar has tens of thousands of email subscribers. Under these circumstances, these local businesses (who also tend to be the ones most likely to have a marketing budget) are no longer looking to throw a wide net, but actually target by psychographic even more than before.

But equally important are numbers 15 and 16. Fourcher says he was slow to realize how badgered small business owners are by cold-call salespeople:

They are selling credit card processing, new products to stock, marketing opportunities, you name it. It took at least a year of publishing useful neighborhood news before a majority of local businesses acknowledged me and our salespeople as something other than a nuisance.

He also notes that most local businesses simply don’t have the cash flow to experiment with advertising on a new Web site. As one business owner explained it to him, “If I buy a $300 ad, I need to make $3,000 of new sales that month, just to break even, since I have a 10% markup. Why would I take that risk?”

And in Lessons Learned numbers 2 and 17, Fourcher notes how much harder it is to find good salespeople and build a successful ad sales plan than to hire good reporters.

Fourcher obviously is thoughtful and it is sad to see him give up his dream (though given his insights, I have a feeling that somebody will give him another opportunity soon — Hello, Jim Brady). But one factor he can’t evaluate is the possibility that hyperlocals can work, but only as part of a broader network. I don’t know if Patch or one of its national competitors will make it to profitability, but they DO have a big advantage. Ultimately, the goal of any publication is to win readers and doing that requires producing interesting content day in and day out. We realized early on at Patch that while we were focused on hyperlocal, there were also stories that could be shared, whether it was two Patch towns playing each other in football, or a new store that would be of interest to a regional audience, or a countywide or even statewide issue that would apply to all of our sites. I was initially wary of our push for bloggers, but when our 85 sites found an average of 10 folks each to try to blog, you discover 15-20 of them with strong voices that can be shared elsewhere.

Yes, you absolutely need current local content to win in the hyperlocal space, but some days the reality is that there just is not that much interesting to report on in an upscale town of 30,000. That’s where shared content, including stories from neighboring towns, issues of statewide interest, compelling bloggers and aggregated content are key to producing a must-read site.

Fourcher does a great job of laying out the challenges faced by a sole local hyperlocal editor. A handful of folks (my colleague Debbie Galant of Baristanet among them) have figured out how to overcome them. But personally, I think the answer to saving local journalism lies in larger networks, whether formal, such as Patch or Jim Brady’s Digital First, or informal, like the New Jersey News Commons Deb has formed here at MSU to try to help New Jersey’s small news producers to share content.

What worries me right now is that nobody has convincingly figured things out. Fourcher has the best explanation I have yet seen as to why that is so hard.