Monday, July 09, 2007
The Problem With Hyperlocal, Redux
I got an interesting comment today:
"...Punxsutawney may be boring to you but it is far more interesting to the people who live there than Pittsburgh. And advertising in Punxsutawney publications would provide local businesses with much better value than advertising in State Newspapers and Yellow Pages directories. After all isn't hyper targeted advertising why google is so successful?"
The point isn't that Punxatawney is boring to me (though it well might be :)
Rather, the point is network effects.
Why doesn't Craigslist choose small towns? Because there isn't enough liquidity in the market.
Let me put that another way. In cities, there are enough buyers and sellers to make markets work - whether of used stuff, new stuff, events, etc, etc.
In smaller towns, there just isn't enough supply or demand. Don't believe me? Check out the classifieds listings on most hyperlocal sites - they're updated very infrequently.
Put another way, there are network effects in cities - sometimes called urban economies - which can explode value creation. This is why most young people hate living in the burbs - it's relatively boring.
The numbers bear this out - there's just not enough news/classified/etc volume/reader (population, whatever) to make hyperlocal strategies work.
Now, lots of other stuff does happen in smaller towns - other kinds of interactions, like intense debate over the allocation of public goods, gossip, etc...these are avenues hyperlocal players should be exploring.
But for the typical news model, the deep economics don't - and I suspect can't - work.