the gap / November 20, 2016

This News Blog Just Sold for $25M

It also unveils an incredible business opportunity.

With most new online business startups looking to create the next Snapchat, Instagram and Pinterest, are we perhaps looking too far from home when it comes to online success? Once you read about this one website, you may just come to that conclusion.

Although it sold for a huge amount, you’ll soon see that it isn’t reaching a huge amount of visitors. I’m very tempted to follow this business model myself so I’m excited to share it here to see what you could do with this opportunity.

The opportunities shared in this gaps report include:

  • One website which recently sold for $25m
  • Another profitable start-up who have made over $850,000 so far this year
  • A Dutch-startup which recently passed 40,000 paying subscribers

While everyone tends to be focused on creating “the next big thing”, the opportunity for success may (literally) be a lot closer to home than you thought.

Just last month, local news site Texas Monthly was sold for a staggering $25m. The site was sold to Paul Hobby, whose father, William Hobby, was a six-term Governor of Texas.

While the sum is far from the acquisition numbers we see gracing the homepage of TechCrunch, according to SimilarWeb the site was only reaching around 1 million people per month. Almost 90% of whom hail from (unsurprisingly) the United States.

Further stats on the site suggest that 41% of their traffic is coming from search, with terms like “texas sayings” and conspiracy theories around InfoWars founder Alex Jones actually being a deceased comedian bringing in thousands of visitors per month.

The Texas Monthly, which recently sold for $25m

The Texas Monthly, which recently sold for $25m

As you would expect, the site covers everything you can think of when it comes to Texas.

From which sporting events are happening soon to the best places to eat and relax, you’ll find it all covered in daily updates.

While the sale will not come as a surprise from anyone tracking its parent company, Emmis Communications, who had been under pressure to reduce their business debt, it does reveal a site worth a lot of money that isn’t reaching an unobtainable amount of visitors.

The Texas Monthly success alone shows the potential with a local-focused news site, but it’s certainly not the only one to be picking up traction.

The Charlotte Agenda is profitable and on track to bring in $850,000 this year

The team of 11 behind the Charlotte Agenda, based in North Carolina, are already doing far better than they expected to in 2016. Self-funded since its launch in April of 2015, they have only four staff members focused on creating content, while others like Lizzy Sirkin (Digital Strategist) and Gi Hallmark (Emerging Products) focus on how to grow the brand.

Those roles have already paid off, with the team recently launching Raleigh Agenda, where they hope to replicate their success with another news site in the state.

It's not the prettiest site, but it's working.

The Charlotte Agenda, on track to make $850,000 in 2015.

As far as numbers go, the Charlotte Agenda receives an estimated 200,000 visitors per month. Their main sources of traffic, reported by SimilarWeb, are:

  • Search: 36.12%
  • Social: 21.91%
  • Direct: 21.84%
  • Mail: 15.63%
  • Referrals: 4.50%

Since they currently claim to have over 21,000 email subscribers I would estimate that their traffic from their email list is higher than what is being reported.

Nieman Lab recently interviewed their co-founder Ted Williams on the success of the site. He stated that almost 500 people pay for access to premium content on the site, which costs just $5 per month.

While $2,500 is a small percentage of their monthly revenue, their future success will rely on being able to diversify their income.

Mr. Williams also had some interesting things to say about their focus on profitability.

“Unlike the strategy for launching a global media company, the strategy for launching a local media company needs to generate revenue early.”

85% of their revenue is generated from sponsorships and display advertising and though you would expect their focus is on local advertisers, they’ve also been able to attract large brands such as Uber and Bank of America.

Their social media focus consists of the usual Facebook, Twitter and Instagram triage, but surprisingly their Instagram is bigger than both of their Facebook and Twitter audience combined, currently sitting at 58,000 followers.

Dutch news site, De Correspondent, recently passed 40,000 paying subscribers

Launched via a successful Kickstarter campaign in 2013, De Correspondent has one focus for its (currently) Dutch-only content: To get people to subscribe to the site for an annual fee.

Currently priced at €60 per year, the sites co-founder, Ernst-Jan Pfauth, states that they’re converting 1.8% of people from their free email newsletter into paying subscribers.

The Netherlands is currently home to around 17 million people so while their potential for growth is far from limitless, they are targeting an affluent market. Neimanlab reports that they aren’t willing to settle on just writing in Dutch however, and plan to reach more English-speaking readers as they grow their brand and staff.

They’re reaching an estimated 1.4 million visitors each month. We can see that 80% of those visitors are coming either directly to the site or via social media.

Sources to traffic to De Correspondent via SimilarWeb

Sources to traffic to De Correspondent, via SimilarWeb

It’s interesting to see how much their sources of traffic differ from the Charlotte Agenda, but it shouldn’t be surprising. Since people are paying for access to content, which isn’t freely available, it makes sense that most of their traffic would be coming to the site directly.

Why there’s so much money to be made with this business model

If you’re new to gaps, then you might not know that we don’t just report on successful startups or solo ventures, but we find gaps in the market that you can capitalise on for your next online business.

We’ve featured this story on our launch because there are so many possibilities to replicate these successful ventures. Just a few reasons why this business model works so well include…

Advertisers know what they’re getting. Any local business that caters to the Charlotte crowd know they’re reaching that exact audience when they advertise on the site or sponsor the daily newsletter. They don’t have to worry that their ad dollars are being spent on reaching an audience who can’t benefit from their offering.

Readers want content from the source. You don’t want someone from the South of England reporting on those from the North and you don’t expect the people of New York to claim they know everything about the people of Texas. The people who are going to be able to describe your town or city the best are typically from people who were born and raised there.

You can cover content others don’t have the resources to. If there is an event of national interest happening in your town then you’re going to see it covered in the New York Times or similar, but that’s probably all. The Charlotte Agenda recently posted an article on “What 19,000 People Think of the Charlotte Dating Scene” which – as one of the most popular articles they’ve ever written – attracted more than 20,000 visitors.

It’s interesting to the people of Charlotte, but a site focused on the city are the only people who would write such a piece.

You don’t need a huge team. Unlike writing for a national news site, there are only so many stories you can cover when it comes to local news. Unless you’re in a violent neighbourhood, some news days are going to be slow. The Charlotte Agenda only has four full-time writers in a team of 11, and Billy Penn, a local news site in Philadelphia, has just 7 full-time staff yet is generating similar revenue numbers.

Feature in Google News. For the local sites I’ve investigated, all of them feature prominently in Google News. Not only when you’re searching in Google News itself, but when looking for news related to a specific local area. This could be a huge traffic driver for the site.

New to gaps? This is half of the story…

For every success story we feature, we highlight gaps in the market which reveal additional opportunities to be successful. Many are possible by simply changing the industry (or location) to focus on while others look at how to profit from other traffic sources or monetisation options.

Unlike other profitable ventures featured on this site, the other applications of this business model should hopefully be obvious: Creating a news site for other big states and cities around the world.

There’s no reason you need to start with a huge team, a huge budget or anything of the sort. Simply go and pick up a domain relevant to your local area and start setting up your website. We recommend WordPress, which gaps also uses, and Namecheap for your domain registrar.

If you’re worried about whether there’s enough people in your local area then keep in mind that Charlotte has a population of less than one million people. 792,862 to be exact. Similarly their new website, focused on Raleigh in North Carolina, will be reaching a population of less than half a million people.

The key to success here is focusing on a single area, being consistent, and writing the types of articles that people from the specific region you’re targeting would relate to.

For instance, the Charlotte Agenda has an article on The Most Expensive Homes in Charlotte. It contains no text and only 11 images yet just one day after posting it has amassed more than 11,000 views.

If you’re from Charlotte or live in the area, it’s the type of article you’re going to want to read and share with others.

If you think starting a local-news site could be the next venture for you, we’ve went into great detail on how we would tackle this challenge with our own free report.

It’s not just a few words saying “start a news blog” but shows you how to choose an area to target, how to set-up your website, great themes which fit this concept and so much more. Our report on the following page consists of thousands of words and is completely free.

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