Patch Redesign Emphasizes Social as Path to Revenue Growth

AOL’s hyperlocal news network Patch released a major redesign Sunday evening, pushing the platform away from a traditional editorial news property and into a more social, user-driven service. The move marks the beginning of what AOL CEO Tim Armstrong called “phase two” in the company’s evolution as it looks to establish a place in the market as a local utility with news as one spoke of the wheel. The redesign, which initially is only being pushed to five Long Island sites, will be rolled out to 50 sites by the end of the year and the remaining 800 plus Patches by the end of the Q1 2013.

Part of finding that sweet spot is managing the massive editorial costs associated with a standard one-to-many news model and, with the new redesign, Patch has made its clearest statement yet on how it plans to redefine content production, and implicitly the role of the editor, in local media.

At the heart of Patch 2.0 are Groups: subject-specific feeds, through which users and editors can share information about a topic. It’s newspaper sections reimagined with a symmetrical, and vastly more open content structure. The flagship Groups — sports, crime, business etc. — are still largely managed by editors and updated with content from Patch staffers. But it’s the crowd, and particularly the “power crowd,” so to speak, that the company hopes will add value in the same way that power users have allowed Yelp and Foursquare to scale so quickly.

“When you live in a town, news is almost on a continuum,” Rachel Feddersen, Chief Content Officer at Patch, told Street Fight in an interview, “There’s hard news — journalism with a capital “J” that only an editor can create. Then there is news that is ‘news to you’ because your child’s soccer practice has changed fields. These are all pieces of information that change where you physically go throughout your day and are super-important to your daily life.”

It’s the news long tail — small, actionable bits of hyper-personalized information with a short life span — which Patch is going after with its new content system. With Twitter still somewhat aloof in its local ambitions, the market for time-sensitive short-form information remains underserved, and it’s a segment in which user-generated systems work well. The question for Patch is whether it can leverage the crowd selectively without compromising the value and integrity of its costly journalistic content.

While the new product highlights contributions from Patch staffers with a logo attached to each post, there’s little differentiation as far as the type of content that can be created. Fedderson says that the structure of how users follow, invite, and participate in groups will likely weed out the outliers from sabotaging the content. However, the redesign lacks the more nuanced filters and verification systems needed when managing more complex, and open forms of information than a directory listing or restaurant review.

But for Patch, the social push is as much about setting the stage for new revenue opportunities as it is about scaling back editorial costs. Yes, editorial costs are a concern, but it’s the shrinking margins afforded by unidirectional advertising that present the most foreboding existential issues for Patch’s model.  User content means user engagement, and with engagement come opportunities to build more interactive marketing and commerce products, netting larger margins.

“We really believe that this platform will rise all boats,” Jon Brod, Patch’s CEO and co-founder, told Street Fight in an interview.  “What were seeing is this evolution and convergence of capital ‘J’ journalism with the benefits of a social platform for a marketing solution.”

Brod says that the emphasis on groups may also strengthen the company’s connection with small businesses: “It will lead itself naturally to some additional commerce opportunities, which we’re not ready announce but will certainly be rolling out where the platform affords us,” he said.

The success of those forthcoming commerce opportunities, and the company’s financial health, rests heavily on the redesign, and the ability for Patch to shift from neighborhood news site to local utility. It’s the fragile business of fostering a climate of content creation, not only consumption, that poses the most acute challenge for the traditionally editorial-focused company, and may require more time, and space, than AOL’s already-massive investment will afford.

Steven Jacobs is deputy editor at Street Fight.