EveryBlock Opens its Code, Seeks a Business Model

(MoneyWatch)  EveryBlock.com, the hyperlocal project created by Adrian Holovaty with funding from the Knight News Challenge Grant, has released all of its code as of this month, as required under the terms of the grant. "(W)e've reached an interesting point in our project's growth," Holovaty wrote on his personal blog, "We're open-sourcing the EveryBlock publishing system so that anybody will be able to take the code to create similar sites."

"But," he allowed, "It puts the six of us EveryBlockers in an odd spot. How do we sustain our project if our code is free to the world?"

As I considered this question, I was reminded of hard-learned lessons from the 1970s, when groups of us launched various media businesses, each of which failed -- inevitably -- due to our lack of any sustainable business model. (My personal interest in media business models dates to that period.)
Sometimes, we all forget that it is really difficult to build a new, successful business, even when the idea is good and the market is receptive. I'm not precisely clear as to why the Knight grant to EveryBlock held that restriction to release the source code once the grant expired, but it probably is due to the complexities of a non-profit foundation subsidizing potentially profitable startups with funds that are gifts, not investments, that are, in turn, exempt from taxes.

In any event, EveryBlock now has a presence in 15 large U.S. cities, and partnerships wth various newspapers including The New York Times. Although competitive efforts, such as Outside.in, will no doubt continue to emerge, Holovaty's group has a nice headstart on most of them, some strong brand equity inside the U.S. market, and the potential to franchise their service.
The big win for a hyperlocal service, theoretically, is local advertising. But I'm not certain that partnering with metro dailies like the Times is the best way to realize that revenue, actually. I might recommend going with the alternative newsweeklies in each community, which have a more granular business model, including stronger relationships with local advertisers, neighborhood by neighborhood, that more closely parallels the hyperlocal approach.

Then again, the company may also prove an attractive candidate for acquisition -- by a big media company! A good place to start would be a privately-held media giant, say the Hearst Corp., which despite bad times at its individual print titles, is an active investor in technology plays.

Here are some links to our previous coverage of EveryBlock, which continues to impress me as the best hyperlocal service yet available:

• EveryBlock a New Model for Local News?
• NYTimes.com Goes Hyper-Local Too
• New Media Tools Go Beyond Multimedia
• Hyper-Local, Geocoded Sites Need Community Input