Backfence Shuts Down

Backfence announced June 29 that it is shuttering its 13 community sites, which were in the DC area, Illinois and northern California. The ambitious site raised an initial round of $3 million, but never had high penetration in its communities, or sold enough Yellow Pages listings or banner ads to be optimistic about its future.

In recent months, company co-founder Mark Potts has been seeking strategic partners for the site to bring it into the Web 2.0 wave of widget-centered community that it just missed. There is no apparent activity in that direction. But it could still happen.

Backfence joins several predecessors in the community graveyard. Yet other companies continue to plow the path, with different models (SmallTown, CitySquares, American Town Networks and now, FatDoor). Community-centric blogs have also sprung up everywhere, along with community blog aggregators (Placeblogger and Outside.in.)

Ultimately, Backfence’s real legacy may be that it was a laboratory that helped pave the way for newspapers to seriously pursue hyper-local solutions that, notably, are not centered around local news (which it turns out, is not always very compelling). In the past several months, a number of useful, imaginative and fun newspaper hyperlocal sites have sprung up. Check out what The Washington Post is doing.

Here’s the note that Backfence composed for its communities.

“We are sorry to announce that Backfence (Name of community) will be ceasing operations within the next few days. We have been honored to have been members of this vibrant local community over the past several months. Your postings and discussions on Backfence have been been a reflection of the strength and interests of the members of the community. We hope we have provided you with a valuable local forum. Unfortunately, business issues are forcing us to close our doors and shut down the site.

The people behind Backfence still believe strongly in the need for community information services, and we hope to apply all that we’ve learned from our experience here to new endeavors in the future. Thank you for your interest and participation in Backfence. Hopefully, we’ll see you around the neighborhood. “

Let me add a personal postscript. It seems to me that people have been less critical of Backfence than other sites, in part because of goodwill for Mark Potts and Susan DeFife, and some of the great people they brought into their company. For sure, anybody would want to be friends with these people. But what we saw was that bloggers, journalists and even money people suspended their critical facilities, and basically became a rooting section. I may be a little guilty of that also. I hope none of us sentimental types are chosen to cover the presidential campaign!

24 thoughts on “Backfence Shuts Down

  1. Kudos and sympathies to the Backfence folks and their readers and contributors. A great contribution to this whole evolving field.

    Peter… I’ll add Front Porch Forum to your list of new local community models. Better than 20% of our pilot city (Burlington, VT) has subscribed in our first nine months… they’re doing amazing things with it.

    Michael Wood-Lewis
    Front Porch Forum
    FPF progress: http://frontporchforum.com/blog
    Member quotes: http://frontporchforum.com/testimonials
    Media reports: http://frontporchforum.com/about/press.php

  2. I hope the failure of Backfence will prompt some hard but still creative thinking about what will work at the hyperlocal level, both journalistically and business-wise. It’s clear, I think, that the Backfence strategy of letting contributors set the entire editorial agenda, without any mediation by the sites’ staff, produces unfocused content that will not attract users. Also, as Mark Potts said after Backfence’s problems went public in January, local-local sites like Backfence have to have a strong social media context. That would attract registrants and help keep them coming back.

  3. It’s interesting to see the VCs keep showering money to these start-ups on local sites. I wonder how do they made the necessary financial projections to convenice VC’s money.

    For these community portal to gain enough traffics or eyeballs to justify the ad money just won’t add-up. Any VCs out there care to comment?

  4. I complelely agree with Joe Zekas above. It was obvious to anyone who knew anything about advertising sales that the minute that Backfence made any real money in any of its markets, the local newspaper would create a $50 “hyperlocal” website, offer all the BackFence advertiers free ads on it, and maybe discounted ads in the paper, and that’s it. All advertisers gone in 60 seconds. In my opinion, this applies to almost every hyper-local site. Create a community site, sure–but do it for community’s sake, not to make money, because you won’t.

    But I liked your candid last paragraph, Peter. I agree –too much hype, spin (and self-serving comments). Too much Kool-Aid, and too many people drinking it.

  5. Before we wrote a single line of code, we did extensive research to try to understand why it is so difficult to make money selling local ads on the Internet. One of the conclusions we reached is that traditional Internet advertising, such as banner ads or pay-for-placement search results, don’t scale for the local market. So we set out from day one to design a completely new type of advertising that directly addresses the needs of local merchants and their communities.

    Smalltown’s focus is on providing tools for a local merchant to build their own rich, multimedia Web presence that is easy to make, change and share. We don’t have traditional Internet ads because every Webcard is an “ad” in the same way a nicely designed 4-color brochure is an ad.

    Our goal is to engineer a new type of advertising that visitors seek out because the ads contain useful, timely information. And since it is so easy for neighbors to pass along a Webcard, our culture rewards those merchants who create the most information-rich and useful Webcards.

    Here is a half-baked analogy:

    Imagine everyone carried around a magic box that contained a recently printed 4-color brochure for every business in their town. You’re having coffee with a friend, and you mention that you need to find a new accountant to do your taxes. Your friend reaches into his magic box, hands you a brochure for XYZ Accounting, and says “I use XYZ accounting and they do a great job. In fact, last year they saved me over $1,500 on my taxes. Here is a brochure that contains a list of all their services, their rates, customer testimonials, an article about how to prepare for 2008, and all their contact information.”

    Smalltown is a “box” of rich media Webcards that neighbors use to recommend local businesses. We generate revenue by charging local businesses and community groups for the Webcards. Today Webcards can contain text, photos, videos, coupons, and an anonymous suggestion box. Our plan is to continue to build functionality into Webcards, such as opt-in newsletters, appointment calendars, and so on.

    But no ads.

  6. With regard to the issue of hyper local news sites having a viable economic model, a new hyper-local network of sites is just launching in New Zealand. The economic model is slightly different because the revenue base is more than site advertising. With a searchable directory and the provision of a range of services to local businesses, our revenue forecasting is looking positive! Have a look at http://www.iworldpeople.co.nz

  7. No surprise there. Wanna check out some real ‘hyper local’ journalism (whatever that means) in Northern California brought to you by veteran journalists with less passion for venture capitalists than the First amendment?
    Lake County News
    This site spanks the local corporate media daily, has gobs of local contributors and is totally ad free.
    That is the new model.

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