Digital news platform Patch pivots away from advertising to payments

Patch, the hyperlocal (and profitable) digital news platform, is doubling down on digital transactions as it seeks to pull further away from advertising as a sole revenue source, Patch CEO Warren St. John tells Axios.

Why it matters: Scaling a high-margin revenue stream that's not contingent on page views (the way advertising rates often are calculated) is critical in local news, because truly local news is usually only relevant to small group of people.

• Revenue from selling access to its hyper-local calendars grew 110% year-over-year from Q2 2018 to Q2 2019 and now generates in the low single-digit millions in revenue.
• Calendar payments are Patch's first major foray into local transactions, and will hopefully open up a world into other local transactions that Patch can monetize, St. John says.
• The calendars are free to post on locally, and cost a dollar per day per town to buy. The average transaction size is $48 because people choose multiple towns and multiple days.
• The transactions on-site can conducted with Stripe, PayPal or Apple Pay.

The big picture: For a long time, a lot of the focus on saving local media has been on subscriptions and memberships. Both Facebook and Google are investing heavily in developing business models that work for local companies around those models.

• But St. John argues that asking people to pay for news at the local level can be difficult, and rather, asking them to pay for a local service, is more realistic.

The bottom line: "Payments is probably best highest margin scalable solution for local," St. John said last quarter.

What's next: The company is looking to increase payments within its classifieds section, which launched last quarter.