Just as revealing as what went wrong is the list of things TBD seemed to have going for it, which help to clarify the intense interest local online news ventures have drawn for the last five years. Most important was its association with sister site Politico.com, another well-funded, generously staffed Allbritton venture led by high-profile news veterans. Like Politico, TBD promised to be not just on the web but “of the web,” in Brady’s phrase, meaning that it would link abundantly, deploy social media aggressively, and engage closely with users. And like Politico, TBD promised to deliver to its advertisers a well-defined audience—not just generic news consumers, but people intensely interested in the particular news it had to offer. (Still, it is worth keeping in mind that at least through 2009, Politico earned more than half its revenue from its free, ad-supported print edition, with a circulation of about 32,000.)

TBD also sought to strike a balance between focus and scale: Visitors would be drawn in by news about their immediate environs or interests, but behind the scenes the operation could reap the “efficiencies” of serving a large metropolitan area. (Brady insists “hyperlocal” is the wrong word for what was really a regional site with a neighborhood interface.) Likewise, the site would include a mix of aggregation and firsthand reporting. To describe the site, Robert Allbritton has used the analogy of a supermarket bringing together items that previously could not be found in one place. Before TBD, he declared when the site launched, finding local news online was “like trying to buy groceries in the old country. First you went to the fishmonger, then to the baker, then to the grocer, and so on.”

Other hyperlocal ventures have tried to apply versions of that idea on a national scale. A good recent example is Main Street Connect, a “national community news company” that went live in 2009 and consists, so far, of ten sites serving towns in Fairfield County, Conn. The separate sites share editorial resources (neighboring communities see many of the same articles), technology infrastructure, and an ad sales team. “We’ll soon be bringing our vision to other groups of towns,” Main Street’s website promises. “Watch for us.”

By far the grandest of the new hyperlocal journalism ventures is the nationwide Patch network, which was bought by a struggling AOL in 2009. With sites in 700 communities and counting as of March 2011, each led by a local editor making $40,000 to $50,000 a year, Patch has turned AOL into one of the biggest sources of new journalism jobs in the country. Visitors to a local Patch site see news and information about a specific community, written and curated by people in that community, whether it’s Dublin, Calif., or Dunedin, Fla. (In March 2011, AOL also bought Outside.in, a hyperlocal network that automatically aggregates news, blog posts, police reports, and other public data, and says it is in 57,830 neighborhoods. Reports suggest AOL was interested in the underlying technology more than the business itself.)

To run all of those Patch sites, AOL can count on centralized resources like a massive in-house ad network, a sales force with ties to national brands, and sophisticated search engine optimization technology for maximizing the meaningful lifespan—and thus the economic return—of every piece of content it produces. Like McDonald’s, AOL uses sophisticated market research to assess the commercial potential of the communities where it is considering planting the Patch flag. (According to a New Yorker profile of AOL chief executive officer Tim Armstrong, the Patch formula considers fifty-nine factors, from average incomes to voter turnout.)

The same infrastructure supports AOL’s growing stable of niche or “vertical” content sites, anchored by acquisitions such as the martial-arts blog MMAFighting.com, the tech-industry site TechCrunch, and the sprawling Huffington Post, which AOL bought for $315 million in 2011. It’s no exaggeration to say that AOL, whose original business model (providing dial-up access to the Internet) is badly out of date, has staked its declining fortunes on local and niche journalism.

Why? The underlying logic is the same at AOL as it was at TBD: In a world where much of the daily news has become commodified, only news that people can’t find elsewhere will command a loyal audience. This is hardly a novel insight among media analysts, who since the late 1990s have pointed to financial news as a rare example of the sort of information that people, and advertisers, will pay for online.

Bill Grueskin, Ava Seave, and Lucas Graves are the co-authors of "The Story so Far: What We Know About the Business of Digital Journalism." Grueskin is dean of academic affairs at the Columbia University Graduate School of Journalism. Seave is a principal of Quantum Media, a NYC-based consulting firm. Graves is a PhD candidate in communications at Columbia University. For further biographical details, click here.