To download the complete version of "The Story So Far: What We Know About the Business of Digital Journalism," a new report on digital news economics from the Columbia University Graduate School of Journalism, click here.

A similar formula applies at Baristanet, one of the most successful local news sites in the country. Baristanet has one decisive advantage: its audience of affluent, media-savvy professionals in the retail-rich bedroom communities of suburban New Jersey, anchored by the towns of Montclair and Maplewood. (The area scores well on AOL’s algorithms—six of the seven towns Baristanet serves have their own Patch sites.)

Baristanet, launched in 2004, keeps costs radically low. Everyone involved with the site has another job—even the two founders, Liz George and Debbie Galant. “Everyone’s freelance,” George explains. She and Galant act as top editors, giving the final word on every article; one other editor is paid by the month.The rest of the site’s dozen or so freelancers—many of whom “daylight” from salaried jobs— are paid by the piece, usually about $50 each. “We don’t want long articles,” George says. “If they spend half the day on a story, that’s too long.”

Then there are people who write for free, submitting opinion pieces, comments, bulletins, and photos. Baristanet offers roughly the mix of content that a community weekly would; one Friday in March 2011, for instance, some political news about local budgets was sandwiched between pieces on “weekend highlights” for kids and a major markdown at the local cheesemonger. George explains that many smaller items require no reporting at all, just a photo and a blurb. The combination of paid articles, opinion, aggregation, and “things that come in over the transom,” yields more than enough material to keep the site fresh, she says.

Altogether, editorial costs run to $5,000 or $6,000 per month—higher than at The Batavian, but still fairly modest for a site that runs about eight longer articles per day and, according to George, attracts 80,000 unique visitors monthly. Most important, costs are far below the roughly $20,000 in advertising Baristanet pulls in each month. For several years, according to George, the site’s profits have provided a sizable second income for the two founders and their hired editor.

Baristanet also eschews cost-per-thousand pricing in favor of a simple calendar model, and, though rates run higher than at the Batavian, an advertiser can get on the site quite cheaply. Merchants pay from $150 to $1,600 per month (weekly rates are also available) depending on their ad’s size, placement and frequency of rotation. George says businesses in the area have no interest in buying by the impression or by the click, though Baristanet does report such statistics to them.

Because Baristanet rotates ads across its available inventory, a merchant’s exposure is limited by the amount of traffic the site gets. According to George, consultants have advised against ad rotation, but so far the hospitals, car dealerships, real estate agents, restaurants, and other businesses that advertise on the site don’t seem to mind. Merchants occasionally call wondering where their ad is; George advises them to refresh the page a few times until it appears.

As a result, Baristanet achieves an enviable ratio of revenue to traffic. With an average monthly volume of about 475,000 page views, the site enjoys an RPM in the neighborhood of $42—many times the revenue it would get if it used a standard CPM model. Just as The Batavian’s revenue would collapse if merchants complained about being stacked together on a single page, Baristanet could not do the business it does each month if it had to guarantee a hard number of impressions to each advertiser.

It seems fair to assume that the site’s appeal to advertisers is not tied to such narrow statistics. George suggests that merchants are paying relatively little to be a part of a one-of-a-kind community resource that enjoys wide recognition in the towns it serves. Baristanet claims to have 53 percent household penetration in its core market of Montclair and has logged more than 300,000 comments since its inception—roughly one for every other person in all of Essex County (though many come from repeat commenters) “It’s been an easy sell,” George says. “Everybody wants to partner with us.”

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.