Terry Heaton has a great post out on what happened at Backfence, and what it means for the hyper local movement. Among the interesting points that he makes is the differentiation between hyper local and niche media. I've long been both a fan of the *idea* of intensely focused media, and deeply skeptical about the business prospects for the same, and think having a way to describe an important distinction (local v. niche) is super important. Anyone looking at communications today is already super aware of niche communication and the attraction they have, as well as the potential for monetization -- and the need to show a business model is a good, not bad thing. Find a group of people that is passionate about a topic, find interesting ways to showcase content about that topic, and readers/viewers will come and stay, and as they come advertisers will as well.
Hyper local as it currently exists is dead. This is true for at least two reasons, probably more. First, there is no business model. It costs money to create great content, it's actually something must local newspapers and radio stations already do, and they're bleeding money from the gills. Second, as others have noted, school awards and local road closures aren't going to pay the bills. Considered in a vacuum, they're just not interesting enough for people to galvanize around.
That said, the idea of community generated news is alive and well, it's just not going to drive an IPO anytime soon, because most of the interest doesn't scale. For example, I have this blog in my newsreader and read whenever it's updated -- even though I'm outside the area by a few miles. Why? It's local information about an area I care about, since I drive/ bike/run through and shop there.
Take away the hype and the IPO numbers and there is still something interesting going on. But it's interesting because what will come out will look more like what we already have -- local news -- augmented in interesting and personal ways.