OwnLocal is a Y-Combinator bred startup that helps local newspapers survive on the Internet. OwnLocal swoops into small towns sprinkled across America’s less tech savvy plains and puts on quite a clever show. In no way are they grifters; but with their guaranteed promises of success, small town publishers don’t stand a chance.

Lloyd W. Armbrust, II, OwnLocal’s Founder and CEO, puts its technology in the hands of local publications, newspapers or television stations, so that they can then sell successful modern digital strategies like owning a website, blogging, SEO optimization, design, group deals and more to local businesses. In other words, OwnLocal acts like a web development department for local newspapers providing them with simple, sellable products including a white label daily deal product and a white label Yelp-like product.

“In rural America, small businesses would rather the Internet didn’t exist, but it does. We sell a package through their local newspapers that creates a website for them, writes relevant blog posts for them and pushes out media to Twitter and Facebook. So, we manage all of that for them but we do it through their newspaper.”

-Lloyd W. Armbrust

OwnLocal trains local media employees and shows them how to put on a “Web a la carte” presentation for small businesses even though the local businesses may have never heard of Groupon, Yelp or LivingSocial. To date, OwnLocal has powered more than 1,000 small businesses and over 100 publications.

Screen shot 2011 04 05 at 12.20.29 PM 520x98 OwnLocal cleverly makes newspapers money with Web 2.0 tools

OwnLocal also sells its product, “AdForge” as “the best print-to-digital ad conversion software in the world.” AdForge is designed to take print ads and put them on the web, on mobile and on tablets. AdForge easily converts print ads into clickable, shareable, printable, mappable and sendable digital ads.

Say you’re a lawyer or a plumber, OwnLocal will create websites optimized for search engines and deal with social media elements like blogging, tweeting and Facebooking, saving these small service businesses a lot of time and effort. Businesses can choose from a variety of different websites from simple splash pages to editable, manageable sites. OwnLocal then taps into its network of college students and stay at home moms to write the company’s blog posts. But again, all of this is through the local newspaper.

Today, OwnLocal announces its “Arcade” partnership with HeyZap, another YC startup, to bring more than 50,000 social and casual games to newspapers and local media. Rather than just having a few puzzle games like crosswords and Sudoku, newspapers will have access to games that reflect what their audiences have come to expect from social networks and social game sites. Initial launch partners include A.H. Belo Corp.‘s The Press-Enterprise and Impre Media, the largest Spanish language newspaper group in America as well as 25 other newspapers. OwnLocal expects that newspapers will see financial benefits, increased time-on-site and more return visits.

Screen shot 2011 04 05 at 11.52.31 AM 520x136 OwnLocal cleverly makes newspapers money with Web 2.0 tools

In York, Nebraska– a town with a population of 10,000– OwnLocal made The York News Times $140,000 last year. OwnLocal takes 30% and the newspaper gets the remaining 70% of revenues from its tech products sold. $100,000-300,000 is an easy number to make for local papers, says Armbrust.  OwnLocal doesn’t work with media outlets that have circulations less than 1,000. And its sophisticated system tell them exactly how much money they can make just from circulation numbers. Guaranteed revenue reports based on circulation for dying newspapers? Maybe dreams do come true.

Screen shot 2011 04 05 at 11.57.07 AM 220x83 OwnLocal cleverly makes newspapers money with Web 2.0 tools“The community newspaper I worked at was purchased and sold to Gatehouse Media. I started thinking, what can we do? Is there a situation where you can make this product that’s all-encompassing that could make these newspapers money? I felt for these guys. Print is declining.”

–Lloyd Armbrust

Armbrust has worked in the newspaper industry for 11 years, including two years working on OwnLocal. His Co-Founder Jason Novack is the hardcore hacker in the pair. Armbrust says their main competitor, ReachLocal charges 5 times as much as OwnLocal because they utilize a network of 1,000 local sales reps.

To date, OwnLocal has received just under a million seed funding from Y Combinator, Baseline Ventures, Lerer Media Ventures, Paul Buchheit, Joshua Schachter and Alex Moore.