Small economies can often find themselves with a dominant player who suppresses free speech. But as this latest example in the Virgin Islands shows, the internet can be the saving grace.

In this Caribbean paradise, the local media scene is dominated by Innovative Communications, which owns the only daily newspaper, the telephone company, two local cable-TV firms, and banks. Of Jeffrey Prosser, who owns all that, The Wall Street Journal in a critical profile last year of the businessman said, “No man is an island, but Jeffrey Prosser comes close.”

Prosser bought the newspaper, the Virgin Islands Daily News, from Gannett Co. Inc. a few years ago. It’s a virtual media monopoly, and according to critics, the paper is selective about what it covers. Its long-time executive editor quit in a dispute about covering unfavorable news that involved Prosser cronies – including former Virgin Islands governor Roy Schneider, who won election partly based on substantial financial support from Prosser, according to the Journal investigation.

Prosser’s critics in the Virgin Islands are many, but he’s undoubtedly powerful and wealthy. But Prosser’s power may be part of the reason that Shaun Pennington, an independent Internet news publisher, was named the Person of the Year by the Rotary Club II of St. Thomas recently.

The one-woman competition

Pennington is proprietor of the Source news Web sites, St. Thomas Source, St. Croix Source, and St. John Source. She is the sole full-time employee of the 2-year-old Internet publishing enterprise, which presents news coverage – online only, with no print version – as the only daily alternative to news produced by Prosser’s island media empire. (There are also two weekly papers, the The Avis serving St. Croix and The Tradewinds in St. John.)

Despite being dwarfed by Prosser’s properties, Pennington is making a splash in the local media scene. She relies on a network of Islands free-lancers, some of whom she pays, others who write regularly for her on a volunteer basis. Her ambitious goal is to present a digital competitor to the Daily News that tells the stories that the newspaper won’t or can’t touch because of Prosser’s business connections.

The Source sites have a number of “scoops” under their belts, including a story about AT&T suing Prosser’s phone company over alleged non-payments – which the Daily News did not report on. Pennington herself broke a story about one of her own advertisers, which had built an illegal breakwater. Articles are posted as they’re written, so in effect the Source sites are “daily” e-publications.

“We want to be a hard-hitting news operation,” Pennington says, “and we have the resources to do that.” By resources, she means her free-lancers, many of whom have lived on the Islands for much of their lives. An old friend of Pennington’s, a retired journalist, covers the legislature. A news director at an Island radio station writes for the Source sites on the side.

The genesis for the Source Web sites was Penny Feuerzeig, the Daily News editor who quit over Prosser’s influence of the paper’s editorial coverage. She convinced Pennington, who was looking for something new to do, that there was a need and opportunity for an alternative news operation covering the Virgin Islands. Feuerzeig serves as a close adviser to Pennington and even helps copyedit the sites’ content – as a volunteer.

Pennington also counts among her close advisors Frank Jordan, a retired NBC News bureau chief and communications dean who splits his time between San Francisco and the Virgin Islands, and Irene Silverman, an editor of a Long Island, New York, newspaper who spends several months a year on the Islands. Both donate their advice and assistance as a “labor of love.”

Pennington does everything, from writing and editing, to selling ads, to concocting business strategy to keep the operation growing – and works long hours, often seven days a week. While the sites allow her to eke out a salary and pay free- lancers, they are not yet profitable. She has borrowed money to stay in the Internet publishing game, and manages to keep expenses low.

The sites are run using template technology from OnePaper.com, which hosts them on its Florida servers. Pennington uses Web forms to post stories, so she doesn’t have to spend time being a Web guru on top of all her other duties.

Islands Internet access

The Source sites are currently generating between 350,000 and 400,000 pageviews per month. The islands have a population of about 110,000 (plus the large and ongoing tourist influx), and are well wired. It’s estimated that more than one-quarter of the island’s residents have dial-up Internet accounts, and there’s also a broadband wireless Internet service available to the three islands.

Pennington thinks that the time is right for an Internet news and information service to make it. Not only is Island Internet usage significant now, but there’s a large diaspora population – Virgin Islanders who grow up but leave due to lack of job opportunity in their home state – hungry for news from home.

The Islands of course attract many tourists, but outside investors are also an important audience. Pennington says her Internet news service is useful to that crowd, as well as U.S. government officials in Washington, D.C., who send money to the Islands but don’t have good access to Islands news without the Internet.

Business model evolving

Despite being a site serving a tourist hot spot, the Source sites’ revenues – which all come from advertising sales – are mostly from local businesses. Clients include an insurance company, local airline, real estate companies, a bookstore, and local phone/communications companies. The biggest island resorts do advertise on the sites, Pennington says, but the smaller resorts have been a tough sell – primarily because tourism Web sites tend to charge less for ads.

A promising revenue stream for the sites has been government legal notices, which are published not only in Islands newspapers but also on Pennington’s Web sites. Pennington hasn’t moved into e-commerce for local merchants yet, primarily due to lack of resources.

The Source sites foremost are news oriented, but there’s also a tourism component – where there’s considerable opportunity. Pennington doesn’t yet describe her enterprise as a “portal” site for the Virgin Islands, but that’s the direction she’d like to take. She would like to eventually establish relationships where her sites help tourists book travel and lodging deals and take a cut of the transactions, for example. Such a strategy is common among Web sites that serve tourist destinations.

Keep it going

“It’s important for me to keep this going,” Pennington says. Despite not yet turning the corner on profitability and still struggling without paid full-time staff, she says she’s determined to press on, to hire some help, to make the sites succeed – and provide an alternative to the near-monopoly journalism represented by Prosser’s media properties.

Clearly, Pennington’s is a small-time operation that could get squashed should Prosser’s media enterprises decide to take publishing to the Internet seriously. To date, they haven’t done so. The Daily News’ Web site, which would pose the most serious threat to the Source sites, today is an amateurish service with grainy graphics and articles pulled from the print edition. Pennington is hoping the newspaper doesn’t take the Internet more seriously until she’s had a chance to get a firm foothold as the top dog in Internet news serving the Virgin Islands.

One thing is certain in the Islands: There is a strong and clear need for an alternative media voice. The Internet provides the vehicle.