Your headline poses a question that isn't really addressed in your post. By "works" do you mean why isn't there one that is profitable? or heavily trafficked? or one that produces meaningful and enduring dialogue to resolve local problems?

Community can be many things. Media at its best can bring useful information and help make conections for people, but it's not likely to be the arena where substantive issues can be resolved. So, maybe everyone is trying too hard to do something that isn't really possible in new media as also it isn't in traditional media formats.

Craigslist is transactional community at its core, but isn't likely to serve as a socio-political platform (in its current form) to tackle more complicated issues facing a local community.

Today, all these neighborhood sites are indiscernible in their approach. I think they are also coming at the problem from the wrong perspective. They should be in service to the people enriching their neighborhood, not a neighborhood filter on generic services. Rather than worry about profit, it is best to start with creating wealth. Clearly e-bay creates wealth, Craig’s list also. Wealth is what we want; money is one way we pay for it. Wealth is food, clothes, houses, travel, etc. Clearly most neighborhoods are about wealth, different neighborhoods have different types and levels of wealth. So for my neighborhood examples of wealth include the ability to walk to leisure activities like coffee, food, markets, etc. Wealth is a good park. Wealth is also having an effective representative on the city council who you know understands and works to increase the neighborhood’s wealth. So the question is what do the current sites really do to create wealth in a neighborhood? How do you empower people to increase their neighborhood wealth? How does a strong i-neighbors community become a critical asset to a neighborhood like having a great park?

Eddy: I'm still sorting out what I mean. I think a "digital neighborhood that works" would reflect the diversity, complexity and spontaneity of community life. It would be one where a significant fraction of the residents, businesses, and local leaders would be present, engaged, and well-served. And yes, it would be fiscally sustainable although not necessarily created for profit.

Patrick, great reframing of the term "wealth". The physical presence of houses and sidewalks and coffeeshops and parks are a huge element of what gives a neighborhood its character. Maybe part of the problem with local online services is that they are so disconnected from that wealth, that physical reality.

Another thing I note about i-neighbors and backfence is they are planned communities, somewhat in the spirit of Disney's slightly creepy Celebration, FL. Post your pictures! Take a poll! Search your community! Upgrade to GoldNeighbor Status and skip the ads! You can do it all on our comprehensive, safe, secure and fun community platform service! Hrm.

Credit for the wealth framing to Paul Graham, I like its use in this context. Disney Celebration comment is spot on. It will be hard to build a "planned community” site and not have it seem this way though. Maybe the answer is in mash-ups of a bunch of social capabilities, created by communities or participants themselves. I think the city government and local business participation will be critical, strong communities make government more effective and neighborhoods richer. I know my neighborhood has active debate on Yahoo! Groups over zoning changes, liqueur licenses, new housing developments, changes in gang enforcement policy, parks development, etc. These are tracked by our council person and neighborhood leaders. People know these things affect their lives, and the value of their communities. Of course there is plenty of need for organizing events, tool co-ops, local shopping and services, recommendation systems, effective advertising, etc. The hard problem is indeed as Eddy points out: how to make it sustainable? Whether regarding profit, content, and/or participation.