Wednesday, February 22, 2012

One local NYT partner fails as another regroups

Evidently beguiled by seeing their stories in the pages of the New York Times, two high-profile journalism start-ups failed at building sufficient audience for their own brands.

Now, one of the two philanthropically backed ventures is folding and the other is seeking to merge with a neighboring non-profit that was wise enough over the years to cultivate multiple audiences and diversified financial support to sustain its important journalistic work.

The start-up about to close is the Chicago News Cooperative, which will leave a staff of 30 jobless after it sends its final stories to the New York Times later this week.

Meantime, the Bay Citizen in the San Francisco is pursuing a merger with the 35-year-old Center for Investigative Reporting (CIR), which pioneered non-profit investigative journalism well ahead of such prominent brands as Pro Publica, the Texas Tribune and, well, the Chicago Cooperative and the Bay Citizen. The Bay Citizen says its contributions to the NYT will continue for the time being.

The Chicago Cooperative and Bay Citizen are notable not only for launching with hefty endowments from local benefactors but also because they were selected at inception by the New York Times to provide two pages of local coverage in their respective markets on Friday and Sunday of each week.

Though both start-ups were sworn to secrecy by the NYT, sources confirmed that they received only token financial support from the newspaper, which sold and kept the proceeds from any ads appearing on the local pages.

The Chicago Cooperative ran out of money when the MacArthur Foundation, its single largest benefactor, decided to discontinue funding. With no other significant donations in prospect, the cooperatve, which had raised some $2 million from a number of prominent local sources, could not go on, according to James O’Shea, its founder and chief executive. (UPDATE: In a statement issued today, the foundation, which gave the cooperative $1 million over the years, said it was "working on a renewal grant to CNC when it notified us it was closing.")

The financial situation is more positive at the Bay Citizen, which entered 2012 with some $7 million of its initial $17.5 million nest egg intact, according to its financial statements. But things have not being going smoothly.

In addition to the death in December of its principal benefactor – a local businessman who gave $6 million to jump start the project in 2009 – the Bay Citizen has suffered the sudden exodus of nearly all of its top leadership, including a chief executive who was paid $456,918 for her work in 2010. The merger with CIR is aimed at saving nearly $2 million in operating costs and increasing the impact of the reporting by both organizations, according to the Bay Citizen website.

CIR, which is based in Berkeley, CA, enjoyed none of the advantages of the Bay Citizen when it was bootstrapped from nothing in 1977 by journalists Lowell Bergman, Dan Noyes and David Weir. Under the leadership today of executive director Robert Rosenthal, CIR is a well-regarded contributor to 60 Minutes, Front Line, the Washington Post, the Los Angeles Times and other California and national media. Its work is supported not only by institutional and individual philanthropic donations but also by contributions and fees from its array of media partners.

In the last two weeks alone, CIR won a $1 million grant from the MacArthur Foundation (yes, the same outfit that stopped funding the Chicago Cooperative) and a Polk Award for a yearlong investigation exposing bogus Medicare billing at California hospitals.

Despite of – or, perhaps, because of – obtaining early validation by the Times, both the Chicago Cooperative and the Bay Citizen failed to achieve anything close to the audience engagement necessary to wean them away from big-ticket charitable funding in the foreseeable future. Here’s how weak the audience-building efforts were:

According to Compete.Com, the Chicago venture had just 10,121 unique visitors to its website in January, representing 0.1% of the population of the metropolitan area. The Bay Citizen attracted 41,626 uniques, or 0.6% of the eyeballs in its market.

By comparison, the website of MinnPost.Com, which commenced operations with $850,000 and never enjoyed the visibility of four pages a week in the NYT, reaches 1.8% of the population in Minneapolis-St. Paul.

While MinnPost’s audience falls well short of the market penetration of the well-established print and broadcast media serving the Twin Cities, the non-profit venture has made a major effort to diversify its support among corporate and individual donors.

Only 21% of MinnPost’s support in 2011 came from foundations, with the balance of funding coming from individual donations, corporate sponsorships and even an annual gala featuring organic vodka martinis provided by a local producer.

By contrast, the Bay Citizen relied on major philanthropic gifts for 92% of its backing in 201o, according to its annual report. And the situation was no better in Chicago, according to an inside source who was not authorized to speak publicly on behalf of the cooperative.

What went wrong at these two well-intentioned efforts?

In retrospect, it seems clear that both projects were so well funded and so gratified by the presence of their work in the NYT that they did not do nearly enough to establish the independent visibility and financial viability of their nascent brands. Yet, each of them seems to have stumbled in a different way.

The Chicago Cooperative concentrated all but one of its hires on journalists, including several prominent and well-compensated individuals who devoted most of their efforts to putting the best possible work into the NYT. While readers may have appreciated the articles in the newspaper, scant attention appears to have been paid to converting them into individual or corporate supporters of the venture itself.

The Bay Citizen, on the other hand, invested heavily on development. Its tax return shows that it spent $648,225, or 17.9% of its total operating budget, on management and fund-raising in 2010. While this may have yielded some big-ticket donors who otherwise might not have materialized, the Bay Citizen to date reports that it has recruited only 8,500 individual donors, or a mere 0.12% of the more than 7.2 million people living in the Bay Area.

That’s hardly the broad support a non-profit needs to sustain itself in the absence of continuing philanthropic largess. And our friends in Chicago can tell you what happens when institutional funding dries up.

5 Comments:

Blogger Rose Roll said...

Correction: we received over 260,000 unique visitors per month on average throughout 2011. We also reach over 60,000 people per month through the Bay Area New York Times.

8:26 AM  
Blogger Robin said...

The miserable performance of The Bay Citizen is sad but not surprising. Run by an overpaid McKinsey consultant instead of anyone who'd ever operated a media business...it's a shame that its failure is generalized to the news sector. Would have been nice to see what smart management could have done with $10 MM.

4:12 PM  
Blogger dc said...

They were boring. Simple as that.

7:04 PM  
Blogger Timo Ketonen said...

A question rather than a comment: Were there any high-profile journalists on board these two projects i.e. was the intention to create new Media Brands through well-known journalists? If so, they seem to have made an "epic failure". NYT is a brand, but can single journalist become bigger than the Media Brand itself?

12:49 AM  
Blogger Larry G said...

The old adage--that you don't start a newspaper in a market that is already provides adequate news coverage, rings just as true in the digital world as in print. The market was not clamoring for additional coverage and responded as such.

3:58 AM  

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