Chi-Town Daily No More, Sort Of

By Kate Gardiner in News on Sep 11, 2009 7:30PM

We couldn't believe our ears this morning when we heard that editor-in-chief and CEO of Chitown Daily News, Geoff Dougherty, laid off his staff of five yesterday afternoon, effective immediately. We (and the rest of the Twitterverse) thought that meant the end of the website, which has been responsible for several important local stories lately. In actuality, the site, which was started with a Knight Foundation grant, is merely headed to the for-profit realm. In a statement posted today, Dougherty said:

We've concluded that, as a nonprofit, we cannot raise the money we need to build a truly robust local news organization that provides comprehensive local coverage.

The Daily News needs $1 million to $2 million per year to do a great job of covering a city as sprawling and complex as Chicago. And despite hundreds of phone calls and letters to foundations, corporations and individual donors over the past four years, we've never come close to that.

Last year, we raised about $300,000. This year, due to the economic downturn, it was unclear whether we would be able to maintain that level of revenue, let alone move quickly to expand our coverage.

So, after much soul-searching, we've decided to turn our efforts toward a business model that will support the kind of vibrant public affairs coverage that Chicago deserves. Ultimately, we believe we will be able to fulfill the same mission we set out to accomplish with the Daily News, though with a different business structure and a slightly different approach.

Converting a non-profit to a for-profit entity apparently entails firing all the employees - Chitown's reporters and staff members have been laid off while Dougherty finds new funding, though he wrote that the group will continue with its volunteer-driven news model was heralded as a low-budget way of producing strong coverage of local news.

The nonprofit news site was founded in 2006 and funded in 2007 by a two-year grant from the Knight News Challenge, as well as a variety of other grant programs.

In an unusual show of transparency for a news organization, Dougherty shared the costs of everything - from reporting out a simple story to the complete financial paperwork of his company, hoping that transparency would facilitate donation from the community and the site's users. But the model was unstable, and Dougherty prefaced every job-related discussion with a frank outline of costs and risks.

All three of Chicago's major print publications have gone into bankruptcy over the past year: the Reader's parent company was purchased by its major creditor at auction last month, while the Sun-Times' only lifeline is a $25 million offer from a group of investors. The Chicago Tribune, after several rounds of layoffs, is restructuring and has yet to produce a formal plan.

It will be interesting to see if a for-profit news website dependent on angel investors is sustainable, or if Dougherty is merely staving off the end of his publication by changing business models.