‘A shitty week’: Spirited Media seeks new revenue streams after layoffs

Photo of the Denverite office in October 2016 by Corey Hutchins

SPIRITED MEDIA LAID OFF STAFF at each of its three local news sites this week, undercutting hopes that the company and its team of investors may have cracked the code for a profitable and sustainable business model.

ICYMI: Local news suffers a tremendous loss

The layoffs come eight months after Spirited Media merged with the parent company of Colorado’s Denverite, a hyperlocal news site positioned as a potential model for other cities. Denverite laid off three staffers on Tuesday, reducing its newsroom team by nearly one-third. Laid-off staff include Denverite’s transportation and real estate reporter, the site’s social media and engagement specialist, and its sports reporter. Philadelphia’s Billy Penn and Pittsburgh’s The Incline each laid off one staffer and each won’t fill open positions. Spirited Media’s investors include Gannett, which owns 31 percent, according to its 2016 annual report.

I could give you some corporate-speak about ‘We’re getting smaller but smarter, we’re going to do more with less.’ I could say some of that crap, but it’s just not true. …It was a shitty week.

At the time of the merger, Denverite was a 10-month-old site, launched with a splash and the backing of a trio of Business Insider investors, who pitched it as a pilot project for a potential string of for-profit news sites that could pop up in similar-sized cities across the country. Denverite Editor Dave Burdick told CJR after the high-profile merger, “This is the most job security I’ve ever felt in a journalism job in my entire career.”

In an interview with CJR, Spirited CEO Jim Brady didn’t try to spin the news. “I could give you some corporate-speak about ‘We’re getting smaller but smarter, we’re going to do more with less,’” he says. “I could say some of that crap, but it’s just not true. … It was a shitty week.” The company raised money from investors, says Brady, but not enough as it hoped.

“We don’t have the revenue to support having staffs that size right now,” he says, adding that the cutbacks should give the company a runway of a year or two as it tries to build revenue at its properties in new ways.

Since Denverite’s inception last year, its close-knit staff had cranked out meaningful local coverage and experimented in engaging directly with its audience. Reporters set up a tent on a popular downtown promenade for a day of live journalism and held happy-hour events to discuss their work in other parts of the city. At Denverite, reporters often each publish four posts—original reporting, features, explainers, aggregation, and curated content—a day. Recently, the site has sent out close to 10 newsletters each week.

Without these three folks, we’ll have to think a little bit about beats again and figure out which things we’ll do less of.

Brady traveled from Washington, DC, to Philadelphia and then to Denver to deliver news of the cutbacks in person. He told staff he wasn’t going to ask them to do more with less, just less with less.

“Without these three folks, we’ll have to think a little bit about beats again and figure out which things we’ll do less of,” Denverite editor Burdick says. “But ultimately the mission is the same: to tell the ongoing story of Denver and its successes and its anxieties, and all those things in a way that’s more personal and intimate than anyone else.”

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When Denverite launched, its investors said they saw an opportunity amid the disruption of local news and a decade of decimation at newspaper newsrooms in major metropolitan cities. The thinking went something like this: If a site like Denverite, in a city with a metro area of nearly 3 million, could hook an audience, then that audience could be monetized. When Denverite first launched, there was no business plan; after the merger, the site hired a business-side staffer and started bringing in some money with sponsored events.

In March, at the time of the merger, investor and former Wall Street Journal publisher Gordon Crovitz said Spirited Media’s plan was to invest up to $2 million per market in its existing cities with each one eventually delivering $15 to $20 million in value. They had a short list in mind for potential new cities, too.

“As we serve more and more cities across the country, we expect to create a company with a value in the hundreds of millions of dollars, as Business Insider created in business and Bleacher Report created in sports,” Crovitz told CJR then. “It will take scale to create profitable local publishing, which we are now further along in creating than any other local news venture.”

Asked this week about the recent cutbacks, Crovitz punted to Brady, who says that’s still the plan, but getting there will take time.

“We’re not your classic venture capitalist path,” says Brady. “We’re not going to get you to some crazy profit margin in two years. This is a labor of love in the way of trying to find out how local news can thrive down the ways a little bit, because it’s been a pretty tough stretch for us.”

To build profitability at Denverite, Brady says the site plans to launch a membership model in January that will also involve events and provide exclusive access for members to places like, say, sports team locker rooms. “We’re looking at custom content, custom newsletter kind of things, early access to content and maybe even something like a public Slack channel where members can get a sense of what we’re working on on a given day,” he says.

ICYMI: Plagiarism scandal hits local newspaper 

Adrian D. Garcia, a Denverite reporter who wasn’t laid off and sits on the boards of the state Society of Professional Journalists chapter and The Denver Press Club, came from a newspaper owned by Gannett, a company that wasn’t a stranger to rounds of layoffs. “It’s unfortunate that we’re in this position because we were supposed to be different,” he says.

Stephanie Snyder is one of the three laid-off Denverite reporters. The 28-year-old engagement specialist moved to Colorado from New York for her job. On Wednesday, she posted a poignant tweetstorm about her departure and how she viewed her role in helping grow Denverite’s audience during her 14 months at the site. She said she focused on creating a “presence in physical spaces that allowed us to talk to people we might not have otherwise met about issues that matter to them.”

“Trying to stay in this industry and caring about the future of local journalism just keeps getting more and more difficult,” she wrote. “Online startups, nonprofit news organizations and legacy media *all* need people who care about being informed to sustain journalism.”

The news about Denverite, Billy Penn, and The Incline comes the same week DNAinfo, which runs local news sites like The Gothamist in New York City and Chicagoist in Chicago, shut down after a vote to unionize. The company’s billionaire owner, who did not make money on the sites, said the company was a business, “and businesses need to be economically successful if they are to endure.”

Burdick, Denverite’s editor, says it is precisely because of the challenges of the local news industry that his site exists at all.

“But we really need to figure this out, and we are dedicated to doing that,” he says. “We are very upset to lose three colleagues and friends, but we have to keep doing what we’re doing and be even more nimble and more flexible than anybody has been.”

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Corey Hutchins is CJR’s correspondent based in Colorado, where he is also a journalist for The Colorado Independent. A former alt-weekly reporter in South Carolina, he was twice named journalist of the year in the weekly division by the SC Press Association. Hutchins recently worked on the State Integrity In vestigation at the Center for Public Integrity and he has contributed to Slate, The Nation, The Washington Post, and others. Follow him on Twitter @coreyhutchins or email him at coreyhutchins@gmail.com.