FORTUNE -- Good news! The Daily Voice, a company that produces "hyperlocal" news sites in Connecticut and suburban New York, has filed for Chapter 11 bankruptcy.
OK, that's not good news at all, but neither are layoffs. And when the company was preparing to announce mass layoffs to its staff last March, Chairman Carll Tucker sent out a memo on a Friday saying: "Monday morning we will share with you the news about where we're going and how we're going to get there. The news is good -- but you'll need to sit tight while we finalize our plans." His sign-off: "I am pumped about the prospect of working with you to build a great company."
On the following Monday, the staff learned that the company was shutting down its 11 Massachusetts sites and laying off 45 employees without severance. The company now employs just 44 people to run its 41 remaining sites, and that includes salespeople and administrative staff as well as journalists.
Tucker blames the bankruptcy filing on a lawsuit filed last year by some former reporters who claim they were incorrectly classified as "exempt" from being paid overtime. The company, formerly known as Main Street Connect LLC, "does not have the financial wherewithal" to continue fighting the lawsuit," and that it is scaring off potential investors, Tucker said in court papers. The company says its legal costs are already at $500,000, and that it is relying on debt to finance operations. Tucker says he has lent the company $250,000 of its $550,000 of secured debt. Its total debt is $867,000, and its assets are worth less than $400,000. Its remaining local sites drew about 437,000 unique visitors in March, for an average of less than 11,000 each.
And yet Newsday reports that Tucker believes the company to be "healthy," in the paper's words.
Hyperlocal news just doesn't make much economic sense. With online ad rates in general small and shrinking, trying to derive revenue from tiny markets might be the worst possible strategy for a Web publisher. As sites like the Huffington Post have shown, ad-supported online news (aside from niche publishing) works only at high volumes. One of the ideas behind hyperlocal was that tiny neighborhoods are sort of a niche, but the ad markets in which they operate aren't very different than they are for any other general news operation.
The Columbia Journalism Review's Kira Goldenberg, writing about a panel discussion of hyperlocal publishers in January called "Hyperlocal Publishing Models that Work," defined sites that "work" as being those that "have yet to fail." None of the publishers on the panel, which included Daily Voice, were earning profits. "In the absence of financial metrics," she wrote, "'successful' in the world of hyperlocal news startups … means growing -- both audience and ad base, a continuing challenge for companies that, by design, cover finite domains."
And yet, The Daily Voice had managed to attract investors like George Soros, Wesley McCain, Saks CEO Steve Sadove, former Bill Blass CEO Haresh Tharani, and columnist (and Tucker's wife) Jane Bryant Quinn. The company launched in 2010 and has raised $18 million from various investors.
The company plans to continue operations and hopes to exit bankruptcy within 60 days. In the meantime, the litigation will be put on hold, and the company will seek to either sell itself off or undergo a restructuring.
Social media analytics firms such as Dataminr are trying to take on Bloomberg in the race for fast-paced business news updates.
By Omar Akhtar, reporter
FORTUNE -- Bloomberg LP has long prided itself on being the premier provider of financial data, news, and analytics, but can it deliver news faster than social media?
Millions of dollars can change hands through the rapid decisions investors make based on industry news. It's why they're MOREApr 24, 2013 6:35 AM ET
Lots of grim statistics in a new report for magazines and newspapers from the Pew Project for Excellence in Journalism - with a few rays of hope.
FORTUNE -- The Pew Project for Excellence in Journalism's report, "The State of the News Media 2013" contains plenty of grim news about an industry that appears in some respects to be falling apart at the seams (along with a few rays of hope). But MOREDan Mitchell, contributor - Mar 19, 2013 7:19 AM ET
Less than 3% of adults tweet or retweet news links. It seems unlikely that Twitter will ever be a powerful news platform for the masses.
FORTUNE -- To hear certain Twitter enthusiasts (or as many of them are otherwise known, Twitter obsessives) tell it, the microblogging platform represents the future of news. In some ways, Twitter is already the present of news, since most big news organizations and many journalists use MOREDan Mitchell, contributor - Mar 6, 2013 9:09 AM ET
San Francisco-based startup Circa slices and dices top news stories to make them more accessible on mobile phones.
FORTUNE -- Pint-sized mobile device have created a problem for news readers: a 500-word item about Berkshire Hathaway's (BRKA) $23 billion acquisition of Heinz may be easy-to-read on a desktop but require many awkward swipes and taps to get through on a smaller screen. "All content today is produced with the intention of being read MOREJP Mangalindan, Writer - Feb 19, 2013 11:43 AM ET
The results of a new survey bode well for news, not so well for the printed word
Here's what a team at the Missouri School of Journalism learned in a survey of 1,609 Apple (AAPL) iPad owners conducted over the past three months:
Using the iPad to follow breaking news reports and current events is the most popular use for the device, with 84.4% of respondents saying this is one MOREPhilip Elmer-DeWitt - Dec 10, 2010 11:48 AM ET
The new service which debuts today could give cable TV's last real advantage, live news and sports, a run for its money.
You can already watch just about any TV show or movie out there on Hulu, iTunes, Netflix, Amazon (AMZN), YouTube or some other Internet site. Some are pay per view, while others use paid advertising or "commercials." Clearly the Internet has made the archives of pre-recorded video content a virtual catalog MORESeth Weintraub - Sep 13, 2010 8:10 AM ET
If HP CEO Mark Hurd does merge the PC and printing businesses, what will that mean for printing chief Vyomesh Joshi?
A few months back, I spent some time at Hewlett-Packard (HPQ) headquarters with Joshi, who's known around HP simply as "VJ." We talked about how he led the printing group to become a sales and profit powerhouse, the how the slowdown in printer sales growth is unfolding, and how he's MOREJon Fortt - Oct 2, 2009 2:25 PM ET
User-generated video goes mobile - and live
Ramu Sunkara was at home in Silicon Valley three years ago, chatting with a friend in Moscow, when inspiration struck. He didn't just want to hear about his friend
playing in the snow with his kids. He wanted to see it, live.
Now he can. Soon after that phone conversation, Sunkara and two friends started Qik (pronounced "quick"), a company whose software lets cell phones broadcast MOREJon Fortt - Sep 28, 2009 11:01 AM ET
Billionaire Oracle CEO Larry Ellison doesn't expect the U.S. economy to significantly improve until halfway through the next decade – a gloomy scenario he dubbed an L-shaped recovery.
"The American consumer is so deeply in debt, this is not going to come back, certainly for five years," he told a packed ballroom at a Churchill Club event in San Jose. "I believe we're going through some fundamental changes."Jon Fortt - Sep 22, 2009 6:30 AM ET
|Millennials may not be able to afford retirement essentials|
|Home sales surge 25% in October|
|Illinois OKs pension cuts in landmark reform|
|EU fines banks record $2.3B over Libor|
|Netflix won't release 'Turbo: FAST' for binge viewing|