As always – this roundup is made possible through reporting from MinnPost and The Uptake. They are the editorial power behind this pitch and they are the organizations you’re helping to support by sharing this content, donating or “earning credits.” Speaking of which – you can try our latest “community-focused sponsorship” to earn more credits which turns into REAL money for these organizations so they can continue this great coverage.

After the Minnesota primaries earlier this month the three candidates still remaining are Tom Emmer, representing the Republican Party; Mark Dayton, representing the DFL Party; and Tom Horner, representing the Independence Party.

Doug Grow sums up each candidates main message after a more generic forum sponsored by St. Paul Business Journal and the University of St. Thomas on Tuesday.

• Dayton: Fair taxes and investment, especially in education.
• Emmer: Get government off our backs.
• Horner: Get some government off our backs but invest some in education.

But how does Horner plan to invest in education?  This was revealed all when he announced his budget outline Monday. But he may have revealed too much.

Both the Republicans and DFL found fault in Horner’s outline and quickly took the opportunity to oppose it.

Republican Tom Emmer has received his fair share of criticism as well. DFL candidate Dayton started complaining about the Republican Party trackers known as GOP (Grand Old Party) Trackers and called a press conference to discuss the “disruptive” and “unprecedented” behavior of political trackers as well as attack ads.

GOP Spokesman: Polite, Courteous and Has A Problem With The Press.

Emmer did not seem to take the complaint seriously, and made a rebuttal by pointing out more questionable ties Dayton has to an organization called Alliance for a Better Minnesota (ABM), which sponsored attack ads and is funded by Dayton’s family.

Candidate Emmer released a new ad last Monday all about his family titled “work” as he tries to put his best foot forward and appeal to the suburban family.

Things have also been turning around for candidate Dayton. The Service Employees Union in Minnesota (SEIU) are now endorsing Dayton and his campaign.

While the candidates did have a debate at General Mills

There is one thing they agree on – JOBZ didn’t work.

The three candidates have one more battle to win for the position as Minnesota’s governor on Election Day November 2nd, 2010.  But recent studies show that voting may not be as simply as the best candidate wins. A report came out suggesting where you vote and your physical polling place can impact how you vote.

MINNPOST fact check

Emmer misspoke on Minneapolis dropout rate he was also misquoted when referring to Arizona’s immigration law.

More on the three candidates budget proposals and debates.
Governor candidates say yes to more gambling and Vikings stadium.

Dayton and Horner are putting pressure on Emmer to get specific with programs he plans to cut in order to achieve his plan to reduce the $6 billion deficit.

Dayton Urges Pawlenty To Accept $263 Million In Federal Funding.

Anyone that has followed Spot.Us from the beginning knows we’ve tried to remain iterative and agile. In the earlier stages of Spot.Us I thought this was one of the larger lessons for journalism-entrepreneurs. I went through the iterative and agile process and tried to document it so others could repeat. I hope to continue this tradition as I get ready for an academic fellowship at the Reynolds Institute. Indeed the heart of this post addresses two features of Spot.Us (expansion and community-focused sponsorships) which will be my focus while at Missouri.

Inherent to this mindset is the ability to acknowledge missteps and pivot. There are countless things I believe we’ve done right (pats self on back) but there are other things where we made the best guesses we could and upon failure have to pivot. Recently Spot.Us made one big pivot and is openly thinking about how to dance around two remaining problems. Before we analyze those, let’s get to the good news (pats self on back again, rewards reader with cute kitten photo).

Community-focused sponsorship continues.

We have another community-focused sponsorship, this one made possible by Clay Shirky (how cool is that!).

In this sponsorship we are asking the community questions about objectivity and journalism. Not only do we reward your time by giving you control over a part of our budget, but we will release answers to these questions so that we all may become smarter and learn about what the Spot.Us community thinks about this subject.

Community-focused sponsorships was also a notable entry at the Knight-Batten awards and we’ve created a sponsorship package to help spread the word. Next step is an affiliate program. If you help us sell a sponsorship, you’ll get the commission. Interested? Contact David at spot dot us.

Editorial highlights

Just about every week we complete a reporting project and publish a handful of blog posts. Some of the recent victories include…..

• The LA Times imitates Spot.Us reporting:

They say imitation is the best form of flattery. If that is true, then the LA Times gave Spot.Us a huge kudos recently. Our ongoing investigation into the UC Regents found that one regent has invested lots of money into private educational institutions. The LA Times followed up our reporting, giving a small nod to the original investigation – without really giving full credit. In a separate email the LA Times reporter did admit that our reporting inspired his column. The Spot.Us community can collectively pat itself on the back for that one.

• Our most dynamic collaboration ever – covering the Johannes Mehserle trial

This week we published the 40th post in our coverage of the Johannes Mehserle trial. Mehserle, a former Bart police officer, was found guilty of the involuntary manslaughter of Oscar Grant. What was unique and interesting for Spot.Us about this project was the number of partners that participated. Our pitch  had seven different organizations taking part including, Oakland Local, New American Media, California Beat, KALW and The Bay Citizen. In another era each organization would have hired its own reporter and provided competitive (and perhaps overlapping coverage). Through Spot.Us we were able to create a ethos of Co-opetition. We hope to see more pitches like this in the future and our hat is off to these organizations who were able to pull it off

• The Treasure Island Investigation

Our partners in crime the SF Public Press put out a print product recently with an exhaustive spread on Treasure Island. It’s a fantastic look at development in SF from several angels and will be adapted and republished by Shareable.Net this week.

• Tons of new pitches.

There are more new pitches than we can highlight. They range in topic from Native American issues in Minnesota to recycling in Champaign-Urbana, homelessness in California and beyond. Check out all the new pitches. You can fund them through our community-focused sponsorships. Taking a quick questionnaire can create $5 for the pitch of your choice!

Lessons Learned and Missteps

• Expansion isn’t clean

A careful observer of Spot.Us would have seen this coming and may have even noticed the change last week. We have removed the networks on Spot.Us. Where we used to say we were based in SF, LA, Seattle, Minnesota and expanding – we are now open to anyone with a good local/regional pitch in the United States.

As I noted in a previous post in June:

From the start, I thought Spot.Us would expand a la Craigslist: Pick locations, create sub-domains and let people aggregate around them. Certainly San Francisco and Los Angeles have worked like this. We always have about five active pitches in both locations at any given time. Seattle however, might not be that way. I fear I’m viewed as an outsider ….

But that shouldn’t stop me from expanding. Especially not when I am getting very solid pitches from around the country.

Related – it makes little sense for me to tell a good pitch from Illinois or Alamo Texas that they can’t put their pitch up until we find a handful of other pitches in their region (which might be mediocre).

As of last week the sub-domains at Spot.Us have been removed. Trying to convince people in a specific region to use the site, while stopping others from using it because they aren’t in the right region is not the best use of our time or energy.

So the lesson here is really one about internal expectations and external realities. While in my minds’ eye it still makes sense for Spot.Us to expand region-by-region I don’t see this happening anytime soon. This is not the end of the world. In some respects I find it freeing. In the end Spot.Us is a platform, not a news organization. Opening up the platform is a positive endeavor, especially considering the vast majority of pitches so far have been successful. The major misstep then is not making this change sooner. The challenge going forward is finding a different organizing mechanism so that people can find pitches that are relevant to them as quickly as possible on our search page without expecting those pitches to be grouped geographically.

• Letting go isn’t easy

Related to the misstep above is a larger phenomena. Put bluntly I was a smothering Jewish mother (trust me, I know what these are like). I think I clung to the “babyness” of the Spot.Us project instead of letting it go free. It’s natural for anybody who starts something to hold onto it and fear releasing it into the wild. I’ve tried to avoid that – but  I’m afraid I’ve put Spot.Us into a tough position of wanting it to expand but also being protective over the pitches that are uploaded into the site.

There are some pitches I felt very comfortable rejecting. The best example was a pitch from a Seattle fortune teller that was going to read people’s future via the Internet and published on Spot.Us. I feel justified in saying “that’s not for us.” As a nonprofit – we have a mission to fund local/regional reporting.

At the same time – this tension hasn’t always been easy to negotiate. Some pitches we get exist in a much more difficult space. The tension exist between a site where the founder (David Cohn) should have authority over what pitches are included and a site that is truly open, but still filters out pitches that don’t meet our mission (like fortune telling). I am not 100% sure how we will negotiate that tension. For the immediate future it will be a site where I filter pitches. I will not be filtering pitches based on “credentials” but rather the topic of the reporting and the earnestness and eagerness of the reporter. Ideally Spot.Us and its community board members will be able to come up with a system whereby pitches can be accepted and/or rejected not at the whim of my decision but that of the community and its representatives.

In conclusion

Spot.Us continues to push forward.  We’ve had some missteps and some beautiful moments. I suspect both will happen in the future as well. The beauty of all this continues to be that we do both in public and that it is only with the public’s participation that either can happen. This remains an experiment in transparency and public control over the process of journalism. It will continue to be such an experiment as we move forward.

Crowdfunding in the Spot.Us way includes many features that are radically new in journalism.

Pitching in public is one of them. In the traditional journalistic process journalists pitch to editors, not to readers.

According to my study, the Spot.Us reporters find pitching in public intriguing, yet challenging in many ways. One of the reporters describes his experience with pitching in public:

“I don’t like pitching in public. Yeah, hell, it is scary to pitch in public. I didn’t reveal everything in the pitch – I know more than I wrote in the pitch, and have learnt more too since the pitch was published.”

The reporters are concerned about exposing their story in public because there is a risk that a competitor might use their idea. Investigative reporters identify the risk that the publicity might affect their sources, and the actions of the people the reporters are investigating.

However, the reporters think experimenting with the new level of transparency and publicity is worth it.

“If this story was easy to cover, somebody would have done it already. You need to have the experience and resources to do this story. And if I don’t try crowdfunding now, when will I try it?”, one reporter says.

I have interviewed Spot.Us reporters and donors for my study about crowdfunding in journalism. The study is a part of my Ph.D. project, in which I’m studying collective intelligence in journalism. More about my findings on the PBS MediaShift, and a SlideShare presentation based on my paper here.

The 2010 Knight News Challenge Winners have just been announced. We knew about one a few weeks ago when Jake Shapiro from PRX contacted us. Their winning project is to build StoryMarket. Rather than try to define it – I’ll let Jake Shapiro explain. We will try and keep folks in the loop about what this means – but it is a fantastic development that means Spot.us will have an API via PRX.

This isn’t a win for Spot.Us – it’s a win for any news organization that might want to use Spot.Us. Soon the power of “community funded reporting” will be in your hand!

Jake Shapiro from Knight Foundation on Vimeo.

Building on the software created by 2008 challenge winner Spot.us, this project will allow anyone to pitch and help pay to produce a story for a local public radio station. When the amount is raised (in small contributions), the station will hire a professional journalist to do the report. The project provides a new way for public radio stations to raise money, produce more local content and engage listeners.

Spot.Us can be many things to many people. For 48hrmag.com it isn’t a fundraising mechanism. That’s fine.

What they do need is a tool to be as transparent about money as possible. They were looking for an entity that can act as an independent third party to publicly keep track of money. That’s certainly one way to describe Spot.Us. The fact that one of the founders behind 48mag.com is Alexis Madrigal, the first ever Spot.Us reporter, is even more incentive for us to step up and help out.

Don’t know what 48hrmag.com is? Check it out – it’s a cool concept. And keep an eye on their Spot.Us pitch to see where the money is coming from and how it’s being spent! Alexis has the details below.

We’re happy to announce another very important partner: Spot.us will be our platform to let you follow the money. We want to provide total financial transparency and Spot.Us is how we’re going to do it.

Money is usually the stickiest (and ickiest) part of fun projects. Handling money that isn’t your own can be a terrible responsibility. So we at 48 Hour Magazine were a little nervous about what to do with the cash that’s going to flow through our collaboration.

Luckily, along with the other tools of the emergent flash publishing ecosystem — Twitter, Magcloud, Heroku, etc — there are new ways of doing the financial side of things, too. David Cohn’s Spot.us began as a way of crowdfunding local stories in the Bay Area. Recently, it sprouted pseudopods and moved to other cities as well as into broader journalism activities. Cohn recently called his site “a collaboration engine” that helps you deal with the tough parts of unconventionally funded projects. We like that.

So, we now have a pitch page up on Spot.us. That’s where we’ll be depositing our sponsorship cash as well as profits from magazine sales. You can read up on our overall financial plan here.

Perhaps it’s ironic for me to write about advertising. Fellow Knight News Challenge winner Dan Pacheco can quote me as once saying “f*&# advertising” and one of the initial inspirations for me to get into journalism was Adbusters Magazine. Below I want to describe a potential advertising model that Spot.Us hopes to employ (and others can steal) along with general thoughts about the diversification of revenue streams.

Community Centered Advertising

The underlying inspiration for Spot.Us is to give the public a freelance budget so they can help set the editorial agenda. Right now that is done via contributions from their own wallet. But what if they directed an advertising budget? What if the people to whom an advertisement was directed had a say in where the money it generated went? I imagine it would look something like this.

A button on Spot.Us that says “Earn Credits.” Upon clicking a user is sent to a blatantly sponsored page. We even have our first sponsor Mortgage Revolution. They are holding a fundraising event in San Francisco and part of the proceeds will go to sponsor our first Community Centered Advertising campaign which will try and stir up conversation about the real estate and mortgage industry.

In Community Centered Advertising the sponsor is looking for some kind of engagement with their brand, cause, business, etc. In the case of Mortgage Revolution they hope to stir up a healthy conversation about the real estate and mortgage industry. But let’s use Levi Strauss purely as an example.
Perhaps Levi’s provides survey questions:

• What is your favorite cut of jeans?
• What is a memorable Levi’s moment you’ve had?
• You buy Levi’s jeans because… (multiple choice answer).

Or it can be a branded survey simply to get the customer to think more about Levi’s

• What year was Levi’s invented? (Multiple choice)
• Guess how much of material X Levi’s produces a year?

Or a quick video that people have to watch Hulu-style.

Upon engaging with the advertisement the Spot.Us community member earns X credits, which represent real dollars, and they can direct those credits toward funding the story (or stories) of their choice.

The community still makes the decisions about what stories get funded but they are doing so with our advertising budget, not their own money.

At this stage it’s just theory but we have our first sponsor and hope to roll this feature out soon and I hope more sponsors will follow (if interested in details, send me a note: david@spot.us). Then again, we may find that the Spot.Us community reacts negatively to it. Who knows? That’s why we need to try it — even new media experiments need to experiment.

Depending on the level of the sponsorship Spot.Us would probably take a small overhead fee. But even if we didn’t, I would feel encouraged that with a low overhead we will be funding independent reporters. (Want to know when this feature is live so you can be one of the first to try it out? Sign up for our newsletter).

Journalists Awash at Sea

I bring this up because like all news organizations Spot.Us needs to diversify revenue sources. An analogy I often use is that, “Journalists are awash at sea. Previously we could rest the majority of our weight on a few revenue streams — advertising, classifieds — but now we need to get many revenue streams and a piece of rope to tie them all together in order to make a stable raft that distributes our weight.”

This also requires re-thinking and re-inventing our relationship with classifieds, advertising and even coupons.

One of the problems I’m observing is that instead of re-inventing our relationship with classifieds, advertising and even coupons, news organizations are assuming they can take the old models and stick them on the web and move on.

Craigslist as Counter-Factual; GroupOn as Factual

I hate when journalists point to Craigslist as a “killer.” But let’s talk about why there is so much tension there. The fact is Craigslist was not a technical innovation. Any newspaper company could have invented it. They didn’t because it would have drastically re-thought their relationship with classifieds. The bummer in this is that newspapers were really always in the advertising and classifieds business and used their profits to support journalism. That business has dwindled and journalism has suffered. Imagine if Hearst had created Craigslist? The profits from that would most likely be pumped back into newspapers.

This isn’t to knock Craigslist either. With his profits Craig Newmark has created the Craigslist Foundation which is a HUGE boon for society. Craig has also supported journalism here and there. Understandably this isn’t his top issue — but at least it’s on his radar.

Now look at GroupOn. Take a good hard look. I think Michael Skolar is right in his post “I‘m suggesting you steal the idea for your local news operation fast before national competitors own the market.”

These sites represent a new relationship to coupons, one of the last great revenue streams is being revolutionized right underneath newspapers’ feet. And once again the technology isn’t mind-blowing. I’m talking to the big guns (Hearst, McClatchy, Gannett, etc.) when I say “start something like this up now or buy one of these startups.” The revenue you make can be reinvested into journalism because that’s what your companies do.

I consider the founder of GroupOn a friend, but I doubt his company would just take profits and subsidize journalism — that’s understandable. The few companies that historically used profits from advertising, classifieds and coupons to prop original reporting are few and some of them are going bankrupt.

Re-inventing our Relationship to Advertising

One of the reasons Facebook is worth so much is because of the relationship they have created between advertisers and users. As an example a little birdie at the NY Times once told me that the number two country for registered users on the New York Times was…Afghanistan.

Before you start scratching your head as to why so many Afghans are reading the NY Times, consider the image of this registration drop down from NYTimes.com:

Now you can stop scratching your head.

Compare this to Facebook where most people freely reveal their age, religion, relationship status and more. Now ask yourself: As an advertiser, where do you want to be? The site with lots of people pretending to be Afghans or the site where you can target the customer you most want? Privacy issues aside, it’s pretty ingenious. And some might even argue that a good advertisement is good content. If the advertisement is exactly what you were looking for, it isn’t annoying — it’s helpful.

Interestingly enough the new relationship to advertisers is predicated on the new relationship with the audience. The more the audience is ready to reveal about themsleves the more advertising is valued. Same with GroupOn. If a customer freely reveals they are interested in a deal before it becomes official, the small business offering the deal starts licking their chops — rightfully so. And in all cases the user is incentivized to reveal the information because it’s in their benefit. For the Facebook user they are connecting with friends. For the GroupOn user, they are looking for money saving deals.

With Community Centered Advertising our hope is that community members are encouraged to reveal something about themselves in exchange for the ability to fund the original reporting of their choice. Most news organizations don’t have a system by which individuals can direct cash towards stories but perhaps they can offer something else?

What incentive can a news organization give to a user so that they freely reveal more about themselves in an effort to become more attractive to advertising? I would argue that it’s best if the end goal, to become attractive to advertisers, is done above the table — as with Spot.Us’ model and GroupOn’s. There is no deception. You are engaging with an advertisement. I wouldn’t argue that Facebook is being devious, but certainly they have come under criticism because users aren’t sharing their info with advertisers in mind, but rather with their friends as the goal.

So Now What?

As always, I never claim to have solutions. Just crazy ideas that I want to execute. Keep your eye open for Community Centered Advertising. If you’ve never donated on Spot.Us before, I hope this inspires you. Instead of having to reach for your wallet, you can just donate a little time and a little bit of your own knowledge. Register for our newsletter why doncha!

Two of Spot.Us’ more recent and ambitious projects share a significant and exciting development. “Collaboration” is a buzz word in journalism and I am one of its biggest proponents. There are some occasions where collaboration is just that – a buzz word, something that gets in the way or producing meaningful journalism and can be a nightmare (herding journalists is probably akin to cats).

But on other occasions collaboration can be an enabler.

Last night Oakland Local, KALW, New American Media, Placeblogger and Spot.Us came together to share resources to provide independent coverage of the Johannese Mehserle trial in Los Angeles.

Placeblogger has the details.

Placeblogger, the largest searchable index of local weblogs, will be funding an investigative reporting project at Oakland Local, an online community news site based in Oakland, CA. Along with their partners New America Media, Spot.Us and KALW/Crosscurrents, Oakland Local has hired journalist Thandisizwe Chimurenga to cover the trial of Johannes Mehserle, a former transit police officer. Mehserle is on trial for the shooting of Oscar Grant, a 22 year old Oakland resident.

Oakland Local founder Susan Mernit says, “People in Oakland are very concerned about whether this is going to be an unbiased trial. It seemed really important to provide thorough, independent coverage of this story on an ongoing basis.”

You can read more at Placeblogger.

What does this represent?

Aside from New American Media – none of these organizations have the resources to hire an independent reporter to cover this trial. But together… they do. That’s the collaboration that is going on here. It isn’t necessarily editorial (although editorial collaboration will happen since we are all sharing a reporter), instead it’s a sharing of resources. Combined we have the ability to hire a reporter to stick to this trial which is of interest to anyone in the Bay Area and Los Angeles.

Similarly: There are many reporters that work for small organizations like Oakland Local, KALW, New American Media, etc and would cover a trial like this for one of them. In doing so, however, the reporter can only expect to get paid $250 (give or take). That isn’t because the organizations don’t want to pay more – it’s simply a matter of resources. But by sharing content and pooling resources the reporter AND the organizations benefit. They can keep a reporter on the story longer, the reporter is paid for their time and the impact of the piece will be greater.

This is very similar to our UC Regent investigation. This is a collaboration of weekly newspapers that don’t have the full budget to keep Peter Byrne on the story to do the kind of in-depth reporting that he has been doing but together and with members of the public have been able to follow the UC budget cuts and investigate the UC regents. A positive development indeed.

In both the Mehserle trial and the UC regent investigation Spot.Us has created a platform that allows these various partners to come together. We are an independent third party that is looking out for the interest of all parties. We create a transparent space where money is accounted for publicly. All these things enable this type of collaboration to happen smooth and fast. And that – pushes boundaries.

People looked at McSweeney’s Panorama as a moment for independent publishers. Spot.Us played a small role and we were very honored to. But I disagree. The startup capital needed and the margins don’t match. I am a big believer in starting small and iterating. What these two projects represent is something real and tangible in independent media. Anyone (with or without Spot.Us) can corral simpatico organizations to try this kind of collaboration. Whether or not you open it up to the public as well (via Spot.Us to donate) is a side issue.

So where are you based? What is a friendly sister organization? And most importantly – what is an ongoing story that both of you are interested in covering?

Since Spot.Us first launched in late 2008 as a simple wiki, I’ve wanted this to be a learning and growing endeavor both for myself and for  journalism as a whole.

There are so many lessons in starting a non-profit news project, especially one that is unique in its scope and mission like Spot.Us. I hope to share some insight below, but first the news.

Today Spot.Us takes a huge step forward with a new design and new features. This was made possible by lead designer Lauren Rabaino and the excellent development team of Erik Sundelof and Dan Newman. Please join me and Anh Do, managing editor of the Los Angeles branch, in thanking this team.

The new interface will continue to be tweaked, but it is already much more appealing and user friendly than our old design. I dare not call it “Spot.Us 2.0″ just yet. There are two major new features planned before we hit that mark. This is Spot.Us 1.9.

New Features

Suggest a city: It’s time to start looking beyond the Bay Area and Los Angeles. That’s right — expansion is a priority. Spot.Us is a tool or platform, not a news organization. With that in mind, we are looking to expand where we know people are interested in using the site. Would you intend on using it if it was available in your area? If so, suggest your city!

Assignments: This is a feature I am very excited about. In some respects it transitions Spot.Us out of “community funded reporting” and into “community powered reporting.” It’s a subtle but important distinction. Every reporter now has the option of creating “assignments” that are limited only by their imagination. A reporter could crowdsource a collection of photos, distribute the workload required for reviewing documents, etc. The reporter has control over who can and cannot contribute to an assignment, and how assignments exist, if at all, in relation to their pitch. This is an optional feature for anyone that wants to build a movement around their reporting efforts.

Widgets, Facebook, Twitter, Oh My!: Yes, it’s been a long time coming. I admit we haven’t been moving fast enough in this space. But we are making up for it ASAP! We aren’t breaking ground here, but considering that we are playing in the new media space, it’s a crime that we haven’t had these features.

More on Widgets: This is a deceptively forward-looking feature. Our hope is that soon people will be able to donate through a widget without ever having to leave the site where the widget is placed. This could also pave the way for an API (which is much further out, but is along this train of thought). For now, widgets will be built into a “Spot.Us Lite” that can be hosted on your website by just copying and pasting some code. (This is coming soon.)

Story updates: We’ve had blog posts associated with every pitch, but the vast majority of blog posts have been overlooked. Now we are highlighting the latest story updates on the front page, and will encourage reporters to show the process of their reporting.

RSS: We now have an RSS feed for…everything: Latest stories, newest pitches, blog posts, even the most recent contributions — and they can all be filtered by networks. Only interested in Los Angeles news? Go into the LA network and all the RSS feeds will be relevant to you.

Spot.Us Channels: The first channel we’re creating is “Spot Us Picks.” But in the future, channels, or filtered menus of pitches, can be created around topics (the health channel) general types of organizations (the public media channel) or specific partnering organizations (The Bay Area News Project channel).

There are also a few more minor features and tweaks. For example, we are finally able to better highlight our successful partnerships, our community advisory boards, and more.

General Lessons, Observations

I’ve learned more during this process than I can truly reflect on in a single blog post. But I have always seen winning the Knight News Challenge as a great privilege that has afforded me the luxury (and responsibility) to publicly expound on how Spot.Us is going, and what I’m learning along the way.

Many of those lessons are in past blog posts around being iterative, the things you must weigh in website development and collaboration. As of right now, these are some of the best lessons I’ve been able to articulate. I hope to share more as I continue.

How Is Spot.Us Doing?

I never know how to answer this question. No matter how many times I say it won’t, some people still expect Spot.Us and crowdfunding to somehow replace the gobs of money that has been lost from traditional advertising.

Here’s what I usually say: “Considering all the things that could have gone wrong, we are doing amazing!”

And that is true.

Now in our second year of an initial grant from the Knight Foundation, I am proud to say that with micro-donations and other foundation grants, we have almost raised a third of the amount of money given to us in that first grant. Which is to say: In another two years, we could be a net positive to the cash flow of working journalists. That, of course, assumes nothing changes.

This design represents a shift from the proof-of-concept stage to the expansion stage. Indeed, I’m talking to (and want to talk to more) folks around the country who want to use Spot.Us in their area. My hope is we can continue to funnel more money into the pockets of journalists who are reporting on important civic topics.

However, if people expect Spot.Us to replace major metro papers, then we are in trouble. As I often say, there is no such thing as a silver bullet. Spot.Us is a new, growing revenue stream. It is not meant to be as big of a revenue stream as classifieds were 20 years ago; but it is a revenue stream that requires little effort (just create a pitch and embed a widget), and an option that can be combined with a multitude of other streams

We continue to be a platform — a growing platform. This year is a make or break moment. At the end of 2010, Spot.Us could be a beautiful failure in that we can report back to the larger journalism community what we know, what we learned and how we think others could build off that. Or we will keep going — the little startup non-profit that could

I’ve always been an underdog, a nice guy that didn’t buckle to authority. With that in mind, I have every intention of breaking through every barrier I see in front of Spot.Us. I hope you’ll join me!

The following is a report from a union member who was in attendance last night at a Beverly Hilton hotel picket of the UC Regents. Lead by Peter Byrne Spot.Us continues to support an investigation into the UC Regents.

Last night, approximately 50 AFSMCE Local 3299 members held a lively picket at the Beverly Hilton hotel in Beverly Hills where UC Regent Paul Wachter and Gov. Arnold Schwarzenegger were holding their After-School All-Stars annual gala fundraising event.  As well dressed donors and celebrities entered the posh hotel, workers were there chanting, “Hey hey Arnold, hey hey Paul, we say UC for us ALL!” and “Regent Wachter you can’t hide, we can see your greedy side!”

UC’s low-wage service workers were clear they were not there to protest after-school programs and even made a cash donation to the program.  Rather, workers were there to ask Regent Wachter how he justifies his profiteering while students, employees, and their families are being forced to bear the brunt of the University’s “fiscal emergency” by enduring massive fee increases, lay-offs, pay-cuts, and threats to their retirement security.  AFSCME members wanted to call attention to the injustice they’re facing while UC’s Regents continue to move on misplaced priorities and function as a virtual “country club” for California’s elite.

Attendees inside and outside the event were given the attached leaflet [see photo sideshow].  After a raucous demonstration outside the hotel entrance, protestors were asked by the Beverly Hills police to move their picket line off the hotel property and on to the street, where workers remained until being re-joined by three AFSCME members who managed to get inside the event.  The three workers were escorted out of the event, but not until after they successfully leafleted all of the more than 200 attendees.

All in all, it was a good action, and although workers were not able to make direct contact with Wachter or Schwarzenegger, it was definitely hard for anyone inside the hotel to ignore the commotion.

By Peter Byrne
Photos/video by Monica Jensen, multimedia editor of SF Public Press

This is an update on the progress of the Spot.us-sponsored investigation into possible conflicts of interest among the Regents of the University of California. This is a community funded reporting project. You can support it at the link above.

On January 8, the regents held their bi-monthly meeting at the Mission Bay campus in San Francisco. The building bristled with armed guards—both uniformed and in plain clothes.

The regents, many of whom are multimillionaire financiers (view the Regent’s form 700s online), appeared worried that students and workers might engage in acts of civil disobedience because the governing board had recently raised tuition by 30 percent, while continuing to spend hundreds of millions of dollars on such non-educational projects as a sports stadium retrofit.

Incensing furloughed employees, the regents have rewarded top university executives with $3 million in bonuses—on top of 25 percent pay raises—while the salaries of professors and instructors are reduced, and core educational programs are eliminated or cut to the bone. The pay of janitors and service workers has been slashed by 15 percent, causing further hardship to families already afflicted by recession. From Los Angeles to Berkeley, workers, students, and professors are accusing the regents of union-busting and de facto privatization of a public institution. They complain that corporate and military research and multinational investment agendas are being funded at the expense of the general curriculum and student admissions. The university has discarded its mandate, they say, of educating the masses, affordably—and is transforming a publicly-funded institution into a school of the elite.

State senator Leland Yee has been asking hard questions of the regents—questions about excessive pay scales for executives while education is being cut back, and questions about how the regents invest UC’s pension and endowment portfolios–worth$53 billion. Before the meeting began, Yee was in the lobby chatting with Lakesha Harrison, president of the service worker’s union, Local 3299.

I had a chance to ask Yee and Harrison how they felt about the regents investing billions of public dollars with financial firms with ties to some of the regents (see Yee interview near the bottom).

But, first, some background information.

Let’s start with Regent Paul D. Wachter.

Since the early 1990s, Wachter has been Governor Arnold Schwarzenegger’s main business partner and personal investment advisor. One of the governor’s first acts in office was to appoint Wachter as a regent. Since then, he has been a leading force on the board’s investment committee, which currently oversees $53 billion in public and private equity investments.

The governor is himself an ex-officio member of the board of regents. This means he does not vote on matters before the board, but he has access to information available to the regents and their staff (but not to the public). He clearly has the ability to privately lobby his fellow regents. Many of these regents are campaign donors who Schwarzenegger rewarded by appointing them to the powerful board. But he is obligated by law to influence them in a manner that does not conflict with his private financial interests, which are valued at more than $100 million.

Thickening plot

It turns out that Regent Wachter is paid to administer Schwarzenegger’s blind trust. In theory, placing a government official’s assets in a blind trust prevents him from knowing what changes are made in his investment portfolio after he assumes office, so that he will not be tempted to use his governmental power for personal benefit. However, as a Salon.com investigation (by yours truly) showed a few years ago, it is not ethically logical to put your business partner in charge of your blind trust, especially when that partner is a close friend and political advisor.

Interestingly, many of Schwarzenegger’s real estate and business partnership holdings are not in the blind trust (which is mostly composed of publicly traded stocks). According to his annual financial disclosure statements, Schwarzenegger has a large ownership stake in a financial firm called Dimensional Fund Advisors (DFA). And since 2004, the regents have invested a third of a billion dollars in DFA.

DFA is an “index” fund (a type of mutual fund) created in Santa Monica, California during the early 1980s. It’s claim to fame was putting three Nobel Prize-winning economists on the board of directors. The Big Brains designed algorithms for efficiently pumping pools of public assets — combined with money fronted by wealthy, private clients — in and out of the stock market with (sometimes) better than average returns.

Wachter’s and Schwarzenegger’s financial disclosure statements from 2004 to the present show that each owns stock worth “more than $1 million” (no upper limit is specified) in the privately owned DFA, which controls a $160 billion investment portfolio, much of it funded by public pension funds. Schwarzenegger discloses “more than $100,000” in annual dividends from his ownership stake in DFA. He is reported to own five percent of DFA.

Indexfunds.com DFA Article

DFA stock is not publicly traded and ownership is available only to select institutions, company employees, and a few private investors.

In 2006, the UC retirement fund invested $226 million in a DFA “emerging market fund.” In 2007, this investment increased to $329 million. By the end of 2008, the value of the investment had fallen to $151 million. As of December 2008, the UCLA campus endowment fund had placed $82.3 million (nearly 8 percent of its total endowment) in three market funds offered by DFA.

When the stock market tanked in 2008, it appears that UC’s investments with DFA took a substantial hit–Nobel Prize winning smart guys notwithstanding. But DFA insulates its stockholders (e.g. Schwarzenegger, Wachter) from downturns in the market by charging large management fees to its investors (e.g. UC Regents).

The law of the state of California (Gov Code Section 87100) proclaims: “No public official at any level of state of local government shall make, participate in making or in any way attempt to use his official position to influence a governmental decision in which he knows or has reason to know he has a financial interest.”

The magnitude of the University’s investment with DFA, and the magnitude of Regent Wachter’s and Regent Schwarzenegger’s stake in DFA suggest that there a conflict between their personal financial interests and their public duties.

Wachter told Spot.us that the regents do not direct university staff to select specific investment fund managers. Rather, the regents decide the types and amounts of investments that are to be made, e.g. certain percentages of the total retirement fund are slated for private equity funds or emerging market funds, etc. Considering DFA’s size, he commented, “It is not surprising to see [DFA] represented in part in any endowment or pension fund.”

Neither Schwarzenegger, Dimensional Fund Advisors, nor the Regent’s press office responded to a request for comments. But it is remarkable that Schwarzenegger and Wachter allowed the UC Treasurer to invest hundreds of millions of public dollars with an investment management firm which they partly own. The regent’s investments with DFA were not a secret: they were publicly reported to the board. And Schwarzenegger’s and Wachter’s large stake in DFA has long been a matter of public record, so the Treasurer could easily have refrained from investing in DFA.

Conflicts at CALPERS

Since 2004, DFA has been paid about $4 million a year to manage about $1.5 billion in the California Public Employees’ Retirement System. CALPERS is one of the world’s largest public employee pension funds and is periodically afflicted by scandal. Recently, an internal investigation by CALPERS revealed that certain financial firms (but not DFA) were paying two former CALPERS board members to lobby employees to invest with those firms.

CALPERS also keeps a large portfolio of investments with an investment bank run by another regent, Richard C. Blum, who is the husband of U.S. Senator Diane Feinstein. Blum and Feinstein ran afoul of federal conflict of interest prohibitions during the early years of the War on Iraq as the senator micromanaged $1.5 billion in military construction appropriations that were awarded to two companies controlled by Blum. See “Senator Warbucks” and “Blum’s Plums.”

CALPERS also pays Blum’s real estate corporation, CB Richard Ellis, millions of dollars in management fees. Nice work, if you can get it.

As our investigation of the regents continues to develop, we will plumb Blum’s political pipeline into California’s public pension investment pools and beyond. And we will examine if the regents are invested in a series of nested private equity partnerships (aka “leveraged buyout” firms) tied to Wachter, Schwarzenegger, and Blum. We will paint a detailed portrait of the financial holdings of each regent; and continue to place public record databases online for all to see.

But first let ask Senator Yee and Ms. Harrison what they think about the regent’s investing hard-earned worker pension funds with DFA

YEE: “I’m not only surprised … its horrible, shocking … get all information out …”
HARRISON: “That’s despicable … destroying workers lives…”

Interview with Leland Yee by Peter Byrne

Interview – Senator Leland Yee by SpotUs and Peter Byrne

Interview with Lakisha Harrison.

Interview – Lakisha Harrison – President of Local 3299 by SpotUs and Peter Byrne

And now let’s visit the regent’s meeting and see what happens when members of Local 3299 implore the regents to listen to reason and stop cutting the salaries of manual workers while executives get quarter million dollar bonuses and politically-savvy investment banks run wild with retirement funds.

Notice Mark Yudof, president of the university. Between 10 am and noon his Twitter account registered numerous posts, such as “UC’s research performance tells world how UC is doing as a university … Regent Dick Blum tells those unhappy w. the budget: Don’t yell at Regents. Don’t yell at Mark Yudof. Yell at your legislators in Sacramento.”

Either Yudof was madly Twittering away under the table, when, you would think, he could have been doing something more productive to earn his $828,000 salary, or the university is paying a public relations flack to pose as the Yudof on Twitter.