The Bay Citizen opens for business this week in San Francisco, and there are two big reasons the news industry is paying attention. One is that the New York Times has given the Bay Citizen instant credibility, paying it to provide four pages of local news a week for its Bay Area edition—just as the Chicago News Cooperative has been doing in Chicago for the Times for the past six months.

With the second reason, the Bay Citizen and CNC part company: The Bay Citizen got $5 million from local financier F. Warren Hellman to set up shop. When CNC founder James O’Shea (who’s also on the board of Creative Loafing Inc., the media company that runs the Reader) was rounding up seed money, his big score was $500,000 from the MacArthur Foundation.

The Bay Citizen’s nest egg is why it can launch not only its Times pages but also a Web site “chock full of original, multimedia news and information about the Bay Area, created by our professional newsroom.” CNC wants its site to be a stand-alone attraction too, but for now it’s still pretty much limited to the stories written for the Times.

CNC can look at it this way: there are blunders it takes money to make. The Bay Area teems with tiny, extremely local Web sites to whom $500,000 is all the money in the world and $5 million would buy the universe. On May 14, representatives of about 40 such sites gathered at the Bay Citizen’s invitation to hear an intriguing proposition. Editor Jonathan Weber (cofounder and editor in chief of the storied late-90s “newsmagazine of the Internet economy,” the Industry Standard) wants to post a lot more news than his six beat reporters can churn out. So he told his guests he wanted their best stories too. But he didn’t want to link to these stories—he called the link-following experience “disconnected” and “frustrating.” He wanted their sites to become “partners,” and he wanted to be able to post, in their entirety, any of their stories that struck his fancy. His offer was $25 a story—plus the Bay Citizen’s help from time to time with its new partners’ projects.

No one keeled over with joy and gratitude. “The Bay Citizen seems to want to position itself as a kind of benevolent lord of the manor, nourishing small sites with advice and reporting aid, while at the same time lifting up their content to display to a larger audience,” wrote SF Weekly blogger Lois Beckett. “Crumbs from the entrepreneurial table are not enough,” wrote Becky O’Malley of the Berkeley Daily Planet. Bob Patterson of the Smirking Chimp blogged sarcastically from the scene, “When the crowd had been sufficiently tantalized by the prospect of money for content, Weber upped the ante by dropping in an inside baseball tidbit that was guaranteed to drive his audience on to new limits of Pablovian [sic] enthusiasm: the best stuff from Bay Citizen might be printed in the Bay Area edition of the New York Times.”

“They’re jumping in with both feet and pockets loaded with cash,” observes David Greising, general manager and deputy editor of the Chicago News Cooperative. But think before you leap. “If you’re going to offer anything, offer real money,” Greising says. Twenty-five dollars is “insulting.”

CNC lacks the cash to make even that kind of insult. To date, it has raised about $1.3 million, Greising says. “We don’t have no money. We have enough to manage the business that we have. We will require some more money to staff the business we need to build.” But like the Bay Citizen, it’s also interested in finding partners—the cooperative in its name refers to the alliances O’Shea wants to form. “We’ve had similar discussions with people,” says Greising. “But the issue of ‘What are you going to pay us?’ hasn’t come up as much as ‘Together, how are we going to build an audience?’ That’s the more germane question.”

CNC is running ahead of the Bay Citizen—about six months ahead—in one area. “They are going to learn a lot about what it’s like to deal with the New York Times, which will be an awakening for them,” says Greising. “The Times has very exacting standards. It has taken us quite some time to really understand what the Times wants, and how our report fits into the rest of the Times national report.” He predicts that the Bay Citizen staff is in for “considerable discussion with their clients in New York.”

Like Greising and O’Shea and other key CNC staffers, sportswriter Dan McGrath is a refugee from the Trib, where he was the sports editor. I told him that I thought he wrote differently for the Times, that he’d taken up a more stately idiom, flecked with $5 words like errant and inimitably and local nines. He suggested that if there’s a difference, it’s the opposite. “I don’t say this to disparage the Tribune, but the editing standards are quite a bit more rigorous,” McGrath told me. “Everything’s read two or three times before it goes to New York and it goes through the editing process there all over again. They’re pretty strict. I did a piece about a basketball game at Leo High School, where I went to school. It’s all black now. I referred to Leo’s gym being tiny compared to other gymnasia. They didn’t like that. They’re a little less freewheeling than the Tribune. At the Trib I always felt writers were in the saddle. We let them take chances with the writing.” McGrath said that “there were a couple of testy exchanges early on” between CNC and the Times, “but more recently the relationship’s been pretty good. They trust us. We know Chicago and we know what we’re talking about.”

Says Greising, “We’re consciously doing a fairly aggressive edit here. We’re pushing people to make extra calls, find outside voices, think through the argument of the stories. Very few stories go in without some fairly substantial rewriting. That just isn’t done at the Tribune. There was a little resistance at first, but now they all get it and feel their stories benefit from it. I hope they feel that way. At least they say they do.”

When Greising speaks of a “fairly aggressive edit” he’s referring to the excruciating process somebody mired in it might call spiritual evisceration. Tomorrow’s always another day so the trick is to make up and go home (or out drinking), but when the last word is always spoken from New York, by someone who is the New York Times, which you merely contribute to, moments of smoldering consternation can be assumed.

“I do think,” says Greising, “that they’ve been pleasantly surprised—or quite pleased —with the hardiness of our content. We’ve broken a lot of news and stayed true to the original stated mission of original, substantive, enterprise reporting.”

What he’s not saying, but I’m hearing, is that the CNC is sending New York a stronger report than the Times expected. Pride is a good thing to run on when there’s no $5 million.

Jim Schachter, the Times‘s editor for digital initiatives, oversees the campaign to build up local coverage in other cities. He tells me the Bay Citizen will benefit from the lessons the Times has learned in Chicago,

Which are?

“The experience of collaboration we’ve had working with a very capable and experienced bunch of journalists asking them to do a tricky thing—asking them to satisfy the New York Times. Me and the other editors who work closely with them have learned about the very distinctive bobbing and weaving it requires to let your partner have its head while meeting the expectations and standards and goals we have. Presumably we will be more adept at that with the editors of the Bay Citizen.

“Talented people tend to be willful people,” he continues. “Part of the joy of working in journalism is the give and take, I expect a fair amount of give and take, and we thrive on it. There’s a hard-to-define place where give and take turns into friction. Look, what we expected was that we were working with extremely talented people who knew Chicago really really well. And from day one that’s what we’ve had. What we’ve worked on, go back and forth on, is balancing a Chicago feel with a Times-like feel, and I really think that what the folks at Chicago News Cooperative experience is akin to what every reporter who works for the Times after working somewhere else experiences. With every publication there’s a certain amount of idiosyncrasy—I’d go so far as to say we have more than our share of idiosyncrasy. Once you get past that ‘Oh, boy! My byline is in the New York Times,’ then you say, ‘Oh, boy! What a pain those people are.'”

He goes on, “I don’t want to say anything that denigrates their experience at the Tribune. I would say that the way we sort of write things in the Times is maybe slightly more nuanced than the way they were accustomed to. And so we’ve gone back and forth about that and I think we’ve come out in a good place. We wanted a vigorous, eye-opening local news report that complemented the work of our national correspondents, and that’s what we’re getting.”

“The biggest point of friction,” says Greising, “has been stories that our newsroom wants to do that the New York Times national desk is saying, ‘That’s a good story. We want all our national readers to see that story.'” CNC stories run only in Chicago.

Earlier this year CNC decided to profile Senator Bill Brady, the downstate Republican nominee for governor. The Times national desk thought that was such a good idea the whole country should read it—which meant assigning it to Chicago bureau chief Monica Davey. CNC was forced to choose another angle. “So we did Brady and the challenges he faces raising money in Chicago,” says Greising. “We’re not cheapening our news judgment but we’re shifting gears a little bit.”

Davey suggested the fund-raising angle to CNC. Her profile of Brady has yet to appear in the Times.

By both Greising’s account and Schacter’s, the CNC project is succeeding. The economic argument for the Chicago pages was to defend the Times‘s readership in Chicago, and over the past six months, says Schacter, readership has actually increased. “Focus groups value the fact that local people are producing content,” Greising says. “They see us bringing a kind of local savvy that they don’t expect quite as much of from the New York Times. They don’t realize Monica Davey is a former Tribune reporter who grew up here and knows the city as well as any of us. They think she parachuted in.” 

Like the CNC leadership, Davey used to work at the Trib, so everyone’s friends. She doesn’t vet the stories CNC sends to New York. But whenever managing editor Jim Kirk—another Tribune ex-pat—thinks there could be a conflict, he checks with her. In the early days CNC had to deal with Davey through New York. “It made no sense,” says Greising. He says Davey “looks at us as freeing her from some of the obligation of covering the city. But she has final say. If she wants to bigfoot us, she’s entitled. But in every case but one, we wound up doing a story we were happy with. When we get the Web site going, if she wants to bigfoot us we’ll just say fine and put it on the Web.”

By all appearances, that day can’t come soon enough. The CNC blast e-mailed twice a week to tout each new batch of stories makes no mention of the Times, which is where they can all be found. The blast links to the stories on the CNC Web site, and the Times isn’t acknowledged there either. It’s as if the Times merely subscribes to the CNC report, rather than oversees it. From the get-go the Bay Citizen will be posting more stories than the ones you might read in the paper that shall not be named—and that’s what $5 million gets you.