Of course not, but it does give rise to concerns. Backfence had constantly grown in the past 18 months, and expanded from the Washington D.C. area to Chicago and the Bay Area.

“Its apparent cash flow problems and layoffs could be telling, and a more sustainable hyperlocal strategy could be in an aggregation model like that of the newly launched Placeblogger,” reported the Search Engine Watch.

A number of other citizen journalism local websites, such as High Plains Messenger, or Dan Gillmor’s Bayosphere, have been forced to shut down due to lack of funding, despite their participatory structure.

“Community-based online media thrives when there's strong participation and collaboration. It's not enough just to read the news there, or even to publish your own stories there,” wrote Amy Gahran, from the Poynter Institute.

For more concrete and theoretical advice on how to solve cash flow problems for local news aggregators, Gahran pointed out several sources – Steve Outing for Editor & Publisher, Pramit Singh, and Matthew Ingram.

Matthew Ingram: “in order to draw people in, a local site has to live and breathe the area it covers, and have lively personalities and content. And maybe giving citizen journalists some financial incentive might help too.”

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Source: Poynter.org – matthewingram.com