Several things about that process convinced me that the tide has turned, both for our organization and for online news:

• I've been explicit with our candidates about the risks involved. We're a start-up, and it's possible that our grant funding will go away within a year. More than one candidate has told me that, given the state of our industry, he considers working for us LESS risky than taking a job with a daily newspaper.

• More than half of the applicants for this position were journalists of color. This absolutely stunned me, but I suppose it makes sense. Given our business model, and the massive network of citizen journalists that we're building, it's clear that we're a different kind of news organization that's open to new stories and new voices.

• We're attracting applicants that are shockingly qualified. Yesterday, I had the somewhat embarrassing task of running a former New York Times editor through a tryout on our desk. Frankly, I'd consider myself lucky to take dictation for some of these candidates, let alone supervise them.

The fact that we're attracting this caliber of applicant is great for us, but should be concerning to editors at newspapers. As papers shed jobs and stumble forward with little in the way of mission or business plan, the brightest talent will migrate to the online competition.

While some content that comes in this way is impeccably written and delightfully newsworthy, most is not. So news organizations interested in publishing quality content, and hoping to do it for free, are bound to be disappointed.

Partnering with citizen journalists to produce great neighborhood coverage involves money, and sometimes a lot of it. The journalists need training, and each story requires an editor's close attention all the way through the process, from generating ideas to dotting the final "i".

At various points during our year-long experiment with citizen journalism, I've wondered if it wouldn't be more economical to simply pay experienced journalists to cover Chicago neighborhoods for us.

But some cocktail-napkin calculations show otherwise.

Right now, we're working on plans for Phase Two of our citizen journalism program. It'll provide Chicago readers with at least one story a week from each of our city's 77 neighborhoods. We're shooting for about 5,000 stories a year.

To produce that coverage, we'll be recruiting more than 300 citizen journalists, training them, facilitating monthly story meetings in their neighborhoods, and assigning each journalist to work closely with a pro editor.

How much does it cost? We're still hashing out the budget. But it's not likely to exceed half a million bucks a year, even when you factor in marketing and recruiting costs. Our cost per story will likely be between $90 and $125. Costs for the first year of our program have been similar.

By contrast, we pay our freelancers $125 or more per story. That number doesn't include editing time or overhead related to recruiting and managing those freelancers. With those expenses, freelance stories cost us between $160 and $200. So citizen journalism is clearly an economic win.

The benefits go beyond economics, though.

Each one of the 60 or so citizen journalists working for us is an advocate for our site. They tell their friends and family about what we do, which helps drive traffic and recruit other volunteers.

On a personal level, they combat the image of reporters and news organizations as elitists stuck in the ivory tower. It's hard not to like the press when the reporting on your neighborhood is done by your neighbors.

And in terms of civic engagement, we're getting dozens of people involved in their communities, attending school council meetings, interviewing their aldermen, and writing about zoning issues.

So there's a wealth of social benefits that come along with citizen journalism. And it's hard work. And yes, it's cheaper than paying reporters. But not as cheap as you thought.

Now Toyota is on pace to unseat GM as the world's auto sales leader, and is regarded as one of the most innovative companies around.

A New Yorker article by James Surowiecki gives a quick rundown on how that happened.

At Toyota, "the goal is not to make huge, sudden leaps, but, rather, to make things better on a daily basis ... Instead of trying to throw long touchdown passes, as it were, Toyota moves down the field by means of short and steady gains."

The piece had a lot of resonance for me, because I've been talking lately with people who wonder where the Daily News is going, if the site today represents the culmination of our business plan or merely a first step toward a much more ambitious goal.

Most news organizations today are well past their formative phase. The typography, logo, tone, biases, breadth and quality of coverage have been compressed by the weight of time into diamond-hard rules. While layoffs may loom, there's not much question that someone will show up to cover the City Council meeting, and the office Internet service works pretty well.

For us, it's a different picture. The Daily News, unlike any news organization I've ever worked for, is a work in progress.

Every day we try to move the ball forward an inch or two. We attract a dozen more readers, bring another talented writer on board, hone our procedures for retaining citizen journalists, wrestle with our accounting system, fantasize about lighting our non-functional wireless router on fire, tweak the site design and connect with funders. There are few gigantic leaps in this process.

Of course, we can't slap a big 'Work in Progress' sign on the front page. Readers will value us -- or not -- for what they read on the site any given day, not what they hope they'll read a year from now.

That can be frustrating. Today's news report represents the best we can do with the resources we have available. It doesn't represent our vision for what our news report should look like.

But it's also amazing to compare the site today to the site we operated a year ago. We've doubled our readership, regularly beat the Trib and Sun-Times on stories of citywide importance, and have built a crew of 45 or so dedicated volunteer neighborhood correspondents.

Likewise, it's fun to look at what we've achieved given the resources we have. I think we run one hell of a $200,000 news organization.

Surowiecki says: "Every day, Toyota knows a little bit more, and does things a little bit better than it did the day before."

When things proceed at that pace, it can be hard to tell they're proceeding at all -- until you add up the incremental gains and realize you've just toppled a giant like GM.

On the other hand, last week I was able to introduce a citizen journalists to one of our business' greatest pleasures -- the random famous-person interview.

Here's how it went: The citizen journo, Jack Newell, was working on a feature about a local artist who makes theatrical masks. The artist told an anecdote about the time he spent traveling in Russia with Patch Adams.

So Jack unexpectedly found himself on the phone with Patch Adams, verifying the details. And now he has a really weird story to tell his friends over cocktails.

We've had to take some unexpected detours into CRM software, etc., to make sure people and stories don't fall through the cracks, but it seems to be working fairly well.

As of this week, we're looking to break those tasks into two separate jobs. All of our non-editorial operations will be supervised by a general manager, and we're looking to fill that role ASAP.

You can check out the complete job posting here. And please pass it on to anyone you know who might fit the bill.

On Feb. 5, primary voters in Chicago will cast ballots for ward committee leaders, the county's chief prosecutor and a slew of other positions.

From my point of view this is an interesting deal, because I've never run a news organization's election coverage before. I'm always the guy who comes in afterwards to do the big project on voter fraud. Which is a good thing, because I can't plan my way out of a paper bag.

It's also fascinating because we've got an enormous opportunity to use our crew of 30+ citizen journalists to cover the election in nifty new ways.

Leave a comment or drop me a line (geoff at chitowndailynews dot org) if you've got ideas.

The features are focused on what's become known as geotargeting, and they're things that you won't find on any other website.

Basically, we're making it easy for you to see the news and ads that are relevant to you because they take place near you.

If you're a registered user on the site, you'll have the opportunity to give us your address. Our frontpage will then display a map centered on that location. It'll show you the recent news that's closest to you.

Similarly, you'll get ads from local merchants -- people whose businesses you're most likely to want to support.

For advertisers this represents an amazing opportunity to pay for ads that reach people in a particular neighborhood. And they're cheap -- $50 to get started.

There's more. It's not just that we're matching users with ads near them. We're pairing content with nearby ads, too.

We've been geocoding our content for more than a year now, so we have a library of thousands of articles that are associated with a spot on a map.

Starting today, if you're reading an article about a zoning issue in Jefferson Park, you're likely to see ads for bars and restaurants in Jefferson Park. Which makes a lot of sense, because the people reading that content are the ones most likely to visit those businesses.

Geotargeting has been around for awhile now, but its effectiveness has been limited. Typically, a website will calculate a location based on your IP address -- the unique web address that identifies your computer's position on the network. In some cases, that information can be used to determine where you are, down to the city or zip code.

But in lots of cases it can't. And even when IP geotargeting is successful, it's imprecise.

That's why what we're doing represents a significant move forward for the industry.

We're serving users ads that are within a mile of their location. As we get more advertisers, we may even tighten that up, so users will see ads for businesses that are at most a half mile away.

I already get several dozen e-mails a day. Add to that a dozen or so phone calls, voice mails and letters, and I begin feeling like I need to be less networked, not more.

But I finally sat down and looked at what the site has done with its publicly available APIs -- programming features that let web developers like me build stuff on Facebook.

Yes, it is cool. Cooler than I'd imagined. It took me about three hours to slap together the Daily News' first Facebook app. There's definitely more to come in this area, because it looks like an amazing tool to get our journalism in front of more people.

For instance, our next app will probably let our citizen journalists automatically notify their Facebook friends when they've posted an article on our site. Our volunteers do some amazing reporting, and part of the fun of writing for us is sharing with your friends and neighbors. It seems like an excellent way to make sure our citizen journalists get the attention and admiration they deserve from their friends -- and to push our traffic numbers ever higher.

We're likely to put together something that allows Facebook users to show which Chicago neighborhood they're in, along with a Google map of stories and events around them.

It's also interesting to think about using Facebook as a model, rather than an API. In other words, can news sites become development platforms that others can use to build web apps that provide useful information?

I don't have the answer to that question. But I'm sure one of my Facebook friends does.

If we ran a typical local news operation that had a dozen reporters or so, we'd have a dozen people out and about who might see some news. But with grassroots journalism, the possibilities are vastly expanded.

We got an illustration of how important that is on Friday, when citizen journalist Kimberly Michaels called to say that an acquaintance had witnessed an instance of apparent police brutality on Chicago's North Side.

We encouraged Kimberly to pursue the article and worked with her to make sure it was well-sourced and credible.

The result is this important story detailing police abuse of a teenage boy and of the bystanders who attempted to film the incident.

Now, if we could only get someone to send us video of the incident.

Our website doesn't currently run obits, but in light of my blathering about how valuable they are as a community service, it seems like we probably ought to. The question: What's the Web 2.0 version of the obit. Video? Roll-your-own death notice?

How can we best use the web to fulfill and expand on the purposes of the traditional newspaper obituary?

Suggestions invited.

It's not true.

As we build our network of citizen journalists, we're finding that some folks have a good feel for what's newsworthy in their neighborhoods. But most don't, and so we need to help them.

But how? We can't know what's going on in every neighborhood in Chicago, a city of three million people with a southern boundary that's more than 10 miles away from our newsroom.

For us, the answer has been creating an amazingly detailed community calendar.

We started compiling it with a combination of user-submitted items and entries researched by our beat-reporting interns, whom we asked to spend a few hours each week updating the calendar.

That didn't cut it. We often found ourselves with a willing volunteer and no information on stuff to cover in his neighborhood.

So earlier this month we hired a part-time events editor, and she's going gangbusters.

We've now got dozens of neighborhood community policing meetings on the site, along with local school council meetings, arts events, etc. It's already proving to be an invaluable resource in matching volunteer journalists with story ideas.

We also built a geographic interface to the calendar, so our volunteers can search for events near them.

Of course, none of this is free, and some of it requires a lot of work. But I can't really think of another way to solve the problem we faced.

And we now have Chicago's most detailed events calendar.