An e-business is reborn via online obits -
Legacy.com capitalizes on Trib link

Revenues and remembrances:

Legacy.com CEO Stopher Bartol says his firm has found new life hosting obituary sites for newspapers. Photo: Steve Leonard

August 20, 2001
By Julie Johnsson

Legacy.com, an online obituary site, seemed headed for the dot.com graveyard when last year's tech crash grounded its plans to build and host Web sites for funeral homes.

But the Evanston venture has found new life as an interactive publisher, capitalizing on the backing and newspaper connections of its largest investor, Chicago media conglomerate Tribune Co.

The strategic shift hasn't been easy. The company slashed its head count 75% to about 15 full-time employees last year as it struggled to find a workable business model.

"The funeral home model only works if you have a lot of time and a lot of cash," says Stopher Bartol, president and CEO of Legacy.com, which had neither, as it had raised only $8 million from investors. "Our fear: A lot of time meant a decade."

Legacy.com has been reborn as a market leader in its new niche: hosting customized obituary sites for newspapers, posting obituaries online and offering grieving families and friends a chance to publish the deceased's life story and photographs or to establish "guest books" — message boards where people from around the world can post condolences.

The dot.com pilot-tested its new model on the Chicago Tribune's Web site in February, and has since signed up 20 other newspapers. They include some of the nation's leading dailies: the Los Angeles Times, Orlando Sentinel and Boston Globe, which is slated to launch its Legacy-hosted site on Monday.

"The Tribune connection gives them a ton of cachet," says Brian Hieggelke, president of Chicago's New City Communications, which publishes the alternative weekly New City in print and online. "Unless other daily newspapers decide to get into that business competitively, it gives them an almost insurmountable head start."

The Evanston upstart is in talks to sign up another 30 to 40 newspapers for its service by yearend, and estimates its sites' traffic — 375,000 visitors and 2 million page views during July — will double in the next 90 days.

Newspapers view Legacy as a link to a new media phenomenon: the growing numbers of ordinary people who use the Internet to share life events with a broad audience.

Beyond Chicago

In fact, Legacy last week agreed to develop a pilot project with a newspaper outside Chicago to post engagement and wedding announcements online. "But we want to do this (obituaries) really, really well first before we get too interested in other categories," Mr. Bartol says.

For now, Legacy is broadening its reach by creating new revenue streams for its newspaper partners at a time when ad sales are slumping badly.

The Tribune's obit site, for example, draws 35,000 unique visitors monthly and generates revenues "in the six figures annually, at this point, and growing," says Owen Youngman, vice-president of development for the Tribune. "It's real money."

That's because Legacy and newspapers split all sales from the sites. Families pay $7.50 to post an online death notice, $49 to establish a permanent guest book (provided free for two months with all obituaries) and $195 for a life story.

Legacy's Mr. Bartol won't disclose much about Legacy's finances or its revenue-sharing arrangements with the newspapers. However, he says the company's total revenues will fall below $5 million this year; it expects to break even in 2002. Its newspaper contracts, he says, contain terms more generous than the 10%-to-15% share typically paid to partners by most Web affiliate programs.

But the potential market is clear. About 98% of families who purchase death notices at affiliated newspapers also opt to post them on the Internet, sources say. In fact, more than 7,000 notices were published on Legacy sites last month, a number that Mr. Bartol estimates will triple over the next 90 days as his company launches other newspaper sites.

"Most families find this a nice addition, especially when they receive a personal note from an acquaintance who's across the country," says Michael Heeney, funeral director at Evergreen Park's Heeney-Laughlin Funeral Directors.

Changing habits

But customers have been slower to adopt Legacy's other interactive services. Fewer than 10% also establish a permanent guest book and/or publish a life story, although this number is growing, Mr. Bartol contends.

"The big challenge is to condition people to look to the Web for communication when people die," says New City's Mr. Hieggelke. "We have 100 years of experience looking to newspapers for obituaries."

The venture is the brainchild of Frank Cheswick, a Chicago businessman who thought there'd be a market for paying tribute to the dead online. He attracted seed money from North Shore businessman Matthew Spagat, and they hired Mr. Bartol, then a consultant, to start up a company in 1998.

An internal project team at the Chicago Tribune, meanwhile, was developing plans for a similar business.

"We called it death.com as a joke," says Mr. Youngman, who oversaw the project as the Tribune's director of interactive media. "As we were in the home stretch, they came calling on Tribune Ventures, looking for funding. We saw the opportunity for someone else to do the heavy lifting."

Tribune purchased a one-third stake in Legacy in early 2000; USA Today publisher Gannett Co., based in Virginia, also holds a small stake. The two media giants helped persuade Legacy management to build their business around newspapers.

"Over the last year, it's become clearer and clearer that's the sweet spot," says Mr. Youngman.

©2001 by Crain Communications Inc.