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April 01 2010

09:08

Lance Knobel: ‘Sour taste’ over Bay Citizen funding

A name and URL has been announced for the San Francisco based Bay Area News Project: the Bay Citizen to be launched at the end of May, with initial funding of $5 million from the Hellman Family Foundation.

But news entrepreneur and journalist Lance Knobel says its call for individual donor funding leaves a “sour taste” in his mouth.

If The Bay Citizen were really a grassroots effort it would make a lot of sense. But it’s not. I find it bordering on deceptive that The Bay Citizen is seeking individual donations without noting clearly that the Hellman Family Foundation gave $5 million in “seed” funding (that information can be found on the site’s FAQ). Warren Hellman, one of the richer people in the Bay Area, is chairman of the board.

(…)

I still want The Bay Citizen to be wonderful and to succeed. But there’s a very sour taste in my mouth. I still think our modest, bootstrap approach, building readers and community organically and then finding our way to sustainability once we have something to show is the right way to do things.

Bay Citizen’s membership director replies to his criticism in the comments.

Full post at this link…

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January 22 2010

17:01

A new convert to nonprofit journalism out west?

The start-up Bay Area News Project announced its new leadership team yesterday, as reported by the New York Times and paidContent, and it’s unfortunate that the most eye-catching bit of the news was CEO Lisa Frazier’s $400,000 salary. Yes, that’s a lot of money, and, like the news about Paul Steiger getting $570,000 to run ProPublica, it invites questions about what are appropriate salaries for a nonprofit.

But let’s set those aside for now, and let’s appreciate the news about the hiring of NewWest.net founder Jonathan Weber as editor-in-chief of BANP.

A year ago, Weber authored a thoughtful and well-argued, if withering, critique of the nonprofit model as a solution to the financial problems plaguing newspapers and journalism more generally.

Weber’s essay, entitled “The Trouble with Nonprofit Journalism,” dismisses the nonprofit model as an ill-suited to define what is newsworthy and unlikely to be sustainable. Here’s a passage:

[W]hen I started NewWest.Net in 2005 I considered going the non-profit route, but decided against it for what I still think are good reasons. I had to raise investment capital, which was arduous and way, way more time-consuming than I anticipated, but with luck I won’t have to do it again. Even more importantly, we are held to the brutal discipline of the market, which is very unpleasant a lot of the time but I think is ultimately a healthy thing. For the core problem that non-profit journalism will never be able to solve properly is deciding what is worthy. In a business, the customers ultimately decide what is worthy, for better and for worse. Managers at good companies can think for the long term and the greater good — and in fact there is clearly a market for thoughtful journalism — but as the VCs like to say, eventually the dogs have to eat the dog food. It keeps you honest. In a non-profit, either the board or the employees decide what is worthy — and why them?

Think Weber included the essay when he sent his resume to BANP founder Warren Hellman? Me, neither.

But this is not the place or time for told-you-so’s or questions about how much Weber’s being paid to run BANP. Rather, I take Weber’s conversion as validation of the nonprofit model as a place “to keep the spirit and tradition of socially responsible journalism alive,” as University of North Carolina professor Philip Meyer said in 2004.

In his own way, Weber said as much in the paidContent article when asked how a nonprofit differs from his work at NewWest:

In terms of profit versus non-profit, I’ve certainly been an advocate of the for-profit model. I do think there are for-profit models that work, but at the same time, the reality these days is that investment capital is not going into for-profit companies where the primary use of proceeds of that capital is to pay journalists. For whatever reasons, investors have not seen that as a big opportunity to date. There may be a few exceptions in narrow niches but certainly for general news there’s been very little investment of that type.

But I think there’s more to it than where the capital is flowing.

Since Weber wrote his essay just a year ago, the nonprofit model in journalism has undergone a full generation of transformation and growth. It used to be that nonprofits were oddities and one-offs, however successful financially or journalistically. ProPublica was really the only grand experiment anybody could name. But now, there are any number of start-ups that are using nonprofit status and the IRS 501(c)3 tax designation as a tool to create new business models that can sustain socially responsible journalism. In addition to BANP, we now have examples in Texas Tribune and the Chicago News Cooperative. And some of the early, community-based experiments such as MinnPost and Voice of San Diego seem to have held their own through the downturn in the economy while finding new ways to attract readers and donors.

It is said that converts become evangelists. I’m looking forward to seeing what Weber will do at BANP — and what role he will play within the nonprofit sector. As a co-founder of the now-defunct magazine The Industry Standard, Weber has a distinguished track record as an innovator, and I think he’ll find his new environs will be a hospitable place for his creativity.

Welcome aboard, Jonathan.

November 20 2009

14:00

The FTC should give nonprofit news a closer look

You know the old saying about how we’re from the government and we’re here to help you? That’s what came to mind as I read the Federal Trade Commission’s notice for its workshop on journalism in the digital age.

The notice makes the case that “news organizations,” which it notably does not attempt to define, are suffering at the hands of aggregators and other online actors that have drained the fun and profit from news gathering. Among the solutions the FTC wants to examine are some that would seem to support nonprofits — tax treatment and greater public funding, for example.

Memo to the FTC: No thanks.

It’s not that the FTC’s proposed solution are so bad, though I don’t much like the idea of government funding non-broadcast news operations. It’s that they provide fresh fodder for misinformed critics who have come to the conclusion that nonprofits pose a threat to for-profit news sites and journalism generally.

Mention “nonprofit” to some of these folks, and you’re likely get an allergic reaction. No sooner had San Francisco investor Warren Hellman ponied up $5 million for the Bay Area News Project than somebody complained errantly that the new venture would rely on unpaid college students, forcing other media to cut staff to remain competitive. News flash: Old media aren’t competitive in the online age, and that isn’t the fault of Warren Hellman or any nonprofit. Others fretted that donated money like Hellman’s comes with agendas and strings attached. And advertising dollars don’t?

But I digress. Nonprofits offer a viable solution to the decline of socially responsible journalism. By design, they put mission ahead of profit. And as a result, they will live or die based on their commitment to transparency. When the government gets involved, it introduces the appearance of special favors and the potential for political interference. That’s the death of transparency.

To be clear, I don’t object to the notion of government oversight. A little can go a long way — witness the FTC’s late-1990s antitrust investigation of Intel Corp. At the time, Intel dominated the computer chip market and, along with Microsoft Corp., seemed capable of devouring anything in its path, much as Google appears today. But just before trial began in 1999, Intel signed a settlement with the FTC in which it admitted no guilt and essentially agreed to be nicer to the smaller kids in the technology sandbox.

Based on this experience, we can assume that what the FTC workshop really hopes to accomplish is to once again nudge the bullies into being nicer. I would submit that there are better ways to accomplish this goal. One might be to bring in witnesses who can explain how the nonprofit model works and how it complements the work of for-profits in journalism and other sectors.

My nomination would go to Duke’s Jay Hamilton, author of All the News That’s Fit to Sell, which is cited in the FTC notice. In the book, Hamilton makes the case that journalism is becoming a public good. He writes:

The point here is that since individuals do not calculate the full benefit to society of their learning about politics, they will express less than optimal levels of interest in public affairs coverage and generate less than desirable demands for news about government.

I do agree with the FTC that the stakes are high because unlike the great oil and steel trusts of old, the big powerhouses of the Internet are in the business of ideas. As Bill Kovacic, then a law professor at George Washington University and now an FTC commissioner, told me during the Intel case: “I think the impact is so important because its impact on information services affects everything we do.”

The FTC workshop will be held in Washington Dec. 1-2.

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