Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

No Future For Philanthropic News - The Math Doesn't Add Up

Posted by Tom Foremski - April 2, 2010

I'm not a supporter of philanthropic non-profit news ventures because I believe that we need to find a news business model that is self-sustaining and doesn't rely on handouts from rich people or fundraising. If it generates a reasonable profit it will encourage a range of competitors -- which is good for society.

San Francisco used to have more than a dozen newspapers yet today, it has just one major daily newspaper, the San Francisco Chronicle. It was losing about $1 million a week last year but this year it has managed to stem some of those losses.

As many other newspapers struggle with losses and their transition to an online business, philanthropic backed non-profit news ventures have gained a lot of attention as a possible way forward.

In the Bay Area, Warren Hellman, a leading billionaire philanthropist, has funded a high profile non-profit venture The Bay Citizen, with $5m. [Please see: Is the Future Of News Dependent On The Generosity Of Billionaire Philanthropists? - SVW]

Are philanthropic non-profit news organizations viable? Can enough funding be collected to support all the editors, reporters, etc, needed to produce high quality news reporting?

Alan Mutter, a former journalist and successful serial entrepreneur, recently crunched the numbers.

Mr Mutter quotes Rick Edmonds, an economist at the Poynter Institute, who estimates that newsrooms are spending $4.4 billion to fund their operations -- and these are severely depleted newsrooms. The SF Chronicle newsroom, for example, is down to less than 150 staff from more than 400 staff three years ago.

Over the past four years, Mr Mutter says that only $141 million has been raised by non-profit news ventures in the US. So even if funds from billionaire philanthropists were augmented with funds raising locally, from regular citizens, it would not be enough.

So, let's stop dreaming about a visit from the Non-Profit News Bunny and get serious about discovering some realistic possibilities.

I agree. It would be wonderful if Mr Hellman could fund an additional project whose goal is to develop a viable for-profit news media business model. Because if one can be found, we all benefit, we all can adapt it to our needs.

Let's learn how to fish rather than ask for fish -- after all, yesterday's newspaper is today's fishwrap.


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