Why It Matters that Pierre Omidyar is Doing a News Startup

pierre omidyar.pngPierre Omidyar, founder of eBay, is launching a for-profit news startup in Hawaii, where he and his family live. This is important news, and not just because he’s involved.

A few months ago Pierre and Randy Ching founded Peer News. Their first project was a Twitter-related experiment called Ginx, which didn’t get critical mass and is being closed.

Now they’ve announced Peer News’ more important move — a project aimed at creating the kind of local journalism that brings accountability and value to a community.

Pierre, in a note on the company blog, says he and his team are launching — they aim for early 2010 — based on deep research: “talking to a lot of people in the industry about journalism and how we might be able to have an impact, listening and learning as much as we can.”

I’m one of the people Pierre has talked with, but I’m not privy to the details of the new venture. In a conversation last evening, he did say this will be service combining professional journalists and citizen journalists in “a commercial model that hasn’t been tried yet.”

Tantalizing, no? Let’s focus for a second on the word “commercial,” because Pierre and team are going for something that seems to have fallen somewhat out of favor for local news startups, the notion that they can and should be profitable. Not-for-profits are springing up in various places, and while Pierre is happy to see them he also believes it’s essential to find solid for-profit models for sustainable media.

One message is for the local newspapers: Watch out. Pierre has analyzed the Hawaii media market and sees enough advertising money is going toward journalism in Honolulu “to fund a high quality operation” — but clearly not the kind that dominates the revenue stream today, namely the local newspapers.

Peer News will operate in the leanest possible way compatible with doing solid journalism and community information. It will involve social media in a big way as well. (The Omidyar Network, the investing and charitable arm of Pierre and his wife, Pam, has been deep into socially valuable media for a long time. Count on them bringing what they’ve learned into Peer News.)

Plainly, the Hawaii launch is a test bed, in part. If it works, expect more local versions in other places.

Peer News is looking for a founding editor. My advice has been to find someone local, if at all possible, but especially to find someone excellent. If you’re interested, here’s where you can find out more.

One of the people who’ll be talking to editorial candidates is Howard Weaver, a former vice president of news at McClatchy. Howard has been consulting with Peer News and offers some perspective on his own blog, including this:

I’m interested for a lot of reasons, but I’d sum it up this way: the new venture intends to demonstrate that a digitally native, technologically fluent web organization can profitably serve targeted readers who want sophisticated journalism focused on local civic affairs.

Maybe Pierre and his team have cracked part of the code for sustainable digital journalism. Maybe not. But the fact that they’re going to try, with some serious resources behind the effort, is great news.

So I’m looking forward to following the progress of Peer News. So should anyone who’s interested in the future of journalism.

(Note: The Omidyar Network was a seed funder of my long-ago Grassroots Media (Bayosphere) project. It lost money.)

YouTube Direct Needs a Payment System, Too

YouTube Direct is a platform to let online content providers, especially news organizations:

embed the upload functionality of YouTube directly into your own site, enabling your organization to request, review, and re-broadcast user-submitted videos with ease. News organizations can ask for citizen reporting; nonprofits can call-out for support videos around social campaigns; businesses can ask users to submit promotional videos about your brand.

Essentially this lets anyone create the equivalent of CNN’s iReport operation. It’s a smart move by YouTube, and a welcome one in many respects.

But it’s the equivalent of iReport in another way that’s just as unfortunate as the original: no compensation for the video creators apart from a pat on the back.

In fact, it’s worse than that. Look at the terms of service at Channel 7 in Boston, one of YouTube’s partners, which include the following:

(W)hen you submit or post any material, you are granting us, and anyone authorized by us, a royalty-free, perpetual, irrevocable, non-exclusive, unrestricted, worldwide license to use, copy, modify, transmit, sell, exploit, create derivative works from, distribute and/or publicly perform or display such material, in whole or in part, in any manner or medium, now known or hereafter developed, for any purpose. The foregoing grant shall include the right to exploit any proprietary rights in such posting or submission, including, but not limited to, rights under copyright, trademark, service mark, patent or other intellectual property law under any relevant jurisdiction.

As far as I can tell, none of the partners has even suggested an intention to pay anyone for what they submit. Which makes the tool a giveaway for the creator — and a windfall for the collector, not to mention YouTube, which cements its position in online video.

But there’s a silver lining. YouTube has open-sourced the platform. This means someone could add a feature the system desperately needs. I wrote about it a few months ago in this post.

To repeat what I said then, we need better ways:

to reward creators when it comes to breaking news, where news organizations derive enormous benefits from having the right image or video at the right time and too frequently get it for less than peanuts. Indeed, practically every news organization now invites its audience to submit pictures and videos, in return for which the submitters typically get zip.

Which is why we need a more robust marketplace than any I’ve seen so far, namely a real-time auction system.

The sites currently promoting citizen journalists’ work don’t offer anything of this sort, as far as I can tell. This isn’t to say I don’t like those sites, which include NowPublic and Demotix, because I like them a great deal. But someone needs to go further.

How would a real-time auction system work? The flow, I’d imagine, would go like this:

Photographer captures breaking news event on video or audio, and posts the work to the auction site. Potential buyers, especially media companies, get to see watermarked thumbnails and then start bidding. A time limit is enforced in each case. The winning bid goes to the journalist, minus a cut to the auction service.

The premium, then, would be on timeliness and authenticity. One or two images/videos would be likely to command relatively high prices, and everything else would be worth considerably less.

Eventually, someone will do this kind of business — which could also be useful for eyewitness text accounts of events. For the sake of the citizen journalists who are not getting what they deserve for their work, I hope it’s sooner than later.

This is worth working on, and fast, before the news industry decides it has found a nifty way to make money on other people’s work.

The Only ‘Journalism’ Subsidy We Need is in Bandwidth

Robert W. McChesney and John Nichols believe that “journalists deserve subsidies, too.” They argue that America is “nearing a point where we will no longer have more than minimal resources (relative to the nation’s size) dedicated to reporting the news.”

There’s every reason to dispute their woe-is-us assumption. There’s even more reason to say they are wildly off-base in calling for special subsidies for journalists.

The authors, longstanding activists in media reform, are exceedingly well-meaning. And they are more accurate than not when they say:

We seek to renew a rich if largely forgotten legacy of the American free-press tradition, one that speaks directly to today’s crisis. The First Amendment necessarily prohibits state censorship, but it does not prevent citizens from using their government to subsidize and spawn independent media.

Indeed, the post-colonial press system was built on massive postal and printing subsidies. The first generations of Americans never imagined that the market would provide sound or sufficient journalism. The notion was unthinkable. They established enlightened subsidies, which broadened the marketplace of ideas and enhanced and protected core freedoms. Their initiatives were essential to America’s progress.

If the authors had only pursued their logic, they’d have ended up at the only sensible conclusion — that taxpayers could well subsidize the equivalent of the postal and printing subsidies they celebrate (among many other infrastructure supports that helped get the news from one place to another, such as roads, never mind the variety of other government help that’s gone to news organizations over the past several centuries.

What would following their logic lead us to in a digital world? That’s easy: We should collectively install dark fiber to every home and business where it’s feasible to do so, and put fiber as close to the ones that are too remote to make sense otherwise. It should be “dark fiber” — that is, data lines not controlled by government but available for others to light up to provide services for users.

This would not be about journalism only, any more than building roads in the 18th and 19th and 20th centuries was about helping newspapers deliver their goods to people’s homes and businesses. It would be about boosting trade of services and information (for-profit and not-for-profit), one part of which would be media.

We are seeing an explosion of creativity and innovation in media and journalism right now. Entrepreneurs and big companies alike are experimenting in new forms of journalism and ways to pay for it.

We have never had so much high-quality coverage in some areas, such as technology, as we have today. We have never had so much truly local conversation that has high value as we have today. And we will have vastly more tomorrow.

We may well be losing, at least temporarily, some of what Alex Jones calls “accountability journalism” — hard-nosed reporting of what powerful institutions, including government, are doing with our money and, in some cases, our lives. But to assume it will disappear and not be replaced, especially given some of the experiments we’re seeing, is grossly premature.

But Nichols and McChesney make that worst-case assumption, and veer off to this conclusion:

Saving newspapers may be impossible. But we can save journalism. Step one is to begin debating ways for enlightened public subsidies to provide a competitive and independent digital news media. Also, we should greatly expand funding for public and community media, and establish policies that help convert dying daily newspapers into post-corporate low-profit news operations that realize the potential of the Internet. If we do so, journalism and democracy will not just survive. They will flourish.

We don’t need government support of this kind. It will lead us down a path that media reformers will rue: licensing of journalists, picking of winners and other pernicious outcomes.

Government surely does have a role, no question. But it should be to create the fundamental communications infrastructure on which tomorrow’s journalism can thrive.

Galactic Rights to Your Work Are Wrong Way to Go

Wall Street Journal: Lawyerese Goes Galactic as Contracts Try to Master the Universe – WSJ.com. Lawyers for years have added language to some contracts that stretches beyond the Earth’s atmosphere. But more and more people are encountering such everywhere-and-forever language as entertainment companies tap into amateur talent and try to anticipate every possible future stream of revenue.

Big Media companies have figured out that they can profit handsomely by persuading amateurs to make fools of themselves. That’s bad enough, but the really sleazy part of this is not rewarding the performers more fairly, if they reward them at all.

It’s one thing to host a website where others post their work and reserve rights to reuse that work, but still ensuring that the creators own the work in question. As long as everyone knows what’s going on, there’s no problem. It’s another thing to take this to wild extremes, as Hollywood does.

When you are in a position of taking something with what you’ve created to a big-media company, you need to recognize that they hold all the power. This is why we need better mechanisms for pushing some of the power back to the creators. I’m working on some ideas and will be sharing them here, soon.

Solutions for Journalism, or Re-Creating a Priesthood?

Leonard Downie Jr. and Michael Schudson (Washington Post op-ed): New-model journalism needs community support. American society must now take some collective responsibility for supporting news reporting — as society has, at much greater expense, for public education, health care, scientific advancement and cultural preservation, through varying combinations of philanthropy, subsidy and government policy. It may not be essential to save or promote any particular news medium, including print newspapers. What is paramount is preserving independent, original, credible reporting, whether or not it is profitable, and regardless of the medium in which it appears.

The sentiments behind this executive summary of a new report are fine ones. No one wants to see journalism disappear whether or not newspapers do.

But the authors’ solution is, in part, another example of asking taxpayers to fix problems we can solve ourselves.

Before continuing, I should note that Len Downie, former executive editor at the Washington Post, is a colleague at the Cronkite School at Arizona State University. I admire him and his work, and the report he and co-author, a professor of communication at Columbia University, have released is an excellent compendium of some of exciting new projects under way in the journalism sphere.

In fact, their wide-ranging look at the new entrants — people and institutions trying journalism and business experiments amid the failure of newspapers — could well have been the basis for an entirely different conclusion, namely that we’re making wonderful progress, than the recommendations they come up with.

The authors especially seem to crave government intervention at several levels even as they praise market solutions. (In his well-reasoned post today Jeff Jarvis says that the authors “are addressing the business problem of news without doing reporting on the business.” I agree with most of Jeff’s post but disagree in part on this point.)

Instead, as I read this, the authors effectively dismiss what they earlier surround with great praise, saying it’s not nearly enough to replace what we’re losing. Of course that’s true today (though there’s insufficient recognition of the deep and valuable news/information flow in important niche arenas that journalists rarely if ever covered in their monopoly days). It won’t be true in a few years if current trends persist.

Several of the recommendations make good sense (and are already happening in some cases), such as encouraging journalism schools to be part of the local media ecosystem in a more direct way; spurring philanthropy; and, a very good idea, persuading public broadcasting to turn its mission to a more local focus.

But when the authors call for collective action, watch out. What they’re talking about is using government. The only institutions that seem able to use government without being used are too-big-to-fail banks and military contractors; the rest of us fall into the inverse category. Journalists get government help at some peril.

For my money, the most problematic recommendation (among several mistaken ones) is the fifth:

A national Fund for Local News should be created with money the Federal Communications Commission now collects from or could impose on telecom users, television and radio broadcast licensees, or Internet service providers and administered in open competition through state Local News Fund Councils.

Whoa. Think about it. Take taxpayers’ money — this is a new tax we’re talking about, or diversion of current fees and taxes — and give it to councils that will pick winners, re-establishing a journalistic priesthood to replace the increasingly ingrown and unimaginative one we’ve had. Who’ll pick the councils, moreover? Government, that’s who, either directly or by proxy.

Now, government has long had a hand in supporting journalism, as I noted in this post a few months ago. Some of that support has been indirect, such as postal subsidies (though even those were targeted by intention). Others, which were never justified, included the odious 1970s law, still in effect, that let newspapers combine business operations in communities to preserve the illusion of competition.

The only government intervention I’d support at this point would be the one that’s apparently not on the table: a taxpayer-funded wiring of America, putting fiber-optic lines everywhere, or at least to every curb. Let private businesses and local institutions light it up. Nothing would do more to spur media development of all kinds.

Look, we definitely do have a problem in the journalism craft. The upcoming period will be messy, at best. Maybe there will be a time for intervention in a more “collective” and direct way on the news. Maybe, but not now.

Let’s watch the market work — a market that includes for-profit, not-for-profit, volunteer and all manner of new approaches, in addition to the remaking of some traditional methods. It’s increasingly clear to me that it is working.

Non-profit Media: What You Pay For (and Who Pays)

UPDATED

I’m a big fan of ProPublica, the not-for-profit organization that in the past year has become an important source of excellent journalism. I’m not a fan of the pay that’s going to the top people.

As Alan Mutter first reported this week, a fair chunk of the money ProPublica has raised is going toward some breathtaking paychecks. Paul Steiger, the editor in chief, took home a 2008 salary of $570,000, Mutter noted.

Steiger isn’t the only person there who’s doing well by doing good, according to ProPublica’s IRS disclosure (PDF, 2.7 MB). Steven Stephen Engelberg, the managing editor, pulled down more than $450,000 in salary total compensation, which includes $325,000 salary and (see comment below) almost $120,000 in relocation expenses. (Note: my apology to Engelberg for my original misstatement of his compensation as all salary.)

Both of these men are terrific journalists and leaders. That’s not in dispute. But their princely salaries, while entirely legal, send a message that ultimately detracts from the mission.

Richard Tofel is ProPublica’s general manager (he holds official posts of treasurer and secretary; he made just under $300,000 in 2008), and former Steiger colleague at the Journal.He justified Steiger’s pay in a comment on a Reuters blog, noting that Steiger had made more, including money from stock options, at the Journal. So what? The Journal was a huge organization by comparison to ProPublica, and it was part of a for-profit enterprise.

The salaries aren’t in the ballpark of what some of the biggest nonprofits pay — including stunning compensation at a few hospitals, megabucks arts institutions and big universities. But for the size of the operation, the ProPublica top-gun salaries are mind-boggling.

They can spin it any way they want, but they can’t really justify this kind of pay for people at a relatively small non-profit. In the end, this will hurt ProPublica, not help.

UPDATE

Tofel responds:

Dan, you’re more than entitled to your view, of course, and I have great respect for your work.  But this post is yet another indication of why people should make phone calls or emails before they finish reporting a story.  Three quick points: 1) Steve Engelberg’s salary at the end of 2008 was $325,000, not $450,000.  The “reportable compensation” on our Form 990 included relocation expenses, which we would have told you if you had checked.  2) My only point in the Reuters blog comment was to refute the point of that original post.  It alleged that Paul Steiger’s comp had increased 4% from 2006 at the Journal to 2008 at ProPublica  when in fact it fell 59%.  The difference seemed worth noting– and was again the consequence of publishing without checking.  3) While I do hold the corporate offices of treasurer and secretary, I’m employed as the general manager of ProPublica.

My response:

As noted in the corrected post, I got Engelberg’s money wrong, and major apologies on that. I should have read the IRS form more closely and/or called Tofel, as he rightly says.

What Steiger made as head of an enormous news operation at a for-profit company still doesn’t seem relevant to me. I was very well-compensated (more than I ever imagined I’d make as a writer when I started my print newspaper career) when I was a columnist at Knight Ridder. Since leaving in 2005, my employment compensation hasn’t reached half of what I got in salary and benefits during the apex of my time at the company.

So I believe the issue I raised is valid. According to Charity Navigator’s 2009 survey of CEO compensation at medium to large charities, the average CEO pay (including bonuses and expenses) in New York (the highest regionally), where ProPublica is based, was about $220,000 — which is less than half of what Steiger makes and a lot lower than Engelberg’s salary.

Again, I have the highest respect for what ProPublica and its leaders are doing. But I continue to believe that these salary levels are inappropriate, and damaging to this otherwise great enterprise in the long run.

AP’s Nonsensical News Protection System

Like many of us, Ed Felten at Freedom to Tinker was puzzled by the news-article registry system announced by AP last week. After taking a look at it, he concluded that, yes, it makes no sense whatever and isn’t worth the fretting that’s emanating from some quarters. Key quotes:

As far as I can tell, the underlying technology is based on hNews, a microformat for news, shown in the AP diagram, that was announced by AP and the Media Standards Trust two weeks before the recent AP announcement.

Unfortunately for AP, the hNews spec bears little resemblance to AP’s claims about it. hNews is a handy way of annotating news stories with information about the author, dateline, and so on. But it doesn’t “encapsulate” anything in a “wrapper”, nor does it do much of anything to facilitate metering, monitoring, or paywalls.

It seems that there is much less to the AP’s announcement than meets the eye. If there’s a story here, it’s in the mismatch between the modest and reasonable underlying technology, and AP’s grandiose claims for it.

The AP and its newspaper owners are starting to remind us the music industry and its attack-dog RIAA. That’s sad, in the extreme.

A Brazen Proposal to Re-Monopolize Newspaper Stories

UPDATED

My new definition for “brazen” starts with a pointer to a column by Cleveland Plain Dealer columnist Connie Schultz, who says that “Tighter copyright law could save newspapers” — a tirade against online news aggregation that fails in logic and honesty.

Maybe her Cleveland readers know this, but you might not, and there’s no disclosure in the column (though you will find it buried in a Schultz bio on the Plain Dealer website): Schultz is married to U.S. Sen. Sherrod Brown, an Ohio Democrat who is in a position to do something about her proposal. And if the column doesn’t qualify as lobbying, it’s awfully close. (UPDATE: My friend Jeff Jarvis discussed this issue in his blog post, where Schultz responded in the comments and drew this response from Jeff.)

Other people, notably Kathy Gill, have ably deconstructed some of the more egregious elements in Schultz’s piece. My own disgust with it is the sense of entitlement it reflects, from a journalist whose career rose in large part on the monopoly business model that enriched a few newspaper companies while ultimately impoverishing true public debate about important matters.

And a commenter on the column noted what appeared at the end of the column online, namely a list of links begging readers to send the story to the attention of friends and, ahem, online aggregators and social-networking sites, plus a permalink that further begs folks to link to the piece:

aggregators list

The entitlement Schultz expresses stems from her belief — also apparently irony-free — that newspapers have some fundamental right to survive, and her evidence of this is a (wonderful) series of articles by a Plain Dealer reporter that led to the ouster of a corrupt local sheriff):

(M)any of us wondered aloud how much longer newspapers could support this kind of journalism. It’s an anxiety that is graying hairlines in newsrooms across the country.

Journalists are not broken, but the business model that used to sustain the work we do is toeing the cliff. The Internet poses challenges we never anticipated. The question is: What will save us?

Her answer, relying on advice from brothers David and Daniel Marburger, respectively a newspaper lawyer and an Arkansas academic, would require a severe rewriting of copyright law. They’d let newspaper publishers and other content “originators” have sole rights to exploit the information, which sounds simple but is absurd on its face?

It’s not just impractical, given a world where we all have multiple ways to talk about what we’ve seen and multiple ways to find what others talk about. It’s also dangerous, because it would wound or wipe out much of what gives the Internet its journalistic value in the first place, namely linking and citation, which the the Marburgers call “unfair competition with unjust enrichment.”

To save newspapers’ monopoly profits, and to thereby save what’s left of newspaper journalism, these meddlers would severely wound journalism and crimp academic research — and create all kinds of other mischief in the public sphere.

Why? Because as newspaper journalists and editors have been doing for years, we all stand on each others’ shoulders in the creation of information that, at some point, becomes journalism. We observe. We discuss. We cite. We point. We quote. Then others pull together various pieces of this and we have news, commentary and more.

We are all “parasitic,” in the deliberately inflammatory word of the Marburgers and their credulous scribe. This is the very nature of how journalism and scholarship happen.

Schultz, whom I met several years ago and found intellectually impressive, shows none of that here. She demonstrates a shallow understanding of her own craft, and no grasp whatever about how a networked world can work for us all. As a former newspaper columnist, I’m embarrassed for her.

What Pays for Newspaper Journalism? Not the “Cover Price”

In “Is Free News Really Worth the Price?, Alan Cowell of the New York times writes:

The cover price of a newspaper acknowledges that news has a value and a price worth paying. Yet that idea sometimes seems remote to a Web-savvy generation brought up to believe that their laptops offer a portal to a cost-free universe.

Cowell’s point is muddled by reality. He’s making the same assumptions — and mistakes — that newspaper journalists have been making for a long time now. They don’t realize that they’ve already been, for practical purposes, giving away what they produce.

Cowell doesn’t mention that the advertising is the most important part of the financial equation in paying for journalism, not the cover price. It has been so for as long as he’s been a journalist. The word “Advertise” appears three times on this Web page (and “Advertisements” once), but not in Cowell’s column.

In most newspapers ads overwhelm the circulation revenues, the money people pay for subscriptions and single-copy sales. Newspaper publishers have trained readers to assume that the news is all but free.

As many folks have noted innumerable times, the monopoly/oligopoly model of news, when advertisers had few if any choices, is gone. Newspapers can’t extract the kinds of fat, unjustified profits they once did from advertisers anymore, especially on the Web, so they model of using monopoly profits to pay for some journalism doesn’t work anymore. This is sad for journalists, and in the short run for the public, but it’s also reality.

Cowell compounds his error by referring to the “cover price” of a newspaper, which is itself hugely misleading in most cases. The single-copy cover price isn’t close to what most people pay for newspapers, because most who buy the printed edition do so with subscriptions that are deeply discounted from the cover price. True, the Times costs more from a news rack than most other papers, but people who subscribe pay much less than the news-rack price there, too.

None of this is to say that journalism, or at least the journalism business, isn’t in trouble. It is. Nor am I saying that journalism doesn’t have value. It does.

We subscribe to the Times at home, gladly, and will continue to do so. (I own some NYT stock, a tiny amount that keeps losing value.) But we don’t pay anything close to the cost of the journalism, and never have. The Times’ problem isn’t so much that people don’t understand the value of what it produces journalistically; it’s that the paper conditioned everyone to have this misunderstanding in the first place. Now that economic conditions have changed, it’s asking everyone to fix the situation it helped create.

Saving Journalism, One Idea at a Time

True/Slant’s hybrid model (some* reporters find their own advertising sponsors) will save journalism! Or not.

The Huffington Post is creating tomorrow’s business model for journalism! Or not…

Northwestern University’s “computer nerds” will save journalism! Really?

Ultra-cheap netbooks could save the media industry! Umm…

Journalism Online LLC will save newspapers (!) by helping them charge for what they’ve been essentially giving away for 50 years. Could be.

The iPhone will revolutionize mobile journalism! Or not.

The recent panic over the demise of newspapers has led to a predictable flurry of omigod, now-what speculation. We’re being treated to one hype-filled piece after another about this or that startup or project that has the potential to save, revolutionize or do something really, really special to move us into the future of news and information.

Let’s take a deep breath, calm down and understand what’s going on here. There’s no way of knowing which of these worthy enterprises, products and projects — and hundreds or thousands more like them that already exist or will soon — will be around in a decade. The fact of their existence is what’s exciting, not their individual prospects.

We’ve become accustomed to a media world dominated by monopolies and oligopolies. So we — and especially the paid journalists who remain in the craft — tend to imagine that just a few big institutions will rise from the sad rubble of the journalism business.

That’s not where it’s going, at least not anytime soon. We’re heading into an incredibly messy but also wonderful period of innovation and experimentation that combines technology and people and pushes great and outlandish ideas into the real world. The result will a huge number of failures but also a large number of successes.

This is why I’ve grown more and more certain that we will not lack for a supply of quality news and information. This comes with two caveats. First, we need a solid supply of people who are willing to take some responsibility for getting quality news and information. Second, we can’t let government and/or big media take away the freedoms we now have to experiment.

Meanwhile, the next time you see or hear a story about this or that magic wand that someone is waving to save journalism, appreciate the entrepreneurial or technical or journalistic imagination that its founders have shown. But consider it just one small step along a long, long road to our future.