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Nov. 20, 2009, 9 a.m.

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.

POSTED     Nov. 20, 2009, 9 a.m.
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