Interesting post on Alan Mutter's blog about the role that non-profit outfits could have in the future of news delivery.
He slates the idea that non-profits would ever be able to replicate the newsgathering effort produced by the traditional media companies.
I don't buy it. I think Alan's forgotten that non-profit doesn't mean non-income generating.
Let's take the Herald and Times group as an example. Profit there is about £20 million a year. Turnover is about £80m. So let's assume that the cost of newsgathering and other costs is about £60m.
Let's discount inflation to make the figures easier. If the Herald and Times group became a not-for-profit enterprise and invested its surplus every year and got a return of 5% per annum, in 30 years it would create a fund of £1226m. That money could be turned into an endowment and invested. The annual return at 5% pa? About £60m a year.
In other words, after 30 years of investing its profits the Herald and Times group would be able to continue its newsgathering and associated operations without any advertising income, without any cover price and definitely without any paywalls.
Now that's just illustrative. Will the Herald and Evening Times still be around in 30 years? Who knows. Will they become not-for-profit organisations? I hope so.
My point is that the for-profit model has failed to deliver. The Herald's been around since 1783. It could have become a self-financing organisation operating for the public good decades ago. All that money paid to the Herald's various owners by readers and local advertisers. Years of investment. All gone in shareholder dividends.
It could have all been so different.