The End of Power (39 page)

Short-route philanthropy has yet to reach the volumes of money that large foundations or, for that matter, government agencies churn out, but it has become a new paradigm for giving. Individual fundraising for projects of all sorts is possible through services like Kickstarter, which enables would-be recipients to promote their project for a period and receive funds only if they raise the target amount of commitments during that time. A measure of the appeal of this approach is its adoption—and use as a marketing tool—by corporate philanthropy, as firms like American Express, Target, JPMorgan Chase, and Pepsico hold contests where Internet voters decide which among competing projects the company will support.

In the new philanthropic realm, where old-line foundations represent just one end of the spectrum, with short-route individual gifts via Internet at the other, the space between is now populated by funds, services, and advisers that are making the philanthropy business more complex, plural, and decentralized. The Wealth & Giving Forum, Social Ventures Partners International, Philanthropy Workshop West, The Big Give, and many
more groups do everything from helping small foundations become more efficient and teaching newly wealthy individuals how to be hands-on philanthropists to advising on the design and monitoring of projects and creating forums for donors to compare experiences and practices.

This new, small-scale private giving is not poised to replace large foundations. Big-ticket funding by the Bill and Melinda Gates Foundation has given major impetus to worldwide research and treatment of diseases like malaria. A gift of $100 million from the Doris Duke Foundation in 2007 added 20 percent to the funding available for research on climate change for a five-year period. A gift in the same amount by Joan Kroc, heiress to the McDonald's fortune, turbo-charged America's National Public Radio. Medium and small-scale venture philanthropy, to say nothing of small-donor gifts via Kiva and similar platforms, address a different segment of the recipient community. By the same token, these new tools are not likely to displace official aid by government agencies. In fact, the scholars Raj Desai and Homi Kharas have found that Kiva and GlobalGiving donors base their choices on criteria that are different from those used by official aid administrators. Kiva donors, for instance, do not worry much about the overall political or economic situation of the country in which a recipient is located, so long as they like that person's project. This means that the new small-scale giving complements, rather than replaces, the old approach.
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But the new philanthropy has demolished the idea that only large foundations and public agencies have the expertise to design charitable projects and the efficiency to run them. The legal and bureaucratic obstacles that hamper official aid are well known; continuing waste, delays, and corruption have rekindled the long-standing critique of aid articulated by the economist P. T. Bauer at the London School of Economics and now given new voice by the Zambian economist Dambisa Moyo.
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Major private aid organizations such as the American Red Cross in the wake of the Southeast Asia tsunami in 2004 and Hurricane Katrina in the United States in 2005 have been dogged by scandal and public suspicion. This is not to say that the newer, smaller charities are immune to waste and corruption. In the wake of the January 2010 earthquake in Haiti, small donors flocked to make $5 donations by text message to Yéle Haiti, the relief organization of singer Wyclef Jean, only to learn several weeks later that the group was suspected of major mismanagement.

But the premise of venture philanthropy and the new short-route vehicles and platforms is that the collective expertise of donors and recipients—the parties at either end of the ultimate transaction—can be assembled in a
way that improves on what the old architecture of foundations and aid agencies have thus far delivered. As Tom Munnecke, head of Uplift Academy and a pioneer in new philanthropy, put it to a British newspaper: “Instead of having to go to one big, centralized bureaucracy such as the Red Cross or Oxfam, we can now go to the edge and take control.”
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At the edge, donors forged in Silicon Valley–style venture capitalism apply a broad range of tools from that milieu to vet projects, while would-be recipients make their proposals in the knowledge that they are competing with peers around the world. The boards and program officers of the big foundations and bureaucrats of large aid agencies have seen their influence lessened—whether by the new tools that aim to disintermediate them or by the celebrity activists, such as U2 frontman Bono or Senegalese singer Youssou N'Dour, who have used global media and communications platforms to advance their own views and priorities.

That said, the lines are not completely rigid, and the traditional players are capable of adapting—or at least trying to adapt. The Rockefeller Foundation, for example, is one of the original investors in the venture-philanthropy Acumen Fund. Desai and Kharas note that many major official agencies are splitting into specialized units in order to improve focus and reduce waste. Steps like these only confirm that the future of philanthropy is going to be more fragmented than in the past. Would Rockefeller, Carnegie, and their cohorts object? Not necessarily. “Rockefeller viewed his philanthropy through the lens of his business,” Acumen Fund founder Jacqueline Novogratz told
Forbes.
“It was highly centralized, it was top-down, it was based on experts and it was big picture.” Today a new class of entrepreneurs, finance and technology workers who forged their wealth in the networked economy, are simply applying their own business worldview to philanthropy, as Novogratz put it, “from the bottom-up of the market.”
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Andrew Carnegie favored “scientific philanthropy.” It is logical enough that as the “science” of business has pointed away from large centralized corporations to the advantage of small, fast, and networked new players, philanthropy would follow in the same way.

Around the world and especially in the most Internet-intense markets, the sources and repositories of the news were—and are—in a constant state of flux. The rapid and relentless digitization of information and communication has led to cohabitation on the same platforms by different types of
content (news, analysis, opinion, commercial, propaganda), emanating from different kinds of providers (news organizations, advertisers, advocates, individuals). Once-separate media with their own technological requirements and business cultures are converging: radio and newspapers now operate as much online as in their original format, and derive more and more of their revenue that way.

News consumers have watched their favorite newspaper attempt to preserve advertising and develop new revenue streams, find the right design and figure out the balance between free and paid Web content, staff bureaus in other cities and countries, allocate personnel between print and online operations, and so forth. Many have failed. In the United States, for example, an average of fifteen papers, or just about 1 percent of the industry, vanished each year from 2006 to 2011. In terms of circulation and advertising revenues, the US newspaper industry has shrunk 43 percent since 2000.
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Television viewers have seen their favorite shows made available on-demand and online through partnerships with preferred video companies. Radio listeners can now choose to get their music from satellite stations, or through new tailored services such as Spotify and Pandora. News addicts can seek out coverage from one or another source, letting Google or Yahoo filter it through their news aggregators, or perhaps letting their Facebook and Twitter contacts do the sorting, relying on whatever links those people see fit to share.

The implications of these developments, while much debated, are less clear. Journalists understandably spend considerable time fretting over the future of their profession; but where is power in the media, and in what direction is it shifting? The answer depends a great deal—perhaps more than in any other field—on where one looks for clues.

On the one hand, evidence abounds to support the argument that a small number of major firms control a very large share of global media. One count of dominant firms in the US media market placed their number at 50 in 1983, decreasing to 23 in 1990, six in 2000, and five thereafter.
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Certainly media mergers accelerated in the United States after 1990, and regulatory changes lifting bans on certain kinds of cross-platform media holdings helped spur this along. More recently, the purchase of the Dow Jones company, owners of the
Wall Street Journal
, by Rupert Murdoch's News Corp added to the heft of one of the seven top-tier international multi-media corporations identified by the Spanish sociologist and renowned media scholar Manuel Castells: Time Warner, Disney, News Corp, Bertelsmann, NBC, CBS, and Viacom.
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Whatever its effects on democracy, acquisition and consolidation in the media industry have yielded what might charitably be called mixed results as a business strategy. When Time Warner spun off AOL about a decade after its infamous merger, AOL's value was a fraction of the price reflected in the original $175 billion merger. And that result is not an exception: according to one analysis, from 2000 to 2009, the largest media conglomerates together wrote down more than $200 billion in assets. And these companies' poor stock performance relative to indexes such as the S&P predates the business destruction precipitated by the Internet. Media companies have a history of predominantly achieving growth through acquisition, but revenue growth has not necessarily translated into better stock performance and a certain kind of market power.
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On the other hand, power in the media business these days is increasingly wielded by technology firms and content-deliverers of one type or another. Castells, for example, adds to the top-tier list Google, Microsoft, Yahoo!, and Apple—all of them technology firms that have made significant moves into media of one kind or another—to form a snapshot of the “global core” of media operations today. Facebook should surely also be on it, especially after its 2012 initial public offering worth more than $100 billion. Indeed, by 2015, Facebook is expected to account for one out of every five digital display ads sold.
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Even in 2011, five technology companies (not including Apple and Amazon) accounted for 68 percent of all online ad revenue. The relations that exist between these giants are not solely cutthroat and competitive, in that they also involve case-by-case collaboration through local joint ventures in various countries and regions, content or platform development, distribution and advertising deals, and sometimes membership on one another's boards of directors.
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But does this mean power is concentrated—or more concentrated than before—in the media industry? First, the comparison is hard to establish since changing technology keeps shifting the boundaries of the media industry. Second, even if merger activity seems to have bred consolidation in some countries and formed some major international media empires, the choice of media in any given country is more abundant today than it was a few decades ago. Until the 1970s or 1980s, the state controlled most or all television and radio not only in developing countries and the Eastern bloc but also in much of Western Europe. Third, the consumer experience via the Internet has expanded the range of choices. The
New York Times
, for example, offers local news coverage for Chicago; the
Guardian
, based in London, has become a popular news site in the United States; the
National
,
published in Abu Dhabi, features highbrow culture coverage that draws its writers—and its audience—from well outside its local market. As the journalist Michael Kinsley observed in 2010, “Every English-language paper published anywhere in the world is now in competition with every other.”
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Finally, any argument that the media is more concentrated now than in the past should not forget that the American Big Three TV networks, the Associated Press news agency, and numerous other players long held dominant positions in their respective segments, and that is no longer the case.

But the nature of the media, with their appeal to our curiosity and belief systems, is such that their power lies as much in authority (of its writers and sources) and influence (on our views and decisions) as it does in business organization and company revenues. The newspaper considered “of record” in its national market—the
New York Times, Le Monde, El País
—is rarely the one with the largest circulation or revenue. Tabloids usually enjoy the largest readership. A subtle hierarchy places certain media outlets ahead of others with respect to credibility and prestige. Now, not only is that hierarchy under threat but the boundaries of journalism as a profession have fallen, as one after another upstart venture has shown itself able to compete with, if not surpass, established journalistic outlets. The Huffington Post, for example, which used to be derided by mainstream media as a rip-off aggregator, has beefed up its reporting staff and won the Pulitzer Prize for national reporting in 2012. Widespread digital and cellphone cameras and video recorders have catapulted “citizen journalism” to the forefront, with ordinary people competing with paparazzi for celebrity shots (which online brokers then market to the tabloids) or supplying raw evidence of police brutality or early images of a natural disaster. (It should be noted, however, that David Wood, the Pulitzer Prize–winner at The Huffington Post, has decades of reporting experience.) Meanwhile, the ease of publishing on the Internet has turned blogs on everything from electoral politics to fiscal policy, rock music, and business travel into credible and revenue-earning specialty sources that often outperform beat reporters and magazine analysts.