Tuesday, November 11, 2008

spot.us: how to abuse the non-profit designation...

oops... I had a misplaced link (should be ok now) D.
David has deleted some comments that were on on his blog -- what can I say?... seems cowardish to me...the links are now pointing to the entry itself, although if you look at the http address, you will see the comment number at the end; I put down the entire pass including the comment number at the bottom of each of my comments... just in case it all disappears... not that big a deal, I just like to have a good record of my blogs for the future);

anyways, you got all my comments here... so you can follow it all... (my FINAL is quoting from what was his last comment on his blog before he deleted it) D.


#1 "Freelancers don't make the profits!!!!! They simply get paid for their work. I don't know how else to explain this."

straight from the spot.us webpage (and I did point this out early on in my comments):

http://spot.us/pages/about (the heading before "General FAQ" and third bullet under it)

"Advice On Working With Spot.Us. How to bolster your freelance budget"
....(...) Donate 100% of the value of an investigation and you'll get exclusive rights". --> *somebody* would have to believe those stories are profitable, otherwise they would have no interest in acquiring *exclusive rights*

#2 "This would NEVER work on eBay." -- I said ebay *or similar* (I find it very hard to believe that there is *nothing* out there that could be used -- that it would have to be developed from scratch)

#3 "It does work within the nonprofit status." (not as far as I can see...) "Stop accusing me of being a tax cheat." --> I do believe the IRS will have a problem with this set-up but it would not have been *you* that would have profited from the non-profit... you just have a set-up with big problems... (I hope you somehow get to see them and correct them)

#4 "I can't waste any more time on this conversation. I'm busy trying to make a positive change." --> as I said, best of luck!


P.S. please don't email me again and/or submit comments for my blog (you may also want to abstain from giving your phone number and asking people you don't know to call you -- I thought that was pretty odd) D.



I do believe you have huge problems. In spite of that, I wish you best of luck! (I hope you come to see them and solve them one way or another).

I'll have to respond to your last comment on my blog only (just to clarify things for those who want to see my side of this -- I had already posted my prior comment on my blog also).

I would not have put anywhere this much time into this topic if you would not have emailed me and asked for more (I had already closed my online journalism blog).




David, you already told people they can acquire exclusive rights to any of the stories by simply refunding what the spot.us community put up upfront -- no "ifs" about it.

#1 "What if it's put on the open market and we got 1/4th value of what
the public put up front?" --> then you don't put it on the market...
they must be willing to pay MORE then what the community put up
(willingness to acquire *exclusive rights* implies that the buyer
believes there is profit to be made)

#2 "how do I distribute the money"--> as far as I can see, the only
option you would have is to put all the money thus gained back in the
pool of money to be used for stories that are worth reporting but are
not profitable (I said this in one of my prior comments)

#3 "What if we get 4x what the public put out?" --> great! the community
has that much more money to spend on worthy stories

#4 "Can I, as a nonprofit, let individuals profit as though it was an
investment from their tax deductible donation?" no individuals would
take the "profit" out of the community -- it would just be *all* used
for other stories! (this was in one of my prior comments)

#5 "The news organizations that, as you say, "stand to make a profit"
most likely won't." --> they would not be interested in having
*exclusive rights* to those stories if they didn't think they would make
a profit; if they *want exclusive rights* they need to pay fair market
price (otherwise, you are favoring them at the expense of the community)

#6 "implementing the kind of legal/software code framework to do what
you just described" --> I don't see why you would need to do anything of
the kind (you should be able to use ebay or similar)

#7 "But first it has to work." -- you need to make sure it works
*correctly* within the non-profit community set-up you chose (otherwise
the whole project would be compromised)

#8 "All I want is for the public and journalists to work together." It
would never really work if you don't make sure nobody is unfairly taking
advantage (e.g. free lancers walking away with profits without fairly
compensating the community)

#9 "All I want is for the public and journalists to work together. But
it won't if all we do is fight, accuse, etc." -- you want people to tell
you what problems they see, the way they see them... the worst would be
if they just didn't tell you (the problems would still be there)




regarding NPR (or any other non-profit) hiring free-lancers (one of David's comments to this entry): I don't see anything wrong with a non-profit hiring free-lancers or whatever (you need to hire all sorts of people to get things done); when somebody does "work for hire" they do not own the intellectual property that results; the *exclusive rights* -- what gives the legal rights to make any profit that can be made off of it -- remain with the employer (non-profit) D.

TRAILING CODA: please read David's last two comments to this entry! (6th and 7th)


I really don't know you at all so all I can go by is your project and the choices you make within it. It doesn't seem to be a difficult project to understand so I would be shocked if I indeed misunderstood it.

I do apologize if I misunderstand this but please explain why would you not have any sort of profit sharing between those who would stand to make money from a particular story (you did acknowledge this) and the spot.us community that made that possible?

Here is what I would have done: at the point where somebody expresses an interest in acquiring exclusive rights, an auction would ensue and the story would go to the highest bidder. This would mean that the rights would have been bought at fair market price and the spot.us community would have shared into the profits that can be made.

Anything less than this is favoring the buyers at the expense of the community, is it not?


P.S. something about my blogs and my comments in general: they are just my thoughts... sorry if they come across as accusing or anything of the sort... (they are not meant to be -- I'm just putting down what I am seeing and I do not benefit one way or another).

P.P.S. no, I don't think it's at all funny that people like Dan Gillmor didn't see the issues with your project ... ... even if your project may not be the only one that has these problems (makes me wonder if he really meant the things that made me decide to continue reading his blog) D.


CODA: I just need to ask...


I wonder if you felt that being so "friendly" (financially) towards the establishment -- allowing free lancers to just reimburse the original donors in exchange for exclusive rights to the profitable stories -- was necessary for getting that grant.

I mean... why did you set it up this way? Did you think you would not have had much of a chance to get the grant if your project would have been friendlier (financially) towards the spot.us community, instead?

I find it hard to believe you made this choice without any such pressure... it makes no sense...


OOPS!: looks like it's not quite over:


well, David *knows* exactly what the problem is… so I must have made it pretty clear:)

re: David: “Yes. A news organization that refunds the original donors does stand to make some money.”

so why is David giving away other people’s work and free interest loans for the financial gain of some news organization? he has wrongly likened his enterprise with kiva.org but there is no comparison: David’s enterprise is out to “help out” some news organizations (or free lancers or whatever) that are just out to make a profit… (not in any sort of dire straights).

why aren’t the profits at least shared with the community if a story turns out to be profitable? –> let it go towards other worthy stories that are not profitable but are worth reporting… why do the profits need to end up *all* in the pockets of somebody else? whose interest is served here?

people are expected to do free work and give donations but if profit can be made they are not entitled to any of it! David’s going to let some news organization or whatever come along and acquire *exclusive rights*… and walk away with whatever can be made off of it… looks like a classic case of delivering the suckers!


P.S. ohh, and I believe the IRS is going to have a problem with this set-up also (as I said, the way it is set-up looks like an abuse of the non-profit designation: David’s enterprise isn’t itself profiting but is allowing the buyers — news organizations or whatever — to do that *instead*; looks like a straw man situation)

P.P.S. I’d like to think that David and his endorsers are just naive but it’s hard to believe… I mean, he *knows* what he’s doing…

P.P.P.S. anyways, I’d like to wrap this up — I said pretty much everything I had to say… (I’m also closing my “online journalism blog” — I think I’ve seen enough of this) D.


FINAL: this is nuts! there is no way none of these people see the problem... heck! the IRS is going to take a look at this if they just don't want to see it...

MORE: Jon, I have no idea what is so difficult about this: David’s enterprise is betraying the community for the benefit of free lancers that are in no position to receive charity. (please see comment on my blog re: how Kiva.org is different) D.

EVEN MORE: (the comment is in not posted at this time: Nov. 16, 9:22 PM Eastern):

Hi,Hal! I'm shocked that you (as well as others) appear to not see the problem with this project: I believe it abuses the non-profit designation. Here are some exchanges that should make it clear (the comments to the entry on Dan Gillmor's blog: http://citmedia.org/blog/2008/11/10/spotus-launches/#comment-153882 and to the entry on my own blog are most relevant): https://www.blogger.com/comment.g?blogID=2411652386354465356&postID=4464240303655822960&isPopup=true


MORE: there are more comments to this entry: please read


sorry about the delay (was away yesterday)


I don’t know if you read my response to David’s comment on my blog (he posted his prior comment in three different places so I just answered on my blog). Here it is:

re: “Advice On Working With Spot.Us. How to bolster your freelance budget.

Donate 100% of the value of an investigation and you’ll get exclusive rights. You can do this at any time - all extra proceeds will be given back to community members to invest in another pitch.”


You must know that there is money to be made from a good piece of journalism well beyond the costs of production (that would be just breaking even and would never work as a business model). So why are you volunteering the work of others — and the profits that could be had on the open market — to “bolster” the “freelance budget” of who knows whom? (makes me think you are a mole and are abusing the non-profit designation)


you are welcome to show how the above is not “saving money” for some freelancers that are expected to rip the profits by selling the stuff in whatever form they would like (David’s enterprise is giving them *exclusive rights*) while the community that made it possible does not share into those profits in any way (they are just refunded their money — this is like asking people to put up investment money and the community to do all sort of work so that somebody can come along and make a profit from it and just refund *the investment money*… ; in case it can’t be sold to some freelancer … then, David’s enterprise would just call it a “donation,” and keep people’s money… (it *would* get the tax treatment as such but I believe this is an abuse of the non-profit designation because the donation is merely a default in case profits can’t be made)



EVEN MORE: please read comments to this entry
PS. the comment above was regarding spot.us (not the other projects talked about in the entry)D.

MORE: now, why am I not surprised you'd endorse this sort of thing? (it should be illegal as it is an abuse of the non-profit designation for financial gain) D.
... and get people like Dan Gillmor on board....

Dan, I can't believe you are part of this. Spot.us is really asking people for a free loan, unless they can't find a buyer for the stuff... in which case they would NOT return their money!; if they can sell the stuff, those who financed the enterprise have no financial stake in the profits -- this sort of thing should be illegal! (it is an abuse of the non-profit designation for financial gain) D.


DigiDave said...

I understand your concern and want to address it.

You'll be happy to know that Spot.us does not and never will cut a check to a news organization. That would be corporate subsidy. Instead - all pitches on spot.us are from independent freelancers. Essentially they are contracted to do civic journalism (it should also be noted that Spot.Us only supports pitches in categories like education, environment, etc - pop-journalism is not allowed).

If we don't find a buyer the content is still published on our site - and made available for free to anyone to republish (from bloggers to news organizations). We believe that since the content is commissioned by the public it belongs to the public). All donations are tax-deductible so the while we didn't find a buyer - it is a charitable gift, similar to a donation to NPR.

If the content is sold - then the proceeds go BACK to the original donors who get their money back in the form of credits to invest in another story.

All donations are tax-deductible as we are a non-profit project.

The goal here is not to be underhanded in any way. We want to be as transparent about the money as possible because we have a sincere public mission: To support independent journalism.

Never hesitate to contact me if you have more questions: David[at]spot[dot]us.

D. said...

re: "Advice On Working With Spot.Us. How to bolster your freelance budget.

Donate 100% of the value of an investigation and you'll get exclusive rights. You can do this at any time - all extra proceeds will be given back to community members to invest in another pitch."


You must know that there is money to be made from a good piece of journalism well beyond the costs of production (that would be just breaking even and would never work as a business model). So why are you volunteering the work of others -- and the profits that could be had on the open market -- to "bloster" the "freelance budget" of who knows whom? (makes me think you are a mole and are abusing the non-profit designation)


DigiDave said...

I'm sorry you think that I am a "mole."

I assure you I am not.

I am a very well-intentioned person who has dedicated his life to trying to figure out how meaningful journalism can sustain itself.

Yes. A news organization that refunds the original donors does stand to make some money. So does the person who stands to benefit from Kiva.org. Would you accuse them of being a "mole" for third world entrepreneurs?

I assure you there are far bigger villains out there on the the internet than me. I'm not sure who you are angry at - but I don't think it's really me.

D. said...


you haven't answered my question: "why are you volunteering the work of others -- and the profits that could be had on the open market -- to 'bolster' the 'freelance budget' of who knows whom?"

kiva.org is a completely different story. Have you seen the situation of those recipients? e.g. ". Their combined incomes are not enough to support their family, which includes three children, one of whom is employed in a garment factory while the others attend the local school."


I can certainly see how giving an interest free loan in such circumstance qualifies as charity. This is not at all the case for your enterprise: you are giving away free loans and free work for the benefit of *any* freelancer that comes along...


D. said...

P.S. I am not angry with anybody -- I'm just telling you what's wrong with your project (and I'm shocked that your advisors haven't pointed these problems out to you if you didn't see them yourself) D.

DigiDave said...


I think the reason it hasn't been pointed out is because it isn't really a problem.

The works of journalism that people are donating towards is civic journalism.

People donate to NPR - that is journalism.
NPR hires freelancers.

So a nonprofit can support a freelance journalist.

If a news organizations will reimburse the public then they are given back their original donations to invest in another story.

This is no different than a news organization hiring a freelancer. It happens ALL the time. Spot.Us is just a tool for them to find new talent that the public supports.

The public gets their money back in the form of credits to give to a different freelancer.

And as I've pointed out before: The VAST majority of incidences won't actually have this action. Most of the time people will donate towards a jouranlist and we will make that content free under a creative commons license.

In a comment on my blog (in response to you I wrote).

No. There is no conspiracy here. Again, I'm really just trying to do what I think is best and will work for all parties.

In fact: This aspect of spot.us was not part of the grant - so no, I did not make it "friendly" in order to get the grant.

I'm concerned that you continue to think I'm some evil guy out to make a buck or exploit people. If you knew me or anything about me - you'd realize that is simply not the case.

Truth is: There is very little money that can be made from online advertising. If I were to try and put ads on spot.us against the content the community funds: That would NEVER without seriously crazy advertisers willing to basically donate huge amounts of money, reimburse the original donors.

I also believe that most cases of spot.us won't result in reimbursement. It will simply be a donation towards producing content that is released under a Creative Commons license.

I need to consider this issue finished with - I have much bigger concerns and I can only explain this to you so many times. I realize you think there is a conspiracy or that I'm exploiting people. Believe me - that is not the case.


DigiDave said...


I just read over your comments again. I think you GROSSLY misunderstand what spot.us is and how it works.

As Jon noted: You are simply stringing together a bunch of big words and an accusation.

Don't you think it's funny that out ALL the people that have seen and heard about spot.us you are the only person in the entire world to hinge on this....?

Again: I hope there are no hard feelings, I just need to say my peace here since you seem to be accusing me of some kind of cronyism and as I've said before: I have nothing but the best of intentions here.


D. said...

answered in the body of th entry D.