The recent track record of billionaires starting up or buying news organizations have been mixed to say the least.

You have developer Sam Zell's disastrous acquisition of Tribune Co., which is now operating under bankruptcy protection, and Dallas Mavericks owner Mark Cuban's investigative news site sharesleuth.com., which has attracted little following and much controversy since its start up. (See:)

On the other hand, Denver tycoon Philip Anschutz's investment in Examiner.com, a collection of tabloid newspapers and local news Web sites around the country, is making headway.

Enter Hawaii's richest man.

Earlier this month, eBay Inc. founder and philanthropist Pierre Omidyar announced plans to start his online news service covering public interest and civic matters affecting Honolulu. (See:)

It's part of his local start-up called Peer News Inc.

Omidyar, whose net worth has been estimated at $5.5 billion, said the news service will strictly online and will operated on a for-profit basis. Some see this as a trial run for other markets. (See:)

To be sure, Omidyar has been stingy with details of his new enterprise. He says he doesn't even have a name for it.

But a person familiar with the news service said that it will be a lean operation that will rely a lot on content provided by volunteer journalists which would be vetted by editors, who also would contribute stories for the news service.

Omidyar hinted at this when he first unveiled the news service, saying it's goal is to empower citizens and encourage "greater civic participation through media." (See:)

That sounds like something similar to the nonprofit Chi-Town Daily News that's operating in the Windy City. (See:)

The Daily News has a"Neighborhood Reporter Program" which relies on dozens of  citizen reporters to cover topics such as development, politics, crime, the art scene or education.

Until recently, the Daily News also had a paid staff of about three reporters and a budget of about $200,000 and was largely financed by donors and grants.

Those reporters and editors work closely with the volunteers and provide them with training in the form of monthly workshops on such journalism basics like interviewing techniques and writing skills.

Recently, however, the Daily News had to lay off its paid staff due to a funding shortfall. The service is still running thanks to content provided by its volunteer reporters.

Based on what little we know about Omidyar's news service, experts say it's difficult to gauge whether his model will be sustainable or not

Many of my fellow journalists also are skeptical of a business model that relies on contributions from unpaid volunteers. They wonder if its coverage will be fair or whether the volunteer reporters have enough expertise on the subjects on which they will write.

One place where Omidyar's news venture will likely make inroads is the classifieds. The newspapers' business  classified ads have been decimated by Internet sites like Craigslist.

Omidyar, who created eBay in 1995 while working in a spare room of his California townhouse, knows e-commerce as well as anybody and can tap the talents of the best programming minds that Silicon Valley has to offer.

It will be interesting to see what new wrinkle that he comes on this part of the newspaper business. No doubt, newspaper and Internet executives will watch these developments closely.

Tags: Chi-Town Daily News, citizen journalism, eBay Inc., Examiner.com, Mark Cuban, Philip Anschutz, Pierre Omidyar, Sam Zell, sharesleuth.com, Tribune Co.

This entry was posted on Friday, November 27th, 2009 at 6:03 pm and is filed under Biz Bites. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.