The failure of the recent uprising at OpenAI against Sam Altman and his brand of artificial intelligence didn’t surprise me. Altman clearly thinks capitalism should play a bigger role in the future of AI than an altruistic non-profit headed by a one-time soulmate. Capitalism always wins when you pit a non-profit against a capitalist. The trouble is capitalism may prove to be as incompatible a partner to Altman’s cause as it is to journalism.

My views about the for-profit/non-profit schism at OpenAI and elsewhere comes from experience. In 2009 I tried to forge an odd-couple alliance between an innovative news non-profit and a for-profit company. It didn’t work.

The scope of Altman’s venture is far beyond anything I tried to accomplish in any of my ventures, and I’m not suggesting the two efforts are comparable. Altman’s the poster boy for a technology that’s being compared to the invention of electricity or the iPhone. In contrast, my little endeavor involved an alternative to a broken business model that gave journalism the existential crisis it now faces. But there’s an object lesson in my experience that anyone wrestling with the future of AI or journalism should consider.

David Greising, the deputy editor of the upstart Chicago News Cooperative, and Sharene Shariatzadeh, the business development director, hung the company's sign as the editor, James E. O'Shea, right, planned how to compete with The Chicago Tribune.Credit...Sally Ryan for The New York Times

A little background. In 2009, I cofounded the Chicago News Cooperative (CNC) on a shoestring after decades of experience in newsrooms, including years as managing editor at the Chicago Tribune and editor of the Los Angeles Times.

The CNC was an innovative effort to counter the declining tortures of the news industry. For just two dollars a week, we offered readers a chance to own the news as members of our co-operative, a status that would give them access to quality local news, our website, a political newsletter, and access to our reporters and editors. Despite our meager financial footings, we got off to a rousing start thanks to help from many people, such as Peter Osnos, my cofounder and a gifted journalist and publisher, and Chicago’s MacArthur Foundation, which gave the CNC a $500,000 seed money grant.

We also struck an alliance with the New York Times. The Times gave us a nice initial donation and agreed to pay us a monthly stipend to produce two pages of Chicago news for its Midwest edition twice a week. The deal with the Times marked the first time that the paper allowed editors not on its staff to originate and edit copy for its pages. The value of that partnership exceeded the money; the alliance gave us immediate credibility.

For the next two and one-half years, we produced some outstanding local journalism and embarked on a plan to turn that two-dollar-a-week audience into the source of the cash we would need. We hoped to grow our resources so we wouldn’t have to rely so heavily on the charity of our donors, a class that included many celebrated Chicago capitalists. We were ahead of the times, though and never got enough readers to pay the two dollars a week we sought for news, regardless of its quality.

My job went from being a proud editor to someone with a cup in his hand always asking people for money, which is something I hated. So, in 2011, I decided to change the narrative. I pitched my board on an idea to raise enough investment capital to buy the Chicago Sun-Times, a major market newspaper that had just emerged from bankruptcy hobbled by some investors that wanted out of the newspaper game.

I had an agenda that I’ve never really discussed publicly. I wanted to create a for-profit/non-profit hybrid corporation that would be a model for the future of journalism. At the time, the Sun-Times still had a modest cash flow. I wanted to invest the paper’s cash flow, which came from the printed newspaper, into the creation of a vibrant website for breaking news online, an approach that was just getting its legs. The non-profit arm would continue to seek grants to fund the expensive but crucial job of investigative and interpretive reporting. That kind of journalism may generate praise, but it doesn’t make money.

The idea worked partially. Despite some deep misgivings on my board, the capitalists, led by John Canning, a private equity investor in Chicago with a social conscious, raised the millions of dollars we needed to acquire the Sun-Times. The deal closed in 2012.

Things changed when a capitalist faction hired by the board smelled the prospects of profits in the deal. Suddenly there was little interest in the non-profit public service arm of the venture, which I continued to lead. Sadly, I had to close it a few months later. I could point fingers of blame here for the fate of the CNC including one pointed at myself. I was the CNC’s editor and CEO, and if things don’t work out, you take responsibility for the outcome and move on. That’s part of the job. I sold the intellectual property of the CNC to the Sun-Times and raised enough money to pay off any CNC debts. I convinced the paper to offer many of the CNC journalists jobs. Eventually, the greed of the capitalists killed the Sun-Times. Ironically, it’s now a non-profit.

But the CNC’s fate contains a lesson for the weird deal now evolving at OpenAI. It, too, started as a non-profit with the lofty social mission of developing artificial intelligence responsibly and doing no harm. Altman gradually began shifting OpenAI to rely more on capitalism, earning him a pink slip from his non-profit board but also triggering an uprising against his dismissal. Altman’s now back at Open AI and the capitalists are clearly in charge, but Altman’s victory could be pyrrhic, or come at great cost.

Generative AI is a revolutionary technology that will change the world and is evolving at lightening speed. With the capitalists in charge, the speed of AI development will probably accelerate as will its offspring, ChatGPT, the technology that generates text, images, and other media. In the big picture, that’s probably a good thing. For-profit operations are nimbler and lure better talent to wrestle with evolving technologies with so much potential. I witnessed how seeking investors is much easier than asking for donations.

There’s a downside to the capitalist approach, though. Dangling the prospects of huge profits on the horizon is a powerful incentive to diminish the importance of the social consequences of AI, which can be significant. Technological entrepreneurs such as Richard Boyd of Ultasim emphasize that human involvement is an essential guardrail to the nurturing of AI. My experience with my little venture proved the pure pursuit of profit to be reckless; it destroyed the goals of for-profit and non-profit alike. Sam Altman could learn the same lesson on a far larger and more significant scale.

Capitalists always champion organizations that make enough money to take care of investors’ interests first. The prevailing mantra is a company that doesn’t make money can’t afford public service. That is the same mistake the newspaper industry made.

Entrepreneurs founded many of America’s great newspapers with a sound mission: If you provide the public with the news and information it needed to make good decisions, you will get readers and advertisers and make money, which many publishers did. For a variety of complex reasons, the mantra changed, starting in the latter half of the last century. Newspaper capitalists flipped the industry’s mission on its head: Take care of investor interests first. The public service element became a dividend they enacted if the companies they ran could afford it. The result is the disaster in the news media we now see unfolding.

I believe in capitalism and think it’s the best way to run an economy. But capitalism must have a countervailing force. Unconstrained capitalism can rage out of control. Although Sam Altman and his followers won the war at OpenAI, the company and Artificial Intelligence need the voices of dissent that inhabited his non-profit wing to ensure the currency of capitalism – greed – doesn’t overwhelm AI’s vast potential for good. The capitalists now in charge should keep that lesson at the top of their minds. Otherwise, they invite more government regulation. But that’s another story.

—James O’Shea

James O’Shea is a longtime Chicago author and journalist who now lives in North Carolina. He is the author of several books and is the former editor of the Los Angeles Times and managing editor of the Chicago Tribune. Follow Jim’s Five W’s Substack here.

Substack

Altman’s Pyrrhic Victory