The nonprofit online news sector may be vibrant, but it is small in scale. The Knight Foundation hosted a recent gathering of leaders from 12 of the most influential and well-funded websites. Together they employ 88 full-time staffers, which seems quite encouraging until one remembers that more than 15,000 journalists have left the newspaper industry in the last decade (and 13,000 left in the last four years alone.)

Another point of reference: while newspapers have been suffering an estimated $1.6 billion drop in editorial spending per year, foundations have contributed an estimated $180 million to fund new online ventures over a period of five years. Billions out, millions in.

In addition to the local websites, there are a handful of national Internet companies making major efforts to serve local communities. Examiner.com has sites in 233 cities, deploying 67,000 “examiners” to write on local topics. But these part-timers focus on lifestyle topics, such as entertainment, retail, and sports—not on hard news. AOL’s Patch has created local websites in 800 communities, hiring a reporter-editor in each location—meaning that Patch has likely hired more reporters than any other media organization in the past two years. In the wake of the AOL merger with Huffington Post, founder Arianna Huffington maintained that a major reason for her interest in this deal was to do more for local news and information. On the other hand, AOL executives in the past have stressed that to succeed financially, they must focus their efforts on affluent areas. And a single editor wearing many hats, even working with volunteer contributors, will usually not have time to do full-time enterprise reporting on par with the best of traditional urban dailies—though he or she may well match or better the efforts of local community newspapers. In other words, Examiner, Patch, and companies like them add tremendous value to the media ecosystem, but they also leave many crucial gaps unfilled.

Michele McLellan, who has studied the digital news scene comprehensively for the University of Missouri journalism school, writes, ‘The tired idea that born-on-the-Web news sites will replace traditional media is wrong-headed, and it’s past time that academic research and news reports reflect that.’

“Information Needs of Communities,” page 44:

J-Lab: the Institute for Interactive Journalism, a center that funds journalism innovation, studied the Philadelphia news “ecosystem” during sample weeks in 2006 and 2009. In a report on its findings, author Jan Shaffer, formerly an editor at the Inquirer, concluded that “available news about Philadelphia public affairs issues has dramatically diminished over the last three years by many measures: news hole, air time, story count, key word measurements.” She summarized interviews she did with civic leaders: “People in Philadelphia want more public affairs news than they are now able to get. They don’t think their daily newspapers are as good as the newspapers used to be. They want news that is more connected to their city.”

Raleigh-Durham, North Carolina: When Leonard Downie Jr. and Robert Kaiser published The News about the News in 2002, they lavished special praise on the Raleigh (NC) News & Observer:

“The News & Observer stands out from most American newspapers because of its ambition and its execution…. Raleigh, its region, and the state of North Carolina are all better communities because the News & Observer is their paper. The paper challenges resident officials to confront serious issues. it creates a sense of shared experience that strengthens the connections among individuals and institutions in its area. Not incidentally, it enables readers to know what’s happening that could affect their lives.”

But the News & Observer is no longer the same paper. Professor James Hamilton of Duke University (a consultant to the Future of Media project) studied changes at the News & Observer and found that its newsroom of 250 employees in 2004 had been reduced to 132 in 2009. By February 2011, the newsroom headcount was down to 103. Among the beats the paper stopped covering full time: Durham courts, Durham schools, legal affairs, agriculture, science, environment, and statewide public education. And among the losses in staff were a “workplace reporter” who once produced stories on illegal immigrants in North Carolina, visa violations, and companies that evaded unemployment tax payments; a full-time banking reporter who had written about predatory lending in the state and about Fannie Mae and Freddie Mac’s mortgage ties in the Research Triangle Park, a well-known high-tech research and development center; a full-time tech reporter who had covered the many high-tech companies in the Research Triangle Park; and a pharmaceutical reporter who covered local drug and health companies. “With all those full-time reporters gone, the odds of similar series and stories being written have declined,” Hamilton concluded.

Steven Waldman was senior advisor to the Chairman of the FCC and principal author of its report on the changing media landscape. He was chair of the Council on Foundations Working Group on Nonprofit Media and is a consultant to the Pew Research Center. Before that, he was the founder of Beliefnet.com and a national correspondent for Newsweek.