A NY Times Op Ed today suggests newspapers should move to a foundation-supported model and become 501(c)3 not-for-profits. Through that model, with its tax advantages, the newspaper business can survive, the authors write.
Their piece starts by quoting Thomas Jefferson, who said he’d prefer a country with newspapers and no government to the inverse. But I don’t know that Jefferson would have anticipated the rise of everything from public radio to the BBC, from Pajamas Media to The Huffington Post to hyper-local news websites. Many people have come to think of newspapers as the catch-alls of community information, with hard news in one section, opinion in another and service in yet other pages. They have been constructed that way, in large part, because of the business model. Advertisers were assured that news would be presented without slant so as to offend no potential customers, while in other sections relevant ads could appear next to relevant content -- food ads next to recipes, electronics in the tech section, car ads near car articles and so on. Of course, the biggest economic decline for newspapers comes from the classifieds, which for newspapers were like printing money.* Today, the newspapers’ cost structures -- everything from huge printing operations to sales staff and organizational hierarchies -- are in place to support such a business model, built up over decades in which their medium had near-monopoly status. Newspaper chains had achieved such levels of profitability that they competed with oil companies for investors' hearts on stock exchanges. Those investors were interested in whopping financial returns rather than any journalism the papers produced, or even seeing that the papers survived.
Yes, as Dave Morgan, Jeff Jarvis, my colleagues on Rebuilding Media, I and others have written, there are ways to use the newspapers’ cost structures to better effect. Sure, there’s a place for the foundation, or at least the not-for-profit contributory model. NPR is one example. The Knight Foundation is experimenting, to the tune of tens of millions of dollars, with endowing various news ventures to see what can survive and thrive. In a recent interview conducted for the We Media Game Changer awards, Knight president Alberto Ibarguen said the best measure of success for the funded projects would be whether those in the local communities used them for news and information, correcting himself when I challenged an earlier assertion he made that success would be spelled when mainstream news organizations used the nascent products. That kind of flexible thinking is unusual in the news business, and it came from a man who once ran the Miami Herald.
Just because the newspaper business as practiced isn’t feasible, that doesn’t mean news will die or that there is no model to support it. Many smaller blogs are serving their local communities and covering their costs -- without large staffs or printing presses, and minimal costs for infrastructure, distribution and sales. I’ve been told that certain free dailies, such as my hometown’s amNY, are profitable, even if their operations are taken as a standalone entity. Blogs and free newspapers run on a shoestring are not the only possible for-profit business models, either. News cannot always be expected to make a profit, on its own. Network news shows were, according to books I've read, originally seen as public service loss leaders, attracting viewers to entertainment shows that in turn funded the news programming. The news shows also helped the networks keep in the good graces of the FCC. (TV news shows apparently became profit machines only after producers in the Roone Arledge era showed that TV news magazines, morning shows and their ilk could bring the kinds of sponsor-pleasing audiences that would earn many millions of dollars.) Other news operations are also supported by separate operations. The Advocate, a leading voice of news for and about the gay and lesbian community, is funded at least in part by an entertainment company that produces movies and other fare. The news operations of Thomson Reuters are a fraction of the operational cost and income of the financial information parts of the company. Other news organizations are supported by events, custom or other paid media, syndication and other outlets.
I'm not saying foundation support of the news business is a bad idea, inasmuch as news is a public trust. They could be a healthy part of the mix. The foundation-supported news product could even feed the for-profit ventures, much like News 21 and Pro Publica are trying to do.
I don’t know in what fashion(s) the news business will survive, but I do have a very clear picture of how to make individual news operations work cost-effectively -- whether funded by benefactors, investors' capital or simply readers and ads. The ramp-up to profitability takes awhile but much less time than the five or more years it typically takes in the print world. Everything from GigaOm to PaidContent to Gawker Media to The Poliico, from MarketWatch to some very targeted products I’ve worked on under non-disclosure agreements are run as real businesses. Whatever you think of their journalism, they’re no less reliable, journalistically, than a panoply of so-called mainstream newspapers and tabloids I could cite.
There are for-profit models there, and great journalism can survive. Just maybe not in the newspaper business the way it’s been run.
* Classified ads were almost literally printing money. Every square inch of the page represented income, and profit. That was so much profit per square inch, in fact, that newspapers for years were in the very top in profitability -- up there competing with oil companies for the highest profit margins. And the list continues, with auto ads, real estate ads, coupons and other forms of informational advertising to a highly interested buying public that has been rendered, if not useless, at least much less cost-effective by a much more efficient Web, delivered online or on mobile devices.