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The financial problems of the newspaper business have produced all manner of hand-wringing about the danger to democracy allegedly inherent in the alleged fall of the fourth estate. I certainly don't argue with the proposition that good journalism is important to society - on the contrary. But the solution du jour - that newspapers should be run as non-profit organizations - strikes me as cop-out. We're only in the early innings of figuring out how new business models might replace the industrial-age structures of traditional newspapers, and we're already throwing in the towel. Warren Buffet has a few extra billion, so there's an easy fix!

The Trouble with Non-Profit Journalism

The financial problems of the newspaper business have produced all manner of hand-wringing about the danger to democracy allegedly inherent in the alleged fall of the fourth estate. I certainly don’t argue with the proposition that good journalism is important to society – on the contrary. But the solution du jour – that newspapers should be run as non-profit organizations – strikes me as cop-out. We’re only in the early innings of figuring out how new business models might replace the industrial-age structures of traditional newspapers, and we’re already throwing in the towel. Warren Buffet has a few extra billion, so there’s an easy fix!

In a recent op-ed in the New York Times, two portfolio managers from Yale, David Swensen and Michael Schmidt, argue that newspapers should be organized like universities, with non-profit status and large endowments. They set up their point with what, for money guys, should be an obvious fallacy: equating the current fiscal problems of debt-laden newspaper companies with the overall health of the news industry. The daily newspaper business certainly has existential problems, but statements like “average profit margins at The Washington Post over the past five years have been about 25 percent less than what they had been in the previous 15 years” mean very little in themselves.

Neither do statements like “news organizations have cut costs, with grave consequences.” The only grave consequences cited are staff cuts at big newspapers, and that the number of foreign correspondents at U.S. newspapers has fallen significantly. But why would the quality or quantity of reportage from overseas be measured by the number of full-time overseas correspondents employed by American newspapers? Frankly, access to quality foreign coverage has by any measure increased dramatically in recent years, thanks to the Internet.

They go on to state flatly that “advertising revenues that newspaper Web sites generate are not enough to sustain robust news coverage.” That might be true at the moment, but does that mean it’s a truth? Has any newspaper actually made the Web enough of a priority to even test that proposition fully? And how is “robust” defined anyway? Outside of New York and Washington and a few other big cities, it doesn’t describe the newsgathering efforts of most daily newspapers to begin with.

So the model they are proposing is…Yale. Now as a Wesleyan graduate, I have my biases against Yale, but that aside, it’s almost funny to read that “just as endowed educational institutions charge tuition, endowed newspapers would generate incremental revenues from hard-copy sales and online subscriptions.” At Yale (and Wesleyan) that “incremental revenue” runs about $50,000 per student per year, which the institution can charge because it is perceived as a sure ticket to the upper class. Elite universities with big endowments controlled by boards of directors of the said-same upper class – that hardly seems the model for scrappy watchdogs of democracy.

Steve Coll of The New Yorker, whose work I generally admire, endorses the Swensen/ Schmidt approach, with some added nonsense of his own. He takes as a given the premise that the (pre-Internet) newsroom structures of the past half-century are the best possible structures for all time. He also laments the decline of the foreign bureau – a lament I’d wager is shared mainly by other former foreign bureau correspondents.

Meanwhile, at a more proletarian level, new online news organizations like MinnPost and Voice of San Diego have pursued a non-profit approach, with some success, scraping by on grants and public-radio-style patronage. That’s great, and I truly appreciate their excellent work and entrepreneurial effort. But what happens when “saving journalism” is no longer a cause of the moment? How can a news organization properly go about its business when it’s constantly on bended knee looking for funders? When my friend David Brewster, founder of Seattle’s Crosscut.com, told me he was going non-profit, I saw his logic, but I was still disappointed.

I certainly have a dog in this fight: when I started NewWest.Net in 2005 I considered going the non-profit route, but decided against it for what I still think are good reasons. I had to raise investment capital, which was arduous and way, way more time-consuming than I anticipated, but with luck I won’t have to do it again. Even more importantly, we are held to the brutal discipline of the market, which is very unpleasant a lot of the time but I think is ultimately a healthy thing. For the core problem that non-profit journalism will never be able to solve properly is deciding what is worthy. In a business, the customers ultimately decide what is worthy, for better and for worse. Managers at good companies can think for the long term and the greater good – and in fact there is clearly a market for thoughtful journalism – but as the VCs like to say, eventually the dogs have to eat the dog food. It keeps you honest. In a non-profit, either the board or the employees decide what is worthy – and why them?

Let me give a few examples. Does the non-profit newspaper cover sports? Why? How about movies? Surely the market is filling the need for sports and movie coverage. But if not movies, why theatre, or dance, or opera? How about personal finance? Do we need endowed newspapers to give us trendy advice about our personal spending and saving habits, when huge racks of books and countless magazines and Web sites all offer the same trendy advice? As Michael Hirschhorn ably noted in his Atlantic story about the future of the New York Times, the whole lifestyle end of the mainstream newspaper package throws an odd cog into the question of the public good.

Supposing the non-profit newspaper limited itself to serious, worthy public policy matters, with a sober non-partisan approach – and therefore had the readership that tends to go along with that. Circulation has been falling at newspapers for decades because people find them less useful and necessary. How many copies of the Warren Buffet Times would need to be sold to make that $200 million-a-year newsroom a worthwhile investment? What would happen when the managers went to Warren and said, you know, the numbers aren’t even close to panning out (even non-profits have to hit their numbers), so we’re going to have to pay attention to Britney – or maybe go online only. Would the foundation mission allow either?

Further, if these non-profits are going to sell ads – that “incremental revenue” is important, after all – isn’t that unfair to the myriad tax-paying online companies that are also trying to sell ads? As an entrepreneur, it’s hard enough to compete without facing subsidized rivals.

I think non-profit journalism has a place, maybe a very important place. Indeed, even as I write this I’m actively looking for ways to get non-profit support for some specific reporting projects. But let’s keep some perspective here. The newspaper industry has spent decades playing defense against the onrushing technological tide, and now that it’s being overwhelmed we are at a point of major change. But just because the old business model for news doesn’t work so well anymore doesn’t mean that no new models will emerge.

Here at NewWest.Net, we’re getting by with online advertising, a solid conference business, a few complimentary activities like online event calendars, and relentless effort to do a lot with a little. We think we’re going to do big things, and we have some more new business angles up our sleeve, but it will take a while. In the meantime wages aren’t what they were at, say, the Los Angeles Times (where I once worked), though they’re competitive with the local daily. Life is stressful, and we don’t have anywhere near the editorial resources we’d like to have. But in that regard our position is no different from countless other businesses in these difficult times. And the happy fact is that the last three months have been our best ever on the business side, despite the economy and the general ad-market meltdown.

Journalists, like most people, would like things in the future to resemble things in the past, and a gentle billionaire seems like a good enabler of the journalistic norms that we are all accustomed to. But before we commit to that path, I say, give the entrepreneurs a chance. New business approaches will, ultimately, be a much better guarantor of quality journalism – and democracy – than sugar daddies.

About Jonathan Weber

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When I first moved back home to Montana last year, people encouraged me to write about the experience. A year later, I finally understand why I couldn't do that at the time. It has taken a full year – a cycle through four very distinct seasons – to combat the writer’s block that paralyzed me from this simple task. It’s a strange thing, this connection to the land that drew me home. It informs everything I think, and it informs everything I do. It has such a hold on me that it required a year of penitence (for ever leaving in the first place) before it loosened its grip and my pen. What I finally realized is that, in order to leave in the first place, I had to shut off a part of my spirit to find the courage to go. But it has worked on me, this year and this land, and now my finally-addressed heartbreak of the first leaving, the first loss, so many years ago, has begun to heal. I am not sorry I left and yet I now understand the full toll that the leave-taking exacted on my psyche and my spirit.

11 comments

  1. Todd Wilkinson in Bozeman

    Jonathan—
    Well done. What some readers may not know, and I will remind them here, is that you are a thinker well ahead of the curve when it comes to contemplating the direction of “new media.” Many don’t know of your history with the LA Times and Industry Standard and the fact that you pen a column on media that appears in a newspaper in London.

    Though I am cut from the cloth of old school journalism and admit that I find much of “citizen journalism” and the blogosphere, especially the nature of anonymous posting and writing under pseudonyms, to be troubling and disconcerting, I greatly value your ruminations, and hope that you’ll write more on the subject.

    In spite of the corporatization and concentration of media, the actual trend is one of deconcentration, which has really put the grand old papers of the past in a bind. Just as foot-loose lone eagle business people no longer must live in the suburbs and commute to skyscrapers in the city—in the West they can make their commute digitally and remotely from their home office—the structure of journalism is going in the same direction, away from newsrooms in big-box office complexes that reside next to printing presses out back.

    What this portends for advertising I’m not sure, though at the end of the day the same rules of reporting still apply regardless of the medium on which it appears.

    Thanks again for this old school report. And keep up the good work.

  2. Jonathan:

    Well put, as usual. I wrote a story in the February issue of Oregon Business on the state’s small dailies and weeklies and came to some of the same conclusions. Small papers – whether online or in print – are weathering the recession and changes in the newspaper business for a number of reasons but not because they’re getting hand outs or going non profit. They are making it because they already run lean & mean, are privately held so aren’t accountable to Wall Street or public shareholders, never had the national or classified advertising that’s departed major dailies & figured out how to live without it, have a lock on news in the areas they serve and have diversified into contract printing, book publishing, Web properties, etc. I know of a handful of online community news ventures keeping those factors in mind as they start up – and they could look to NewWest.Net as an excellent example.

    Michelle Rafter
    Oregon Business – The Smalltown News, http://tiny.cc/v0th2

  3. Jonathan:

    RE: “Further, if these non-profits are going to sell ads – that “incremental revenue” is important, after all – isn’t that unfair to the myriad tax-paying online companies that are also trying to sell ads? As an entrepreneur, it’s hard enough to compete without facing subsidized rivals.”

    I really like New West, and your writing’s as good as ever. As a service to readers (and Romenesko), though, I think you might note that High Country News, a widely respected magazine about the West that’s been a nonprofit for many, many years, is a significant competitor of yours. It’s just a bit of context that might help readers understand what all is in play here.

    Anyway, best of luck with New West. It would be great news for all journalists if you made it work.

    John Mecklin
    former editor High Country News
    Editor in Chief, Miller-McCune (yes, another nonprofit magazine)

  4. J. Craig Anderson

    Jonathan –

    I appreciate where you’re coming from here, but I think some of the arguments you make against nonprofit newspapers apply tenfold to the for-profit ones. Example:

    “How can a news organization properly go about its business when it’s constantly on bended knee looking for funders?”

    The above sentence is actually the strongest argument against FOR-profit newspapers. When money’s tight, I’m concerned that the wants and needs of still-paying advertisers will seem to some publishers as more important than the wants and needs of the readers. I’ve noticed further erosion lately of the shoddily constructed wall between advertising and editorial, and while I am not 100 percent convinced that a non-profit model is the solution, I certainly don’t think it would do any harm to the quality of journalism. If anything, it would improve quality by minimizing what has long been for-profit journalism’s Achilles heel: advertiser butt-smooching.

  5. Thanks everyone for the kind words (Todd, you are too kind 😉 ) Michelle I think your points re local media are spot-on, thanks for that link.

    John, as to High Country News, I think it’s a very fine and important publication. It’s true they are a competitor at some level, though honestly I can’t think of a case where there was an ad deal that we wanted that went to HCN instead. Indeed, it’s more likely that an advertiser would buy both. I always did find it a little odd that HCN seemed to regard us as a threat; seems like non-profits should be supporting the greater eco-system, as it were, rather than defending turf. But in any event I continue to have very high regard for HCN and Betsy and Paul and Ray and hope we can find more ways to work together in the future.

    Craig, your point is well-taken. I can’t see we have been immune these issues. But I do think that ultimately the best way to retain your independence is to have a robust business, in which case it’s fairly easy to resist inappropriate advertiser pressure. I agree though that publishers too often are not in that position. I’d bet though that getting money from foundations is even more time-consuming than selling ads 😉

  6. I like NewWest.Net because it covers the physical territory and issues I’ve lived in and with most of my life. Given the choice, which is worse, no newspaper or a non-profit news paper? Maybe, especially on the internet, news is becoming a messy Socratic dialogue open to all comers sane or insane instead of a cut and dried story or description of events by a single person.

  7. With brevity; I cannot see yet myself what the future of newspapers and the so-called ” new media” looks like as newspapers ( and mainstream media in general) succumb to the financial pandemic. I do not see where the groping for new business models for journalism is leading us. But I do know one thing that is as certain as the Sun rising over eastern Montana tomorrow: Journalism as a vehicle for corporate profit is no different than pimping and prostitution. Newspapers should have never been run as for-profit vehicles in the first place, not to the extent they had become, anyway. When rewarding stockholders and appeasing Wall Street became more important than Who-What-Where-When-Why newsgathering and in depth investigation and providing the daily grist of society’s doings , the news “industry” began to self-corrupt. News should never be done for money. It is too vital a public service and essential organ to be trusted to the moneychangers and the userous. My visit to William Randolph Hearst’s lavish San Simeon Castle on the mid California coast was a shocker. I had no idea afore that WR Hearst was far wealthier in his day than Bill Gates is in ours . So I can look back and say we shoulda seen it coming, beginning with the Spanish American War , the Big Sellout Of News For Hire, using a newspaper as a sweat shop with a license to print money instead of performing a vital democratic service. Some of us look back no further than the ascension of Rupert Murdoch or Ted Turner , but we should. The Past is Prologue to the Future, is it not ? Medical Doctors used to take their Hippocratic oath seriously …I believe Publishers and their handlers should also take a Hypocritic Oath…to swear to do news in the public interest and not for profit. Is it too late ?

  8. So then, how do physicians and journalists make a living? Who pays them?

  9. Excellent piece Jonathan. Among my problems with the non-profit model is that is seems to be pushed by those who are pining away for the way things were, instead of how they are and how they are going to be. It’s simply unrealistic. I think we first need to redefine what our core mission is (who really believes we can still be all things to all people?) and not get hung up if have fewer foreign bureaus than we did back in the day. Nice piece JW.

  10. For profit or non profit, you still have to have a revenue stream. Are you not merely talking about what tax liabilities you have with your business model? And are taxes not, as VP Biden has said, a duty we should gladly shoulder? How can anyone support the “change” without having a burning desire to pay taxes?

    Years ago, I read a book by a reporter for the Missoulian that was an examination of the western Montana timber business. (He mostly missed the real story which was Clark Fork Logging, a company owned by all the larger mills, which bid and bought USFS timber with no competition, and then divied it up according to need to the multiple owners–anti trust, collusion, you name it–and somehow they were given a pass by the US Attorney for closing the company). The one statement the author made about the Lee Newspaper chain, and the Missoulian, was that it was expected to make a pre-tax profit of 40% of gross revenues. I do understand how Hearst acquired his fortune.

    The New West internet communication forum allows people to stay on top of their area of interest across a wide landscape, and on time, up to date. As New West grows and its readership expands, the revenue stream will expand accordingly. It will be a place to visit to take the temperature of the whole of West…as it is now, but with more detail. And it works. It has been a good idea that works. And as it works, other ideas of how to tweak it to make it more self sustaining will arise. A work in progress is perhaps what you could call it. A good work in progress. There are going to be a whole lot of people not working, with time on their hands, and sites like this are going to be used and watched. A good link to match employers and employees will probably grow on a site like this.

    It sort of seems to me that for profit and not for profit are end games, but you start by having revenue and keeping revenue and growing revenue. Who gets any surplus and how it is accounted for are not relevant to the readers. If it is a need for disclosure or intent as to what boxes to check for the government, and how you can report or not report, that sort of seems to me to be gaming the system and slanting the whole of the deal which will disenfranchise somebody or some ideas, and it think that is part of what has become fatal for the dead tree press. The one paper cities, with Congressional dispensations as to monopoly issues, and their ability to kill, and kill right now, any competition that strives to arise, in the end killed those papers. Big did not become better. I laughed only this morning when my two morning papers were out by the curb. They are not heavy enough now to have the inertia to make it past the parking grass strip. The daily danger is that a vesper might launch them, to later be read by someone in Rugby, N.D. long past their content being noted as “news.”

    I applaud the idea of this paper, this site, and the thoughts that are ongoing to improve it all the time. I wish you all well. To this point, job well done.

  11. This article and follow-on comments are the most thoughtful and respectful I’ve read on any topic in New West in a very long time. Thanks, everyone.