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A New Horizon for the News

(The FT, by the way, has introduced a number of specialized services, like “China Confidential,” which offer inside information on high-value subjects to readers willing to pay a premium. This points to another potentially lucrative revenue source for news organizations.)

The Times site does offer much excellent content. Too often, though, it seems overwhelmed by gadgets and gizmos, features and fluff. Technologically in a class by itself, the paper has seemed less adept at grasping the Web’s potential to spotlight issues and stir debate. This summer, for instance, the blogosphere lit up over “The Great American Bubble Machine,” Matt Taibbi’s provocative Rolling Stone article about the political and financial power of Goldman Sachs. On the few occasions on which the Times took note of the story, it was with Olympian disdain. Imagine the stir it would have created had it hosted a Web forum on the piece under a headline like “Is Goldman Sachs a Bubble Machine?” In the long run, such features would, I think, draw far more traffic than word trains or puppy diaries.

Still, the Times seems likely to attract many readers even after it begins charging for content. In view of its unique place in American journalism, it seems certain to weather the current crisis. The same seems true of America’s other nationally read papers, The Wall Street Journal and The Washington Post. (The Los Angeles Times might be able to join them if it is able to find ways to exploit its own comparative advantage—coverage of the entertainment industry.) Many of the nation’s smaller papers have their own advantage—they’re the only news source in town—and many are thriving. It’s the large metropolitan dailies like The Boston Globe, The Baltimore Sun, and The Miami Herald that, contending with both large staffs and brisk competition, are the most endangered, and it’s widely feared that one or more will go under in the coming years.

Such a development would be catastrophic for the public. As gatherers and purveyors of information, newspapers are without peers, and the retrenchment they’re undergoing is seriously eroding their ability to enlighten and expose. At the same time, the industry’s travails are serving as a stimulus. A restless array of entrepreneurs, innovators, and idealists—taking advantage of the Internet’s low entry barriers—has emerged, testing new ways of delivering the news. Are any succeeding?

2.

So far, the attention paid to new Web ventures has focused mainly on the for-profit sector. Most of these sites are pursuing roughly the same strategy—building sufficient Web traffic to attract advertisers. And most are after the same market—the 25 million or so affluent, educated Americans who roughly overlap with the audience for NPR. Three of these enterprises in particular seem to be making a go of it. One is Slate. Founded in 1996 with the help of Microsoft, it initially struggled, but since being purchased by the Washington Post Company, in 2004, it has generally been profitable. Deriving 95 percent of its revenue from ads, Slate owes its success both to the Post‘s backing and to its own journalistic formula—sharply written contrarian pieces offered for free on its site and promoted with clever headlines (for example, “Where Are the Jewish Gangsters of Yesteryear? Or, what we can learn about ‘respectability’ from Bernie Madoff and Meyer Lansky”). In an effort to replicate Slate’s success, the Post in 2008 created the Slate Group, and since then it has introduced several spin-offs, including The Root (African- American affairs), The Big Money (business), and ForeignPolicy.com.

The online arm of Foreign Policy magazine, ForeignPolicy.com is in some ways the most interesting, offering free access to both punchy articles from the magazine and a roster of contentious, thoughtful blogs written by such disparate figures as the military reporter Thomas Ricks; the Harvard political scientist Stephen Walt, coauthor of The Israel Lobby and US Foreign Policy ; and Marc Lynch, a Middle East specialist at George Washington University. It also has offered some original reporting in the form of “The Cable,” Laura Rozen’s behind-the-scenes look at US foreign policy making. (In late August, however, it was announced that Rozen was leaving ForeignPolicy .com to work at Politico.) The model, according to executive editor Susan Glasser, is the newspaper Roll Call, which has long offered advertisers a cost-effective means of reaching a select Capitol Hill audience. Glasser says she’s optimistic but acknowledges that, to date, “We haven’t cracked the code.”

Politico seems to have. After not quite three years, Politico attracts on average about 3.2 million unique visitors a month. Its founders say it’s in the black, though by how much is difficult to say, since it’s owned by Allbritton Communications, a privately held, TV-rich conglomerate. Politico’s hundred-person staff works out of Allbritton’s office building in Arlington, Virginia, and it’s hard to separate Politico’s overhead from that of its parent. Fully dependent on ad revenue, Politico gets much of it from its print edition, which is published five times a week when Congress is in session and—distributed free of charge—has a circulation of 32,000. In other words, Politico, one of the Web’s success stories, remains in no small part dependent on print.

The one site that has turned a profit without the aid of print or a sponsor is Talking Points Memo. In nine years, Josh Marshall has built it from a one-man blog into a bustling political journal with 1.5 million unique visitors a month. TPM relies mainly on advertising—everything from Comcast to T-shirt companies—and its combination of low overhead and an engaged readership has enabled it to thrive. Over the summer, Marshall agreed for the first time to accept outside capital—between $500,000 and $1 million from a group of investors that includes Netscape founder Marc Andreessen. With it, he plans to expand his site from its current eleven employees to about twenty, with the possibility of adding more if the site’s traffic—and revenues—expand sufficiently.

The challenge TPM faces is evident from the experiences of a younger, flashier sibling. The Huffington Post seems in a state of constant motion. In just four years, it has conjured up a cast of bloggers numbering in the thousands, a Washington staff of seven, an investigative unit, and local editions in Chicago and New York. The company has been coy in discussing its earnings, saying only that it is profitable in some months and not profitable in others. In June, the company announced that it was replacing its CEO of the last two years, Betsy Morgan, with Eric Hippeau, one of its original investors. The reason, Arianna Huffington has said, is that the company was not sufficiently “monetizing the traffic.” Though ad revenue has been growing briskly, the company feels it needs to attract far more display advertising—a challenge facing all sites.

Of all the for-profit experiments out there, the most intriguing, perhaps, is Global Post. Launched in January with close to $10 million in start-up funds from private investors, this site already has seventy-four part-time correspondents in fifty countries. The co-founder and editorial chief, Charles Sennott, a former Boston Globe correspondent, says that the “void” created by the cutbacks in foreign reporting has created “an opportunity. We want to be one of the sites that Americans regularly go to when they think about the world.” In June, Sennott and a photographer spent nearly three weeks in Afghanistan, producing a multimedia medley of articles, podcasts, videos, and slide shows about the US fight against the Taliban. (To date, the site seems to lean more toward straight reporting than in-depth analysis, focusing on questions like “Who are the Taliban?” rather than “Should we be in Afghanistan?”)

The service does not come cheap: in addition to paying most of its correspondents $1,000 a month for four stories, it has a full-time staff of sixteen in Boston. To help meet that payroll, Global Post foresees three revenue streams: advertising, membership, and syndication. Of these, the last seems the most promising; already, it has signed contracts with ten papers to run its stories, including The Pittsburgh Post-Gazette (a five-figure deal) and The Newark Star-Ledger. In the course of a long phone conversation, Sennott grew animated as he described his experiment and its potential for radically transforming foreign reporting, offering global dispatches at a fraction of the rate charged by the AP. Yet as I listened, I couldn’t help but think of the huge sums needed to keep his operation afloat and to wonder where they’d come from. The same was true for the commercial sector as a whole. For all the impressive projects out there, their economic base seems tenuous, and my encounters with them left me feeling sobered by the obstacles they face.

3.

My inquiries into the nonprofit world, by contrast, left me heartened. Here I found all kinds of excited activity. Much of it, I discovered, had been set in motion by an Op-Ed piece that appeared in the Times in late January. David Swensen, the chief investment officer for Yale’s endowment management team, and Michael Schmidt, a financial analyst there, argued that in light of the struggles of newspapers, they should consider turning themselves into nonprofit endowed institutions, like universities. “Endowments,” they wrote, “would enhance newspapers’ autonomy while shielding them from the economic forces that are now tearing them down.” Taking the Times as an example, they estimated that, with a newsroom costing somewhat more than $200 million a year to run, and with some additional outlays for overhead, the paper would need an endowment of around $5 billion. “Enlightened philanthropists must act now or watch a vital component of American democracy fade into irrelevance,” they declared.

Swensen is widely known as an expert on university investing, and the article set off a storm of speculation. On his blog at The New Yorker, Steve Coll, calculating that The Washington Post (his former employer) would need an endowment of $2 billion, called on Warren Buffett to write a check to the paper in that sum. In Washington, Senator Benjamin Cardin introduced the Newspaper Revitalization Act, designed to make it easier for newspapers to qualify as nonprofits under federal law, and John Kerry convened hearings in the Senate on how to save America’s newspapers.

The image of the Times and the Post protected by huge endowments seems comforting indeed. Unfortunately, it’s entirely unrealistic. Turning those papers into nonprofits would require the Sulzbergers and the Grahams to voluntarily give away their wealth. Even if they were so moved, where would all those billions come from? They simply aren’t out there. In light of the dramatic fall-off in the value of Yale’s own endowment, Swensen’s proposal seems doubly unpersuasive.

Yet by highlighting the industry’s struggles, the article “sort of rang the bell,” I was told by John Thornton, an Austin-based venture capitalist turned philanthropist and news entrepreneur. Last year, Thornton, seeking investment opportunities in the news business, couldn’t find any. The golden era of commercial news, which had lasted from 1960 to 2005 and which had been based on the confluence of a booming population with an explosion in advertising, seemed gone for good. Where journalism is concerned, he came to believe, “you can’t serve God and Mammon at the same time.” Alarmed by the sharp decline in the number of journalists covering Texas politics, Thornton set out to raise money for a nonprofit online service. He didn’t get very far—until the Times article appeared.

In the months since, he’s been able to raise more than $1 million from wealthy friends, in addition to $1 million he’s put up himself, toward a goal of about $4 million. The Texas Tribune is scheduled to begin operations in November. Already, it’s snapped up some of the state’s top journalists, including Evan Smith, the respected former editor of Texas Monthly. Thornton has since become an evangelist for non-commercial news, urging his fellow philanthropists to invest in it because “the bang for the buck”—the satisfactions of improved coverage—is so high.

Scott Lewis, the CEO of Voice of San Diego, shares his enthusiasm. Founded in February 2005 by Buzz Woolley, a retired venture capitalist disturbed at the cutbacks taking place at The San Diego Union-Tribune, this community-based nonprofit Web site offers a daily dose of local and regional news and commentary. Its nine professional journalists have broken many stories, including the existence of a clandestine bonus ring at a San Diego development corporation. It does all this on an annual budget of $1 million. “If we could get to two or three million, we could do amazing things,” says Lewis, who, in addition to running the site, writes a popular political blog. And he thinks that’s very attainable. “I’m bullish that reporting can survive and even thrive in a nonprofit model,” he said. Currently, the site gets 40 percent of its revenue from foundations such as the Knight Foundation and the San Diego Foundation, 30 percent from large donors, and the rest from corporate sponsors and smaller donors giving $50 or $100. The potential of smaller donors to give more is huge, says Lewis, adding that “we’re being contacted by people from all around the country who want to start something like this.”

In the last two years, similar non-profit sites have sprung up in the Twin Cities, New Haven, Seattle, St. Louis, and Chicago. The same entrepreneurial spirit has led as well to a surge of interest in investigative reporting not seen since the days after Watergate. The standard-bearer here is ProPublica, the national team of investigators backed by a well-endowed club of donors, but there’s also been a proliferation of smaller start-ups, like Investigate West (based outside Seattle), the Watchdog Center (San Diego), and the Wisconsin Center for Investigative Journalism, all seeking to expose corrupt officials, corporate crime, and exploitative working conditions. Investigative reporting has also caught fire at the nation’s journalism schools, with institutes committed to teaching and supervising such work established at American, Brandeis, Boston University, and Columbia. Sheila Coronel, who runs the Columbia center, says that this year 120 students applied for the fifteen spots in her class —double the number of a year ago—a development she attributes to a new wave of idealism among America’s young.

In early July, the representatives of two dozen such centers met at Pocantico, the Rockefeller estate in Tarrytown, New York, to discuss ways of collaborating. In a unanimous resolution, they committed themselves to establishing, “for the first time ever, an Investigative News Network of nonprofit news publishers throughout the United States of America,” with a mission “to foster the highest quality investigative journalism, and to hold those in power accountable, at the local, national and international levels.” Following up, subcommittees are now studying ways to foster cooperation in conducting investigations, displaying work on the Web, and—most importantly—securing funding. “I’ve been doing investigating reporting for thirty years,” says Charles Lewis, the founder of the Center for Public Integrity and an architect of the new network, “and this is by far the most interesting time I’ve seen.”

There’s a big pool of money in the nonprofit world—we need to see if we can tap into it,” says Joel Kramer, the founder of MinnPost, the community-based site in the Twin Cities, who stresses how challenging it is to make an Internet news operation work. “Even on a nonprofit site, you have to find ways to make enough money to cover the costs.” To date, the funding of nonprofit journalism has been led by the Knight Foundation, under the direction of former Miami Herald publisher Alberto Ibargüen, with added support from Carnegie, Ford, MacArthur, and George Soros’s Open Society Institute. Benjamin Shute Jr. of the Rockefeller Brothers Fund, which hosted the Pocantico meeting, says that more foundations are showing interest, but, he warned, most

don’t see themselves in the sustaining business. They’re like venture capital firms—they like to get things started but then want to see them take on lives of their own. At least a significant proportion of income has to come from other sources.

When it comes to cultivating such sources, everyone looks to one organization for guidance: NPR. At a time when not only newspapers but also commercial broadcasters are struggling, NPR has thrived. In 2008, the cumulative weekly audience for its daily news shows increased by 9 percent, to a record 20.9 million listeners. Though not immune to the economic downturn—in December 2008, it eliminated sixty-four jobs, or 7 percent of its workforce, and in April, it cut thirteen more positions and announced five-day furloughs for all remaining staff—NPR remains robust enough to maintain seventeen bureaus abroad and another nineteen at home. To keep all that afloat, it draws on several money sources: its endowment, foundations, corporate underwriting, and dues and fees from its more than 860 member stations, all of which are noncommercial. This last stream is the largest, making up 43 percent of the total. Most of that money is raised from listeners during those annoying pledge drives. In short, NPR is supported mainly by those who actually consume its product—a huge advantage at a time of anemic advertising.

NPR is planning an ambitious campaign to boost the reporting capacities of its member stations. “We’re trying to raise money on behalf of not just NPR but journalism at local radio stations—to raise the level of reporting both on radio and the Web and to step up the coverage that local papers can’t produce,” I was told by Vivian Schiller, NPR’s chief executive. Eventually, she says, NPR hopes to connect these stations into a national network anchored by its Web site. Accomplishing this, Schiller says, would be expensive—the news operations at many public stations are primitive—“but not,” she adds, “as expensive as a start-up—we don’t need bricks and mortar.”

Listening to Schiller, I began to envision the outlines of a new type of news system in the United States, one rooted in the public radio stations that reach into nearly every town and county in the country. If the news-gathering abilities of these stations were truly fortified, they could help fill in the gaps in local news being left by the downsizing of daily papers. They could also provide nodes of collaboration for all those innovative Web sites out there, both for- and not-for-profit.

These sites and stations, in turn, could enter into relationships with daily newspapers. The information-gathering functions of those papers cannot be replaced, but, as their staffs shrink, they could receive a valuable boost from collaboration with nonprofits. The network could also provide a home for all those enterprising bloggers out there, drawing on their knack for instigation, indignation, and outrage, as well as a place for nonjournalistic organizations like Human Rights Watch and the National Security Archive that are carrying out their own forms of investigation and documentation. Finally, if PBS were to expand its operations and mesh them more tightly with NPR’s, there could finally begin to emerge in America a truly national noncommercial news system, akin to the BBC.

America will never have a BBC. The government funding isn’t there. What we do have, though, is a tremendous increase in enthusiasm and initiative that, in the age of the Internet, counts for more than transmitters and printing presses. The retreat of the giant corporations and conglomerates is creating the opportunity for fresh structures to emerge. It remains to be seen whether foundations, wealthy donors, and news consumers will step forward to support them. (Nonprofit Web sites and public broadcasters, it is worth noting, are, in effect, partly subsidized by the public, through the tax deductions taken for the grants and donations made to them.)

The opening won’t last forever. Lurking in the wings is a potential new class of media giants. Google, Yahoo, MSNBC, and AOL, all have vast resources that could finance a new oligopolistic push on the Web. Sheila Coronel, who directed an investigative reporting center in the Philippines before joining the Columbia faculty, sees parallels between what’s occurring here and what took place there after the fall of Marcos. As the old media monopolies crumbled, a host of smaller players rushed forward, offering a new plurality of voices. Before long, however, the rich and powerful regained control, and those new voices were snuffed out. “There’s a historic opportunity to create a noncommercial sector in the media in the United States,” Coronel says:

But my experience, after having undergone a somewhat similar transition, from controlled to free media after the fall of a dictatorship, is that the window is narrow. We need to grab the moment now, because if the old order begins to reassert itself, it will be a long time before such a moment comes again.

August 26,2009

Letters

What Future for the News?—An Exchange November 5, 2009

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