The News Business

The Trouble with Non-Profit Journalism

By Jonathan Weber , 1-30-09

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.

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