Who Will Pay for News?

By Timothy J. McNulty

News of the imminent closing of Editor & Publisher, the newspaper industry magazine, is definitely a sign of the times: there’s less and less of an industry to report on.
The staid and venerable trade publication could hardly keep up with the changes in advertising and circulation that have put traditional newspapers and magazines in freefall.
E&P has been around in one form or another since 1884. While it soberly reported on job changes and new technology, the editors also didn’t shrink from taking journalists to task, most notably for failing to question the rationale for the Iraq invasion.
But E&P became part of the story of the demise of the once-monopolistic newspaper industry; how even a trade publication cannot find the correct business model to remain profitable.
For several years now, newspaper and magazines have been laying off staff, paring pages and trying to devise ways to maintain regular readers and, hopefully, attract new ones. More than 15,000 journalists lost their jobs in 2009 alone. The New York Times, the gold standard of newspaper journalism, is reducing another 100 editorial positions by the end of the month.
Publishers and journalists have redesigned, redeployed and reinvented their products to attract younger audiences and entice advertisers who now spread their marketing dollars across a growing field of mostly electronic options. Last year, for the first time, more Americans got their news online than from newspaper and magazine subscriptions.
If the Internet is print publishers’ nemesis, they hope it also will be their savior.
One of the possible sources of revenue they are exploring is establishing pay walls for online access, or as it is often described, “monetizing digital content.”
Whether the fee is monthly or annually, so far only the Wall Street Journal, with its select audience of business readers, has been able to pull that off. Nonetheless, Rupert Murdoch, the owner of News Corp. which publishes the Journal and many other newspapers, is convinced that fees are the future.
“The old business model based mainly on advertising is dead…,” Murdoch told an FCC workshop on journalism and the Internet earlier this month. “In the new business model, we will be charging customers for the news we provide on our Internet sites.”
Back in September, the giant news aggregator Google informed the Newspaper Association of America that it was developing a click-for-fee program, or a “micropayment” system, where subscribers could pay anywhere from one cent to several dollars for individual news stories or other access. (The original micropayment idea was really “micro” in the hundredths or thousandths of a cent form for individual items. Google applied for the patent in 2004.)
Google has the heft to create buzz on new ideas, including this one based on “Google Checkout”. So micropayment thoughts quickly took off among industry writers. Visions of Google not only aggregating news but putting together “packages” of publications and seamlessly charging credit cards danced in their heads.
An analogous model for selling by the piece was Apple’s I-tunes, which developed the idea of paying for a single song for 99 cents that you could download on your computer. That was an amazing step, considering that not long ago, the music industry only allowed these options: turn on the radio or buy a record (or tape or CD) to listen in your own home.
Along the way, the Internet transformation saw computer users downloading music, legally and illegally, in various forms. Now downloading and sharing via MP3 players, laptops and cell phones makes it hard to imagine anything that limits choice.
Choice is the significant word in news as well as music. A major stumbling block to traditional newsgathering publication is that consumers are willing to pay only if there is a no alternative. So far, there are plenty of alternatives.
Despite the hope of finding a viable way to make newspapers profitable, I doubt there will ever again be just one business model to rely upon.
In a report titled “The Reconstruction of American Journalism,” Leonard Downie and Michael Schudson listed several possible avenues to re-energize the industry.
Not everyone will agree with their recommendations, but among the authors’ suggestions:
1. Changing IRS regulations to allow news organizations to operate at non-profit operations and received tax-deductible donations.
2. Encourage private philanthropists and foundations to support local news reporting.
3. Alter the philosophy of public radio and television to include more locally-oriented programming.
4. Encourage more universities and colleges to participate in news reporting activities following the lead of top journalism schools (including Northwestern University, where I teach) that report on community news and conduct their own investigations, what the authors call “accountability journalism.”
5. Create a national fund for local news using money from the FCC or broadcasters and others that use public airwaves.
The report, commissioned by the Columbia University School of Journalism, also suggests that journalists as well as governments increase the use of information collected by all levels of government and show readers how to access their public databases.
There is, obviously, no monopoly on gathering or distributing news. Along with millions of other news consumers, I am now accustomed to discovering for myself what I consider newsworthy.
I used to rely solely on the serendipity of newspaper or magazine editors selecting, editing and publishing. I might hear headlines on the radio or see a brief visual segment on television, but that only drove me to the print version of events for a fuller, more contextual, explanation.
Now I get less from print. I still enjoy the tactile feel of a newspaper, but I no longer think it sufficient and certainly not timely. Instead, I pick up news from alerts sent to my cell phone, from e-mails and links on social networks such as Facebook.
I scan the Internet not only for news but background information. I use links to go to original sources and to read or hear the cacophony of opinion. I suspect I am a fairly typical Internet user and, though the number of news publications has declined dramatically, the number of online newspaper readers has increased.
The overall impact on democracy isn’t yet clear. There is certainly more diversity of news and opinion; interactivity allows more awareness of events and government decision-making.
The Internet’s immediacy broadens an awareness of events around the globe. The protests after Iran’s allegedly fraudulent election, for instance, may have been reported by the correspondents who were still in the country, but they would not have had the “crowd-sourcing” impact of all the cell phone photos and text messages that were sent out while the demonstrations were underway.
Negatively, I believe, the problem of traditional news media’s decline is the lack of a common narrative about events and decisions. Readers and viewers may have disagreed with each other about what they saw or listened to, but they were all exposed to the same reports. The fracturing or diffusion of news and information now has many choosing to read or see only what they already are comfortable reading or seeing.
If nothing challenges beliefs or preconceptions, then the notion of common goals or understanding common threats is in danger.
Established publications seek a model that pays for an infrastructure that already exists, while others are appealing to non-profit and other civic foundations to subsidize or underwrite new, quality journalism. Is there salvation in philanthropy?
The large foundations, including the McCormick Foundation, and the John S. and James L. Knight Foundation have been providing grants for many newsgathering operations. The new Chicago News Cooperative received its initial funding from the John D. and Catherine T. MacArthur Foundation. These grants and programs are pushing ahead with new journalism models, including online news sites, local investigative projects, community or ethnic news services, and national or statewide investigative news operations.
Many of these may be boutique efforts that I doubt will be a panacea for traditional mass circulation publications, but they are broadening the public perception of newsgathering and the responsibility of citizens to inform themselves.
As for direct government sponsorship, there are many doubters (Murdoch called it a “chilling” suggestion) that governments provide public assistance to keep publications alive.
Still, there may be merit in using tax write-offs, employing the British model for the BBC, or relying on something similar to the U.S. government’s partial funding of public radio and television.
Many business and community models have been tried with limited success. The Pew Center for Civic Journalism funded pilot programs as early as 1993. Still, the search for a new business model is moving to ever newer combinations.
In addition, there is more than one storyline here. While large city newspapers are depressed and dying, a more optimistic picture is seen in community and small town publications. They have suffered reductions, but not near their big-city cousins. The reasons are worth exploring in a later posting.