The Future of News ... Ownership

The hand-wringing in the publishing industry continues as Chicago Tribune files for bankruptcy, The NY Times mortgages its building, and the rest of the dailies mortgage their souls by dumping hoards of journalists out on the street.

What seems like a lifetime ago during my tenure as head of interactive for New Jersey Press, my then boss, Bob McAllan (no relationship to the Scotch -- although he loved it) and I would spend hours talking about the role of the web and information. In 1994, we likened it to the evolution of the transportation industry; how newsrooms needed to evolve to embrace the newest dissemination system. Apparently, all that thought was bogged down in the ether and was just picked up by the New Yorker this week.

And I was non-plussed by its observation that while the byproduct of a paper continues to be consumed, people have ceased wanting to pay for it -- either directly or indirectly. Online advertising doesn't equate to print advertising rates. (This too was a problem manufactured by newspapers when they decided to "bundle in" online, basically devaluing the online ad. Betcha they wished they had a do-over for that dopey decision.)

No, what I found most interesting in the New Yorker piece, cleverly hidden at the bottom, was the suggestion that newspapers may have more success if they retool as non-profits. Frankly, I believe this idea has incredible merit. There is precedent for this -- a handful of small papers are non-profits, thereby becoming self-sustaining news ecosystems. Back in the day, privately held companies, which Wall Street would no doubt dismiss as might-as-well-be non-profits, thought it appropriate to have 10-15 percent margins. All worked well until former USA Today founder & publisher Al Neuharth, whose skills as a marketing genius far outweigh his news sense (despite columns he filled to prove otherwise) convinced the public to buy shares in his product. Suddenly all newspapers wanted to be public. And so they did. And now a decade later, each month, more resources* are spent creating powerpoints in preparation for board and analyst meetings -- than on long-term storygathering and retooling their digital strategies.

(I digress, but Sam Zell, the Trib's owner, publicly ridiculed the focus on long-term investigative projects, telling a New York investors’ conference, “I haven’t figured out how to cash in a Pulitzer Prize.”)

So here is the problem in a nutshell: the business model of news manufacturing has been badly hit by a disruptive technology, making near obsolete the old method of dissemination. However the new method of delivery doesn't generate the same amount of income that the old method does, and further, the people who own the newspaper, the investors and shareholders are a demanding and cranky bunch who want to distill news development into a commodity product that comes off an assembly line -- versus a community-based responsibility that is the Fourth Estate.

And, so why yes, Jeff Jarvis is partially right in that journalists did bring some of this on themselves by not embracing digital at the onset, so too are the owners to blame: Those who cashed out to become public, and those public owners who think being in the news business is about manufacturing dividends -- instead of news.

So maybe it is not the business model that needs to change, maybe it is the ownership model. Because a true news loving gent would comfort himself in knowing that Chicago's mayor was deathly afraid of the incessant questions asked by his reporters, and thus offered money to have those reporters rooted out. For a guy who really loves news, that would be payment enough.

* this is an anecdotal claim based on first hand sightings of burgeoning financial teams clamoring around photo copying machines just prior to investor meetings.