If the business model underpinning old media is broken, what could replace it? Gideon Haigh examines the new models, in the second chapter of his investigative special for Crikey on the future of the media.
In the classic film noir Deadline USA, Humphrey Bogart plays managing editor of The Day, a crusading New York newspaper menaced by a violent gangster and coveted by a competitor with designs on closing it. At the climactic moment, the racketeer seethes down a telephone line at Bogart: “Print that story and you’re a dead man.” Bogart holds the receiver towards the press and bawls: “That’s the press, baby. The press! And there’s nothing you can do about it. Nothing!” Then the coda: the last image is an evening shot of The Day’s offices, where the lights are being extinguished as a dirge-like theme plays.
The news media has always liked to think of itself in the former guise, and not so much of the latter reality. We’ve even made it official, with our firewalls between editorial and commercial, our independence charters and codes of conduct. But news is business, and business is business — and right now, business is as bad as can be. Historically, the profitability of media properties has moved in line with the economy: that is, when business has been buoyant, advertising has been healthy, and readers and viewers leisured enough to read and watch. Yet the past decade of economic plenty has been wretched for traditional media.
In hindsight, The Australian’s George Megalogenis thinks he heard something snap in the second half of 2001. “Housing prices were taking off, new cars were taking off, we were just about to start the second phase of the long boom after the tech wreck and the introduction of the GST,” he says. “But I still had mates in newspaper who were saying: ‘Jeez it’s tough.’ Suddenly the media was disconnecting from the rest of the real economy. It was the beginning of the decoupling.”
Fairfax’s board might still be shocked at the evaporation of those fabled rivers of classified gold, but Megalogenis could sense something amiss a decade ago when he relocated from Canberra to Melbourne and went looking for a house: “I very quickly realised that The Age was next to useless. What I did instead was send an email ‘round various estate agents specifying what we were looking for. Technology allowed me to circumvent The Age’s real estate monopoly. That meant anyone could.”
The advertising-based model of commercial media in which circulation and ratings enticed advertisers while advertisers kept newspapers affordable and television free-to-air had a good run — 150 years and more. Now that the growing ubiquity of the internet has blown the model to smithereens, the challenge is to find new models to fund new digital platforms.
Paywalls are the current hot ticket, although it’s more than 15 years since The Wall Street Journal introduced the first, and there have been plenty of misadventures along the way. Not until three years ago did a general newspaper, Newsday, seek to charge for access to its website, and the pace of adoption only picked up once Rupert Murdoch ushered in the first paywalls at News Corporation in July 2010 by cordoning off The Times and The Sunday Times.
“If I hadn’t already paid off my house, there is no fucking way I’d be doing this.”
Different paywalls have offered different degree of accessibility. Media properties with indispensable and perishable information, such as Britain’s Racing Post, can be most exclusive. The most popular form is a metered system, adopted at 84% of American newspapers according to a recent survey by the Newspaper Association of America, which demands a subscription only for higher levels of access; The New York Times, after a disastrous and quickly discontinued experiment with charging for marquee columnists, adopted such a model in March last year, allowing intermittent visitors to read 20 articles a month for free, recently reduced to 10, while giving print subscribers full and free digital access. It’s estimated that digital subscribers, already in excess of half a million, will outnumber print subscribers within two years.
“The New York papers are starting to get that virtuous circle between online and in-paper,” says The Australian’s editor-in-chief Chris Mitchell. “They’re starting to get it right. You’re seeing good circulation results at The New York Times and Wall Street Journal, good digital results are helping drive the in-paper circulations. If publishers are smart and they know what their papers stand for, they can use the two arms to help each other, to promote each other.”
Such success has encouraged Fairfax, long averse to paywalls, to moot its own metered model, a la The New York Times. The company believes that consumers will pay for quality made convenient, says executive Peter Gearin: “If you’re producing great journalism consistently across a range of platforms, and people want to consume it often enough, you would hope that people would be prepared to pay for the convenience of getting it at any time they choose in any form they wish. If you lock it up and ask them to pay for everything, they’ll never know what they’re missing out on. If you offer them a taste, I think they’ll pay for anything you give them.”
Not everyone is enamoured of paywalls. The Guardian, Daily Mail and Washington Post have held out against them, essentially imputing a value to the influence they gain from complete accessibility. Both newspapers have online circulations hugely larger and more dispersed than their print circulations, so tying print and digital subscriptions makes less sense to them. Some, too, allege that paywalls represents journalistic nostalgia for the days of their information monopolies. In testimony to the US Senate three years ago, new media mogul Arianna Huffington decried them as a pretence “that we can somehow hop into a journalistic Way Back Machine and return to a past that no longer exists and can’t be resurrected”.
NOW YOU BRING MONEY TO MEDIA
The founder of the Huffington Post herself is a kind of throwback, belonging to a lineage as old as news media: that of the wealthy proprietor. And in the search for funding models, none is quite so enduring or so appealingly simple as having a rich owner to provide a bankroll, or at least a backstop. If the new generation of media proprietors is different to the old, it is in one respect: virtually all have brought a pre-existing fortune to the media, rather than growing wealthy first through the industry itself. Huffington’s initial capital was partly from a lucrative 1998 divorce; Alexander Lebedev, owner of London’s Evening Standard and Independent, made his money in banking and investment; Carlos Slim Helú, investor in The New York Times, is a telco monopolist; Tyler Brûlé, founder of Monocle, made money from advertising and branding; Henry Lane Fox, founder of The Browser, was one of the six original investors in Lastminute.com.
Newspaper aficionados fell into a veritable swoon recently when Warren Buffett scooped up his home town paper, the Omaha World-Herald, and 63 other local organs. There are no Beaverbrooks or Northcliffes in this bunch, even if their investments do echo Orson Welles’ Citizen Kane celebrating his inheritance by deciding it “might be fun to run a newspaper”. It is media ownership not so much as vocation as avocation.
Examples have cropped up in Australia also. Since the middle of the past decade, more and less indulgent proprietors have been staking media properties both in print, like property developer Morry Schwartz at The Monthly and biotech pioneer Alan Finkel to Cosmos, and online, such as Wotif founder Graeme Wood at The Global Mail and the Group of Eight universities at The Conversation (aided by the federal government). Some are better heeled than others.
“If I hadn’t already paid off my house, there is no fucking way I’d be doing this,” says Wendy Harmer, prime mover, hands-on editor and chief writer of The Hoopla. ”Because it’s not for the faint-hearted.” As a point of honour, Harmer pays every contributor herself, and every so often eyes the Winnebago in her driveway — if all else fails, she’s selling it.
But this is the way of modern proprietorship. It used to be hard to get going, easier to keep going; now the opposite applies, digital media being destined to disappoint anyone investing in expectation of ample returns and fat margins. Which may mean that it attracts backing that is more like charitable dabbling, with all that that entails: philanthropists can be generous, but they like endowing a range of causes, their tastes change and their focuses shift.Industries in precipitous decline have, of course, often turned to government for remedy or at least financial assistance with adjustment. In The Death and Life of American Journalism, Robert McChesney and John Nichols make a strong case that “it is necessary for the state to institute policies to aggressively create and support journalism”. They argue that for much of the news media’s history, the state has actually been a silent partner, through preferential postal rates, printing subsidies, government advertising and the propagation of public libraries; it is for-profit corporate ownership that has the shorter, and in some ways less distinguished, history.
In Australia, at least one senior political figure, former finance minister Lindsay Tanner, has publicly advocated grants for journalism of public significance, such as investigative reporting.
Amid the twilight of American newspapers, illumination has also come from independent non-profit investigative journalism, supported by funding from philanthropic organisations such as the Ford Foundation, the Carnegie Foundation and the William and Flora Hewlett Foundation, abetted by tax deductibility. The Investigative News Network, a peak body founded three years ago, numbers 60 member organisations turning over more than $80 million a year.
The history of such centres has been chequered, and funding has waxed and waned, but bad news in the industry has helped their cause: there has been a ready supply of able manpower, and a growing sense of a gulf opening in the journalism of accountability. Since coming under the leadership of former Philadelphia Inquirer editor Robert Rosenthal four years ago, the CIR has become a formidable producer of multimedia news content, spinning off a local investigative unit, California Watch, and recently launching its own YouTube channel, The I Files. The CPI, now run by former American Public Media vice-president Bill Buzenburg, merged a couple of years ago with the Huffington Post Investigative Fund, and operates an investigative reporting website via the Centre for Public Integrity. The new glass of fashion is ProPublica, founded in 2008 by former Wall Street Journal managing editor Paul Steiger, which has won two Pulitzer Prizes for its investigative industry.
Such centres usually act in collaboration with established media organisations, including just lately The Wall Street Journal,The Washington Post, New York magazine and National Public Radio. Commonly they have not charged for their content, although that is changing. “There’s been a reluctance to charge, partly because of the belief that if you received foundation money it should be used for a public good,” says Brant Houston, professor of journalism at the University of Illinois. “But there is now some selling of content. It’s not enough to make ends meet but it is providing a revenue stream.” For all their woes, he says, traditional media still provide superior platforms to digital alternatives: “You don’t want to be a flea on a dying dog, but at the moment newspapers still offer great distribution and awareness.”
HOW TO PAY FOR INVESTIGATIVE JOURNALISM
Some Australians have already had a taste of such ventures: former Age journalist Gerald Ryle runs the ICIJ; former Age journalist Bill Birnbauer, now senior lecturer in journalism at Monash University, is a member; The Global Mail’s Sharona Coutts cut her teeth at ProPublica. Swinburne University’s Public Interest Journalism Foundation, on whose board Birnbauer sits with other senior J-school academics such as Margaret Simons at Melbourne University and Wendy Bacon at University of Technology Sydney, has followed them closely.
But they pose their own challenges. Keeping them afloat is labour intensive and skill stretching. “The issue faced by American journalists like Chuck Lewis, Ron Rosenthal and Bill Buzenberg is that they know journalism but they don’t know small business,” says Birnbauer, who has spent six months researching non-profit journalism in the US. “They don’t know marketing. They don’t know about employment contracts, or how to establish business collaborations. They don’t know how to lease a building. Suddenly they find that most of their time is spent on administrative tasks not on journalism. The smart ones pick things up but it takes time.” Such aptitudes are even rarer here. “Journalists in Australia have been on the mother tit for a long time,” he says. “They are risk averse, they are used to being protected; very few are as entrepreneurial as, say, Alan Kohler.”
The most obvious difference between the US and Australia is that philanthropic funding there is mature, sophisticated and discriminating. The $2 billion Miami-based John S. and James L. Knight Foundation, named for the father and son who represented one half of the venerable Knight-Ridder newspaper group, has been pursuing a mandate to “promote quality journalism, advance media innovation, engage communities and foster the arts” since 1950. Its recent initiatives include helping Voice of San Diego launch a monthly magazine, and bankrolling News21 — a program headquartered at the Walter Cronkite School of Journalism and Mass Communication at Arizona State University deploying journalism students as reporters to produce investigative content.
Birnbauer’s own experience of managing a non-profit journalistic project deploying students conveys something of the gulf between the countries. “Dangerous Ground”, a methodical survey of 250 contaminated waste grounds in Victoria, kept six Monash students busy for six months, involved the downloading of 400 company records, a host of Dun and Bradstreet title searches, and a detailed freedom of information inquiry. “I’ve done it in my time,” says Birnbauer. “It will be good for Monash, but I get no academic brownie points for it, because it’s not a paper or a journal article. I was editing student work in a caravan on Philip Island during my Christmas holidays. Ask my wife about that!”
Birnbauer’s efforts to corral regional journalism schools in an investigative news site called UniMuckraker have been still less availing. After an encouraging showcasing of the idea at last year’s Media, Investigative Journalism and Technology conference in Auckland, UniMuckraker has been confounded by the bureaucratic and fragmented nature of Australian journalism education. “After I delivered that paper at a conference in New Zealand, I had 13 expressions of interest from 13 different universities. So — yeah, go for it,” Birnbauer recalls. “Then I thought: what do I do now? How do I turn this notion into reality? Well, maybe a dozen universities could put in 10 grand. But someone has to go to each of those universities, co-ordinate the assignments, talk to someone at, say, UWA, ask whether they have an investigative course, whether they have an in-depth writing course, find out what their electives are, adjust the idea to fit their needs.”
It’s likely the government will tread warily. Communications Minister Stephen Conroy basically rules out direct grants: “It would be hard, given that I subsidise 100% of the ABC, and 95% of SBS, to see myself supporting newspapers. They’re a declining business model. People are closing them down. Would I support news websites? I already support the ABC and SBS websites. We funded The Conversation, which wouldn’t otherwise have gotten off the ground. So in a government of scarce resources, I don’t think that argument will work.”
Tax deductibility could just have a chance. Lately, the Public Interest Journalism Foundation has lobbied Conroy for “mechanisms to promote philanthropic support for public interest journalism, such as tax deductibility for not-for-profit media organisations or for journalistic investigations” — a proposition aired in the Finkelstein report that has received cordial mentions on both sides of politics, the Liberals’ Malcolm Turnbull vouchsafing in a speech last October that “there would be some merit in considering whether some level of support could be given, in terms of deductible gift recipient status, for not for profit newspapers, online or hard copy or both” and Labor’s Andrew Leigh agreeing in a speech a few weeks ago that “the benefit of a better-informed public would be likely to justify the cost of the subsidy”. Without committing himself, Conroy says: “It’s something that might get off the ground.”
“Journalists in Australia have been on the mother tit for a long time. They are risk averse, they are used to being protected; very few are as entrepreneurial as, say, Alan Kohler.”
One apprehension will be that when profit is not an objective, other purposes take over. In a 2011 survey, “Non-Profit News: Assessing a New Landscape in Journalism”, the Pew Research Centre found that almost half the enterprises with tax deductible status “produced news coverage that was clearly ideological in nature”. The Franklin Centre for Government and Public Integrity, for example, funded by the libertarian Sam Adams Alliance and the conservative Bradley Foundation, has bureaus in half a dozen statehouses around the country dedicated to reporting with a strongly Republican flavour. Franklin’s impact has been limited, says Houston, because the US is already oversupplied with partisan commercial media sources: “There was a fear when the Franklin Centre was set up [in 2009] that this would become the journalism du jour, but it hasn’t turned out that way.”
But there are bound to be similar experiments in Australia if tax deductibility is offered, says Chris Berg, research fellow at the free market think tank, the Institute of Public Affairs: “This group of Meg Simons and Wendy Bacon who have come out and said that there should be tax-deductible, public interest journalism — they don’t quite know what they’re doing. You know the first people who will take that possibility up will be us.”
If well-heeled philanthropists and cash-laden foundations are thin on the ground here, are ordinary Australians interested in funding the news media for the sake of a better-informed public and a more accountable pollity? Australians frequently congratulate themselves on their open-handedness but, as Bill Birnbauer notes, there is a difference between generosity and altruism: “Australians might be generous when there’s a bushfire appeal, it’s not clear that they’re altruistic when it comes to things to do with democracy.” Local experiments in what has been called crowdfunding have so far had mixed results.
Again, the inspirations are American — specifically one venture, four-year-old San Francisco-based Spot.US, originally endowed by the Knight Foundation and acquired late last year by American Public Media. The site allows journalists to pitch story ideas and solicit donations for their completion from members of the public, or members of the public to dangle ideas and money before journalists. Other crowdfunding apparatuses, like those provided by Kickstarter and Pozible, more commonly applied to arts projects, have also been harnessed to journalistic ends, but Spot.US, which has raised and distributed hundreds of thousands of dollars, was the model chosen by the Public Interest Journalism Foundation when it set up YouCommNews two years ago.
The result was, to say the least, underwhelming. A total of $2118 was raised, mainly towards two pieces about chronic fatigue syndrome by a sufferer of the disease. Half a dozen other ideas soliciting $18,870 raised $640 between them. In a chapter in the recent compilation Australian Journalism Today, Simons says that YouCommNews demonstrated a “depressing fact”: “The public was not conditioned to accept the high costs of doing complex investigative journalism pieces. Users who contacted us were shocked, even offended, by projects that cost above a few thousand dollars.”
More successful has been the revival of the independent current affairs website New Matilda, which just over two years ago looked destined for the independent journalism boneyard after six years under a variety of managements. For editor Marni Cordell, crowdfunding was a last resort, almost a posthumous one, as she had already announced that the site would cease publication. It was the popular lamentation at the closure announcement that convinced her to try what many friends in the arts were doing through Pozible. “We had no idea whether the crowdfunding of our relaunch would work,” she says. “How do you test whether people will give you money to go with their good wishes? The last thing I wanted was to be was stuck with $50,000, which wouldn’t really get me anywhere, and which I would just have had to return. When we received $150,000, we thought: OK, that’s a significant amount of money, let’s give it a go.”
So she is: indeed, New Matilda might almost be thought of as an experiment in how cheaply a news outlet can run. New Matilda has no office. Cordell draws no salary. Instead she works by night, by arrangement at the desk at which she does her day job, at The Week, where her deputy Catriona Menzies-Pike is also employed. Their Melbourne-based colleagues, Adam Brereton and Ben Eltham, work respectively from The Hub, a reconditioned office building for multimedia types that opened 18 months ago, and from home, with a newborn; the site solicits donations to “buy Ben Eltham lunch”.
They’re dedicated to old-fashioned, almost out-of-fashion, reporting, rather than, as Cordell says the site used to be, “people having a bit of a rant about what they want the country to be”. Notably, New Matilda published a powerful exclusive story last November by divulging an unprecedented level of detail about government contracts with Serco, UK-based operator of Australia’s detention centres. For her own part, Cordell says she is spending a lot of time learning how to run a business: “People have told me I’m crazy to keep New Matilda alive, but I’ve just inherited a $150,000 website, so I’m not going to throw it away. For a while I said: ‘Oh, I don’t want to be a business person, I just want to be a journalist.’ Then something just clicked, and I decided I wanted to make a go of it. I’m lucky I’ve got the online experience, and I’m learning the business side. My friends at Fairfax are really worried about having to scramble together skills. I’m excited by what’s possible.”
She’s already doing better than Humphrey Bogart managed.