News Media Falls On Hard Times

It has been a bad couple of years for newspapers. Major metropolitan dailies have filed for bankruptcy. The Rocky Mountain News closed up shop. On a more local level, the Forum recently had two sizable layoffs.

The reasons given for this are plentiful. The Internet has killed the daily newspaper. People are finally tired of the liberal news media. The recession is biting into advertising revenue. All of these have some validity, but the problem may be deeper. One reason is not discussed much in the news media because it has to do with the very economic model that has driven the news for almost two hundred years.

But first, a quick media history lesson. When newspapers took off in the late 1600s and early 1700s, they were largely financed by political factions. People read whatever newspaper supported their side. They were kind of the Internet of the early industrial revolution. A New Yorker revolutionized this model in the mid-1800s. Benjamin Day, started a newspaper, the New York Sun, which had a general appeal behind its news, as opposed to strictly partisan politics. It was funded by advertisers. This model took off and newspapers became a growth industry in the 19th century. A good share of our country’s dailies and weeklies, were born in that century.

But something happened to the newspaper industry. Our local media company provides a lesson in the economics of news. Small news organizations don’t require a huge profit margin. 10 to 15 % could be perfectly adequate. But, taking the Forum, as an example, the company owns at least 35 newspapers, two radio-TV combinations, and Internet service provider, and a web-hosting and design company. When companies acquire these assets, the money has to come from somewhere. The Duluth/Superior newspaper group, which is now owned by the Forum and the Grand Forks Herald, cost the Forum $135 million. CEO William Marcil has admitted that much of the money to acquire these assets was borrowed.

Individual newspapers then become cost-centers and help pay off the debt of acquisition. They need profit margins in the 20-30% range. One way to do that is to cut both staff and content.

The Forum is hardly alone among media companies for doing this. But, the press is special. It is the only industry referred to as having rights in our constitution. The press has this freedom, because its job is to hold elected officials and others responsible. The job is hard to do when both staff and content are diminished.

An alternative economic arrangement is starting to make itself known in the country and in the upper-Midwest. This is the idea of non-profit news organizations. Basically, a news organization organizes as a non-profit with a volunteer board that is responsible for the money it uses. It also means that it cannot engage in any electioneering;  it cannot endorse a vote on any matter.

These non-profit news organizations do not have the overhead of stockholders who are owed dividends. They can budget money to pay people to edit and write news for the news organization.

Minnesota has two such entities that have taken to the web. One of these is the Minnesota Post. The Post was founded with a grant and has attracted such talent as Pulitzer Prize winners, Chris Ison and John Camp. Many of its writers are former print journalists from the Twin Cities.

Minnesota’s other online publication is part of a network called the Center For Independent Media.  The Center is based in Washington D.C. and has established outposts in the Midwest, including the Minnesota Independent (I work on a freelance basis for the Independent). Editor Paul Schmelzer came to the Independent on a part-time basis after editing a web publication for the Walker Arts Center. That has now become his part-time job.  In looking his web publication, the Minnesota Post and other online experiments Schmelzer said, “It’s great to see so many people trying out a model that’s more oriented to the community than trying to figure out how to make money or please advertisers.”  He adds that his organization and other like it do not have the fixed costs of using resources, such as gas and paper, to get the news out.

Print journalists have been finding an online home. Two years ago, Laurie Schwab, the head of the Online News Association said that 45% of its 1,100 members, at that time, had started in print.

The idea of non-profit journalism is hardly new. The award-winning St. Petersburg Times in Florida is a non-profit run by the Poynter Institute for media studies. The Christian Science Monitor, which ceased its daily print publication last year, is a non-profit run by the Christian Science Church. The Associated Press is officially a non-profit, member-owned cooperative.

But non-profit news is becoming a mainstream idea, as the old model of newspapers seems to be on its last legs. The online and non-profit Voices of San Diego, broke open a municipal scandal that was untouched by other media in that that city. The online Pro Publican has launched an era of public interest investigative journalism as it partners with traditional newspapers. A member of congress, Senator Benjamin Cardin of Maryland has introduced a bill that would allow newspapers to reorganize as non-profits.

An article on alternatives to the daily newspaper would be re-miss if the free alternative news weekly were not also mentioned. Metro areas as small as Wausau, Wisconsin have such publications. Publisher of the High Plains Reader, John Strand, says that the papers’ circulation jumped 900 over the last month and estimates that when college is in session, the paper should have a circulation of 10,000. It is available at various outlets in the Fargo and Grand Forks area.

Newspapers and the traditional way of organizing media have worked and still do. But it may be time to look to another model.