Sotto Voce.

"Qui plume a, guerre a." — Voltaire

Too Small to Succeed

ProPublica’s latest investigative journalism bombshell (“Clarence Thomas and the Billionaire,” Apr. 6, 2023) has not only been picked up by what feels like every major news outlet on the planet, but has also prompted a lot of mainstream discussion about the merits of nonprofit journalism. “See what journalists can accomplish when they don’t have to worry about getting laid off because of slumping ad revenue?” the argument usually goes.

Going nonprofit offers the first really viable alternative to the traditional ad-supported for-profit business model that has supported the newspaper business (both on paper and online) for generations but which is now imploding and leading — directly and indirectly — to the closure of hundreds of local papers a year.

When Google and Facebook muscled for-profit newspapers out of the ad revenue game, the wheels came completely off the wagon (to mix my metaphors). Having been lulled into arrogant complacency by decades of double-digit profit margins, industry MBAs hastily concluded that the only options available for keeping up appearances were fire sales and consolidation. And so began the seemingly endless parade of private equity firms, billionaire buyers, and M&A experts who were all to happy to buy up properties on the cheap so they could squeeze whatever profits they could out of them for however long they produced, and then toss the husks or sell them for parts. For most papers, the logic (to use yet another metaphor) was that being hooked up to a milking machine at least bought time before being led off to slaughter. Today, the only papers that are surviving are the ones that have been able to scale up sufficiently to provide a stable revenue stream for their owners.

Nonprofit news, we are told, is free from all that.

Except maybe not.

For the past 10-15 years or so, the nonprofit sector has been undergoing something of a fundamental revolution, as more and more business executives and MBAs have moved into positions of leadership and dazzled fundraisers and charities with shiny new business concepts like efficiency and scalability and metrics and outcomes.

Oh yeah, and return on investment.

Return on investment is just a way of saying profit that doesn’t get a nonprofit in trouble with the IRS.

Back in the day, the difference between the for-profit and nonprofit sectors was that in the former, the primary purpose of providing goods and services was to benefit the provider, while in the latter, the primary purpose of doing so was to benefit the recipient.

The charity model of philanthropy was about providing goods and services to people in need because they needed them. The return-on-investment approach to philanthropy is all about providing goods and services to people in need because of what the donor gets out of it. Everything from their name on a building and complete control of donor-advised funds all the way down to the contact high they get from cutting a check. (I’m not kidding about that last one. There is an entire school of fundraising devoted to the idea that you can get more donors, and get donors to give more, by selling them on the oxytocin rush they’ll get from being generous.)

So what does this all have to do with news — and especially local news? Just like an old-fashoned charity, news is really about providing information to people who need it because . . . well, because they need it. And the more local you get, the more specific that information becomes, and the fewer people who need it.

Stories like the city council vote to close the animal shelter, or the decision to close the polling place in the fourth ward, or the impact that the hike in water and sewer rates will have on lower-income families aren’t going to scale regionally or nationally. But those stories are no less important to the 500 or 1,000 people who are affected by them than the regional stories that affect 50,000 or 100,000 people or the national stories that affect 50 million or 100 million people.

The problem is that a nonprofit newspaper that writes stories for 500 or 1,000 people is not going to attract the level of philanthropic support that a national news organization like ProPublica can command. Philanthropy is not as downwardly scalable as ad revenue. Small towns will always have local businesses that can take out ads, but they don’t always have local philanthropists with millions or even just hundreds of thousands of dollars to spare.

That’s where grantmakers like NewsMatch and the Knight Foundation and others help make a difference; local nonprofit papers can get grants consisting of money from donors who aren’t in their community but who value local journalism everywhere.

But the return-on-investment demon is starting to rear its ugly head in the nonprofit news realm too. Dick Tofel, a journalism consultant with extensive leadership experience in both for-profit and nonprofit news (he’s a former assistant publisher of the Wall Street Journal and a former general manager and president of ProPublica) recently wrote in his Substack newsletter, Second Rough Draft:

“. . . we should take a hard look at whether every small newsroom is a good bet for NewsMatch. Struggling newcomers surely deserve support, but places that are steadily shrinking may no longer make sense as philanthropic investments. (That’s part of why I’m in favor of more mergers in the field). Over the last two years, I’m told, about a million dollars, on average, in NewsMatch funds have gone to shrinking newsrooms (25% of the total paid out in 2021, 15% in 2022), and almost one in three of the participating newsrooms saw total revenues fall each year.”

I used to work for a newspaper whose owners sought to increase profitability by merging three separate biweekly county newspapers into one weekly. The result: the tri-county region went from six editions a week to one. The newsrooms laid off the three editors (well, actually two, since one quit just before the consolidation) and the regional sports editor, and cut the three newsrooms down to one reporter each. That’s three reporters serving over 370,000 people.

But hey, those cuts meant a lot more money going to the out-of-state investors in the private equity firm that owns the papers. And after all, isn’t that what really matters here?

So yeah, consolidation is great for improving return on investment (whatever the hell that means for grantmakers like NewsMatch), but it puts papers into an unrecoverable death spiral — less money spent means fewer reporters covering fewer stories, which results in fewer readers, which means less website traffic and less subscription revenue and less reach and less relevance and then one day no more newspaper.

What we just have to learn to accept is that news is, economically speaking, incredibly, absurdly, comically inefficient — and, societally speaking, absolutely, critically, vitally essential.

If it takes 20 people to provide news, sports, and features to 10 people, and on any given day their work gives five or three or even just one of those 10 people some piece of information that improves the quality of their lives in some big or small way — helps them decide how to vote on an issue, or helps them find a better job or a better school for their kids, or hell just makes them smile — who gets to say that that’s not worth the investment? What’s the cutoff? Is it OK for 99 people to go without news because it’s only cost effective to provide it for 100 or more people?

The return on investment from community newspapers is fewer people dying. It’s people making healthier decisions, people getting the services they need, schools getting more resources, corruption being exposed, people in power being held accountable, failures being addressed, people being empowered through access to information so that they can make a difference, and their stories being shared and commemorated and celebrated and honored and remembered. Every single individual one of them.

As the nonprofit news movement continues to gain momentum, let’s dare to accept as its basic premise the radical notion that we fund local news simply because people need it.

Categorised as: Journalism Ruminations

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One Comment

  1. sottovoce says:

    Steven Waldman, president of Rebuild Local News and a co-founder of Report for America, discusses the idea of local news paying for itself in terms of taxpayer dollars saved in this thoughtful Atlantic essay: “The Local-News Crisis Is Weirdly Easy to Solve” (August 8, 2023):

    “Unlike other seemingly intractable problems, the demise of local news wouldn’t cost very much money to reverse. Journalists are not particularly well compensated. Assuming an average salary of $60,000 (generous by industry standards), it would cost only about $1.5 billion a year to sustain 25,000 local-reporter positions, a rough estimate of the number that have disappeared nationwide over the past two decades. That’s two-hundredths of a percent of federal spending in 2022. I personally think this would be an amount well worth sacrificing to save American democracy. But the amazing thing is that it wouldn’t really be a sacrifice at all. If more public or philanthropic money were directed toward sustaining local news, it would most likely produce financial benefits many times greater than the cost.”

    I’m not completely convinced that, as Waldman suggests, it should be the federal government that makes this investment through things like tax credits to newspaper publishers (especially private equity firms). I think it should be the local governments themselves that pay into funding their own watchdogs as a budget line item. It’s going to have to be taxpayer approved and funded, of course, but honestly I think that’s how it should be. It’s a matter of civic responsibility and accountability between citizens and their elected officials.

    I’ve argued that the most robust and resilient model for local news to emulate is that of the public utility. I’m going to expound on that idea at length here on SV at some point, and I think Waldman’s article will be a good jumping-off point for that. So consider this comment as something of a placeholder.

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