American Culture

'Penny' press redux: a new business model for journalism?

Edward Wasserman, writing in the Feb. 18 Miami Herald, makes an obvious but still unsettling point about the news business:

The nearly two-century-old marriage between consumer advertising and journalism is on the rocks.

Prof. Wasserman, the Knight professor of journalism ethics at Washington and Lee University, recounts that two hundred years from the penny press to the difficulties that “new media” have with a business model that presumes people will pay for news — and therefore advertisers will pay to park themselves in front of those eyeballs. But, says Prof. Wasserman:

That era is now ending, not because the public no longer needs news or because people mistrust news any more than they always have — but because new technologies are churning out better ways to reach customers who are shopping for cars, jobs or homes.

For two centuries, advertising has supported journalism. The First Amendment guarantees freedom of the press — but does not guarantee profitability. That news organizations must achieve without government support.

And they have been doing that. Even now, newspapers represent cash cows for their owners. Profit margins hover in the mid-teens, although they’re down from the heydays of 20-plus percent of just a decade ago. As investors demand that profits be maintained, news companies have reduced expenses — primarily by cutting staffs and curtailing geographical circulation — to do so.

No more, says Prof. Wasserman. Those means will not allow profitability much longer. A new revenue model is needed. He reviews the revived notions of foundation ownership and public financing and finds them lacking.

In some respects such [foundation] patronage is hugely appealing, though as [the American Journalism Review article] suggests the dangers to editorial independence can be no less serious than with advertising support: Indeed, advertisers could be sublimely indifferent to editorial content as long as it was drawing a crowd they could sell to (and wasn’t about them). But foundations and public-minded plutocrats are less bashful about their preferences and convictions, and some philanthropies may even be obligated to ensure their money advances certain policy goals.

Public financing, too, long banished from polite conversation, is getting a new airing. An article last fall in the Columbia Journalism Review dusted off the topic and noted that in other countries, stand-alone systems of automatic funding have kept dying newspapers alive and made the press even feistier — more, not less, inclined to watchdog governments.

Remember, please, Prof. Wasserman is exploring ways to generate financial support for journalism beyond the dying-on-the-vine business model to which the news business is unwisely and unfortunately tethered.

He asks one fundamental question: Who gets the money?

It’s the Internet age. A great many entities and individuals have leapt into fact-gathering and topical commentary in a magnificent, worldwide surge of communicative enfranchisement. Shouldn’t they get compensated, too?

Maybe the solution isn’t to escape the market, but to empower it. Modern computing offers unparalleled capacities to track and calculate. Imagine a vast menu of news and commentary offered to you ad-free for pennies per item, the charges micro-billed, added up and presented like a utility bill at month’s end. The money that journalism providers got would depend on their audience.

Right now, I enjoy The New York Times free of charge every day. And I read, also free, news stories from other Web sites. Has Prof. Wasserman proposed a workable business model that would benefit bloggers as well?

Would you pay a few pennies for each item you read on the Web, billable at the end of the month? If you visited S&R, would you pay a few cents to read the posts? More to the point, if others read your comments, should you be paid a few cents as well?

I don’t know if Prof. Wasserman’s suggestions are workable. But his commentary is worth the read. It is a new approach to a vexing problem.

And we do know this: Journalism needs a sustainable business model that secures both suitable revenue for ownership and guarantees against government interference.

10 replies »

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  2. The problem is that I haven’t seen a good “micropayment” solution come up. While I’d be willing to pay a little for much of what I read, until some entrepreneur can fix the micropayment issue for something like the music market, I don’t see it working for the even more wild blog/news market.

  3. I agree, but that’s merely a technical problem to solve. And, as Martin’s post earlier points out, if solving that problem makes an egregious amount of money for someone, it will be solved. Thanks for the comment.

  4. I would happily pay for any news source that provided me a diverse range of actual news from a wide variety of fronts, as well as opinion columns from a truly broad swath of thinkers. But such a thing does not exist.

    The papers of record–the NYT and the WaPo–are riddled with right-wing corporatists who are paid to advance a narrow, psuedo-centrist range of opinion as if it’s the gospel. With a few exceptions (Dana Priest, Walter Pincus, Paul Krugman), their reporters are either cub rookies or Stockholm Syndrome-afflicted toadies who regurgitate right-wing talking points without substantiation. It’s a sad day when I get better news coverage on the issues I care about from USA Today than the Grey Lady.

    In the meantime, the best thing you can do is get magazine subscriptions from periodicals across the spectrum and donate to keep them going.

  5. The only problem with the micropayment model is 1) why would the average consumer pay for what he can get for free? Micropayments are nice because they allow consumers to link articles to friends who are not subscribed. Hopefully banner ads make said links profitable.

    Still, MMO games are moving more from subscriptions to micropayments and seeing great profits (see Runescape). Though again, maybe the larger issues are 1) how can you justify that news should cost money (unless your free option is Soviet-era Pravda)? and 2) at what point do people just run out of money to pay for their Gotcha Capitalism and Micropayment lifestyle?

  6. IMO one of the good thing about the blogs is the ability to air controversial opinions.I would hate to see pressure to “attract” viewers to one’s article pushing writers to make their articles “appealing” as opposed to “truthful.” That said, I think that good tight writing should be rewarded over diffuse rants!

  7. Thanks for keeping this issue before us, Dr. D. It’s such a puzzle.

    Maybe just news, since reporting costs money, rather than opinion, should be paid for.

    Also, go Martin!

    their reporters are either cub rookies or Stockholm Syndrome-afflicted toadies who regurgitate right-wing talking points without substantiation. It’s a sad day when I get better news coverage on the issues I care about from USA Today than the Grey Lady.