Shorenstein-newspay

A discussion: How to Make Money in News

Follow proceedings on Twitter at #newsmoney

These are Bill Densmore's raw notes from today's "executive seminar" in Cambridge, Mass., organized by the Joan Shorenstein Center o the Press, Politics and Public Policy at the Harvard Kennedy School. Entitled, "How to Make Money in News: New Business Models for the 21st Century," the event is organized as a roundtable discussion and breakouts.

There are some 24 people in the circle, and some 30 or so observers sitting around the outside of a meeting room at the Charles Hotel, next door to the Kennedy School.

Here are running notes of the day and discussion -- with no pretense that quotes are precisely correct or exhaustive -- but with every attempt to get sense and context correct.

Alex Jones opens:

"We did not want to put a gloss on what we want to do."

"We are trying to find a way that the covering of ... news can be covered financially .... try to find away to solve the riddle of how to keep news alive."

"It is going to take a long time for people who don't have an interest in news, or are certainly unwilling to pay for news ... to realize that the cost of that is too dear."

He took consolation in the latest circulation reports, because the past six months were one of the worst economic times in the American economy since the depression.

In the case of the Boston Globe, 82% decided to keep subscribing at a time of great economic hardship and even though it cost more.

"There is demonstrated out there a core of people who still take news seriously . . . that is the base upon which we need to build."

Bob Giles talks about how the Nieman Journalism Lab got started. They decided to look at best practices in digital development that support journalism.

Now Josh Benton of the Nieman Labs is explaining the mission to share the successes and mistakes in journalism -- that wasn't happening very well before the Nieman Journalism Lab. They are at 150,000 page views a month and 75,000 unique visitors a month . . . and 17,000 followers on Twitter. "That's really been transformative for us ... we now get almost twice as much traffic from Twitter as we do from Google."

A Carnegie grant has allowed them to hire Max Slocum from O'Reilly's book operation.

Bill Mitchell from the Poynter Institute is on a fellowship at Shorenstein this year. He talks about three areas Poynter is working in with the Carnegie grant money, including research and conferences.

David Levy, Reuters Institute

Devid Levy from the Reuters Institute is also "in the circle." Carnegie is funding them to study what's being done about news in Africa. And they are doing some comparative project on how news organizations are responding to the Internet. "I think comparative rsearch is often quite useful" in dispelling myths.

Six oobservations:

• Avoid technological determinish. "The internet isn't killing news, what it is doing is it is increasing the reach of news." It is undermining one business model, but in Brazil, newspapers are growing and in Finland, high news readership is compatible with high internet penetration.

• Move away from an obsession on the supply side.

• Let's look at the demand side. We need more research on how people value the news. The move from pay to free doesn't have to be a one-way street. The bottled water business is now a $2B a year market. SMS messages are profitable. "People will pay for the oddest things ... if we can provide them in a useful and convenient way."

• If journalism matters to democracy, let's focus on that purpose for journalism rather than jobs for journalists." Focus on networked, public journalism.

• Focus on ubiquity and impact. There will always be news for enthusiasts. "What I care about is public-intrest news that is used by large numbers of individuals."

• Public support is rightly viewed by suspicion by many, rightly in some ways, and it may well be impossible in the U.S." Broad support and use can increase the independence of the news organization -- such as the BBC. If you combine that with automatic support mechanisms, that can increase the independence from the funder. In Sweden, a fund makes sure that 15 Swedish cities have competitive newspapers ... there is 75% turnout to elections there. Support for distribution is less contentious than support for content.

"There may well be new business models, but above all let's come up with solutions that are as routed in understanding demand as supply" .... and serve "a mass market, not just a minority interest."

Jeff Cowan, formerly USC

Interested in what the government's role could be. Key findings to date:

Government support of media has always been there. With postal subsidies -- always a core principle. Today the funding level for commercial media is in excess of a $1B a year -- but it is declining. There are three buckets of it:

• Postal subsidies. Takiing 1969 as a departure point -- as of 1970, 75% of the cost of postage for publications was being paid for by the federal government. Today that is down to 15%. "That decline ... if you take those numbers would actually take some magazines that are currently losing money profitable." The Reorganization Act of 1970 made most the difference.

• Public notices. At least one full page of the Wall Street Journal every day consists of legal notices. "We think that the federal government is in terms if lines of print, is if not the biggest one or the two or three biggest advertisers in the WSJ, maybe the single largest advertiser -- the federal government .... but it is certain to decline." it is inevitable that this will move online.

• Tax breaks. Ink subsidies and other things.

"It's more than a billion dollars, but it is hard to assemble this."

"We want to think about some criterias about ways in which the government should be involved."

Copyright is designed specifically for people to get paid for what they do. That's important.

"We think that funding for innovation is important."

"If there is going to be direct funding for publications, it should be on a formula basis rather than for specific programs. ... it should never be more than a small percent of a publication's budget, otherwise they become too beholden."

David Westphal, USC, Online Journalism Review

He writes about the non-profit media sector. He also wants to mention an emerging non-profit model. "There is striking growth going on here and it is probably going to continue." Support of local sites, topical sites and investigative-reporting sites, as well as funding of sites that reflect the interests of the foundation.

Also just getting going -- journalism by non-news organizations, particularly at unversities. The Goldwater Institute in Phoenix has hired an investigative reporter. There are labor unions which have funded two new sites in Orange County, Calif. "So here we are labor unions and the Goldwater Institute, comrades in journalism ... kind of back to the future .... so is this stuff journalism and are these people journalists? ... I suspect these questions are just beginning."

Labor unions, government think tanks, political parties, trade associations and unions will be among funders in the future.

Q&A/discussion

Alex Jones asks Josh Benton of Nieman Lab if any of the things he's looked at that appear promising.

Benton: He is encouraged by small local blogs, 1-3 person startups. "They are either profitable or at least paying their bills." He is also encouraged by the response seem from foundations. He is less encouraged about circulation numbers. "I tend to think the comet has just hit and the dinosaurs are not doing too well."

Jones: "These are people we ought to study very carefully because they have made a very counter-intuitive decision." We are trying to pursuade people to be intrested in the news instead of focusing on growing the base of people interested in the news. He thinks focusing on the demand side is really important.

Alex Jones: What about the situation with the Boston Foundation?

Bob Giles: The management of the Globe hasn't been very forward thinking about changing its content. The Boston Foundation holds money from many people who are particularly interested in journalism. "In this community there could be melding of pepole and funds in a place like the Boston Foundation, in building some specialty websites online that would take the paper beyond its normal coverage of city hall and public places."

Encouraged that:

• Hechinger Foundation (spelling) at Columbia University is starting a website on education coverage.

• Environmental reporting also.

"If you think about the Center for Public Integrity, that's been around since 1990." Chuck Lewis has been able to keep raising the money for it.

Alex Jones: There is also some discouraging news from the foundation world. "Foundation fatique is something I worry about a lot ... do you see this foundation support for journalism ... that would be more neutral in its journalistic support, do you see that as an enduringly sustainable source of support for journalism?"

Westphal: "Enduring for awhile." He says people are becomming more and more concerned about the news ecology. Most people think the legacy news ecology will continue to erode. He thinks foundation funding will continue to increase in terms of the number of players, but after the first three-year grant it becomes a more difficult proposition. We shouldn't assume that sustained foundation funding is out of the question, however.

Alex Jones: What about the idea of established news organizations becoming non-profit?

Westphal: The idea that there isn't a big IRS problem in front of that is important. There may still need to be changes. "Some of them will set out on this course, probably, or think about ways to split off pieces of their enterprise that could be supported by of foundations."

David Levy: Worries about an answer to a democratic problem.

Geoffrey Cowan: The New York Times audited circulation includes over 100,000 copies that go on college campuses, paid by universities. "That's sort of a hidden example something that's already being done." Says Cowan, himself an attorney: "As we have more and more fragmented and weak news organization, which is what we are talking about here, we lose something else ... we lose the ability to have strong lawyers protecting and fighting for these organizations."

Alex Jones now turns to Rick Edmonds at Poynter and asks about a blog report he wrote about how much news reporting has disappeared from newspapers.

Edmonds says it's gone from a $60B industry to something in the mid $30B this year. He estimated how much of that budget goes into news gathering. He figured it was about $1.6B annually that has gone by the boards. That is a lot in comparison to the scale of the new ventures. Granted maybe there is some waste, as Bill Densmore's discussion group said, "It is a little disturbing that we don't know what that $1.6B might have turned up. That's cumulative, it keeps on happening."

It's now 10:03 a.m. in Cambridge and Jones opens it up to general questions.

Scott Karp of Publish2 wants to ask questions about the non-profit model. "In the early days of the web, 1994-1995, there was a general view that search was not a business and it had to be subsidized by portals ... it was something you don't make money of off .... and then a little company called Google came along ... would you agree that there has been a little bit of a sense of capitulation about the possibility of a profit model?"

David Levy of Reuters responds: Newspapers are business with high fixed cost and relatively low variable cost. The logical business case is to try to make your content work harder. "I agree with you people are giving up too fast and people are not being very creative about how they might expand their business."

Alex Jones says the strategy at the NYT is increasing the cost of the paper enough to still keep the circulation at a million. The NYT has found that the demand for the print paper is fairly inelastic.

David Levy: The Guardian had no presence in the U.S. a decade ago. Now have of its 20 million page views on the web are from the U.S. "So there are opportunties." Levy says there is a tendency for complacency, to rely on the reader who will pay for the paper no matter the price. (Another commentator observes The Guardian is losing 20 million pounds a year).