The Value Proposition for Hard News

"The fluff is more fun to read than the loss-leading reports about starvation in Sudan, but it isn't the sort of thing you miss when it's gone. Not many people would get misty-eyed over the closure of, say, 'Thursday Styles,' fascinating as its weekly shopping deconstructions often are."
- The Atlantic

Philadelphia City Paper discusses non-profit journalism

See this article: Journalists Needed

Interesting stuff, although I think philanthropic support of journalism and public funding of journalism are two separate issues.

Biased journalism: With targeted media, does it make more money?

Objectivity, according to Wikipedia, is "a significant principle of journalistic professionalism." One possible reason that objectivity is so common is that it helped a newspaper make a profit by selling ads to the widest number of advertisers: "Publishers did not want to offend any potential advertising customers and therefore encouraged news editors and reporters to strive to present all sides of an issue," Wikipedia notes, citing Gerald Baldasty.

But today, advertisers' desire to reach more and more targeted audiences might reverse this trend. For instance, Newsmax.com is a major conservative news source online. And being conservative appears to play a key role in its business model.

Here's how The Palm Beach Post describes it:

'Meanwhile, much of [owner Chris Ruddy's] profits don't come from journalism at all. Ruddy says about 20 percent of the 100,000 subscribers to his magazine are millionaires, and so are some of the 1.8 million people whose e-mail addresses he has.

"Our demographic is very high-end, affluent, well-educated ... rich Republicans," he says.

Newsmax takes fees from financial services companies and health concerns, to send business offers to its readers through the e-mail lists.

"I'm first of all a businessman," he says. "The key to success is to find out who your readers are and build a database. We are more into financial news and health news that will appeal to a clientele that also likes politics." '

Newsmax is targeting not just the news it covers but also the slant of the coverage to reach a specific demographic. Without the huge fixed costs (e.g. owning a printing press) reaching a huge audience is no longer a necessity to be sustainable.

I think this trend is going to put more focus on the other supposed benefits of objectivity, such as trustworthiness and reliability. If given a choice, will people prefer objective news over news from a viewpoint they agree with?

Foundation-funded Journalism

There's a piece in the New Yorker that suggests that private foundations or rich patrons could be used to keep newspapers afloat.

This is an interesting idea. However, with the profit motive gone, the question becomes what exactly these foundations should try to preserve.

I doubt it would be worth preserving the print newspaper itself. The real goal should be to preserve independent, objective, local journalism. I think that's what people are really concerned about: accountability and independent local news vanishing along with the newspaper.

Bloggers could try to fill in the void, but good journalism requires both time and money. I could see a foundation or wealthy individual providing those resources. If it becomes widely known that advertising can no longer fund journalism, you might even see people becoming full-time reporters/bloggers if they have the resources to support themselves. If people really thought there would be no local news if they didn't do it, there might be an increase in the feeling of a moral obligation to report.

Some university research depends on privately donated funding; there's no reason some journalism can't be supported the same way.

There are some ethical issues with this funding model because journalism sites could lose the financial obligation to maintain high traffic (and therefore to write what readers want to read). Depending on your point of view, this might be a good thing since it would reduce the incentive for sensationalism. But if preserving accountability to the public is the goal, giving readers the opportunity to force change in a publication by not reading it is critical.

If a foundation wanted to keep this incentive around, it could just not fully fund a publication. Then, the publication would still be dependent on ad revenue to meet a portion of its expenses, and the incentive to seek high traffic would remain.

One-person media: With no expenses, small revenue still means big profits

The New York Times had an article last week about Michael Buckley, who produces what his Web site says is the most popular entertainment show on YouTube. According to the NYT article, he's now doing it as a full-time job and earning over $100,000 a year from it.

If this guy working from home can pull off $100K a year, why aren't newspapers making money?

The answer is low expenses. According to the article, "All he needed was a $2,000 Canon camera, a $6 piece of fabric for a backdrop and a pair of work lights from Home Depot."

Gannett, in contrast, has revenues of almost $7.5 billion annually, according to its annual report. But it has to pay almost 50,000 employees. Buckley has to pay essentially no one. It's pure profit.

Of course, most one-person operations aren't going to reach the audience level required to pull down 100K a year. But everyone can take advantage of the idea of making a little cash in a field where expenses are super cheap or even free.

For example, Blogger lets you host a blog on its Web site for free, and it lets you put AdSense ads on the blog. That means you have no expenses (except for the value of your time spent blogging and your computer and Internet connection, which you probably need for other reasons anyway). Any revenue you make from people clicking on your ads is pure profit.

Who cares if it takes you a year to make $100? It didn't cost you anything to get started, so there's no risk of losing money. Plus, with enough hard work -- "I was spending 40 hours a week on YouTube for over a year before I made a dime," Mr. Buckley said in the article -- you might start making some real money.

Hello World

Journonomics. Noun: The intersection of journalism and economics.

The aim of this blog is to identify common characteristics of
companies and people in the media industry that are actually making
money.

Newspapers appear to have declining revenues for the foreseeable
future. Journalists are getting perpetually laid off. They are
replaced by younger, cheaper workers, or the positions are simply
eliminated. But there are still a few people making money. And some of
them are making lots of it. In this blog, I'm going to try to identify
what they're doing right that everyone else is doing wrong.

I'm going to try to bring both normative and practical points of view
to this blog. Journalism does provide a lot of beneficial
externalities for society at large. I'm going to look at how (or if)
those benefits can be preserved under a sustainable business model.
I'm also going to try to be frank: if a business model seems to have
no way of surviving in the modern economy, I'm going to say so.

I'm not going to promise any particular posting schedule; I'll post
when there's material of interest. However, it certainly seems like
there's more than enough right now.