Can We Sell the News?
Questions about my age (or, weirdly, my omniscience) aside, this Matt Welch post furiously attacking my argument for publicly subsidized news organizations is useful in outlining the various positions in the debate.
Welch is the editor of the libertarian periodical Reason. Like many such outlets, it has a sort of peculiar business model: It does not support itself by selling the magazine that is its ostensible product. Nor can it rest on advertising. Rather, a major portion of its funding comes from ideologically aligned donors like Whole Foods founder John Mackey and the right-wing Koch Foundation.
Possibly for obvious reasons, this doesn't figure into Welch's post very much. Nor does the word "advertising." Or "classifieds." Instead, we get snarky jewels like, "we have all observed, and participated in, the buying and selling of news products." We have indeed. In fact, I myself have actually purchased Reason Magazine. But that sentence obscures a lot more than it illuminates. It's not how the bulk of the industry supports itself now, nor has it been in memory. It's not even how Reason supports itself.
News organizations do not sell news. News, it turns out, isn't very profitable. Rather, they sell space to people selling things. Advertisers, say, or people who want to get rid of their car. Others sell a version of newsroom access: Welch's magazine is dependent on funding from people who are trying to push a particular point of view. That's a perfectly appropriate model. I imagine we're going to see a lot of growth in the partisan press over the next few years, and that's probably a good thing. But it's not what Welch means, I imagine, when he talks about "the buying and selling of news products."
Nor is it even a sufficient answer to the question at hand. It's of virtually no use to the sort of news that's actually being lost in large numbers: local and regional reportage. The majority of partisan money is national in focus. It's not terrifically interested in reporting out the condition of Atlanta's public transit system.
Welch also engages in some pretty slick sophistry when he says that "the much-maligned and bankrupt Tribune Co., to pick one wobbly newspaper/television company out of a hat, has actually earned a higher net profit margin this year than Wal-Mart–an estimated 8 percent to around 5.5 percent." The fact that the company is bankrupt should tell you something. But more than that, the trends for Tribune, and all the major media companies, are the real problem. A few years ago, people talked about 20 percent margins. And a few years from now, those margins will be negative. Welch believes in the market. He should check the valuations of those two companies.
Welch also suggests that this problem can be tied to an anachronistic affection for "expensive 20th century models of staffing and deliverance" -- which is to say, paper. As a blogger, I sure wish that were true. The problem is that paper makes money. Advertising sells for much more there, and the gap doesn't look likely to close. Indeed, no one has figured out how to generate online revenue that can sustain a large newsroom, much less a bunch of them. Hopefully, writers and reporters are not actually a staffing model confined to the 20th century.
All that said, Welch is a professional free-market ideologue, so I'm not actually trying to convince him of the worth of government subsidies for the news business. But if you drill down into Welch's post, I think you're left with three primary options, at least if you think it's useful for the country to have journalism. First, a media that's largely funded by foundations and donors -- some of them partisan, some of them not. It's not clear to me, or anyone else, that there's enough money there to actually sustain much reportage. But maybe! Second, a mutation of the advertising model that leaves you with a press that's funded by essentially selling newsroom assets to advertisers. A lot more in the way of advertorials, underwritten salons and various other efforts that muddy the waters of the outlet's agenda. And lastly, a press that's funded by some sort of public subsidy, presumably provisioned either through an automatic process as in some European countries, or an independent, grant-making agency akin to the National Institutes of Health.
In reality, we'll probably have a combination of two or more of these models (in fact, we already do have a combination of all three), plus some we haven't thought of yet. Maybe that will work and maybe it won't. An overreliance on any of them has obvious dangers. But if there is to be a media, it will need to be funded somehow. And the one thing we can confidently say is that very little of it will be funded by selling the news to consumers willing to cover the costs of its production.
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