Newspapers without profits

by Matthew Yglesias, Think Progress

The future is going to contain lots of for-profit media enterprises. But the very rapid pace at which information can be disseminated these days makes it difficult for a media enterprise to internalize all the gains of reporting new information. Consequently, in the future news gathering is going to be a lot less profitable. And that means that more of it is going to have to be done by not-for-profit institutions. So I think it’s very good to see Steve Coll, a longtime veteran of the newspaper business now working for a non-profit, thinking along these lines:

Not to pick on any one institution, but, from a constitutional perspective, how did we end up in a society where Williams College has (or had, before September) an endowment well in excess of one billion dollars, while the Washington Post, a fountainhead of Watergate and so much other skeptical and investigative reporting critical to the republic’s health, is in jeopardy? I’m sure that Williams-generated nostalgia in the emotional lives of wealthy people is hard to overestimate, but still … […] The typical spend rate for endowed nonprofits is in the five-percent range. If the Washington Post had a two billion dollar endowment, it would be able to fund a very healthy newsroom. And this is before revenue from continuing operations—advertising, circulation, etc., which could surely cover at least the cost of distribution and overhead, particularly if the form of delivery is increasingly digital. Two billion dollars, by the way, represents something in the neighborhood of five per cent of Warren Buffett’s net worth, the last I knew that figure.

One problem here is just that The Washington Post is no Williams. Elite American colleges, whether or not they actually do a good job of educating young people, do a VERY good job of producing nostalgic alumni and prestige for themselves. American newspapers have done a very good job of convincing professional journalists that they’re vital civic institutions, but journalists don’t seem to me to have a very good grasp of the fact that the public at large doesn’t like them very much (see here and here). And I have to say that when I worked at primarily journalistic institutions, one of the most aggravating aspects of my job was the need to deal with the self-righteousness of journalists about their work.

And beyond the fact that the Post does not, in practice, attract the kind of warm and fuzzy sentiments that newspaper nostalgics think it deserves to, it just wouldn’t make any sense to offer a $2 billion gift to an outfit like the Post for the simple reason that the vast majority of the Post’s activities aren’t the sort of hard news reporting for which there’s a need for a stepped-up non-profit sector. The world is not currently lacking for sports coverage. Nor is there some kind of critical shortfall in people offering opinions about politics. Business reporting actually seems to have a viable economic model behind it. Similarly, lifestyle journalism continues to be viable in a number of formats. And Warren Buffett doesn’t need to spend $2 billion so that people can find movie recommendations somewhere.

Part of what’s happening to newspapers is the specific issue with the digital era making it hard to make money doing reporting. But part of what’s happening to newspapers is that a newspaper is a gigantic bundle of paper covering miscellaneous topics. The rationale for lumping all those topics into a single geographically-bound institution has a lot to do with the economic logic of printing and distributing bundles of paper, and very little to do with the economic logic of producing and disseminating a digital media product. In other words, two different things are happening simultaneously. One is that as things migrate online, it’s making less and less sense to have a “newspaper” in the traditional sense.

Another is that as things migrate online, the economic foundation of news reporting is looking shaky. But these two things aren’t the same problem, and they’re not equally problematic. If a billionaire was asking me whether investing charitable giving in the media sector was a good idea, I would tell him “yes.” But I wouldn’t tell him to invest in a non-profit newspaper. The smart thing to do would be either to spend money so that existing non-profit media operations—ThinkProgress, the Center for Independent Media, ProPublica, The American Prospect, The Washington Monthly, The Nation, etc.—can add capacity, or else to spend money to create a new non-profit media operation (my suggestion would be a focus on state and local reporting somewhere).

People should also recall that a catastrophic collapse of the newspaper industry would hardly be without precedent. The real heyday of American newspapering came in the late 19th and early 20th centuries when the United States features a literate population and no broadcast media. The rise of radio and television had a devastating impact on the industry and caused massive shrinkage in the volume of papers. This shrinkage then led to what journalists consider the heyday of American journalism when the industry had fallen so far that most papers faced little-to-no competition and could serve as authoritative “objective” sources of information. We’re now once again amidst and era in which technological change is going to kill off a lot of existing business models. But all this has happened before, and all this will happen again.

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The media's job is to interest the public in the public interest. -John Dewey