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Jan. 20, 2017, 11:08 a.m.
Business Models

Newsonomics: Trump may be the news industry’s greatest opportunity to build a sustainable model

Readers have finally understood that their payments for the news will actually make a difference in what they and their community know. That model needs to be extended down to states and cities.

One of the most challenging periods in American press history begins at noon Eastern today. The cries of “Lügenpresse” (defended by the outlet until recently run by new chief strategist to the president) echo almost as much as the stiff-arm salutes in the nation’s capital in late October. The Russian propaganda service Russia Today (now nicely rebranded as RT America) somehow taking over the airwaves of C-SPAN for 10 minutes is just icing on the cake. Who knows what language cable news’ crawls will be in soon?

As we feel the ever-louder banging on the doors of a free press, we should also hear, weirdly, another knocking. That’s the knocking of opportunity.

It’s not just the “journalistic spring” that Jack Shafer predicts as the conflicts and controversies of the Trump administration prove fertile ground for investigation. It’s the opportunity to rewrite the tattered social contract between journalists and readers, a chance to rebuild a relationship that’s been weakening by the year for a decade now.

That’s not just some wishful sentiment expressed in the face of the reality of Trump. We’ve seen it proven out over the past several months, and we must grasp this chance to reset an American press that has been withering away.

In both the immediate run-up to the election, and more so in its dramatic aftermath, we’ve witnessed one greatly ironic unintended benefit of Trumpism. More than 200,000 new subscribers signed up for New York Times subscriptions, many of them not even directly solicited — they just figured out it was the right thing to do. The Washington Post saw its own double-digit percentage increase in new subscriptions, and Jeff Bezos — sensing opportunity —- has just taken the dramatic step of adding more than five dozen journalists to the Post newsroom.

Readers opened their wallets more widely, as The Atlantic, ProPublica, The Guardian, NPR, The New Yorker, Mother Jones, Vanity Fair, and the Los Angeles Times have all reported increased public support.

What’s the lesson here?

Beyond “support,” readers clearly recognize value. They reward reporting, factual reporting, secure in the knowledge that certain news brands are more immune from the fakeries, forgeries, and foolishness than others. They see their own questions being answered with dutiful reporting and thoughtful analysis. The Times, in its 2020 report, long in the works, renewed the new social contract, as it designated $5 million for deeper and wider national government coverage, given the Trump ascendance.

Readers see courage and they support it. The Times and the Post led courageously in 2016, even as the din of press attacks got louder. (And, here, let us recognize the uneven but growing courage of CNN, its reporters and its hosts, for more insistently piercing the bellows of nonsense they encounter. At the same, time, let’s recognize the potential of CNN-taming implicit in Trump’s meeting last week with AT&T chief Randall Stephenson, the would-be buyer of CNN through the acquisition of its corporate parent, Time Warner.)

And, yet, all of that outpouring of post-election support still amounts to a meager down payment on what the American press needs. The national news media lives on the thread of profit. It is not “failing,” as in the Trumpian taunt, but it’s just hanging on, having absorbed financial blow after blow of digital disruption. At the local level — where all but four of the nation’s 1,375 or so dailies operate -— the unraveling is far worse.

Those dailies approached the election emaciated, their weakness exacerbated by 10 years of disinvestment. Make no mistake: Most of the U.S. daily press still returns profits. They just don’t return as much news, or reporting, or knowledge, as they used to.

Further, it’s in that local press that Americans long got their basic news, the basic facts that informed their voting habits. We can draw a straight line between the decline of the American local press and a populace whose factual ignorance has been further distorted by the polarization of democratic discourse. We may struggle to point out a few direct illustrations of that straight line, but the impact — civic and electoral — is only logical. We can’t cut the number of journalists in the American daily workforce in half — replacing the most locally knowledgeable with less experienced, lower-paid recruits — and expect no loss.

Looking forward, though, it’s that local press that we must look to cover the day-by-day repercussions of health, environmental, education, and racial justice policies and laws turned upside down. We’ll see mad spin coming out of Washington, and the national media will cover that. That national media, stretched as thin as it is, has little prayer to cover what seems likely to happen in the 50 states to the formerly insured, the women facing clinic closures, the aggrieved looking to federal legal insistence on fairness and justice, and the families seeking clean drinking water. Those are stories that must be unearthed, and told, across the country.

It’s a question that comes down to a single word: capacity.

Long-time media watcher Merrill Brown pointed recently to the drained ability of American news companies to adequately report on the administration that takes power today.

“There are not enough institutions in the American journalism community that are healthy enough to deal with what the Trump administration is likely to do in its early years,” he said on Brian Stelter’s Reliable Sources on CNN a week ago. Speaking of both national and regional insufficiency, “We need more ProPublicas. We need more Jeff Bezoses. Philanthropists and investors need to be focused on how important media is, right now, during a dramatic change in government. We need more people to step up to the changes in journalism.”

Is it a news emergency? We can make a good case for that, but even if we want to classify it merely as a deepening crisis, let’s remember the advice of Rahm Emanuel as Barack Obama took over a country on the edge of depression in 2009. “You never let a serious crisis go to waste. And what I mean by that is it’s an opportunity to do things you think you could not do before.”

I’ve had many conversations with those in and around the industry since the election, and there’s clearly a greater realization of this existential moment in American journalistic life, yet no singular sense of what to do.

Let me suggest we act on what we’ve learned.

First, that means recognizing the new power of the reader/journalist relationship, one underutilized by-product of the digital age. Though the national/global newspaper-based media (The New York Times, the Financial Times, The Washington Post, and The Wall Street Journal, which is finally finding its feet, bringing its business acumen to tougher Trump conflict of interest reporting) still struggle with the digital transition, they’ve each crossed over. More than 50 percent of their revenue comes directly from readers; that’s up from the industry average of 20 to 25 percent just a decade ago.

That not only provides them a more stable source of ongoing revenue, as digital ad markets prove increasingly troublesome — it also makes the point of journalists’ work crystal-clear. Journalists report and write to satisfy readers.

Finally, in the recent cases of Times and Post subscription spurts, paying readers have finally understood that deeper connection: My payment for the news will actually make a difference in what I know and what my community and country know.

So, on a national level, that message needs to be reinforced at every opportunity, just as John Oliver and Meryl Streep, among others, have begun to do. Another half million to a million digital subscriptions could well certify the successful digital transformation of national news outlets proving themselves indispensable to the democracy. That number now appears in reach, as we assess the progress noted in Monday’s New York Times 2020 report.

It is in local markets that the reader revenue lesson is going largely untested. Yes, most dailies have put up paywalls, but only a relative handful — mostly outside the major chains — have funded still-robust, if diminished, newsrooms. The common arithmetic I’ve described: Halve the product, double the price. Rather than invest in that reader/journalist relationship, too many companies simply milk the life of the disappearing print paper.

My simple proposition: More Americans will pay more for a growing, smarter, and in-touch local news source if they are presented with one. As the local newspaper industry has shriveled, most readers have never been presented with that choice. Rather they’ve had to witness smaller and smaller papers, and then less and lower-quality digital news offerings.

It’s not simply an “It’s the content, stupid” moment. Too many news publishers have failed to create products, especially smartphone ones, that display well even what these local companies today produce. That, though, is a topic for another day.)

Out of the welter of possibility in 2017, we need to see multiple tests of ramping up local quality, volume, and product. We need new scale brought back to local news reporting, which can now exploit the wonders of multimedia presentation, and do it far more cheaply than print could ever offer.

Will any of the local chain owners invest in a Bezosian long-term strategy? Already, I’ve heard discussion at the high levels of a couple of chains about the new public expectation of “watchdog journalism” and how to meet it — and benefit from it.

Will the trying-to-be-feisty independents — perhaps led by The Boston Globe with its own small bump to 70,000 paying digital subscribers and a broad reinvention plan taking shape — see Times- or Post-like rewards for their efforts? Will any of the larger public radio stations tie growing news capabilities to a kind of “news membership,” moving to fill the vacuum of news in their cities? How many local TV stations will test out the idea of becoming broader TV/digital news providers, and doing enough to get reader payment? What kind of stronger, regional roles might the likes of Kaiser Health News (health), The Marshall Project (criminal justice), and Chalkbeat (education) play? Can any of the most ambitious of LION’s 110 local member news sites step up their coverage to benefit significantly from the new reader/journalist virtuous circle?

In business — and news is a business — consumers expect the improved product to be offered first, and then to be asked to pay (or pay more) for it. That’s why we need to see the kind of investment — from investors to philanthropists, as Merrill Brown suggests.

It’s been astounding to me that so few people of wealth have come forward to rebuild the American press in digital form. Why will an Elon Musk, an early investor in newspaper entertainment product Zip2, pour hundreds of millions into space, cars, and batteries, but nothing into his local Silicon Valley news sources? For the most part, even the most sympathetic haven’t seen a sustainable model that they thought worthy of their time and money.

Now, though, that model cries out before us: Majority reader revenue, built on a nationally proven next-generation content-and-product strategy. That’s the carrot. The big stick: Unless a new model is worked out soon, know-nothingism will find fewer challenges across the expanse of America’s news deserts.

Majority-reader-revenue models won’t work overnight, and, there, the bridging aid of a small fleet of foundations that have so far failed to fund a new sustainability will be key. I believe they will renew their own spirits — if and when they see building success.

Finally, let’s consider the intangible of civic pride in this strangest of political times. John Oliver made subscribing to the Times and Post and supporting ProPublica hip. Clearly, he tapped an open reservoir of goodwill. As high hundreds of thousands of people take to the streets this weekend, apprehensive of the future, and looking for accountability, the appetite for aggressive news media — national and local — may never have been as high.

Who will step forward and rise to the occasion?

Photo of the sun rising behind the Capitol, Friday, Jan. 20, 2017, by AP/Cliff Owen.

POSTED     Jan. 20, 2017, 11:08 a.m.
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