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New$ value

News may not always be free online

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In the digital age, carving slogans — even seemingly timeless ones — on the wall might come back to bite you. Case in point: Inside the rotunda of the School of Journalism’s Lee Hills Hall is the statement that “Advertising is the fuel of free enterprise and a free press.” Although the 1995 building is still new by institutional standards, the advertising-as-fuel analogy is starting to look old-fashioned when it comes to the press. Advertising in newspapers is down, many papers have closed, and remaining news staffs are shrinking. The U.S. press, while still free, is much diminished in its ability to protect citizens’ freedoms, says Charles Davis, associate professor of journalism and winner of a 2010 John Aubuchon Freedom of the Press Award.

Part of the problem is what Davis describes as a historically lucrative but structurally unsustainable relationship between newspapers and advertisers. “For the past century, the costs of producing journalism largely have been borne by advertisers, not consumers of news.” Subscriptions and single-copy sales pay just 10 percent to 20 percent of the tab for a news operation. “Advertisers don’t have a dog in the fight, but they paid for journalism because they wanted to reach the audience.” Other industries don’t work that way, Davis says: If Levi’s wants to market jeans, the company doesn’t sell advertising to somebody else to subsidize the enterprise.

Advertisers need newspapers less and less because they have other more precise ways of reaching consumers, says Mike Jenner, Houston Harte Chair in Journalism. Online ads for news sites pay less than print ads partly because advertisers think they are less effective and because they know it costs less to deliver news online. To compound the problem, he says, subscribing to a newspaper is no longer a standard feature of family life, and many people get all the news they want for free online.

Perhaps the carving in Lee Hills Hall will need revision at some point. Although advertising still largely supports the remaining newspapers, the fuel supply is dwindling. Nobody is sure how journalism will be funded in the future, but some faculty members at the J-School and fellows at the Reynolds Journalism Institute seem to agree that people who want news will have to pay for it.

Here’s a look at a few ideas for funding journalism:

So what?


But first a word — commercial message of sorts — on behalf of journalism itself. Davis says the profession needs to answer a key question: Why should anyone care if journalism is on the economic rocks? “No business does a poorer job defining, explaining and promoting itself than journalism,” he says. Yet the profession serves critical functions.

For instance: Stories by the Los Angeles Times helped lead to charges being filed in September 2010 against eight city officials in Bell, Calif., who allegedly misappropriated $5.5 million from the working-class suburb. “The officials were paying themselves enormous amounts of money through fraudulent means and were doing so in a matter-of-fact way because nobody had been paying attention,” Davis says. It costs money to have a seasoned professional looking in on institutions of government, and it costs lots of money to produce investigative reports, Davis says. “The Bell scenario occurred because not even a beginning reporter could be spared to drop in on city council meetings on a regular basis.”

This story is just one example of journalism’s value. Traditionally, editors have decided where to send reporters and which stories reach the public. Although journalists have always relied on tips from citizens, they spend much of their time looking out for the public good according to their own guidelines. For instance, many journalists believe their profession should be a watchdog on government, Davis says. “The three branches of government were set up to carry out their own functions, not to keep an eye on each other. The press is set up for that — hence the fourth estate, the eyes and ears making sure government is functioning properly and raising Cain if not.” 

Strength in numbers


The journalism school’s Columbia Missourian newspaper is known as a hands-on lab in which student journalists gain experience, but it’s also a testing ground for journalistic innovations, such as using crowd funding as a way to pay for news. One such idea is called Kachingle, which eventually could offer the masses a way to make small donations to news sites. Participants can visit sites they want to support and click on a Kachingle button, which triggers a donation to that site. Paypal gets 7 percent of the transaction, Kachingle gets 8 percent, and the favored sites split the rest. “You might think of it as the tip jar at your local coffee shop,” writes Missourian Executive Editor Tom Warhover. For the time being, Warhover has modest expectations for the brand-new Kachingle. “The Kachingle member sites aren’t exactly rolling in dough. Think tens of dollars in contributions, not hundreds or thousands.”

Spot.us is another crowd funding idea — further along in its development — that could help pay for certain kinds of journalistic projects. Founder David Cohn, an RJI fellow and former technology reporter for Wired, borrowed an approach from humanitarian groups such as kiva.org that let donors specify the recipients of their money. For instance, a kiva.org lender could send $25 to a particular aspiring entrepreneur in, say, an African village. At spot.us, writers, photographers and organizations post proposed projects and budgets on the site. Visitors read the “pitches” and can donate money to particular projects. Once donations cover the budget, the project gets under way.

‘We need good clean information as much as good clean water. Getting the public involved makes journalism more pure, more responsive.’ — David Cohn

The site launched late in 2008 with a $300,000 grant from the Knight Foundation. Since then, donors have funded 165 projects with about $250,000 in gifts. Project budgets range from $100 for a short article to $20,000 for live-streaming video coverage of the Wisconsin debates regarding unions. Although spot.us sometimes works with independent journalists, most projects are carried out by nonprofit organizations and news outlets.

“Our goal is to increase transparency and participation in the process of journalism,” Cohn says. He points out that citizens have long funded journalism through donations to National Public Radio. At NPR, editors decide which stories air, but at spot.us the donors decide what is news. Cohn likens the information journalists produce to clean water. “We need good clean information as much as good clean water. Getting the public involved makes journalism more pure, more responsive. Journalism is a reflection of society.”

Spot.us has a version of advertising that Cohn calls community-focused sponsorships. Visitors willing to take a three-minute survey earn credits they can donate to projects of their choice. Advertisers who sponsor surveys get the response data without identifying information. “At newspapers, advertisers pay the publishers, but here the money goes to a community member who decides what to do with it,” Cohn says. “The flow of money is very transparent.”

Although spot.us is the headquarters of the project, Cohn foresees a day when the site is not the “destination.” Organizations that originate pitches will be able to use spot.us technology that allows visitors to donate to a project without leaving their website. “We are not an editorial organization,” Cohn says. “We are a platform that helps people do what they want to do.”

A local window on the wide digital world


RJI fellow Bill Densmore also is working to connect readers to information they want and to see that journalists get paid. But his “networked” model is more akin to paying for information with a credit card than donating to an info-charity. 

The short version of Densmore’s model looks like this: The website of a local newspaper acts as a reader’s virtual home base for local news, and it also aggregates national and international news specific to individual preferences. Readers subscribe at one site, which gives them access to content at many other sites.

This is a big idea with a lot of moving parts, a digital-world revision of the old “value proposition” for local newspapers: provide a service to readers by delivering important, hard-to-find information in a timely fashion. “That packager-gatekeeper role for print newspapers is dead,” Densmore says. “Papers need to do what they always did but in the new native environment of the Web. They need to emerge as service providers. They need to make money referring readers to information they want and need from anywhere on the Web.”

To hold up their end of the bargain in Densmore’s scheme, news organizations would become “information valets.” Like valets who assist employers by catering to their needs and desires, the InfoValet software Densmore is testing would customize news offerings for each reader based on preferences they specify and sites they visit. Readers who click on an article from another organization would set in motion a third-party credit check similar to what happens when retail shoppers swipe a credit card through a reader. Without having to log on and open an account at every news organization, readers could get what they want in a hurry. The payment for another paper’s article would likely be pennies or fractions thereof, some of which would go to the home base paper. Of course, readers would agree to all this ahead of time, and the systems would ensure privacy and security. 

‘That packager-gatekeeper role for print newspapers is dead. Papers need to do what they always did but in the new native environment of the Web.’ — Bill Densmore

Densmore and several journalism faculty members seem to agree that the network idea may be in their field’s future, but probably not its near future. “There are lots of hurdles,” Densmore says. To make it work, InfoValet has to prove valuable in offering individuals news they are willing to buy; an information commerce network — which Densmore says already exists in technology — has to be broadly adopted. As a step in the process, Densmore has written a white paper for RJI called “From Paper to Persona.” It argues for creation of a public-benefit Information Trust Association, which would develop rules and protocols for the network. And, remember, these ideas hinge on news organizations charging for their online products.

All the news that’s fit to digitize and monetize


On March 17, The New York Times took the bold step of charging for some of its online news product. Readers can view 20 stories a month before the meter starts running and they have to pay for more stories. That was a seismic event in the journalism world, Davis says, because “where the Times goes others will follow.”

Although the Times is a trendsetter, Jenner is skeptical that the roughly 1,400 daily U.S. newspapers will get in line quickly. “Only about a hundred of those papers have started charging for online content.” For the time being, papers still make most of their money on the print edition. That, coupled with a glut of free news and low revenues for online advertising, makes the prospect of charging for online content a hard sell for publishers. Plus, Jenner says, “It’s like herding cats to get 1,400 newspaper publishers to act as a group.” For instance, it took years just to get them to standardize sizes for advertising space.

Even so, Jenner sees charging for online content as an important first step toward fostering the idea among publishers that Densmore’s network idea could eventually work. For instance, the Columbia Daily Tribune recently started charging for online content, and response has been good. Within a few months, the paper recouped its software investment, and its online income is on track to bring in the cash equivalent of two or three reporting positions.

“For a long time, I was looking for a eureka moment for how journalism would get funded, like iTunes with music,” Davis says. “Now I think the answer is going to come through a lot of incremental changes and new technologies and developments like the iPad and the Times going to a metered approach.”

Jenner agrees. “Any way you cut it, this is a tough business right now.”

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