When it comes to the future of journalism, I often hear us asking the wrong questions and then wondering why we can’t find any reasonable answers. For example, people ask: “Should government get involved in journalism?” The reality is that since the establishment of our democratic system of government, laws and policies have always shaped journalism and media. So we should not ask if government should be involved, but rather how government should be involved.
The owners and lobbyists for big consolidated media companies understand this, which is why they pour millions of dollars into lobbying Congress and the Federal Communications Commission each year to pass policies that benefit them. By asking the wrong question – if instead of how – we ignore the facts and remove ourselves from the political process. This leaves those with the greatest stake in the future of news – journalists themselves and the communities they cover – out of the policy debates reshaping media in America.
Similarly, conversations about the future of journalism spend far too much time focused on the question, “What’s the cost of journalism?” instead of the question, “What’s the value of journalism?”
The first question is an old one rooted in an obsolete business model and an outdated understanding of the relationship between communities and their newspapers. By focusing on cost, we focus on output – how much can one journalist or one paper produce? This emphasis on cost encourages cost-cutting. We hear this argument every time media companies combine and consolidate. They argue that by cutting costs, they will be better able to serve local communities.
Time and time again, however, we have seen that cutting costs means cutting value. But too few of us are talking about value. A focus on value encourages a focus on inputs. What are journalists and newsrooms producing? How is their work affecting society, community, democracy? We may need to address the cost of journalism, but if we do so without also considering journalism’s value, then we are doomed to kill the product we are trying to save.
The newspaper industry is perhaps the best example of why questions of cost are the wrong questions. In many instances, papers that are nearing bankruptcy actually have profitable newsrooms – often with double-digit margins. McClatchy’s newspapers saw a 21 percent profit margin in 2008. Yet the company still cut its work force by nearly one- third in the past year as it struggled to finance the $2 billion it owes from acquiring Knight Ridder in 2006. Gannett earned an 18 percent profit margin last year, with some papers seeing profits as high as 42.5 percent. Nevertheless, Gannett slashed 3,000 jobs and forced employees to take a week-long furlough while the company’s top executives continued to receive six-figure bonuses.*
By starting from the question of value, we come to vitally different conclusions. C. Edwin Baker’s testimony to the House Judiciary Committee this spring illustrates this point. His testimony highlights the tension between a focus on costs and a focus on value. He said:
“Much of the value produced by newspaper journalists goes to people other than media companies’ customers. We all, including non-readers, benefit from journalist reports exposing corruption and the consequential remedial responses. We all benefit from the governmental or corporate corruption or negligence that never occurs due to news media’s reputation for watchfulness. We all benefit by the wiser voting of those informed by journalism. To the extent benefits go to non-readers, newspaper companies cannot adequately turn these benefits into revenue. This gap between benefits provided and revenue obtained results in inadequate incentives to put resources into producing news.”
Baker argues that it was the priority placed on the value of journalism that drove the founding fathers to subsidize newspaper distribution. At the time, the market couldn’t support the journalism the country needed, and the success of those early papers hinged on government subsidy. For Baker, the decline of American newsrooms is directly associated with newspaper companies’ emphasis on cost, and he argues that the government has an important role to play in supporting journalism.
“The real problem, the decimation of the journalists employed by the media, represents the inability of media companies to obtain revenue that even approaches the real value that journalists’ efforts produce for the community. If the government gave these companies a tax credit for half of the journalists’ salary… these tax credits would reverse the incentive for newspapers to lay off journalists, which in turn would increase the quality of newspaper journalism and cause circulation to rebound.”
A focus on cost suggests that users should be paying for the news. It is concern for cost that drives media companies to put up pay walls and to provide their content only to those who can pay up. It is concern for cost that encourages conglomerates to collude and combine, despite the fact that readers have seldom if ever paid for the news. At best, subscribers have paid a portion of the delivery costs, but they have never come close to paying the full, actual cost of producing news. To ask them to do so now is unrealistic and a symptom of asking the wrong questions.
The news has always been subsidized – whether by the government (as with NPR), advertisers (most newspapers), or other forms of income (such as the Washington Post’s ownership of the Kaplan Test Prep company). As other systems of subsidies are failing, we are left with a clear and present need, and the government has a key role to play.
As Baker says, a focus on value makes it clear that it is not readers who should pay for the news, but all of us who should be footing the bill. We all benefit from a vibrant watchdog press, from in-depth reporting, from the value quality journalism adds to our communities. We all should support that value, and policy is the vehicle to make it happen.
While Free Press doesn’t necessarily endorse Baker’s policy prescription, we do agree that we need government to focus on the question of value, not the question of cost. The question of cost is a Wall Street question. The question of value is a Main Street question. By shifting the conversation to the value that local news organizations provide, we get closer to finding actual solutions to the problems facing journalism.
*For more on these earnings numbers and the role of policy in the future of journalism read Saving The News: Toward a National Journalism Strategy.
(This post was originally posted at SaveTheNews.org)