Notes from the New Economic Models for News conference
A Note from Guild member Janet Moore:
Recently, the Twin Cities Newspaper Guild and the Minnesota Journalism Center of the University of Minnesota sponsored a day-long conference called New Economic Models for News.
The conference featured speakers from all over the country discussing new ownership and revenue models for newspapers, as well as the industry’s changing regulatory environment.
David Shribman, editor of the Pittsburgh Post-Gazette, gave a rather inspiring speech at lunch about Why We Still Matter. Brian Leehan and I took notes from the conference:
Changing Regulatory Environment:
* Bernie Lunzer, President of the Newspaper Guild
* John Sturm, Newspaper Association of America (self-described lawyer and lobbyist)
Sturm: Said there was “a greater appreciation in government now about the importance of local media. Attitudes and environment has changed …” for the better. Feels things are right for legislation that will help.
Lunzer: “The Guild is agnostic on any specific solution to current problems. The future rest with the frontline journalists and creative staffs.”
It was noted that leader of the House Nancy Pelosi is pushing for the relaxation of anti-trust laws as they apply to media, especially newspapers. The current anti-trust laws are “a 1975 construct” and make no distinction in views/treatment of TV, newspapers, internet, magazine, Yellow Pages ads or anything else.
Sturm: Dean Singleton utilized concept of “cluster” - rolled together 30 different newspapers (dailies, weeklies); cut staff - “pooling talent” where one reporter shares content across the “cluster.”
Sturm: Insists that “newspapers are the least consolidated” of all media. “Gannett owns 7% of existing titles, and it’s the largest newspaper media company.”
Lunzer: “No one wants a direct link between government and press.” But he pointed out that there are opportunities for tax breaks, tax credits, etc. to help newspapers economically in the current crisis.
Sturm: He worries about special tax breaks for newspapers - “What government gives, it can take away,” and the industry would have to deal with that when it happened. He’s against giving special, specific treatment to individual industries.
Question: “Newspapers structured as local utilities?”
Lunzer: No. There needs to be distance between what papers do and what the government does - utilities are regulated.
Question: “Need for/possibility of restructuring of bankruptcy laws?”
Lunzer: “Currently the only goal of bankruptcy is saving the company.” It leads to harmful actions, such as abrogating labor contracts, killing pension plans, etc.
Sturm: “Pre-packs” becoming popular. It’s a pre-packaged bankruptcy plan, already structured, agreed and voted on between all parties, and then bankruptcy is filed. Judge goes over everything, approves or not - but much time, cost, bad-feeling between parties is saved/avoided.
Revenue issues:
Lunzer: Ken Doctor’s “Fair Share” proposal: fair compensation to creators of content from aggregators (any online medium that takes stories or chunks of stories and links to them and/or posts them directly - ex.: Huffington Post)
Sturm: Legal considerations - “hot news” or “breaking news” concept for a story/coverage is only covered in state law, not federal. It makes it tougher to deal on national/international level re: internet. Legal constructs, for litigation purposes: “property rights,” “unjust enrichment,” “appropriation of property;” aggregators taking content and using it “way above and beyond ‘fair use.’”
Lunzer: His 21-year-old son argues the issue with him, saying “information wants to be free;” L’s reply: “You can’t eat a virtual sandwich.” Need for journalists, content providers to be compensated fairly for the work they create.
Google: using other’s content, but enriching it with ads that they benefit from directly - should content providers be compensated, receive part of that ad revenue?
Strum: business model for local papers - “one-stop shop” for local businesses; newspaper handles all aspects of their marketing, information services, printing, delivery.
Trends in broadcast industry exactly like newspapers, only they’re several years behind.
New Ownership Models:
- Ted Venetoulis, Corridor Media, Inc.
- Robert Lang, Manweiller Foundation, L3C Advisors
- Jennifer Towery, Peoria Journal Star, Peoria Newspaper Guild
T.V.: The need is to push for local ownership (he is head of a group trying to purchase Baltimore Sun from Sam Zell/Tribune Media Co.) - using a “non-profit structure, where profits go back into content.”
Using the argument that a newspaper is “a public service” will allow the non-profit status.
Working with Maryland Senator Ben Cardin to get SB 673 through (no sponsors yet for the legislation). The bill 1) allows revenue to be tax exempt - like Public Radio/TV; 2) allows for all grants, individual contributions, etc., to be tax deductible.
http://www.niemanlab.org/2009/03/non-profit-news-outlets-deserve-a-tax-exemption-for-ad-revenue/
R.L.: He developed the L3C, which is a hybrid of “for-profit” and “non-profit” status for a business entity.
http://www.nonprofitlawblog.com/home/2008/07/l3c.html
He thinks L3C can be used immediately for newspapers, without SB673, because of 1969 law “Program-related investment” - if a program is providing a public service, non-profits can invest in them.
The L3C is currently legal in Vermont, Michigan, Utah, Illinois, several other states; you can “incorporate” as an L3C in any state where it’s legal, then you can operate legally in any other state under that status.
Problem is that there is not enough endowment money in the entire country to save every paper; “I’ve seen estimates that run anywhere from
$2 billion to $5 billion just to endow and run the New York Times, alone, as a non-profit.”
In terms of the exact structure for operation (operating agreement) of the L3C company: “You can set-up any kind of structure that everyone involved agrees to.”
J.T.: Issue is not saving “newspapers,” it’s “saving journalism.” “The work of journalism is a public service, a public trust, in terms of the purpose it serves.” “We’ve done a poor job at covering our own story and troubles.”
- There’s the need for a lot of “owners”: subscribers and investors
- No more “sugar daddies,” the days of single owner/investor carrying it all is over
R.L.: Regarding potential issue of a newspaper’s editorial board (commentary, endorsement of candidates, etc.): argument out there that, as non-profit, newspapers couldn’t do the conventional things that commentary/editorial does. “Set-up the editorial board as a separate L.L.C., then the L3C can contract with that L.L.C. editorial board to provide content - commentary and endorsements.”
- New paradigm must be “media company,” not just “newspaper;” it must be an overall newsgathering” entity.
- Need for greater, wider community involvement; need “for the local community to have a direct investment in the newspaper’s success and longevity.”
New Revenue Models in the Digital World Panel
–Joel Kramer, MinnPost
–Steve Yelvington, Morris DigitalWorks, Morris Communications, (and founding editor of Startribune Online)
MinnPost has roughly 1,700 donors, and is now the largest local online Website in the U.S. not attached to legacy media. Roughly a quarter of expenses are paid for by ads. Focused on breaking even by 2011, 2012 at the latest.
Kramer doubts there will be enough Foundation money out there to support journalism as it’s currently practiced. The single-provider media model is dead. He predicts multiple small players in any given market will provide local news that will be much more focused and specialized.
Here’s a good story about MinnPost’s first year.
Yelvington was much more cheery: Newspapers aren’t going away any time soon, he said, and they’re a lot healthier than generally believed. “Don’t confuse huge corporate finance mistakes with the failure of the advertising business model,” he says. In fact, most newspapers are still fairly profitable businesses.
He also said not to underestimate how devastating the current economic downturn has been to newspapers, and that once we cycle out of the bottom, conditions in our industry will improve - not to the extent of the good old days, but perhaps enough so we can regroup, recover and innovate.
Steve has some interesting thoughts on his blog. I especially enjoyed the recent entry about what McClatchy did to the Strib’s website.