Profitable news

One of the most controversial things I have said (you’re welcome for that straight line) is that I insist my entrepreneurial journalism students at CUNY build only for-profit businesses. When I said that at a recent symposium for teachers of entrepreneurial journalism, I thought some of the gasping participants would tar-and-feather me.

I’m not against not-for-profit, charitably supported journalism any more than I’m against pay walls. I, too, crunch granola (and sell books). But I do not believe that begging for money from foundations, the public, or especially government is the solution to journalism’s problems. And I am certain that there is not enough charity in the nation to support the journalism it needs. Lately we are seeing too much evidence that the siren call of not-for-profit journalism seduces news organizations away from sustainability, survival, and success (more on the Chicago News Cooperative and Bay Citizen in a moment).

I insist on teaching our students the higher discipline and the greater rigor of seeking to create profitable enterprises. I also believe they are more likely to build better journalistic products, services, and platforms if they are accountable to the marketplace. When class starts, many students invariably talk about what they want to do. In my best imitation of a gruff old-timer, I tell them nobody gives a shit what they want to do, save perhaps their mothers. They should care about what the public — their customers — want and need them to do. They need to care about the market if they have any hope of the market sustaining them. That is why they start every term talking with the public they hope to serve. They always come back with surprises.

Of course, the market, too, can be corrupting. I’m tempted to use Rupert Murdoch as the best exhibit of the argument, though in that case, it’s hard to tell which came first, the rabid chicken or the rotten egg. In the long run, cynically giving the public only what it thinks it wants will not deliver value and will fade like the fad it must be. I have that much faith in the market.

And, of course, we can point to many valuable and well-sustained not-for-profit news enterprises: NPR is the best we have, but as its former CEO Vivian Schiller has said, it is very much run like a business, complete with advertisers (pardon me, [cough] underwriters). Texas Tribune is doing a brilliant job of bringing in the support needed to continue its brilliant work (though I argued with its founder and funder, John Thornton, a venture capitalist, that he’d serve the news industry better by demonstrating profitable models). Pro Publica is already a national treasure (though let’s note that it had to get a grant from the Knight Foundation just to figure out how to diversify its funding beyond its original patron, mortgage man Herb Sandler).

But there are other less shining examples. Now we turn to the Chicago News Cooperative, which just announced its closing. It found itself too dependent on a foundation (MacArthur), a customer/benefactor (The New York Times), not to mention the IRS (which needs to clarify the rules for not-for-profit news). Dan Sinker argues that it never met is promise of building news with the community.

Then there’s the Bay Citizen, which ran through $11.4 million in 2010 [see this comment for a correction] before collapsing last year; it will merge in still-uncertain terms with the better-run, more penurious Center for Investigative Reporting. When the Bay Citizen started with a pot of cash from investor Warren Hellman, I remember the San Francisco Chronicle complaining that this non-market player could unfairly compete with the paper and hasten its demise, an unintended consequence that didn’t come to pass mainly because the Bay Citizen was to terribly run. Non-market entities often are.

I recently judged a contest for an international journalism organization that received a large grant from a very large corporation to fund journalism startups and — here’s why I’m naming neither — I was appalled at the complete lack of thought that went into sustainability and responsible fiscal management in every one of the proposals. I urged the organization to not give away one penny and to start over. It didn’t quite do that.

The problem is that journalists don’t know shit about business. Culturally, they don’t want to. I often hear from journalists who are downright hostile to corporations and even capitalism not because they’re commies but because they believe they’re above it all (there is the root, I believe, of much of their cynicism about Google and other large technology companies). As I’ve said here before, when I came up through journalism’s academy, I was taught that mere contact with business was corrupting. I’ve had bosses scold me for considering the business of journalism. When I started Entertainment Weekly, I could not protect my baby from the expensive idiocy of my business-side colleagues because I didn’t have the biz cred. I vowed that would not happen again. That’s why I insisted on learning the business of journalism.

That is why I insisted on teaching the business of journalism. For we journalists have proven to be terrible, irresponsible stewards of the craft and its value to the nation. Feeding at the teat of monopolies, we grew fat and complacent and snotty about the markets we were to serve. We wasted so much money on duplicative, commodity coverage for the sake of our egos. We were willfully ignorant of how our industry operated and thus how it is dying, making us complicit in its death. We have only ourselves to hold responsible.

And that is why I so respect my friend John Paton, a newsman’s newsman who learned the business of journalism and is taking responsibility for its fate, as head of Digital First Media (where I am an advisor), which now runs the second-largest newspaper group in the U.S. John does not have the answers but he does have the questions and he’s not afraid to challenge executives in our industry with them. He’s willing to disrupt and experiment and learn. And he’s willing to teach what he learns. “Crappy newspaper executives,” he just said, “are a bigger threat to journalism’s future than any changes wrought by the Internet.”

Yes, it’s not just not-for-profit thinking that’s dangerous to journalism. It’s the unprofitable thinking of for-profit news companies. That is why, again, I insist on holding students and the industry they’ll lead to the more diligent standard of true sustainability. That means profitability. There’s nothing wrong with that.

  • http://www.newsboy.com Maggie LaNoue

    It was a dream of mine from a long time ago to get newsboy.com into a format for wiki news or something like that. I am getting into Drupal programming now so I might be able to revamp into a much more powerful framework before too long. (whitehouse.gov is drupal based.) Content would be the main issue.
    newsboy.com even went to the supreme court once for freedom of speech with aclu – link is on the site.
    just keep this in mind for the future. open to collaborative efforts.

  • http://twitter.com/jmproffitt John Proffitt

    I want to believe in nonprofit news, but I’ve had too much experience in nonprofits to sustain that belief. You say journalists don’t know shit about running a business? That carries over to most nonprofit leaders, who ascend to their leadership roles through dedication to the mission, not by having deep financial or business acumen.

    Public media is riddled with well-meaning people, but not hard-nosed business people, and it’s reflected in the lack of focus, lack of coordination, lack of aspirational goals. I once asked a manager: so what’s our mission? I was told it was “to make people’s lives better.” I suggested we could do that by passing out the money given to us by the CPB. She was not amused.

    For-profit businesses have a bottom line: profits. It focuses people, it’s clarifying. It can also be corrupting, as evidenced by cable TV “news.” But nonprofits have a much bigger problem: a fuzzy bottom line that doesn’t clarify or prioritize, and over which the organization can debate endlessly.

    I’d give real money to find a nonprofit news operation with a hard bottom line. Or a for-profit news operation that kept a journalistic mission alive. We need both. I just don’t know how to keep both halves in sync.

  • http://twitter.com/jcstearns Josh Stearns

    I agree with John, we need both. Our media system will be strongest with a vibrant and diverse mix of for-profit, non-profit, public, and community journalism organizations. In the same way that monoculture crops are dangerous to the food system because they are all share the same weaknesses, our journalism ecosystem suffered from monocultural thinking. When the bad economy and shifts in advertising hit, it highlighted these shared weaknesses (especially at consolidated news companies with huge debt loads).

    The lesson here is less about the model and more about the management. Regardless of what tax form you fill out we need people running organizations who can plan for and achieve sustainability in any sector. I have had the good benefit to work with killer non-profit financial staff who have understood that you can’t meet your mission if you can’t pay your bills. Those who aspire to build lasting nonprofit journalism organizations need to know the business of news too. My question is if you are telling students to only build for-profit businesses are you limiting the set of tools and strategies they have access to, and do we risk more monoculture thinking?

  • Richard Watkins

    Once again, I think this video is one of the best analyses of the failure of newspaper executives to see the change that was coming and to avoid becoming a laughable version of themselves. http://vimeo.com/36773408 Richard

  • http://www.fatcow.com Alex@Fatcow

    I have been working with nonprofits for a while and I can assure you that to reach better quality and development you need to have really good investments.

  • http://internettheory.org/ Richard Hirsch

    Jeff, if you want to make this blog more profitable, put a 728×90 adsense advertisement in the footer.

    • http://rickwaghorn.co.uk RickWaghorn

      Richard,

      You’re kiddin’, yes?

      More AdSense banners for Jeff to turn a profit?

      Lol…

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  • http://www.berkeleyside.com Lance Knobel

    I think you’re absolutely on the mark, Jeff. As you know, there are dozens of thriving local news sites around the country, where journalist founders (for the most part) have discovered their inner entrepreneur and figured out the ways of business. I don’t think any of us are going to get rich through our efforts, but I think we’re finding a way to build sustainable, local news sites.

    On your description of The Bay Citizen as “terribly run”: yes and no. It was the height of folly for a startup — even a well-funded startup — to squander 20% of its budget on its two highest paid employees. That’s truly unforgivable. But The Bay Citizen was (is?) brilliant at fundraising. The reason why CIR wants to merge with it is because there’s this lovely treasure of $12 million or so.

    You describe CIR as penurious but it managed to run a deficit of about $2 million last year. Not what I’d describe as penurious.

    The word in the Bay Area, incidentally, is that the merged CIR/Bay Citizen is going to abandon the local news side and concentrate on investigative and accountability journalism, which has been the core of CIR.

    • http://www.buzzmachine.com Jeff Jarvis

      Lance,
      You know better than I do about the particulars. The general lessons, I think, are sadly the same. But it would be good if CIR has the resources to continue work on accountability journalism, yes?

  • Nikola Karakashev

    “build better journalistic products, services, and platforms if they are accountable to the marketplace”. This is the most ridiculous bullshit I have ever seen. And this guy is and idiot, he mentioned ‘profit’ 37 times and I did not see ‘freedom of speech’ anywhere. MONEY is NOT the most important thing in the world PEOPLE ARE. I hope you stupid corporate slaves do realise you don’t have much time left, the commies are coming:) Peace

  • http://www.baycitizen.org Rose Roll

    Jeff, you erroneously claim “Then there’s the Bay Citizen, which ran through $11.4 million in 2010 before collapsing last year”. If you actually took the time to read our annual report, you would realize that in 2010 we RAISED $11.4M and SPENT $3.6M, resulting in a surplus of $7.8M.

    I hope your journalism students do a better job at reading income statements.

    Sincerely,
    Rose Roll
    VP of Membership, The Bay Citizen

    • http://www.buzzmachine.com Jeff Jarvis

      Apologies. I read a clip.

  • http://shayptc.blogspot.com Shay Shaked

    Very inspiring Jeff. Thank you.
    I used to be a journalism major myself while in college and even got to run the college’s newspaper. I miss journalism at this day and age, but you have to make money somehow… Perhaps I should have taken your course.

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  • http://www.oneminuteresponse.co.uk/ Trevor

    “…which came first, the rabid chicken or the rotten egg”: I love that – they should use that at the Leveson Enquiry!

    On a more serious note, I think that a lot of News International journalists are in such a mess right now because they left the business aspect up to senior management and editors who all bought Murdoch’s methodology of grabbing news. If more had a better idea of the business aspect they might have voted with their feet before the proverbial hit the fan and put their jobs at risk.

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  • Brian Robinson

    I think there are plenty of journalists know shit about business but, unfortunately, most of those can’t make a business out of journalism so they go into other things — PR, marketing, tech — where they can make a profit and build a business. I don’t think that’s a comment on their business abilities, it’s just that they can see better opportunities elsewhere.

    When I started out in the manual typewrite days — oy vay! — there were a steady run of people I worked with who would go off and start newsletters, small local pubs, mix that with marketing etc. They had the usual run of successes/disasters of all entrepreneurs. But enough of them made a good run at it.

    Don’t tar everyone with the same brush. On the other hand, I think you would be right in saying that there’s a dearth of business sensibility among journalists today, or at least among those that remain. That shows through in a lot of the reporting.

  • http://www.shortcutblogging.com Dave Youngd

    As someone with a Journalism degree, I love this approach. Making money by creating content is the core of Journalism. I’m building a business around it….even though I graduated 27 years ago. It’s never too late to become an entrepreneurial journalist! Thanks Jeff!

  • http://oldforestnewtrees.com Michael Andersen

    I think there’s a linguistic problem here. It’s easy for a revenue-negative “for-profit” to be dumb and destructive in all the ways Jeff describes. It’s also easy for a revenue-positive 501(c)3 to be successful.

    Financial sustainability and “profit” are not the same thing. This post assumes that they are.

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  • http://spot.us Digidave

    I love you Jeff – you know that – but I think you are painting with too wide a brush. You yourself recognize this a bit when you point out that NPR is run like a business.

    In the end a 501c3 is a tax-status. Nothing more. It can be used to make a sustainable business. In fact, you can make a profit – it’s just that the profit has to be put back into the business to grow it further (ie: mission outranks profits – but sustainability still outranks mission).

    A nonprofit can fail just as a for profit (and there are plenty of for-profits that have failed).

    Spot.Us was started as a nonprofit – not for any granola reasons – but because we were asking people to give money for an intangible good and it was the easiest/quickest way to get people to open their wallets (also – I thought it was a requirement for the initial grant – but that turned out not to be 100% the case).

    In either event – we survived nearly four years and when we did finally merge with a larger nonprofit (an acquisition) we STILL had 10 month’s worth of funding left and a revenue stream to keep that stretching further.

    Point being: You are right that a “charity case” is not the answer for journalism. But that’s a bit of a straw man. Being a 501c3 doesn’t mean you are a charity case – it just means you can’t sell shares. But you can run a 501c3 as every bit as ruthless as possible if your board agrees that sustainability is priority #1.

    You can get an initial investment from a group of people (philanthropy and Foundations) and you cannot get investment from a different group (Angles/VCs). The initial dance to get that money is different – but the goal is the same. And more and more Foundations/Philanthropists are looking for a sense of sustainability (and impact) while VC’s look for sustainability (and profit) (slightly different ending – but both are doing a dance).

    They both have different feels and I agree that there are advantages and disadvantages to both – but I am not 100% certain that one should be written off. You can cite the Chicago News Cooperative but I can cite NewsTilt (http://blog.digidave.org/2010/07/five-lessons-to-learn-from-newstilt) That doesn’t mean for-profit is a bad idea any more than CNC means nonprofit is a bad idea.

    What IS a bad idea is sucking……… That, I think we can agree on.

    I do think that nonprofit folk often have a negative view of for-profits and that’s just as wrong as the vice-versa IMHO.

    • George

      >> And, of course, we can point to many valuable and well-sustained not-for-profit news enterprises

      I agree with most of what you say, but is pushing forth NPR as a shining light of the non-profit world such a beacon when its get a large part of its funding, which it says it could not survive in its current form without, from the federal government? A good, well run business would not need government subsidies to do its job.

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  • http://connecticutnewsroom.com Matt DeRienzo

    I wonder if Robert Egger’s push to blur the lines between nonprofit and business models, and to get society and politicians to recognize the economic contribution of nonprofits, has some bearing in this discussion.

    http://www.huffingtonpost.com/robert-egger/no-profits-without-nonpro_b_1072742.html?ref=dc

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  • http://www.thedropoutdiaries.com Barbara

    The business of journalism is, sadly, why I am no longer a journalist. I don’t think I have any managerial skills or a business brain, which is why I loved my old job — talking to people, asking questions, looking at things critically and writing. Unfortunately, I think most of my bosses shared my lack of managerial and business skills, which didn’t make for a fun working environment. I’m now trying out working for myself and I quite like it. Although the pay sucks at the moment.

  • Andy Freeman

    I find it interesting that journalists who report on other people’s biz insist on being separated from their biz.

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  • http://www.about.me/ivospigel Ivo Spigel

    This profitability thesis depends very much on the geography / market. It would seem that high quality investigative journalism sites, blogs etc. are finding it hard to build profitable businesses as English language, US-based operations. Some are succeeding, which is great. However, building an operation like this in Croatian, when your market has a total population of 4.5 million – or in most other non-English geographies – is a totally different economic proposition altogether.
    As far as I can see, some form of charity / public funding / grants are absolutely necessary and will continue to be necessary to sustain quality journalism, regardless of the media format, in many, many countries and markets.

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  • http://richardblundell.net FreshThought

    I’m not so sure about not-for-profit, but NOT-RULED-BY-PROFIT is certainly an option.

    Several major newspapers (eg the UK’s Guardian) have secured themselves something of a future by setting themselves up as TRUSTS. While they may aspire to make a profit, the backing of wealthy, philanthropic backers with no editorial control, gives them a future.

    With dramatically falling circulation (the Guardian’s print fell 15% in the last year) it won’t be long before the income from print disappears.

    As yet, income from online is not sufficient in most cases (the Guardian may be ok being the world’s third most read online newspaper ( http://bit.ly/GUkHEr )

    If data from Fairfax of Australia is anything to go by:
    – the average ‘free online’ web newspaper loses $12.40 per week per regular reader
    – the average print newspaper still makes $7.20 per week per regular reader

    See http://bit.ly/H5q6Lu for more details

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