Few of my friends or acquaintances are fans of the editorial page of The Wall Street Journal. I live in Cambridge, Mass, where President Obama received 88% of the vote in November.
So I thought I’d call their—and your—attention to the lead editorial in today’s paper. Titled “Ink-Stained Politicians,” it is critical of congressional initiatives to “rescue” the newspaper industry. One of the leaders of this movement is my own senator, John Kerry. As are many of us, he is concerned about the future of the hometown Boston Globe. (The stakes may be particularly high, though, for the senator. In his re-election bid last year the Globe gushed: "The case for reelecting John Kerry would be strong under any circumstances . . . [but] the country needs his voice more than ever.")
So it was Sen. Kerry’s subcommittee that held a hearing on May 6 titled "The Future of Journalism." It was a morose affair, with publishers enumerating the fate of failing and fallen comrades. Then the senators turned to the culprits, Huffington Post and Google.
The hook for the hearings was what role Congress could conjure to help out what Kerry buys into as “the fourth branch of government.” One proposal, from Maryland Senator Benjamin Cardin, would allow newspapers to convert to nonprofit status (hmm-it seems like the point is that they are already nonprofits. What they should say is not-for-profits). Their operating revenues would be tax exempt. In return, they would be precluded from endorsing political candidates, though, as the Journal points out, that wouldn’t prevent them from taking sides more subtlety.
The other idea being floated was some sort of an antitrust exemption that, as described by Dallas Morning News publisher James Moroney, would allow the newspaper industry to conspire to find ways for making money from putting the work of its journalists online. Of course, I thought that was what the industry has been doing with such projects as Newspaper Next and The Newspaper Project. But I suppose a major league baseball-like exemption would allow publishers to band together for steps that would prevent the Huffington Posts and Googles from making money off their backs.
The Journal’s position is one that I have trumpeted, as have my colleagues here Dorian Benkoil and Vin Crosbie. That is to let the forces of technologies, consumer behavior and the marketplace play themselves out, at least for awhile longer, before panicking. I have argued (as have others) that there will be changes, for sure. But that there will also evolve multiple business models. There will be winners and losers. Services lost-- for example some local coverage if some cities or towns lose their daily printed papers—are highly likely to be regained as new players jump in to fill a vacuum.
We see hints of that with an array of Web sites that focus on local and even hyperlocal news. Some, like EveryBlock, for the moment are compendia of links to local government sites, some blogs and even local news from other sources. But that doesn't mean that is their end point. It is their opening gambit. Should they gain traction some will start adding original content (or they may find the to gain traction they will need original reporting). A few, such as Buffalo Rising and Patch, already do have reporters covering the local scene. Very few now. But given time, and a market, more later.
Dallas’s Moroney speaks for many in the legacy media who are urging Congress to legislate a "consent for content" requirement to get the Googles and Huffington Posts of the online world to pay "fair compensation" for content they pick up and then sell advertising on. The Journal comments “So, although most newspapers are giving away their content free online, the feds should guarantee them a stipend from anyone who gets someone to pay for it. There's a winning business model.”
In any event, it would seem to be a matter for negotiation rather than legislation.
The Journal continues: “The larger story here is that newspapers are enduring the familiar process of economic "creative destruction," in this case brought on by the Internet. Advertisers are fleeing to search engines, while barriers to entry in publishing have crashed. Despite the pain this causes to certain companies, this is not much different than any other industry buffeted by new technology or business strategies.”
Creative destruction is right. In the early 1990s, the 200 year old Encyclopaedia Britannica was a $650 million company. Five years later in was bringing in one third that. It’s business model based on a high priced part time sales force selling “guilt” as much as $2000 sets of books was undermined by Microsoft’s Encarta, given away for free on a CD with a new computer and based on an old Funk & Wagnall supermarket-distributed encyclopedia. The World Book suffered similarly. Both have had to retreat and reformulate to survive in the world of DVDs and online delivery. Where was Congress then?
The Journal’s editorial concludes with an argument almost stolen (dare I charge?) from a recent post of mine, save the last line:
“Some new business model will emerge for journalism, if not for all newspapers, and in the meantime the business of reporting the news isn't vanishing. It is taking new forms and adapting, with newspapers growing their audiences online even as the sources of their revenue shift. The industry is currently debating how to charge customers for content, and no doubt many experiments will be tried. No matter who emerges victorious, the journalism business will be stronger and more credible if it avoids the government's embrace.”
To its credit, the Obama Administration is keeping its distance. Press Secretary Robert Gibbs, responding to a question, commented that while it's sad for cities to lose their daily papers, any public assistance "might be a tricky area to get into.…I don't know what, in all honesty, government can do about it."
The sooner the suits in Washington and the executive suites in Dallas understand that, the better off it will be for the future of journalism.
COMMENTS
COMMENTS
1. karenc on May 16, 2009 11:17 PM writes...
Unlike this article, the Wall Street Journal article is extremely inaccurate in how they portray the hearing. The conclusion that one gets reading it is that Senator Kerry and the rest of that sub-committee are speaking of a bailout - something never mentioned in the hearing.
In addition in a bizarre paragraph, they twist Senator Kerry's reference to the media as the fourth estate, wording that has been used since the 19th century to refer to a free press as a check on government, to somehow mean he favors government influenced media. (The fact is that he was a co-sponsor in 2005 to a Lautenberg bill that would outlaw government agencies from paying for propaganda - as various Bush agencies did in 2004.)
I watched the hearing and to me one good thing was that it got some people from the MSM and some news aggregators together. What seems clear is that it would be impossible to fund a newsroom on the revenues that newspapers can currently get from online viewing of their newspapers. However, Google News and other aggregators need the content from news rooms to function.
Here is a link to a Washington Post article that explains that it was legislation that defined the current playing field - where Google et al flourish and newspapers fail. http://www.washingtonpost.com/wp-dyn/content/article/2009/05/15/AR2009051503000.html Where other than the Commerce Committee's sub-committee on Communications should this occur?
It also is highly likely that plans for this hearing were initiated before the Boston Globe's plight was known. In addition, though the BG editorial board has always endorsed him, their reporting has often been pretty weak. I seriously doubt that there are many papers in this country where a reporter would have gotten away with accusing a 4 term Senator just after he announced that he would soon be treated for cancer of not being honest because he had not told him this 2 weeks before he had told all of his family and close friends. This is clearly not favoritism.
