Those of us who work in traditional media have spent a fair amount of time wondering what part of the implosion in advertising revenue is cyclical (ad buying is suffering because of the recession) and what part is secular (we’re making horse buggies).
The beginnings of an answer came last Thursday, when Google announced that search advertising had come roaring back and said that stronger-than-expected third-quarter results suggested the global economy might be coming back. Net income rose 27 percent in the third quarter as strong advertising sales, most of it from search, increased revenue 7 percent.
Oh, and there was good news for newspapers as well. Turns out while the McClatchy Co’s advertising revenue fell 28.1 percent in the third quarter, it was not as bad as the 29.9 percent it dropped in the first six months. OK, not so great, but with net income of US$23.6 million in the quarter, it was a huge improvement over the US$4.2 million a year earlier.
The reason the balance sheet cleaned up so nicely? The firm cut more than 30 percent of its work force in the last 18 months.
What this suggests is that we’re facing a paperless recovery in which old-line content companies need to continue to slash in order to stay ahead of what looks to be a broad secular decline.
Leonard Downie Jr knows the story all too well. As executive editor of the Washington Post for 17 years, he watched as the Web first seemed to enable and eventually came to threaten organizations that support large newsrooms.
Downie and Michael Schudson, a professor at Columbia University’s Journalism School, were commissioned by Nicholas Lemann, the dean of the Journalism School, to write a report on the future of news and the newsroom. It was Downie who came up with the insight a few years back that the most important fight is not for newspapers, but for the newsrooms they support.
The report’s title, The Reconstruction of American Journalism, telegraphs its sober intent, a realpolitik way of thinking that is reflected in the opening words of the report: “Fewer journalists are reporting less news in fewer pages, and the hegemony that near-monopoly metropolitan newspapers enjoyed during the last third of the 20th century, even as their primary audience eroded, is ending.”
In other words, the current advertising model won’t continue to support so-called accountability journalism.
“Some of the advertising is going to come back as the economy does, but I think we all know that much of what has taken place is secular and not cyclical,” Downie said in a phone call on Friday. “And the Internet philosophers who suggest that individuals posting on the Web are going to replace what newsrooms have been doing are not being realistic. We have to find new ways to maintain professional news-gathering capacity.”
Clocking in at just under 100 pages, the report probably isn’t going to get looked at much beyond people in this racket, but it’s a worthy read, in part because it dwells less on the glory days and meets current realities head-on. The number of newspaper editorial employees grew from 40,000 in 1971 to 60,000 in 1992 and is now driving back to 40,000 this year, with no real bottom in sight.
Downie and Schudson came up with six recommendations, which include tinkering with the tax structure to accommodate nonprofit status for news-gathering organizations, persuading philanthropic foundations to fill the funding gap in more permanent ways, involving universities in news gathering and opening up databases to make them more useful for both pro and pro-am efforts.
Two of the recommendations caught my eye, both of which will create significant turbulence if they gain traction in the discussion.
First, the pair suggests reorienting public radio and television to provide local news, historically not a big interest of public broadcasters. The report says somewhat tartly that much of the money from the Corporation for Public Broadcasting (CPB) is spent on broadcast facilities and television production companies, with “very little money spent on local news coverage by individual public radio and television stations.”
It goes on to suggest that the CPB should step in to consolidate competing fiefs and begin to require a minimum amount of local news reporting in return for funds.
“The money is there, but a lot of it gets sunk into facilities and programming to drive membership, and it needs to be reallocated to reflect the need for local coverage,” Downie said. “And it has to be mandated because this is a time of crisis and we can’t just depend on good intentions.”
The other recommendation that will kick up some dust proclaims that it’s time for government to start funding local news, much in the way it enables the arts, humanities and sciences.
The Federal Communications Commission spends US$7 billion a year collected from telephone bills to underwrite telecommunications services in remote areas and help schools and libraries get wired. The report suggests that some of that money, along with fees paid for broadcast licenses or auctions of bandwidth, should go into a Fund for Local News.
Google CEO Eric Schmidt recently talked a lot about the importance of the plan for universal broadband in the US, but The Reconstruction of American Journalism goes beyond building infrastructure, suggesting it’s time to start funding what goes into those pipes. Downie said that it can be done with safeguards to ensure that the government doesn’t become the yard boss of what constitutes worthy news.
“We are just suggesting that certain kinds of reporting are a public good and should be funded as such,” Downie said. “There are plenty of precedents, and I don’t think that government support necessarily means government control.”
So there you have it. All we have to do is get the government to open the kimono on databases, foundations to rethink their priorities, universities to become newsrooms, rewrite the federal tax code, get public broadcasting overlords to think local and commercial broadcasters to kick in money for the public good, and we will have a dependable news infrastructure for a new, more complicated age. If only it were so simple.
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