The New Niche

How tax incentives and technology came to the rescue

Washington, D.C., 2014—By 2009, we were at an impasse. The news business—newspapers in particular—was collapsing, and there was no obvious way to reconstitute it as a business that was capable of providing serious public-interest journalism. Paradoxically, though, the collapse of newspapers as a viable business didn’t reflect a collapse in the public desire for quality news.

We can rightly blame the convergence of portable computers and the Internet for this collapse. Real-time statistics on who is reading what, and when, revealed to advertisers, for the first time, the true scope and engagement of the news audience. The printed page had provided no such information, and that had allowed publishers to overcharge for their inventory—the display of the ad, not the actual reading of the ad, drove revenue. With no leverage to negotiate a better deal, advertisers had accepted this state of affairs. But by 2009, this was the reality from an advertiser’s perspective: real-time statistics on their consumption of ads that often showed a stunningly low return on investment and an oversupply of Web pages providing advertising inventory. The balance of power shifted to advertisers. As a result, online advertising generated a fraction of the revenue, per reader, that print advertising once had generated.

In recent generations, Americans had been conditioned to believe in the infallibility of market forces. We would glibly say, “The market has spoken,” followed by its corollary, “Let the market sort it out.” Yet the free press occupies a special place in our culture and civilization. It’s the fourth branch of self-government. Without it, how can the public be educated on the great (and small) issues of our time?

The press—or at least its most vital, and most expensive, functions—had been sacrificed on the altar of laissez-faire capitalism. What remained were largely the amplifiers of news: cable, most radio, and the Internet aggregators and blogs that repackaged and riffed on the news and information produced by the small handful of serious outlets that continued to invest in newsgathering. In this information ecosystem, propaganda masquerading as news found a ready pathway. The beast had to be fed. The public’s ability to shape coherent public policy suffered.

Small bands of bloggers and citizen journalists gamely tried to fill the void. And from time to time they did, breaking original news of significance. They weren’t paid (or weren’t paid much), however, and thus the key ingredient required to describe a profession was missing: money.

In 2009, the Center for Independent Media was an exception to this rule, one of a handful of organizations producing daily news at the local and national level, through six state-based Web sites that married the speed and intimacy of blogs with the discipline and ambition of investigative journalism. We had, on a good month, over a million visitors through the network, and were positioned to expand to new states in the coming years. Our goal was to become the leading independent online news network in the public interest, by building a network of state sites and a national news site in Washington, D.C., capable of covering the workings of government, politics, and the issues driving public debate. We believed that Congress would never charter an online corporation like PBS or NPR, and that a certain segment of the news-consuming public would nonetheless crave its online equivalent: a trusted source of news, independent of corporate control, valued precisely because it was nonprofit. This was the niche we aimed to fill, and we did so, at first using a combination of private philanthropy and reader support.

Even as our audience grew, it was clear that the technology we used to deliver the news was unsatisfactory. Computers and mobile devices in those days didn’t have the ease of use of paper. Consuming electronic news remained relatively demanding—something that generally happened tethered to a desk or on a small hand-held screen. We were crossing the chasm from one technology to another at a painfully slow pace. Thus the critical need for philanthropy in this nascent period. At the time, it wasn’t clear that philanthropy would be up to the task of keeping public-interest journalism afloat until the technological gap closed and advertising returned to a level that would again begin to cover the journalistic costs. But it was.

The willingness of people with great wealth to support the news marked a return, in a sense, to the nineteenth century. Moguls with an agenda, liberal or conservative, began to fold public-service journalism into their array of media interests, for the purpose of influencing the direction of the country. We saw this in fledgling form in 2008, with Herb and Marion Sandler funding ProPublica. Soon, there were others, primarily driven by a younger generation of millionaires and billionaires who had made their fortunes on the Internet.

It wasn’t a panacea. Much of this philanthropy failed to trickle down to the local level. The workings of federal government were well reported, but local government remained dangerously undercovered, creating the sorts of conditions in which political corruption could flourish. In late 2010, after heavy lobbying by a coalition of media companies led by The New York Times and The Washington Post, Congress created tax incentives to contribute to news “trusts”: news organizations and their advertisers had the option of reinvesting in nonprofit, public-service journalism, and enjoyed significant tax breaks for doing so. Through the tax code, the government indirectly subsidized the critical parts of public-service news that, on their own, had no way of turning a profit. This quadrupled the amount of philanthropic dollars available for serious journalism.

The Center benefited from this broader base, and the five years between 2009 and today were good to us, in part thanks to our local focus. We were right in forecasting that the audience would be a network of niche audiences, segmented by geography, interests, and ideology, and with the support of philanthropy, we were able to expand our network to ten more states, for a total of sixteen. In nearly all these states, the major dailies have radically downsized to online-only publications, or gone bankrupt and folded.

During those five years, more and more of our readers received our content through an evolving series of inexpensive, dynamic, handheld devices and readers. Each year brought screens that more closely resembled the experience of reading on paper—portable, foldable, flexible. The whole world needed this, and we merely piggybacked on the innovations. This portable medium permitted better targeting of highly valuable ads based on geography, along with retail history and demographic profiles. A coupon emerges on screen that is good for six hours at the nearest Starbucks for that low-fat Venti latte you love so much, and so forth. We are all accustomed to this now, and find some advertising quite useful. This has driven the return of ad revenue that covers a reasonable part of our editorial expenses. While in 2009 we had seventy foundations providing 95 percent of our income, today advertising generates 20 percent. Reader donations supply another 20 percent, thanks to society’s gradual embrace of charitable micropayments online, allowing the share of income covered by private philanthropy to stay at 60 percent.

The news itself, however, is fundamentally different from the apogee of the daily newspaper. A newspaper, with its daily cycle and deadlines, delivers news as a pulse—a discrete article, a discrete edition. Online news is a wave—it has no clear start or finish. And sharing is the name of the game. Linking to and referencing what others are saying has become an essential part of reporting. The days of pretending to ignore the competition are over. Credit those who break news and they will credit you in turn. New information drives everything. Reporting is the gold standard; reporting that breaks news is the currency that fuels growth, prestige, and audience. Those who comment wittily have little to offer; those that do the work of journalism feed the online ecosystem, and reap rewards.

The days of the omnibus newspaper were over by 2012. This has put public-interest journalism—which traditionally had been subsidized by real-estate, sports, and lifestyle sections—on life support. When you stripped those sections out and turned them into bloggy businesses, you left the core exposed: a virtuous section that is expensive and which, unbuffered by the softer stuff, terrifies advertisers who don’t want to be seen as funding, say, an investigation of the president. Thus even today, public-interest journalism remains pitiful in scope.

The old guard was ill-equipped to lead the transition to this new era. Its notions of daily deadlines, balance as objectivity, and just-the-facts writing were never suited to the new reality. By 2012, the Internet offered a critical mass of literate and alienated news consumers the means to fact-check reports and self-organize against an increasingly discredited brand of “he said, she said” journalism, which placed the pursuit of balance over the pursuit of truth. Yet the old guard’s legacy of fact-based reporting and investigation remain the bulwark against propaganda. That must be retained, along with a relentless pursuit of the truth. And that’s what we at the cim are trying to do.

Today, in early 2014, the Center finds itself in a reasonably strong position. We reach fifteen million people a month through our network of sixteen sites. Congress is considering further tax incentives to finance public-service journalism, which will likely add depth to the support for our work. A fledgling network of overseas reporters, managed in the same vein as our domestic reporters, promises another round of significant audience growth: the public is especially hungry for international news written for a U.S. audience, as nearly every American news organization has folded its overseas operations.

Yet the overall landscape for news remains bleak. Our work, and the work of a growing number of similarly focused news outlets, can hardly fill the void left by the disappearance of hundreds of newspapers and their reporters. A new social contract is required, one that recognizes that a strong and independent press is crucial. The rapid decline of our journalism as a watchdog on the powerful is destabilizing our way of life, and we can’t wait for the market to sort it out.

Has America ever needed a media watchdog more than now? Help us by joining CJR today.

David S. Bennahum is president and CEO of the Center for Independent Media, which publishes six news sites in the public interest. Additional information on the Center and its programs can be found at www.newjournalist.org.