That brings me to where where we fundamentally differ: I don’t accept the premise—not yet—that great journalism and profits are now all but incompatible. I don’t believe that “investing in the Post would be money down a rathole,” as Shirky says I do. I believe it could be, but that’s a critical distinction. I also believe investing money in, say, Facebook could be sinking money down a rathole. But you know what? I don’t own the thing. If I owned a company, much less a critical institution like the Post, I would invest in it or sell it to someone who would. No single investment is a sure thing and newspaper investments these days are riskier than most. The truth is, we just don’t know what the Post Company could have done by investing part of the $1.1 billion it’s handed shareholders in the last four years. But we do know where it is now.
The New York Times, whose market position is unique but not radically different from the Washington Post’s, has not gutted its newsroom, and it is doing much better as a business. That’s no accident. Had the NYT halved its newsroom like the Post has, it would be doing far worse and it would be having a much more difficult time snaring lucrative digital subscribers. As David Carr writes on Twitter, Shirky “gives WashPo management a pass, failing to point out (dimunition) of asset sped downfall.” The fatalism that there’s nothing to be done, that chainsaws must be taken to the newsroom, that hamster wheels must be spun, that it’s okay to be sad that newspapers are dying but not to the point of actually doing even the minimum about it, like cutting the dividend, is harmful.
Actually, that doesn’t quite accurately characterize Shirky’s position, which calls for the Post Company to stop disgorging the cash to shareholders. It’s unclear to what purpose it should stop propping up shares, though, if there’s no place to invest that money. I suppose the Post could pay down its debt, but that’s an investment of its own sort.
Shirky looks at the admirable work of a DC website called Homicide Watch as an example of how the Post should transform itself. Homicide Watch covers every murder in the District with a staff of two, providing far more coverage of the issue than the Post does with its newsroom of 500-something.
But this is exactly kind of thing I’m talking about. Rather than handing its shareholders a couple hundred million dollars a year, the Post Company could have taken a couple hundred thousand dollars and offered to buy Homicide Watch or partner with it, or it could have built a similar site from scratch for the Post. That kind of investment would have helped increase the Post’s value to readers. Instead, the company has made its paper less valuable to readers and seriously harmed its long-term value.
DC Porcupine puts it this way:
Shirky is working from a pretty tortured false dichotomy here. The Post shouldn’t invest in its business because it’s screwed, he says, but it should create new models for business, which he seems to think wouldn’t be helped with investment money…
Homicide Watch and the Amicos do great work, and the Post should always be trying new stuff, but it’s not clear why Shirky thinks that whole innovative process wouldn’t be helped with some cash that the Post is otherwise throwing away.
Journalism will never again be (and should never have been in the first place) a 30 percent profit-margin business, and those Gannett papers didn’t produce much greatness anyhow. But can good newspaper organizations be at least slightly profitable in the medium to long term? I think so, and largely because digital subscriptions offer the first real possible path for a significant newsroom to a post-print future.
Just keep in mind that Clay Shirky's incentive is to promote Clay Shirky, not to solve your problems (If he did he'd be out of a gig). He dances around the edges, trying to imply that he has an answer without actually giving anything away. For that you need to read his book, hire him, etc. He's not unique, it's the same with any pundit since Rasputin's time.
Ryan, if you or Mr. Shirkey had your kids' college fund in WaPo stock you'd be clamoring for it back too. It's easy to point fingers when it's not your money.
#1 Posted by JLD, CJR on Fri 1 Jun 2012 at 11:46 PM
Ryan makes a career out of bitching about what other people do with their own money.
#2 Posted by padikiller, CJR on Sat 2 Jun 2012 at 10:50 AM
Let us know what your career is sometime, padi.
#3 Posted by Thimbles, CJR on Sat 2 Jun 2012 at 02:12 PM
'It will also require the Post Company to stop forking out hundreds of millions of dollars a year to shareholders and to invest at least some of that money in its news operations.'
Isn't it ... you know...THEIR MONEY.
#4 Posted by Patrick R. Sullivan, CJR on Sat 2 Jun 2012 at 02:27 PM
Keeping WaPo's cash in-house for investing in its journalism products and to pay down debt are vastly smarter strategies than to toss the money out the door in stock buybacks. Stock buybacks don't benefit either the business or the average stockholders -- the worst of all possible worlds.
#5 Posted by Carl Olson, CJR on Sat 2 Jun 2012 at 02:31 PM
In an effort to aid newcomers in understanding this new school of economics (Thimbilistic Chittumism), here's a primer:
1. It is just and natural for blue-collar workers to demand the highest wages possible. It is unjust and criminal for executives to demand the highest salaries possible. It is just and natural for customers to demand the lowest prices possible. It is unjust and criminal for a company to demand lower prices from suppliers.
Most importantly, it is unjust and criminal for investors to demand the highest possible returns on their investments. This is "corporate greed". (Thimbilistic Chittumism, being a nascent doctrine, is presently unable to address more complicated scenarios - like "what if the employees are also owners?" or "what if the customers are also owners?". Fortunately, what Thimbilistic Chittumism lacks in academic rigor or basis, it gains in amplitude and repetition in debate)
2. If a company makes money, a crime occurred. If a company loses money, a crime occurred. If a company exists, a crime is occurring (unless the company is Solyndra or some other company tied to Obama).
3. The proper role of government is to hinder business, because doing business is tantamount to engaging in criminal activity.
4. The government can do business better than the private sector can.
5. The average American is stupid. REALLY stupid. Far, far too stupid to be permitted to even buy a used car, sign a mortgage, shop for health insurance or fill out a state income tax form without the Gubmint supervising him. Nonetheless, all of these stupid rubes for some reason deserve more power in government and business.
6. If an investor wishes to bail out a troubled company, then the investor should cut a check, walk away and die. The investor should not seek repayment. The money should be used to prop up union pension funds.
7. When you discuss "income inequality" you avoid any mention of work. Specifically, you do NOT mention the fact that adult workers in the top quintile of households by income work nearly TWELVE times as many hours as adults in the bottom quintile of households. You must respond to anyone who suggests the existence of any relationship between work and income with invective and ad hominem.
8. When you discuss taxation, you ONLY discuss payroll taxes and you NEVER mention benefit payments or tax credits for low-income citizens.
#6 Posted by padikiller, CJR on Sat 2 Jun 2012 at 02:52 PM
It is not inevitable that all daily newspapers will be "screwed," i.e. that they will go out of business as the shift to digital delivery continues. Look at the digital photography/reproduction field: Canon USA Inc. is often thought of as some kind of new economy innovation leader, and it is -- but people tend not to realize that Canon started in 1955. Of course, the Kodaks and Polaroids didn't handle the digital-imaging shift so well, but that is exactly my point. Newspapers that were dominant in their markets can survive if they pay attention to detail, use their money wisely, and plan for the long-term -- even as they develop the ability to innovate quickly as circumstances change. Newspapers that don't do these things will be "screwed" and die. I agree with Ryan; when the WP pays off the relatives with stock buybacks and dividends, it is marching resolutely on the path to screwed oblivion. The family should invest in its primary product or put the paper on the market.
#7 Posted by John Mecklin, CJR on Sat 2 Jun 2012 at 03:03 PM
A $1.1 billion 4-year return is amazing, given a market cap of roughly twice that.
If I were a shareholder, I'd like nothing better than to see the WaPo spin off the paper and focus on service.
Dead tree journalism is done. The content can be written by anyone who can type at an eighth grade reading level and published by anyone who has a computer or an iPad.
There's just too much competition for newsgathering and analysis and too many people are doing it for free, many of them well. And, of course, the cost of publishing has evaporated. A news operation can be had in a basement through a DSL line and an HD camcorder comes with every phone.
You can't compete against volunteers..
#8 Posted by padikiller, CJR on Sat 2 Jun 2012 at 03:47 PM
@padikiller: Dana Priest and a panoply of other extremely talented journalists at the Washington Post certainly can compete against volunteers, because they are professionals who produce high-impact, important, interesting stories that -- hate to break the news to you padi -- volunteers simply cannot. The question is whether the Washington Post will invest in the technological and business side innovations needed to support the kind of journalism that amateurs are unable to accomplish.
#9 Posted by John Mecklin, CJR on Sun 3 Jun 2012 at 10:11 PM
@John Mecklin
The distinction between "professional" and "amateur" journalists is artificial and false.
Being a professional is like being pregnant. You either are, or you aren't.
Plumbers are professionals. They have a proven minimum competency and are licensed. Lawyers and doctors are professionals. So are barbers.
"Journalists"? You can't even define the term, much less claim any threshold competency or other qualification. Anybody who can type (or take a cell phone video) can be a "journalist", though some people are certainly better at it than others.
As to the substance of your argument, the web is awash with very smart people giving away quality content, whether or not they meet your arbitrary and capricious definition of "professional journalists".
Is Charles Johnson at littllegreenfootballs.com a "journalist"? He sure as Hell took down Dan Rather and he loads the web with free content.
What about our Dartmouth boys at Powerline? Are they "journalists"?
Dead tree journalism cannot compete with the digital new age.
We don't need 60 union pressmen and a roll paper storage warehouse to get the news to the iPads. We don't need paste-up and litho. We don't need fulfillment.
We need a reporter, an editor and a DSL line. PERIOD.
This is just the reality. You guys in the "professional journalism" trade are to 2012 what TV repairmen were to 1977. That's just how it is.
#10 Posted by padikiller, CJR on Mon 4 Jun 2012 at 11:25 AM
'...to support the kind of journalism that amateurs are unable to accomplish.'
Such as Bill Clinton's relationship with an intern, and her blue dress? Paul Krugman's ridiculous factual errors published in the NY Times, which include believing as late as the summer of 2008 that Fannie and Freddie were barred by law from buying sub-prime mortgages, that George W. Bush has been given some kind of sweetheart deal in the purchase and sale of the Texas Rangers, that Army Sec'y Thomas White had engaged in massive securities fraud (which even his editors came to realize was untrue)?
George W. Bush was AWOL?
That Barack Obama's green-eyed, dark-haired white girlfriend's family lived on an estate (according to Dreams of My Father) that exactly fits the description of the Oughton's of Illinois (Bill Ayers late girlfriend, Diana, of the Greenwich Village townhouse bombing)?
That there was no famine in the Soviet Union in the 1930s? That General Motors destroyed America's streetcar systems in order to make people buy more cars? That Alger Hiss was innocent?
That the Banking Act of 1933 (aka, Glass-Steagall) has been repealed?
Where, oh where would we be without the pros.
#11 Posted by Patrick R. Sullivan, CJR on Mon 4 Jun 2012 at 12:12 PM
Wait, Glass-Steagall was not repealed? Better go arrest Bob Rubin for fraud.
You can leave Sandy alone. His frauds are OK.
#12 Posted by Edward Ericson Jr., CJR on Tue 5 Jun 2012 at 02:29 PM