businessinsider.png Journalism is expensive and good journalism especially so, but the newsroom usually is not the costliest part of running a news organization. The Commerce Department has estimated that printing and delivery account for up to 40 percent of a newspaper’s costs; a 2007 study found that the newsroom accounts for only about 15 percent of a newspaper’s expenses. (One publisher reports that “infrastructure” costs—everything other than editorial and marketing—typically make up two-thirds of a newspaper’s expenses.) Still, editorial production has been a major expenditure, with newsroom costs running into the tens of millions of dollars even at mid-size news organizations, and far higher at major national news outlets. In 2008 The New York Times reported that its newsroom budget was more than $200 million per year.

Such robust newsroom spending has been made possible, of course, by the information and advertising dominance that media traditionally enjoyed. Outlets with 20 percent profit margins had the luxury of not having to think about of the cost of each story produced. For decades, big-city newsrooms provided a wealth of resources to support top-tier reporting: newswires, clipping services, transcription services, research and library staff, and so on. A major investigative series might take months to prepare and cost tens of thousands of dollars, or even much more. (A New York Times editor estimated that the paper’s collaboration with ProPublica on euthanasia in New Orleans hospitals after Hurricane Katrina cost $400,000; he later clarified that’s what it would have cost if the Times had undertaken it alone.) Even in a bare-bones newsroom, serious accountability journalism is not cheap, as the new generation of foundation-supported, online-only newsrooms can attest.

Consider CT Mirror, a nonprofit, online-only newsroom founded in 2010 to cover politics and government in Connecticut. It is hard to imagine a more sober outlet: CT Mirror focuses squarely on news about such topics as education, the economy, human services, and the budget, with almost no human interest stories or even crime reporting. It is also hard to imagine a lower-cost outlet for serious reporting. CT Mirror is based in a modest Hartford office, and most of the seven-person editorial staff works from home or on the road. The site has no printing or delivery costs, and it has minimal sales or marketing expenses, and a simple, straightforward website; fully 75 percent of its foundation-provided budget goes to editorial salaries. “There’s no room for fat,” says founder and publisher Jim Cutie.

Because CT Mirror is foundation-backed, it makes no secret of its budget. In its first fifteen months of operation, the newsroom ran on $1.1 million in contributions and produced about 2,400 news stories, for an average cost per story of around $450. Similarly, the Gotham Gazette, a foundation-funded, nonprofit politics-and-policy news site based in New York City, has four employees and a $350,000 annual budget. It produces between four and eight original stories per week, for a per-story cost of more than $1,000.

Of course, not every item in a general-interest newspaper requires the same level of investment. One print daily, in a mid-size market with a relatively low cost of living, recently did an analysis to determine how much various articles cost. The newspaper, which shared its numbers on the condition it not be identified, found that the salary cost of reporting and writing stories ran from $190 to $430. The most expensive stories came from the opinion section, and the cheapest came from features. (The average cost per staff-written story was $227; articles by stringers cost $85.) Those figures don’t include editing, production, or distribution costs, which could easily triple the cost.

Meanwhile grass-roots local news sites such as Baristanet, in suburban New Jersey, and The Batavian, in upstate New York, operate on shoestring budgets. They keep costs at just thousands of dollars per month with tiny reporting staffs and almost no infrastructure. (See Chapter Three.) To replicate their cost structure would be difficult for a hard-news site like CT Mirror and all but inconceivable for a traditional, bricks-and-mortar newsroom working online as well as in broadcast or print.

This points to a central paradox of the online news economy: In an environment of sharply constrained ad revenue, the media’s traditional economies of scale break down. What look like powerful editorial and business assets for online journalism—like established brands and well-staffed newsrooms—are turning out to be liabilities, because they are accompanied by a severe reduction in pricing power for circulation and advertising. The pressure on costs is intense.

Bill Grueskin, Ava Seave, and Lucas Graves are the co-authors of "The Story so Far: What We Know About the Business of Digital Journalism." Grueskin is dean of academic affairs at the Columbia University Graduate School of Journalism. Seave is a principal of Quantum Media, a NYC-based consulting firm. Graves is a PhD candidate in communications at Columbia University. For further biographical details, click here.