Readers to the rescue?
NEWSPAPERS NEED A NEW KIND OF OWNER: READERS
By Chris Daly
"Freedom of the press is guaranteed only to those who own one."
--A.J. Liebling.
The New Yorker, May 14, 1960
The recent challenges to the ownership structure of The New York Times and The Wall Street Journal have put the spotlight on an issue that rarely gets the attention it deserves, even from shrewd media critics. That is, what are the implications of the various forms of ownership of the mass media that produce journalism?
Does it make any difference HOW a news operation is owned? Does it make any difference WHO owns it?
Based on my research into the history of journalism, I’d say, You bet it does. If it didn’t, people would not be in such a swivet over the rebellion at the Times or the attempted takeover at the Journal.
At the Times, the problem is this: Some people bought shares of Class A stock (knowing full well that those shares come with only limited rights to run the company) and now they are disappointed that the stock price isn’t rising, so they want to upset the ownership structure that vests control of the newspaper in the Class B stock, which is held by members of the Sulzberger family. So, when publisher Arthur Sulzberger faces those unhappy shareholders, the question on their minds is not whether he has raised the standards of journalism, it’s whether he has raised the prices of the company’s stock.
At the Journal, the crisis was provoked by conservative media baron Rupert Murdoch, who came calling with an offer to nearly double the value of the stock if the controlling Bancroft family will sell. The concern then is will Murdoch maintain the Journal’s integrity, or will he use the paper to settle scores, promote conservative causes, and coddle the dictators in China?
What both of these valuable news operations need is essentially the same thing: a way to keep ownership in the hands of people who really care about journalism and to insulate themselves from ever being controlled by someone with a different motive. What they need, in short, is a new form of ownership.
One solution would be to find a large number of affluent people who really care about upholding the highest standards in journalism. In fact, they are not hard to find. They are: THE READERS.
The existing subscriber base of both newspapers is a precious asset, one that is not realizing its full potential. The owners of both papers should take a cue from public broadcasting and launch a “pledge drive” the likes of which no one has ever seen. Instead of just sending money, the subscribers could be enlisted to buy stock.
Actually, a campaign to buy stock in the Times or the Journal is not even that much of a financial sacrifice, unless the stock prices completely collapse, because the new shareholders end up with both a great newspaper and shares of stock. And if those stocks should ever rebound, the rescuers of these great news institutions would find their virtue rewarded.
Could it work? Some back-of-the-envelope calculations suggest it could.
The Times has about 1 million subscribers, and the Journal has a few more. Even leaving aside the people who regularly share the subscriber’s copy of the paper as well as the free-loaders who just read the free stuff on the Web, there is still a hard core of people a million strong who are serious enough about quality journalism to pony up the cost of a subscription.
Consider what they could do at the Times. If each of those million subscribers invested $2,000 in the company by purchasing shares of the Class A stock, that would create an investment pool of $2 billion. With $2 billion, the readers could buy a majority of the value of the company, which is capitalized at about $3.6 billion.
Of course, it could be objected that a lot of Times readers cannot afford to devote $2,000 to the cause. Fine. But the demographics of the Times audience would also suggest that there are plenty of Times readers who could afford quite a bit more, and I am sure that there is a minority of the readers who could buy plenty more shares.
Ditto for the Journal.
So, if those of us who are serious about serious journalism would step up and become part-owners, we could do it. After all, as the pioneer press critic A.J. Liebling pointed out almost 50 years ago, the Constitution doesn’t protect readers of the news, or even news reporters. It really only works for press owners.
Any buyers?
By Chris Daly
"Freedom of the press is guaranteed only to those who own one."
--A.J. Liebling.
The New Yorker, May 14, 1960
The recent challenges to the ownership structure of The New York Times and The Wall Street Journal have put the spotlight on an issue that rarely gets the attention it deserves, even from shrewd media critics. That is, what are the implications of the various forms of ownership of the mass media that produce journalism?
Does it make any difference HOW a news operation is owned? Does it make any difference WHO owns it?
Based on my research into the history of journalism, I’d say, You bet it does. If it didn’t, people would not be in such a swivet over the rebellion at the Times or the attempted takeover at the Journal.
At the Times, the problem is this: Some people bought shares of Class A stock (knowing full well that those shares come with only limited rights to run the company) and now they are disappointed that the stock price isn’t rising, so they want to upset the ownership structure that vests control of the newspaper in the Class B stock, which is held by members of the Sulzberger family. So, when publisher Arthur Sulzberger faces those unhappy shareholders, the question on their minds is not whether he has raised the standards of journalism, it’s whether he has raised the prices of the company’s stock.
At the Journal, the crisis was provoked by conservative media baron Rupert Murdoch, who came calling with an offer to nearly double the value of the stock if the controlling Bancroft family will sell. The concern then is will Murdoch maintain the Journal’s integrity, or will he use the paper to settle scores, promote conservative causes, and coddle the dictators in China?
What both of these valuable news operations need is essentially the same thing: a way to keep ownership in the hands of people who really care about journalism and to insulate themselves from ever being controlled by someone with a different motive. What they need, in short, is a new form of ownership.
One solution would be to find a large number of affluent people who really care about upholding the highest standards in journalism. In fact, they are not hard to find. They are: THE READERS.
The existing subscriber base of both newspapers is a precious asset, one that is not realizing its full potential. The owners of both papers should take a cue from public broadcasting and launch a “pledge drive” the likes of which no one has ever seen. Instead of just sending money, the subscribers could be enlisted to buy stock.
Actually, a campaign to buy stock in the Times or the Journal is not even that much of a financial sacrifice, unless the stock prices completely collapse, because the new shareholders end up with both a great newspaper and shares of stock. And if those stocks should ever rebound, the rescuers of these great news institutions would find their virtue rewarded.
Could it work? Some back-of-the-envelope calculations suggest it could.
The Times has about 1 million subscribers, and the Journal has a few more. Even leaving aside the people who regularly share the subscriber’s copy of the paper as well as the free-loaders who just read the free stuff on the Web, there is still a hard core of people a million strong who are serious enough about quality journalism to pony up the cost of a subscription.
Consider what they could do at the Times. If each of those million subscribers invested $2,000 in the company by purchasing shares of the Class A stock, that would create an investment pool of $2 billion. With $2 billion, the readers could buy a majority of the value of the company, which is capitalized at about $3.6 billion.
Of course, it could be objected that a lot of Times readers cannot afford to devote $2,000 to the cause. Fine. But the demographics of the Times audience would also suggest that there are plenty of Times readers who could afford quite a bit more, and I am sure that there is a minority of the readers who could buy plenty more shares.
Ditto for the Journal.
So, if those of us who are serious about serious journalism would step up and become part-owners, we could do it. After all, as the pioneer press critic A.J. Liebling pointed out almost 50 years ago, the Constitution doesn’t protect readers of the news, or even news reporters. It really only works for press owners.
Any buyers?
Labels: media ownership, New York Times, Wall Street Journal
posted by Chris Daly at 12:02 PM
10 Comments:
What's to stop a "reader" who buys shares out of a concern for quality journalism from acting like any other investor after he or she buys the shares? If some takeover artist offers shareholders twice the amount per share that they paid, it seems to me that this would be a tempting offer for any owner, no matter their original rationale for buying.
For your plan to work, the Times or some other group would have to create a foundation. The foundation could solicit donations to buy shares.
Excellent point by Pat Regnier. Thanks for that.
Bear in mind, my posting was not a detailed business plan, just an opening point for discussion.
For any such scheme to work, you would need to find a way to break the cycle of hostile investor actions.
Chris Daly - Phyllis Rosen (nee' Goverman) here, in total agreement out here in Los Angeles. I moved to LA 18 months ago and feel that my NYTimes home delivery is life's greatest bargain. I teach at a charter high school and my students feel I am a dinosaur, for my reliance on print, and hate all the NYT articles I assign them. But they're much the better for it....P
I would like to respond to one canard you pose in your "Readers to the rescue?." You refer to web readers as "freeloaders."
Virtually no true magazines or newspapers manage to sell their paper editions at a rate which covers the cost of printing and distribution, let alone editorial costs. Certain professional journals are a special case: subscription is de-facto compulsory, a form of journeyman's card, and rather in the nature of trade union dues. These professional journals make their money by collecting union dues, not by distributing content. That said, given current webhosting rates, the additional annual cost of each online reader is, at the highest computation, no more than five cents. The webhosting market is effectively defined by online video, and the written word is down at the noise level.
I find it useful to to think of the price of printed matter in terms of "price FOB Final Page Proof," thus separating the content side of a publication from the production side. This price has traditionally been negative, but with websites, it is much less negative than it used to be. In magazine work, the production side is all jobbed out to specialists, of course. However, the newspaper publisher is also in the commercial printing business, and his sunk costs addle his judgment.
Similarly, in respect of advertising rates, the advertiser on a website knows that the reader does not propose to use the downloaded matter to clean up after an imperfectly housebroken puppy. That is a great deal more than the advertiser in the newspaper print edition knows, because the newspaper has been subsidized to the point of being cheaper than the various kinds of utilitarian paper one buys in the store. Online user registration merely puts the publication at moral hazard for selling personal information about readers. I think part of the issue is that computers and the internet tend to bring out people's suppressed fantasies. For example, there is a certain sort of businessman who wishes that his customers behaved like drug addicts with respect to his product. Give him a computer and he starts trying to make the fantasy into reality, generally with disastrous results to himself. This applies to editors and publishers, of course.
Andrew D. Todd
I was mulling over the issue of newspaper ownership a few months ago and so found this intriguing. A while back, a group of friends and I got together and discussed the following proposal:
It's time in Canada for the major post-secondary institutions, journalism schools, think tanks, and other interested parties (even corporate, if need be) to elect representatives to the board of a new non-profit foundation dedicated to a new national newspaper. The newspaper will only be available online. Everything on it will be freely available to everyone, including its archives. The foundation will recruit the finest minds to write coherently and concisely on the issues of our times. It will pay top dollar. It will aggressively pursue a large readership such that it becomes the Authority in Canada on current events. It will be funded by those institutions sitting on its board of governors.
I think this solution works on several levels. By eliminating the profit-motive, it helps reduce the suspicion that the paper is beholden to corporate interests. By being founded by major institutions, it conveys immediate legitimacy, as well as an instant source of potential freelance articles. By being only online, it can respond to events quickly, it can reduce overheads, and it can provide forums for readers' response.
Conventional newspapers will be dead soon. In the past decade, the changes we've already witnessed in Canada have been vast. Every single traditional media company is cutting costs, laying off staff, and radically reducing hard content in favour of soft, stupid stories like those related above. It's high time for change. Democracy is imperiled by the massive ignorance that our existing newspapers are merely reinforcing.
Andrew Todd seems to fundamentally misunderstand the newspaper business. The main thing publishers get in exchange for their content is a quantity of their readers' attention; that is the commodity that publishers sell to advertisers.
In general, print subscribers spend orders of magnitude more time with the day's paper than online readers do, and are much more likely to desire, read and respond to the accompanying advertising -- so each print reader "pays" the publisher a whole lot more saleable attention for his or her news than each web reader does.
That's why even the best and "stickiest" newspaper web sites -- nytimes.com, for instance -- do not yet yield anything like enough revenue to pay for the content creation behind them, even though they have many more online readers than print readers. (Someday they may do so, but not yet.)
So never mind the supposed incremental costs per reader or any of the other accounting arcana: Print readers are very heavily subsidizing web readers every day -- not with their circulation revenue, but with their attention spans.
Chris,
Nice idea. I wrote extensively about it over at PBS MediaShift:
http://www.pbs.org/mediashift/2006/09/newspapershiftthe_case_for_cit.html
In that case, I was referring to the LA Times, but I don't see why it couldn't work at the NY Times or Journal as well.
Mark --
Thanks for your comment and for the link to your earlier, better-developed similar proposal.
I intended my blog posting as more of a "thought exercise" about responses to the new crises at NYT and WSJ rather than a business plan. That's why I did not do the kind of research that should have led me to your posting.
Thanks again.
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