By Chris Daly
Today's
Times carries
a provocative op-ed piece in which the authors, two financial wizards from Yale, make the case for a new business model for journalism, which badly needs one. David Swensen and Michael Schmidt propose creating endowments, like those that support most of higher ed, to pay for the gathering and disseminating of news.
Why not?
I can see some definite upsides. One is the hope that journalists would be able to operate more like professors. They would be paid pretty well to engage in free inquiry. I would urge that the equivalent of "academic freedom" be built into the new model, so that journalists are able to follow their reporting where it leads them (and not be forced to cover the opening of a Hyundai dealership that just happens to belong to the publisher's brother-in-law).
As it stands now, most large private universities operate on a "dual-revenue" model. They already have this in common with newspapers, which have operated on a dual-revenue model for more than a century. Newspapers depended on circulation as well as advertising (both "display" advertising with images and classified ads, which were just words). Newspapers are finding that both revenue streams are drying to a trickle, which is why they are all dying of thirst.
Among universities, the dual-revenue stream consists of tuition and "income from endowment." (Actually, some have a pretty important third stream, consisting of grants. There's no reason that an endowed journalism of the future could not apply for -- and get -- grants, too.) Just now, universities are suffering from a sharp contraction in the funds they get from the endowment (thanks to the stock market implosion), but that is presumably temporary. The basic model is based on this idea: the current users (students) pay something, in the form of tuition. In addition, other people (alumni, do-gooders) who recognize the value of education have voluntary decided to contribute to the good cause.
In theory, there's no reason why this could not work in journalism as well. There is no absolute necessity that journalism be operated by for-profit private corporations supported largely by advertising. There have always been some alternative models (and for more, see my book, elsewhere on this site). The profit-seeking corporation was merely the dominant force in the field, but there is no particular reason that it should be perpetual, and there is growing evidence that it is in fact doomed.
So, there will be a next business model. In previous posts, I have suggested a few, including one I would still like to see: the readers of a paper like the Times could pony up and buy the paper. Then it would operate like a cooperative bank or a mutual insurance company: the owners and the customers are the same people.
Alternatively, the endowment model has a certain appeal. For one thing, it allows the size of the endowment to grow over time. Just as with a university, the size of the endowment would be a reflection of the value people place in the institution, and this could accumulate over generations. (Indeed, if you took all the money the Times ever made -- before the recent lean years -- that it paid out in dividends and diverted all that money instead into an endowment, and if you had invested that growing pile of dough at a reasonable return, the paper would be mighty well-endowed by now.)
One key step: the paper would have to convert to non-profit status. Some would object that this would amount to a government subsidy of the news business. Yes, it would. But, so what? Do we not agree that having a news industry is worth it? Do we not recognize that government has subsidized the news business in half a dozen ways ever since the founding of the United States? (Again, see my book. Look at the postal subsidy, printing contracts, venture capital for the telegraph, etc.)
I think the most serious objection would probably be practical. Would enough people really step up and contribute? That is a great unknown. They have never been asked.
Of course, if this idea catches on, it could lead to some novel situations. Suppose, for example, that George Steinbrenner wanted to endow a "named chair" in sports reporting. Would he feel entitled to meddle with the copy? Or, imagine the Donald Trump chair in real estate reporting. Would the poor bastard in that position have to cover every Trump opening, wedding, and comb-over? What about a Halliburton chair in defense journalism?
I don't know....
But if they are ever handing money out, I say TAKE IT.
Labels: endowment, journalism, journalism history, journalism's future, New York Times