Editor's Notes: All the news that's ... free

This year’s Pulitzer Prizes were distinguished by a new-generation nonprofit newsroom sharing a prize with an old-generation newspaper newsroom. And while the prize duly rewards remarkable work and shows that a new content model clearly produces outstanding journalism, it doesn’t prove a financial solution for the distressed industry.

This week, ProPublica shared the Pulitzer for investigative work with The New York Times for the astounding story that a ProPublica reporter did about a New Orleans hospital after Hurricane Katrina, which ran in The New York Times Magazine. ProPublica has been up and running for only a little more than two years. Based in Manhattan, it is focused on investigations in the public interest and is primarily funded by Bay Area billionaires Herbert and Marion Sandler, whose Sandler Foundation gave $10 million to start the nonprofit. ProPublica’s stories are offered free to traditional news organizations and also published on its website.

Paul Steiger, ProPublica’s editor-in-chief, told Joe Strupp of Media Matters after the prizes were announced Monday that winning the Pulitzer “suggests that our nonpartisan, nonprofit model can serve a role in this time of expanding change in the media.”

This year’s Pulitzer Prizes were distinguished by a new-generation nonprofit newsroom sharing a prize with an old-generation newspaper newsroom. And while the prize duly rewards remarkable work and shows that a new content model clearly produces outstanding journalism, it doesn’t prove a financial solution for the distressed industry.

This week, ProPublica shared the Pulitzer for investigative work with The New York Times for the astounding story that a ProPublica reporter did about a New Orleans hospital after Hurricane Katrina, which ran in The New York Times Magazine. ProPublica has been up and running for only a little more than two years. Based in Manhattan, it is focused on investigations in the public interest and is primarily funded by Bay Area billionaires Herbert and Marion Sandler, whose Sandler Foundation gave $10 million to start the nonprofit. ProPublica’s stories are offered free to traditional news organizations and also published on its website.

Paul Steiger, ProPublica’s editor-in-chief, told Joe Strupp of Media Matters after the prizes were announced Monday that winning the Pulitzer “suggests that our nonpartisan, nonprofit model can serve a role in this time of expanding change in the media.”

Serve a role, absolutely. It is clear that when you have the money to hire some of the best journalists in the country — as ProPublica has been able to do — extraordinary work of great importance can be done. But foundation-supported journalism is a limited option. There are not that many billionaire benefactors willing to give $10 million to the profession. Actually, just one that I can think of.

The newly released report, The State of the News Media 2010, is the seventh edition of the Pew Project for Excellence in Journalism. It is an exhaustive and definitive look at the health of American media. Dear patient, the news is not good.

“The prospects for assembling sufficient economies of scale, audience and authority may be most promising at specialized national and international sites — efforts like ProPublica, Kaiser Health News and Global Post. For all the invention and energy, however, the scale of these new efforts still amounts to a small fraction of what has been lost.” It added that J-Lab, a project that studies new media, estimates that $141 million of nonprofit money has gone into new media efforts over the last four years (not including public broadcasting). “That is less than one-tenth of the losses in newspaper resources alone.”

In addition to the as-yet small world of nonprofit newsgathering, ProPublica’s model of giving away its work suits its nonprofit mission.

But in the for-profit world, giving your work away for free is a sure way to go out of business. Newspapers and magazines learned that a little too late, as many consumers have dropped paid subscriptions to newspapers and magazines and headed to news websites to get the same information for free — a decision by publishers made years ago often called the Original Sin.

Those websites have lots of traffic, but generate only a fraction of the advertising revenue that print does. Even though a few news companies require you to pay for their online content, and The New York Times has said that next year it will move to a paid model for its online content, putting that horse back in the barn appears highly unlikely.

The PEJ report put it bluntly “As we enter 2010 there is little evidence that journalism online has found a sustaining revenue model. “

PEJ also produced a new survey on online economics this year. The survey, produced with the Pew Internet and American Life Project, set out to measure consumers’ willingness to pay for news online and their attitudes and behavior toward online advertising.

Frankly, the results were frightening. The study, a national phone survey in January, found that only about a third of Americans (35%) have a news destination online they would call a “favorite,” and even among these users only 19% said they would continue to visit if that site put up a pay wall.

“Attitudes toward advertising online are also complicated,” the study said. “Fully 81% of online news users say they do not mind online advertising because it allows the content to be free. But 77% say they also ignore the ads (42% of online news consumers say they ‘never’ click on one of those ads and 35% say they do so ‘hardly ever’)… Over all, the evidence suggests the outlook is difficult both for pay walls and for online display advertising … In short, a good deal must change, the data suggests, before the digital age will begin to sustain itself.”

The question is, what will be left of the professional newsgathering business when (or if) that finally happens?

The Pew study tallied up the loss to the profession in the past 10 years, and it is staggering. Rather than express it in the number of jobs lost, it estimated that the newspaper industry alone has lost $1.6 billion in annual “reporting and editing capacity” since 2000, or roughly 30%, adding “that leaves an estimated $4.4 billion remaining. Even if the economy improves we predict more cuts in 2010.”

The nonprofit model is limited. Consumers like online news but seem unwilling to pay for it (we gave it away free for so long, why would they?). Publishers can try to monetize their online operations, but it appears that readers ignore the advertising. This presents an almost impossible puzzle for a business model. Maybe consumers, once truly faced with having no news or information, will find it a product valuable enough to pay for. But that won’t mean that online advertising will be effective if they ignore it. Maybe advertisers will decide that print publications, with their long shelf-life and devoted readers, again have value. Maybe publishers will realize they should make people pay for their products, which makes those consumers more valuable to advertisers.

The galling irony is that despite my angst about all of this as a journalist and publishing professional, I’m still giving you this column for free. In fact, you get all of the content from the print edition of Oregon Business for free on this website. We know free isn’t a business model, but we’re working on a new one.

Our hope is that when we build it, you will come — and pay for it.

Robin Doussard is Editor of Oregon Business.

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