Thursday, April 24, 2008

Another nonprofit joins the ranks

Increasingly, local communities are growing disillusioned with the media chains that have turned stable newspapers into unstable investments. As reported last week, nonprofit news organizations are moving in to fill the void left by the lackluster coverage of major media chains chasing ever-higher profit margins. New York, Chicago, Minneapolis, San Diego, St. Petersburg...now add St. Louis to the list.

The St. Louis Platform is an online nonprofit, created by former staffers of the daily St. Louis Post-Dispatch, and funded by community leaders and journalism heavyweights like Emily Rauh Pulitzer, widow of Joseph Pulitzer, longtime owner of the Post-Dispatch.

The most interesting thing about the rise of nonprofit journalism is that instead of adopting the "truths" espoused by the media giants, these fledgling businesses aren't focusing on niche audiences, or fancy web technology, or horizontally-integrated production structures. They're offering relevant investigative journalism, plain and simple.

Dean Singleton is famous for saying that the past is dead.

“If you read Romenesko every day and you hear our people in newsrooms whine — they whine and whine and whine wishing for the old days to come back. Damn it, I wish the old days would come back, too, but wishing for it isn’t going to make it happen. You must be focused on the future.”

It may be true that the old model is intrinsically flawed, but how would Singleton know? Most of our largest media chains are run by investors, not journalists, and they've never tried old-fashioned journalism in the first place. Media investors don't want the old days for one simple reason: They're looking for capital growth, not steady dividends, no matter how good those returns might be. Show me a businessman that says a 10% profit margin is too low, and I'll show you a media magnate.

No one, journalist or otherwise, has ever argued that newspapers are a growth industry. Is there any industry that's been around for several centuries and still has vast untapped markets or new revenue streams waiting to be explored?

This isn't a revolutionary idea once you step outside the industry. Mark Cuban pointed all this out two years ago.

Newspapers are a perfect example of how economics dominate common sense. Contrary to popular belief, newspapers aren't dying. Newspapers are making tons of money; they just aren't keeping their shareholders happy, they aren't meeting the expectations on Wall Street. The problem with newspapers is that they're trying to grow like they're Internet companies in 1999. Their shareholders are bitching at them about not showing growth in share prices. The minute you have to run your business for share prices, you've lost.

The other half of Singleton's statement is his call to focus on the future. Is there a long-term plan for the industry? Does anyone really believe that slashing content is a way to increase your circulation or profits? The fact that barely a third of the top newspaper Web sites saw an increase in traffic indicates that even if the old model really is a failure, the new model isn't much of an improvement.

1 comment:

Kristo said...

Sure, slashing content (ie talent) is a way to make profits, but it isn't a long-term strategy. If these guys could look past the quarterly budget, they'd see there's plenty of money to be made by investing in their product. What if these publications became the one-stop online media/sports/entertainment shop in their communities? The money and the readers are there, the content isn't...