The Wired City: Reimagining Journalism and Civic Life in the Post-Newspaper Age

5. Print Dollars and Digital Pennies

68 CHAPTER FIVE Print Dollars and Digital Pennies The idea that a nonprofit organization can be more financially viable than a for-profit business may seem counterintuitive. Yet as the experience of CT News Junkie and the Connecticut Mirror suggests, technology—at least in these early years of online news—has turned the economics of journalism upside down. At News Junkie, Christine Stuart and Doug Hardy struggle to build a for-profit business. At the Mirror, Jim Cutie is able to pay a relatively large staff of experienced reporters, provided he can continue to persuade foundations, corporate underwriters, and readers to give him money. The disparity came up the first time I met Paul Bass. He told me that when he started thinking about resurrecting the old New Haven Independent as a website, he first looked into establishing it as a for-profit venture, as the original Independent had been. He soon realized, though, that he could raise more money more quickly by simply asking foundations for grants than he could through the laborious process of trying to attract advertisers. In describing his decision to take the nonprofit route, Bass wrote: “In my mid-forties, with two kids and a mortgage, I couldn’t afford to dive in without a guaranteed living. I would launch a daily online New Haven news site only if I had guaranteed funding for at least the first year. So I read some more, called up venture capitalists and editors and publish- 69 Print Dollars and Digital Pennies ers in the new field, and decided the for-profit model wouldn’t work. Too much time chasing too few ads that clutter up the site and require constant tending.”1 Starting with an initial grant of $50,000 in 2005, by 2010 Bass had an annual budget of $450,000 to pay full-time salaries for five journalists (including himself) at the New Haven Independent and three more at the Valley Independent Sentinel, in the nearby Naugatuck Valley. As Bass told me, “The thing I don’t like is that I continually have to raise money. The problem is I’m not bad at it.”2 But if Paul Bass, Jim Cutie, and others have found that the nonprofit route enables them to pay for online journalism more readily than a commercial venture would, why is that the case? There are a variety of reasons, all related to the idea of what happens to the economics of news once the newspaper as a discrete product no longer exists. On the Internet, there is no logical reason for international and local news, sports, comics, the school lunch menu, and the horoscope to appear as part of the same package. So they don’t, which means the businesses that wanted to be seen in the sports section, and thus indirectly helped subsidize the capitol bureau, have gone elsewhere. Online advertising on newspaper websites nationally grew by $716 million between 2005 and 2009, but that figure was more than offset by the loss of $22.6 billion in print advertising over the same period.3 Those businesses that do advertise on news websites pay far less than they would in print, partly because Internet advertising can be measured so precisely (before news moved online, no one knew whether readers had actually looked at an ad or not), partly because there are so many websites—not just news sites—competing for those ad dollars. The result, as the Federal Communications Commission found in a study of local journalism, is that “each print dollar was being replaced by four digital pennies.”4 Charging users for online access, another possible revenue source, has met with mixed success—and, in any event, is something Paul Bass refuses to do except on a voluntary basis, as he believes such a policy would drive away many of his less affluent readers.5 In 2011, the Wall Street Journal and the New York Times were enjoying modest success by charging for online content, and a number of local and regional papers unveiled paid websites as well. Perhaps at some point the topic can be revisited. In the early part of the 2010s, though, user resistance to paying for online news was well established. At the local level, competition from free online sources such as the websites of television and radio stations would appear to rule out any 70 CHAPT ER FIV E sort of...