November 14, 2009
Sources of subsidy in the production of news: a list

I was asked to speak recently at a conference organized by Yale University with the title “Journalism & The New Media Ecology: Who Will Pay The Messenger?”  This irritated me. The question should have been “who will subsidize news production?” because news production has always been subsidized by someone or something.  Very rarely have users paid directly the costs of editorial production.

So here’s my list of known sources of subsidy, with examples to illustrate each. What I have left out please put in the comments and I will edit the list.  If you have a link that provides an example, that would help a lot.

1. Government can subsidize, through general tax revenues. As in some Scandanavian countries. (A history lesson and argument for it.)

2. Rate-payers can subsidize, a solution that has to be enforced by government. As with the BBC license fee, or proposals to require Internet Service Providers to support journalism through a surcharge.

3. Political interests can subsidize the press, as with the party press in 19th century America or labor’s willingness to fund some new media operations today.

4. Philanthropy is a possible source of subsidy, as with the rolling grants that Paul Bass secures for the New Haven Independent, or the donations that have flowed to the start-up, Texas Tribune.

5. Rich egoists will sometimes subsidize, as with Mort Zuckerman’s ownership of The Atlantic magazine from 1980 to 1999.

6. Advertisers are of course the most common subsidizers, though as Clay Shirky says, Best Buy never signed up to fund the Baghdad bureau. They just didn’t have a choice. Plus, the advertisers can now go direct to consumers and become publishers themselves.

7. Entertainment and the revenues it produces can subsidize news production, as with the early days of network television, when the news divisions lost money. Good old fashioned sensationalism also fits under this heading.

8. Soft news can subsidize the hard, as with travel and food sections that pay for other kinds of coverage. (A point suggested by Richard Gingras of Salon.)

9. Unrelated businesses are sometimes a source of subsidy, as with the Washington Post Company’s ownership of the highly profitable Stanley Kaplan company.

10. Then there’s logically-related businesses, as with Bloomberg L.P. and Thomson Reuters, both of which make big money providing data to businesses and then subsidize news production (mostly business news) from that. (More on selling data.) The Economist has its “intelligence unit,” which works in a similar way. (Hat tip, Klint Finley.) Another related business would be web services—setting up a website or social media tools—to the people formerly known as the advertisers. Here’s one example, in pdf form. A second, from knoxnews.com.

UPDATE, May 2010: Gannet announces a plan to provide consulting services to the people formerly known as the advertisers.  Meanwhile, a community news start-up, The Sacramento Press, makes $30,000 of its $86,000 in revenues by consulting with local businesses who need help being effectice online.

11. Clever spin-offs can subsidize editorial costs, as with Techdirt’s Insight Community, basically a focus group business featuring the highly informed community that gathers at Techdirt. At the level of the stand alone journalist, this becomes: “Some people who blog make money because they blog,” as against making money from the blog itself.

12. Educational institutions—especially university-based journalism schools—can be a source of subsidy, as with the partnership between Northeastern University’s journalism program and the Boston Globe.

13. Non-governmental organizations (NGOs) are increasingly likely to sponsor or support journalistic work, often in partnership with traditional news producers.

14. Love is a factor. High earning spouses sometimes subsidize stand alone journalists with start-up sites. Middle-to-upper class parents subsidize college students working at newsroom internships.

15. Live events, for which there is an admission charge.  As with magazine conferences or this event: “KCRW & NPR Present ‘Planet Money — Live!’ at the Broad Stage in Santa Monica.”

16. E-commerce, also known as selling stuff, sometimes works, as with Techdirt’s “Connect with Fans and give them a reason to buy” program.

17. The most passionate users (those who can afford it) will sometimes subsidize the production of news available to all users through small donations, as with public radio’s membership model in the U.S., or Firedoglake at the Libby Trial, or the community-funding platform spot.us and its garbage patch story.

18. Premium memberships: those who pay get extra benefits,  and thus help to subsidize the rest. An example of an extra benefit: fruitful interaction with highly informed journalists. (Here’s the Guardian’s version of that.)

19. Many think a future source of subsidy will be lead generation. It means providing good information to businesses on who is exceptionally likely to buy— for a fee. One company doing it now is the technology trade publisher IDG. (Hat tip, Berend Hilberts.)

20. Not common, but it is possible. A church or religious group can subsidize, as with the Christian Science Monitor. (Hat tip, Whet Moser)

21. Start a great news franchise, and license it to other news organizations, pocketing the fees.  The example here is Politifact.com, the Pulitzer-Prize winning fact checker site started by the St. Petersburg Times, which has now spread itself to six states, licensing the idea.

Subsidy ideas in development:

Scott Karp of publish2.com writes of the possibility of high value advertising that would represent a conceptual break with the whole display ad regime. If such a system existed it would be added to my list as a different type of subsidy. The idea is to create advertising of such quality and informational value to users that it enhances the value of high-end editorial production.  According to Michael Boyle in the comments, high value advertising has been working for a while at specialty sites like theheart.org for medical professionals.

Currently in development are voluntary micropayment systems, which would represent a new type of subsidy. No one knows if they’ll be successful, of course. Two to watch are Emanci-pay (“a choosing system… readers, listeners and viewers can easily choose to pay whatever they like, whenever they like, for the media goods they use”) and Kachingle (“crowdfunding sites you love.”)

Also in the concept phase is Lyn Headley’s restrospective funding model for news. “A retrospective news medium is an organization that bestows a continuing stream of awards, each with a monetary component, on the producers of the best pieces of journalism it finds, shortly after each piece is published.”

On Twitter, C.W. Anderson asks the following question: if the rumors come true, and Microsoft pays News Corp. to exit from Google search and deal exclusively with Bing, which category of subsidy would that be?  That would be #20, indexing rights. But it hasn’t happened yet.

Some notes: I do not talk about subscriptions or paywalls in this post, because those are not a subsidy system: they’re direct payment for editorial goods. We get that system.

This interview with one of the founders of the Sacramento Press demonstrates how in practice born-on-the-web news sites combine various sources of subsidy to make a go of it. Nos. 6, 10 and 15 are mentioned.

Official notices carried as ads are a less direct form of government subsidy, kind of a combination of #1 and #6. (Hat tip, John McQuaid.)

Kevin Coates in the comments says: “The BBC has a profit-making arm which among other things, commercializes rate-payer funded content in other geographic markets. Profits go back to the BBC to supplement the rate-payer funds. Similar to your #7, but revenue does not just come from entertainment (e.g, if you view the BBC news website in the US, you see ads; in the UK, you don’t.)

Here’s an interesting model: crowdsource a recurring feature and over time it adds up to a book you can sell. You can also crowdsource demand and use print-on-demand publishing.

Worth mentioning is the newsroom-as-cafe concept, which appears to be succeeding in the Czech Republic. Here, the idea is to take a business that already works—the bustling cafe—and turn it into a news gathering operation. Different.

Bonnie Bucqueroux: “So why not re-think the job of reporters and editors, transforming it into a multi-task position that combines journalism, consulting and teaching?”  Some worthy speculations relevant to this post.

Laura Lorek in the comments. “News as Art or Gifts - Newspapers get subsidized by selling photos, t-shirts, coffee mugs and commemorative issues around a special event or everyday news. This may be a small subsidy but in the age when everyone wants digital delivery, the nostaglia for printed products is a real marketplace.”

For a Spanish-language version of this post, go here.

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