Let’s talk about the economics of great journalism

Responding to various recent postings about journalism, including Ethan Zuckerman, Seth Godin, Dan Gillmor, Amy Gahran and Lisa Williams. I think the economics of journalism and ethics are deeply related and we tend to talk about them separately, emphasizing the dying channels for distribution at the expense of understanding the net loss of reporting.
Written by Mitch Ratcliffe, Contributor

Responding to various recent postings about journalism, including Ethan Zuckerman, Seth Godin, Dan Gillmor, Amy Gahran and Lisa Williams. I think the economics of journalism and ethics are deeply related and we tend to talk about them separately, emphasizing the dying channels for distribution at the expense of understanding the net loss of reporting.

When I worked with the team that built the ON24 iFinancial Network, a personalized financial news network that delivered hundreds of long- and short-form investment news each day, we tried to grow on advertising. Even though we had several million viewers who spent an hour or more a day getting much deeper reports than other sources provided—complete coverage of conference calls, analyst reports, company statements and executive speeches—advertisers were slow to adopt the idea.

ON24's news team operated on approximately $1.8 million a year at its peak, when it was producing 28 hours, and more, of programming a day, far below the cost at competitors like CNBC, which paid just one of their anchors almost as much as ON24's news staff of 85 full-time employees. Such radical changes in the economics of news are always possible, especially now.

Media innovation cannot be dependent on advertisers, they will not take the risk. Innovation must find a foothold with people who demand that great news be available. The users of news have to support it to get it going. In the past, rich men made this investment and we got what they paid for. Are we going to pay for better news in the coming century? Are we going to pay for it now, when media is down and change can overwhelm the old controlled media that delivers more pabulum than hard news?

Having been in and around journalism, citizen journalism and publishing for a long time, let me suggest we stop talking about the ethics of providing complete and useful information to citizens of a democracy, which are barely changed by the requirements of social media and cloud computing technology, in isolation from the economics of journalism. If someone delivers great journalism on a regular basis, what does it cost to do it? What is it worth to you to get better news coverage of an important issue?

Let's posit that if the journalism is "great" or even "good," it will be ethical, and face the problem of paying for the change we want. Unethical reporting is not journalism.

Forget about advertising and the like as a means of support. What's a solid source of useful reliable information worth to you? A dollar a month? Twenty dollars a year? I'd bet you'd pay more for great local coverage, whether your locality is geographic, including your own home town, or topical but global, such as global warming or eliminating pandemic disease.

For example, if you could count on someone to examine federal elections reporting for you and deliver all the articles you need to be fully informed about your reprsentatives' potential conflicts of interest, as well as alerts via Twitter, Friendfeed or SMS, what would you pay? Or comprehensive coverage of your favorite baseball team in the context of the whole of Major League Baseball? Perhaps you'd like extensive research into the activity of the World Bank or the Department of Interior. How about your state legislature? Maybe you'd like grass-roots coverage of USAService.org projects in your region that included financial analysis of the use of funds—that costs money.

The cost of any of these specialties is a good living for someone doing the work, whether that is doled out in parts to members of a team or to a single individual. We can talk in terms of voluntary effort, but even that needs financial support and some organization and analysis that ties together all the bits and pieces, whomever might provide it. If the reporter makes their living some other way, the work of reporting becomes secondary and conditional—they can't commit to deliver news no matter the time or cost if they have to work a day job.

The obvious potential bias of a "press" that can only work voluntarily, making it the playground of the wealthy, makes the benefits of a self-supporting independent media self-evident. The media that people complain about is the product of wealth investing in messages they would support. Any replacement of an egalitarian grass-roots funding with one rich man doling out largesse or investments will get you the same media we have today.

Let's assume that a competent reporter delivering original reporting, not simply reworking other sources, is worth the same as a senior mid-level manager in a corporation, such as Microsoft or Google—they may make between $90,000 to $130,000 a year. We're talking about a good source of information, someone that people find reliable and responsive to the community's ideas. Remember, that could be $10,000 to nine to 13 people sharing the task of coverage or more to participants in a smaller team.

Of course, a smaller beat, such as a town or city's government, might be less expensive to cover. These reporters working directly for the community could price the service any way they like. A kid covering Lakewood, Wash., where I live, might build a living that gives them a platform for covering the Washington State Legislature, a local industry or other "bigger," more lucrative topic.

Good reporters have costs you might not envision when thinking of someone sitting at a desk, using the Internet to do research. For example, subscriptions to various publications and source of background information costs, at minimum, a few hundred dollars a month. Should the reporter need to travel to do any research, conduct interviews or collect information that is not available electronically, that's a minimum of $1,500 per trip for airfare, plus a week's food and lodging.

But, hold on, let's say the reporter needs to file a Freedom of Information Act request? The last time I did it for a story on the National Security Agency, in the 1990s, it cost $7,500 to get the filing shepherded through the process and pushed to success by an attorney. A good reporter might also find themselves the subject to legal attacks or, if they cover a war, captured by insurgents—do you expect them to just languish unaided if they can't deliver the news?

What isn't necessary for the news to flow effortlessly these days is a big company to distribute articles and programming. They might be good at selling advertising, but that need not be part of the business of news, if we begin with the assumption that funding sources also have some influence over coverage—people reading and viewing may be carrying the freight.

The fully loaded cost of a great reporter doing great work, then, falls somewhere in the $180,000 range:

$130,000 salary and benefits
$4,800 a year in subscriptions and other information sources
$2,500 a month in travel
$1,250 a month in legal and insurance coverage
$179,800 total, and that's before the cost of IT, telecom and office space

After salary and benefits, the average cost of supporting a reporter will range between $20,000 and $50,000 a year. This assumes they have no bonuses for great work or world-changing stories. Yes, they might write a book about that story to supplement their income, but this takes away from time that can be dedicated to uncovering the next story and contributes to the phenomenon of the celebrity journalist in sharp contrast to the beat writer. In short, if every other sector of the economy works best when people can compete for success and compensation, this one is going to take some incentives from readers/viewers and, even, collaborators and amplifiers who reblog, rewrite and extend the hard work of original research. It's a system that the Creative Commons licenses could handily support.

How could we make this work? Obviously, legal, benefits and other general and administrative features of this process (such as getting bulk rates on travel and subscriptions), can be lowered by a distributed non-profit or cooperative organization. That entity could also handle distribution of compensation, handling the splitting of payments. This is critical, since it is most likely that supporters of reporting will want a collection of sources, not just one source. So, there might be a "Collective Press" feed on U.S. government, on the state of California, the auto industry, green energy, and so forth, the fees for which are split between many contributors.

Let's also assume that the news should not be behind any kind of pay wall, that it should be freely accessible so that people can use and decide if they want to support the work. Added convenience or increased interaction would be the best way to reward supporting. My thought is to give supporters enhanced commenting, Twitter access to the reporter, and other benefits, such as forwarding with private discussion links.

In the simplest scenario, then, what does an independent journalism supported by the users of information, as compared to being designed to support the producer-of-information's advertisers, look like?

How about this? Pay $1 a month or $12 a year to a reporter who has offered an online "contract" to deliver thorough coverage of a topic. They might ask for more, but they'd have to sell the idea, just as they do in editorial meetings today. In exchange, you'll get alerts about new articles and comments by the writer through email, Twitter, Facebook, Friendfeed or SMS. Another feature would be a social page of your own, where your input to the feed is available, delivered to the reporter for their thoughts, and your own feeds to share with friends. The reporter benefits from these re-feeds by supporters as a form of marketing for their work.

Since this would likely be an entrepreneurial effort, reporters would have to start off building their communities, with the help of early supporters. We could rally around a reporter and get them started with commitments of $1 a month ($0.03 a day). A reporter offering to cover a major federal program that has significant impact on 500 companies and 5,000,000 people should be able to recruit 5,000 supporters after a few months.

Using the costs described above, the break-even point for a $130,000-salaried reporter would be 15,000 readers. That's well within the realm of possibility for a reporter supported by a non-profit that lists their offerings and ensures payments will be fulfilled. Assuming that reporters will be subscribing to other reporters, some of this needs to be kick-started by the members of the "new press" finding one another.

I'll commit right now to support 40 such reporters who will give me a unique, comprehensive and informed feed of information and analysis on subjects about which I want to keep apprised. The kind of quality and coverage I want is of higher quality than the momentary mentions of television and deeper than beat coverage in newspapers or magazines. And I want to discuss the topics I care about with informed reporters and other readers/viewers.

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