David Swensen and Michael Schmidt are calling for major newspapers to turn into non-profit organizations:
Today, we are dangerously close to having a government without newspapers. American newspapers shoulder the burden of considerable indebtedness with little cash on hand, as their profit margins have diminished or disappeared. Readers turn increasingly to the Internet for information — even though the Internet has the potential to be, in the words of the chief executive of Google, Eric Schmidt, “a cesspool” of false information. If Jefferson was right that a well-informed citizenry is the foundation of our democracy, then newspapers must be saved.
Although the problems that the newspaper industry faces are well known, no one has offered a satisfactory solution. But there is an option that might not only save newspapers but also make them stronger: Turn them into nonprofit, endowed institutions — like colleges and universities. Endowments would enhance newspapers’ autonomy while shielding them from the economic forces that are now tearing them down.
As a former editor and publisher of Spare Change News, a non-profit newspaper in Boston that aims to help the homeless, I found this idea to be very interesting. As the authors note in the op-ed column, newspaper circulation and advertising revenue have fallen dramatically for years as a result of the Internet. More importantly, no one has determined a way to generate significant revenue from online advertising. This new approach would eliminate the need to create large profits for stakeholders — income, in theory, would only need to match expenses each year.
However, there are some important questions. As longtime Boston media observer Dan Kennedy says, non-profit newspapers would, theoretically, be unable to endorse candidates for political office, and reporters and columnists could be charged with partisanship and influencing public policy. (Kennedy proposes other business models for newspapers here.)
Still, my experience at SCN sheds some additional light on the proposal. Non-profit organizations are at the mercy of their donors. When I was promoted from editor to publisher and later hired a new editor, I spent most of my time fundraising because our funds were always tight. I doubt that Boston Globe publisher P. Steven Ainsley — or anyone in his position at any newspaper — would like to spend most of his day asking people for money. As a journalist at heart, I certainly did not.
Salaries at non-profit organizations are small compared to other industries. Everyone at SCN — from myself to the editor to reporters to the advertising representative — was paid low wages compared to what people earn at for-profit newspapers. Many were volunteers because they cared about the mission of the newspaper (to report on and help end homelessness). And the old adage proved true: you get what you pay for. Although everyone at the SCN worked as hard as possible to create a professional-quality newspaper, we were severely limited in what we could do. I would fear what would happen to The New York Times if its capacity were diminished in this way.
Non-profit organizations are also extremely vulnerable to recessions. When an economic downturn strikes, the first expenses that people usually cut are charitable donations. (After the September 11 attacks and the following recession, SCN sales decreased more and more each year. Although I was laid off in 2007, I presume this is still a problem.) Grants and donations — not to mention advertising — are also generally harder to obtain in these rough times.
Moreover, fewer and fewer journalists are able to survive on the low wages that newspapers already pay. Most, if not all, publications require reporters to have a bachelor’s degree, and the skyrocketing cost of higher education leaves young reporters with so much debt that I am unsure whether they could afford to work at a non-profit newspaper. Someone who graduates from Boston University (my alma mater) with a B.S. in journalism this year has paid roughly $200,000 (before financial aid that does not need to be repaid) for the degree. What kind of jobs are these students going to be forced to take? I am not sure they could work for a non-profit publication that pays low salaries, even for the newspaper industry.
Still, although Swensen and Schmidt’s idea may have some problems, I am not sure that there is a better alternative in this business and media climate.
Earlier: How to Save The Boston Globe and The Boston Globe Should Be Privately Owned
