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Financing the Future of Journalism

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Maya Raichura
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Financing the Future of Journalism - July 20th, 2012


The Tribune Company’s filing of Chapter 11 this week could wind up being the journalism industry’s equivalent of the subprime crisis. Print is the backbone of American journalism and if it collapses, then all serious, professional journalism is the United States is in peril. To avoid this, we must present new economic models to support good, robust print reportage.

One alternative is not-for-profit journalism. In my role as a senior research fellow at Harvard’s Hauser Center at the Kennedy School, I am creating a dynamic NPO database to follow these various emerging organizations. Though valuable, the not-for-profit model cannot replace a whole industry that represents billions of dollars. There is not enough philanthropy out there to do that. There must be earned income for print journalism.

Right now, almost all newspaper content that appears on the Web is free. The newspaper industry has been trading advertising dollars for Internet cents. How does it turn those Internet cents into Internet dollars? Or, simply, how does it get direct money from its users?

One discussion I’ve had with students here at Columbia Business School is about creating an earned-income model for the newspaper industry along the lines of Skype, where users make micropayments.

I check the New York Times five to 10 times a day on my Blackberry, for example, and I don’t pay a cent for that content. Is there a way for the Times and other newspapers — especially local newspapers, where there is high value for the reader — to create a micropayment each time a reader checks the site?

Multiply those small amounts by millions of users and it adds up to a serious amount of money. Direct micropayments are part of the solution, but experts must first create a model for them.

The challenge is to better understand the technology so it can be implemented seamlessly, like with Skype, or people just won’t participate. Another challenge lays in adoption: if only one or two newspapers do this, will readers simply choose to get their information elsewhere? Migrating from a free to a for-pay service in critical areas, like journalism, will take some work, but I feel confident it can be done.

Journalism is arguably one of the most important industries in the U.S. because it involves fundamental and basic freedoms: the right to free speech and information.

That Tribune Company filed Chapter 11 doesn’t mean that it — and others — are going out of business, but it does create a snowball effect and says to investors that print journalism is not a good place for their money. We need intelligent models to excite investors and present operators before things get worse.

The model that ultimately may make the most sense is some combination of micropayments and advertising. Academics and students must now present plausible models and see if the free market jumps on board. Otherwise, we are in danger of losing the great professional infrastructure that exists in American journalism.

Dr. Baker is the co-author of Leading with Kindness.

Photo credit: Daniel R. Blume



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