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All the news that's free to print

Is charity the newspaper industry's last, best hope?

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“WHAT'S black and white and red all over?” the television interviewer asks Bill Keller, editor-in-chief of the New York Times. Having heard this one before, Mr Keller, without a second thought, replies “A newspaper”—and walks into the sucker punch. “No,” says the interviewer, from “The Daily Show”, a satirical news programme, “your balance-sheets.”

Fears that the Gray Lady, as the New York Times is affectionately known, is about to croak have been growing. Print circulation has been falling, as readers switch to the internet, while recession and migration to the internet have caused advertising revenues to plunge. The paper's increasingly desperate owners, the Ochs-Sulzberger clan, had to turn last year for financial help to a Mexican billionaire, Carlos Slim, and even his money may not do the trick. The New York Times is generally reckoned to be one of the best daily papers in the world, the arbiter of “All the News That's Fit to Print”, and its problems are no worse than that of the entire newspaper industry.

AFP

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The search is on for an alternative business model. Internet traffic to newspaper websites sites is soaring, but is proving fiendishly hard to monetise in amounts that will support an extensive network of reporters and editors. Maybe the Huffington Post, a popular online rag, is profitable; but as Mr Keller told the man from “The Daily Show”: “Last time I was in Baghdad I didn't see a Huffington Post bureau or a Google bureau or a Drudge Report bureau.”

One approach is to work out ways to start charging online, beyond collecting a standard annual subscription charge—from which so far only the Wall Street Journal has managed to make much money. Walter Isaacson, a former editor of Time magazine, has triggered a lively debate over his proposal that publications introduce “micropayments” whereby readers purchase one article at a time. Lionel Barber, editor-in-chief of the Financial Times (which part-owns The Economist), last week predicted that “almost all” news organisations will be charging for online content within a year. The FT currently allows online readers a certain number of free articles before starting to charge.

Three media-industry veterans, Steve Brill (a publisher), Gordon Crovitz (a former Dow Jones executive) and Leo Hindery (an investor), recently launched a website, journalismonline.com, which is intended to be a sort of iTunes for newspapers. Readers will be able to set up a simple account through which they can make purchases ranging from individual articles to annual subscriptions to multiple publications.

Many news publications also hope to persuade readers to switch from print to an electronic reading device, such as the Kindle, rather than to the internet. The idea that news should be free is deeply entrenched on the internet, whereas paying for content is the norm on the Kindle. The Economist recently made itself available by monthly subscription on the Kindle, with a fee (which is shared with Amazon) that works out slightly higher than our cheapest (two-year) print subscription.

Clay Shirky, a media consultant, predicts a coming “great age of patronage” in the newspaper industry

Yet the fear remains that, despite these initiatives, revenues from electronic distribution will not make up for the money lost as print declines. Increasingly, the talk in the industry is that the best hope for newspapers is charity. Indeed, in a recent essay on the Cato Institute's website, Clay Shirky, a consultant, predicts a coming “great age of patronage” in the newspaper industry.

The idea that philanthropists might rescue ailing titles first surfaced a couple of years ago, when the Tribune Group was for sale. There was talk that moguls such as David Geffen and Eli Broad might buy one of its papers, the Los Angeles Times, and run it through a non-profit trust. In the end, Tribune was purchased by a wealthy billionaire, Sam Zell, at what turned out to be considerable personal cost—though this was less a deliberate act of philanthropy than a catastrophic commercial mistake. There is again talk that Messrs Geffen and Broad may ride to the rescue.

A Non-Profit Model for the New York Times?” is the title of a fascinating article published in May by Penelope Muse Abernathy, whose chair at the University of North Carolina is funded by the Knight Foundation, which is endowed with shares of Knight Newspapers (later part of Knight-Ridder). She examines four options: establishing an endowment that could provide funds to support the paper's news department; charitable support for some aspects of the paper's coverage, such as foreign or cultural coverage; purchase of the paper by a university or other educational institution; and sale to an angel investor who would run the paper as a “low-profit limited liability corporation”.

In an article on July 18th, called “One Newspaper, Many Checkbooks”, Clark Hoyt, the public editor (ie, readers' ombudsman) of the New York Times, revealed that the paper is already making use of charity. In particular, he discussed two organisations with which it has relations. One is ProPublica, which funds investigative journalism from an endowment given by Herbert and Marion Sandler, the founders of Golden West Financial, a big subprime lender (making it one of the few good things to come out of America's mortgage mess). The Knight Foundation has also recently become a donor. The Sandlers believe, plausibly enough, that investigative journalism has been in decline as newspaper budgets have become increasingly strained. Under the leadership of Paul Steiger, a former senior editor at the Wall Street Journal, and with strong safeguards of its editorial independence, it has started to produce scoops good enough to run in the New York Times, which gets them free.

The Times's other collaborator is Spot.Us, a website on which journalists can post story ideas they wish to pursue, and what it will cost them to do it, and raise the money from the public $20 at a time. This is based on the “Kiva model”, pioneered by a microfinance website, Kiva.org, which posts requests for loans from micro-entrepreneurs around the world which are typically met within days by members of the Kiva community, currently to the tune of more than $1m a week. Already, the New York Times has agreed to publish an article on a giant floating garbage patch in the Pacific, if the journalist can raise the money to go.

All this will make many newspaper old hands feel queasy. Although there has been a long tradition of philanthropy in the newspaper industry, it was often intended to buy a media baron undue influence over the public. Some has been more benign, such as the creations in 1936 of the Scott Trust, which owns Britain's Guardian newspaper, and in 1975 of the Poynter Institute, which owns the St Petersburg Times in Florida.

Innovations such as ProPublica and Spot.Us may be a better use of philanthropic funds than simply buying a money-losing newspaper lock, stock and barrel. That is because they are targeting the financial support explicitly at newsgathering rather than pouring it into the general budget where it may be frittered away on expense-account lunches and the like, or on trying to keep alive an increasingly obsolete technology, paper publishing.

Of course, accepting charitable funds in this way may create serious conflicts of interest, which will need to be managed carefully. What those conflicts might be is another story—which your columnist will be only too happy to write if you send him a large cheque in an envelope marked “personal”.

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