Only entrepreneurs will save journalism
Water. It’s everywhere. If it hadn’t already happened, who would think of bottling it and turning it into a business? Mother Nature seems to have a monopoly on the water business.
For most of the 20th century, no entrepreneur thought much about competing with Mother Nature. With the advent of safe and efficient municipal water supplies and chlorination, the bottled water business that thrived in the 19th century dried up before the Jazz Age.
Then, along came Perrier in 1977, at a time when yuppies worried about polluted water sources and yearned for things that seemed fresh, clean and trendy. Today, bottled water is $300 billion industry.
From A&P, Sears & Roebuck, U.S. Steel, IBM, and Microsoft, many companies once feared as monopolies suffered declines not because of government intervention, but because of competition and failures of business leaders to invest, adapt and innovate.
Folks in the news business these days seem especially fretful about Facebook and Google. They are feared as monopolies, and maybe they are, but that doesn’t make them invincible.
Read any listicle written about venture capital and start-ups and in that top 10 somewhere will be this bullet point: Find white space.
White space is spotting an area of the market the competition is missing. That’s the space you skate to first because that’s where the puck will be.
Every large company, no matter how big, how well run, how well capitalized, leaves white space. And they often don’t recognize these exploitable holes in their markets until a start-up competitor fills it.
It’s the job of entrepreneurs to find and fill those spaces.
As journalists fret about Facebook and Google, there are periodic calls for Mark Zuckerberg or Sergey Brin to set aside just a small portion of their vast fortunes and fund journalism. These pleas are always directed at making sure journalists can keep covering news. There’s never a mention of funding R&D and building new business models. Most journalists seem to have concluded, with nary a glimmer of doubt, that journalism is doomed without philanthropy.
Craig Newmark is the hero of the month because of his $6 million commitment to various journalism organizations.
This is a worthy and laudable act by Newmark, but as near as I can tell, based on the list of organizations he supports, such as Poynter, the Sunlight Foundation and the Center for Public Integrity, these are all organizations focused on the content side of the business.
Journalists love these donations, but what happens when the funds dry up? The need across the nation to keep journalism functional from one generation to the next is billions of dollars bigger than charitable contributions could ever hope to sustain.
Over the past 20 years of my online news career, I’ve seen many praiseworthy efforts from various nonprofit organizations aimed at helping journalism deal with the challenges it faces in the era of digital disruption, but these funds have largely been funneled to content-side endeavors. Where grant funds have gone to technology and business model ideas, the amount provided has been a pittance compared to the need.
Hence, the results have failed to provide any sustainable path forward for journalism.
Here’s the issue: Journalism doesn’t have a content problem. It doesn’t have an audience problem. Yes, we live an era when the president calls what we do “fake news” and poll after poll says public trust is at an all-time low, but it’s not like trust was all that high in the 1990s, in an era of record profits. And it’s not like we’re alone. Trust in every American institution has been falling since Watergate.
There’s no amount of money that is going to fix the trust issue.
While it’s noble to fund better functioning newsrooms and new ways of producing content, those donations are unlikely to produce new revenue. There will be no new business models that emerge from those scarce resources going to essentially more or better content production. These initiatives won’t help us reach bigger audiences, except on the margins, given the massive reach of news reporting in current markets, so these funds really don’t help build businesses.
Charitable contributions have a short life span. When the money runs out, it’s gone. They are feeding fish to the poor instead of giving away poles, hooks, and worms at a time when a few more lines in the water could help feed a whole village.
That’s how business investment works: It’s using scare resources to help create more resources to provide money to more people. Money is serving its best and highest use when it’s being put to work to create new money. That’s called investment and it’s what we need more of in the news game. Money spent merely on more news creation doesn’t fuel the mechanisms of new capital creation. That is not a sustainable business model. Many nonprofit news organizations will fail for lack of investment in an engine that drives revenue growth.
We need money backing business builders because that’s how new engines of prosperity are assembled. This is how dynamic, aggressive competitors are born, how markets change and how jobs are created.
Again, we don’t have a journalism problem. We don’t have an audience problem. We have a technology problem. We have a business model problem. That’s where investment money needs to flow. The more ideas funded, the more ventures backed, the better chance one or two successful business models emerge.
Technology is the key, catching up to current competitors and preparing for tomorrow.
The sad part of our current predicament — nearly everything we face from our competition now, especially with Facebook — is built on ideas that were floating through newsrooms 20 years ago. Nothing happened then because newspaper owners were unwilling to fund innovation the way a VC would fund a start-up. If an idea couldn’t generate immediate revenue and didn’t have a certain “me, too” ring to it, then news executives shied away. I know. I was there.
The unwillingness of news companies to lose money on ideas 15 or 20 years ago is one of the reasons the news industry is so imperiled in 2017.
That doesn’t mean, though, that it is too late. It may never be too late, but it’s especially not too late today. There’s a Chinese proverb that’s appropriate here: “The best time to plant a tree is 20 years ago. The next best time is today.”
Facebook may seem as ubiquitous as water, but there’s white space out there. Opportunities abound. There is no shortage of ideas. There is only a shortage of the resources to carry them out and the courage of funders to stand behind them. Those funders can be the large news companies, venture capitalists from all over the nation (not just Silicon Valley) and the foundations.
While the nonprofit model has long had a place in the journalism landscape and will continue to be vital to a functioning democracy, the news business thrived once because it is first and foremost a business. The free market is the best way to fund the greatest diversity of voices and ideas, and competition always makes for the strongest companies and the best journalism.
There is no prince on a white horse who is going to come along and save journalism. Only entrepreneurs will save journalism.