Industry, union leaders discuss solutions to newspapers’ revenue woes

Increasingly, Americans are reading their local news on the Internet, where content is largely available for free. Most newspapers’ circulation numbers are declining, and advertisers, in turn, are looking elsewhere – including the Web – for ways to deliver their messages to the public.

For newspapers, it’s a double blow to the bottom line. They are losing subscription revenue and, more importantly, advertising revenue. As a result, daily newspapers across the country are cutting costs by laying off local reporters, photographers, editors and other workers, many of whom – in the Twin Cities and nationwide – are union members.

Can newspapers recover the revenue necessary to support local journalism? Industry leaders gathered last month at the University of Minnesota to discuss that question at a one-day conference co-hosted by the Newspaper Guild, the nation’s largest union of newspaper workers, and the Minnesota Journalism Center.

“Things don’t look so good right now,” Newspaper Guild President Bernie Lunzer acknowledged at the outset of the conference. But Lunzer insisted local journalism has a future; the question, he said, is what that future will look like – both for readers and for newspaper workers.

Lunzer, a former St. Paul Pioneer Press reporter, said the Guild is “agnostic” on what the solution to saving local journalism jobs is, as long as it maintains workers’ professional wages and standards.

Lunzer participated in a “point-counterpoint” session with John Sturm, president of the Newspaper Association of America, and the two gave their organizations’ perspectives on potential solutions to newspapers’ economic woes, as did panelists throughout the conference. Among the solutions discussed were:

• Help from the government. Strum acknowledged a “desire to be helpful” to newspapers among lawmakers in Washington, but turning sentiment into results, he said, is his organization’s challenge.

Strum and Lunzer differed on the extent to which government ought to be involved in promoting local journalism. Lunzer suggested Congress might give tax credits to businesses or organizations that employ journalists. “I don’t have a problem spending some public money for something that supports public good,” Lunzer said.

But Sturm cautioned that “what government gives, government can take away.” Special deals for news organizations, he fears, could make newspapers and journalists beholden to government perks – an uncomfortable spot for news gatherers.

• Eliminating profitability from the newspaper model. Many “failing” newspapers, according to panelists at the conference, remain viable operations, but are unable to meet the earnings expectations set by corporate ownership. Lunzer pointed to the Minneapolis Star Tribune, which filed for bankruptcy this spring, just two years after Avista Capital paid $530 million – most of which it borrowed – to acquire the newspaper.

“Publications like the Star Tribune have pretty good cash flow, but the debt they’re trying to catch up to” is insurmountable, Lunzer said.

If newspapers – like public radio, for example – organized as non-profits, corporate earnings expectations would be a thing of the past. Sen. Ben Cardin of Maryland has authored a bill that would allow for such restructuring. Under the Newspaper Revitalization Act, newspapers’ advertising and subscription revenue would be tax exempt, and contributions from readers or foundations to support coverage would be tax deductible.

• “Fair share” laws that ensure sources of news content receive compensation for its use by online news aggregators like Google.

The idea is gaining momentum, both Sturm and Lunzer agreed. Aggregators, Sturm said, are taking newspapers’ content, “packaging it, and within seconds of its publication are selling advertising around that material, and the money goes to the aggregator and not to the creators.”

Strum said it would take an act of Congress to ensure “fair share,” and he acknowledged opponents would appeal to the public’s interest in the free flow of information. But the reality, he said, is that without a change, there will be fewer and fewer sources for companies like Google to aggregate.

“I think Google’s had a free ride, and it’s time for that ride to be over,” Lunzer said, noting that the company made $36 billion last year, in part, because journalists “have given Google users some incredible things to search.

“I think there are some crumbs out there for the people that actually create the information,” Lunzer added.

• Convincing the public to pay for its news. Joel Kramer, who launched the Twin Cities-based MinnPost.com, a not-for-profit news site, about a year ago, told the conference that if the future of journalism depends on finding new sources of revenue, then journalism itself will have to be a part of the revenue equation. That is, news organizations will not be able to rely solely on raising advertising revenue to do journalism.

“I believe the reader has to pay,” Kramer said.

A $1.2 million operation, MinnPost covers only a quarter of its expenses through advertising and sponsorships. So far, about 6.5 percent of MinnPost’s readers have contributed to the site financially.

MinnPost, though, is a news-analysis site. It doesn’t have the staff level of a daily newspaper, and it is not able to pay reporters for sitting through public meetings or poring through public documents. Jennifer Towery of the Peoria Journal Star said that’s the value of a daily newspaper to its community – a value she believes community members have the potential to recognize.

“Newspapers are still the only organization that put people out there in the community,” she said, adding that the financial challenges newspapers face are “an opportunity for communities to get their newspapers back under their control.”

That’s exactly what’s playing out in Baltimore, where a group of local investors has offered to buy the Baltimore Sun from its bankrupt owner, the Tribune Company.

Ted Venetoulis, a former Baltimore County executive who put the investment group together, likened the effort to keep Sun ownership local to the city’s civic interest in building new stadiums to keep its professional sports teams from leaving town.

“Why can’t we generate that same type of enthusiasm for the newspaper?” Venetoulis asked. “Because if it goes, what in the hell is a town worth?”

Michael Moore edits The Union Advocate, the official publication of the St. Paul Regional Labor Federation. Learn more at www.stpaulunions.org