In this guest-post, which examines the question of how public interest journalism should be funded, media policy expert Leo Watkins argues:
As newspaper profitability has declined, “news deserts” have emerged: areas not covered by any professional journalists
Even in the US, where nonprofit models have been more successful, this emerging sector employs only a fraction of the number of journalists for-profit titles previously employed
Relying on philanthropy to fund the future journalism allows newspapers’ priorities to be shaped by the very wealthy – curbing the prospect of the media covering more radical perspectives
The Government has refused to entertain serious solutions to the funding crisis in the media – because none of those which are workable suit the agenda of the most powerful publishers
Initiatives taken up by the independent media sector are insufficient
The solution – which the Government should take steps to bring into effect – is state funding support for the media, with the public given a direct say in how it is allocated
By Leo Watkins
Introduction: the end of profitable newspapers
Once upon a time, newspapers were profitable assets. For a long time, in fact. The Sun had profit margins of 60% at one point. The reasons were simple: high fixed costs (printing plants, printers, newsrooms, offices) combined with low marginal costs (newsprint, ink) made newspaper publishing an industry not many could break in to, and the costs of doing so got higher over the course of the twentieth century – one reason ownership concentration increased. Local newspapers generally had monopolies in their area. At their peak, before the introduction of commercial television, newspapers were the main medium for consumer and classified advertising, the primary bottleneck between business and the consumer. Even after television, they still made markets: real estate, second-hand cars, job listings. Advertising was as much as 80 percent of some newspapers’ revenue.
When newspapers began to decline, corporate owners took all kinds of measures to try and keep up profit margins. The defeat of unionised printers at Wapping and the move to new printing technology. A proliferation of supplements, stuffed with advertising: cars, homes, travel, personal finance. Titles were agglomerated into large chains to economise on costs. Journalists were laid off – particularly the older, more experienced, higher-salaried (many went into PR). According to the classic exposé of the British newspaper industry Flat Earth News (2008) by the former Guardian journalist Nick Davies, some local and regional publishing chains had profit margins as high as 35 percent as late as the early 2000s. But they only did so because, at the same time, executives were cutting a swathe through local newsrooms.
In the 1950s, each day around 85 percent of the adult population bought a newspaper. By 2019, that figure had fallen to 15 percent. Except for a handful of expensive titles for the elite and business customers, the era of a profitable press is now over.
In societies that depend heavily on the market for news provision, the consequences of this shift have obviously been dire. Scores of local titles have closed, and those that remain are often, in reality, just a local front for articles churned out from a regional production hub. Journalists have been laid off en masse: the Cairncross Review estimated that a quarter of journalism jobs were lost between 2007-17. Yet the job losses in the local and regional press began well before 2007, as Flat Earth News attests.
Many parts of the UK are now ‘news deserts’ with no professional local journalists based in or even covering them. Vast areas of our national life are going unnoticed and unreported by professional media. As far as ‘national’ news is concerned, there are many parts of the UK that may as well not exist. Important institutions like courts now proceed regularly with no journalistic coverage or scrutiny. Meetings of Parliamentary committees go unobserved and unreported. Foreign bureaux have been closed. A range of specialist correspondents have been laid off. ‘Industrial’ correspondents – reporters who specialise in covering the labour movement and industrial disputes – no longer exist.
Registering this disaster does not require us to romanticise the 1960s and 1970s as a prelapsarian ‘golden age’ for British newspaper journalism. There was plenty wrong with the journalism of that era, as plenty of classic work in media studies attests. But instead of democratising and diversifying access to the national, regional and local means of news production, those means have been run down, hollowed out and – in many places – destroyed. Control of what remains is monopolised by a handful of corporations owned either by egregious billionaires like Murdoch, Rothermere, Barclay and Lebedev, or by masses of shareholders opposed to the generation of any value that isn’t monetary.
Amid this depressing vista, people have inevitably looked for sources of hope. In a world where news is less profitable, non-profit news is seen by some as the answer. Over the last decade and a half, the UK has seen the launch of a number of non-profit organisations that produce news: Opus Independents, which produces the local magazine Now Then (2008), the Bureau of Investigative Journalism (2010), The Bristol Cable (2014), The Ferret (2015), The Meteor (2019). Many are companies limited by guarantee, some are co-operatives.
The fact that digital distribution removes the need for printing presses or other costly means of physical distribution has undoubtedly helped. For most non-profit news organisations, staff salaries are now their main expense. But these are still costs that have to be met. Who will meet them, and why? If investment in journalism is not for profit, then what is it for?
Nonprofit journalism in the United States
The nonprofit journalism model started earlier, and has become more developed, in the United States. Starting as around 40 or so before 200,, the number of journalism nonprofits in the US has since ballooned to over 300, with most launches since 2008. Prominent nonprofits include Pro Publica, Mother Jones, The Center for Investigative Reporting (which publishes Reveal – a website, public radio programme and podcast), The Marshall Project, The Appeal, MinnPost and The Texas Tribune.
The Institute for Nonprofit News publishes an annual survey of this burgeoning sector. Its 2020 report found that in 2019, nonprofit news organisations had a total of over $500 million in revenue and employed around 3,500 people, of whom 2,300 were journalists. Meanwhile, a 2013 Knight Foundation study of 18 US nonprofits found that they spent between 34-85% of their budgets on editorial, compared to an average of between 12-16% for commercial news organisations.
Overall newsroom employment in the US in 2019 was estimated at 88,000, which means the nonprofit sector employs 2.6% of the total journalist workforce. And between 2008 and 2019, total newsroom employment fell by around 27,000. So those 2,300 journalists at nonprofits constitute less than a tenth of the cut to journalism employment in the decade 2008-2019 alone. And the cutbacks in many newsrooms began long before 2008. So it is quite clear that despite their impressive expansion since the mid-2000s, nonprofit news organisations are nowhere near compensating for the enormous damage that a combination of corporate predation and collapsing profitability has done – and is still doing – to American journalism.
How is the US nonprofit sector funded? The Institute’s 2020 survey lays bare the extent of the sector’s continuing dependence on philanthropic support, especially from major private philanthropic foundations: 48% of total nonprofit revenue came from foundations, and 35% from individual giving. Looking at individual giving in more detail, 71% of value comes from just 827 donors (out of 125,238 in total), each giving an average of $46,765. In other words, the bulk of nonprofit sector funding comes from a combination of grants and ongoing funding from private philanthropic foundations and donations from very wealthy individuals.
Inevitably, this means that the priorities and the perspectives of nonprofit journalism are heavily shaped by the priorities and the perspectives of the very wealthy. Nonprofits that do not cater will simply not raise anything like as much funding. There is no need for foundations or individual donors to try and exercise direct control over the newsroom in the manner of interventionist media owners like Rupert Murdoch: if they don’t like a nonprofit’s work, they can simply cut off funding. In turn, the senior leaderships of nonprofits must either learn on which side their bread is buttered, or fail to attract funding. Inevitably this means that certain topics are steered away from, certain perspectives cannot be articulated, and issues must be framed in acceptable ways.
The global agendas and programs of the biggest philanthropic foundations, like the Bill and Melinda Gates Foundation, are unwise territory to stray into. The role of private philanthropic power in structuring and organising civil society in the United States, and in containing and domesticating radical challenges to the status quo, is similarly off limits. And the capitalist system that generates the exorbitant inequalities of income and wealth which give the wealthy such enormous discretionary power over philanthropic causes is out of the question. The most progressive causes nonprofit news organisations can address are those that appeal to at least the liberal wing of the 1%.
And though it may not usually be mentioned in the same breath as esteemed outlets like ProPublica, the fact is that there is a major right-wing nonprofit sector too. Reactionary billionaires like the former hedge-fund manager Robert Mercer have been driving forces behind the development of a powerful, expanding network of right-wing ‘hyperpartisan’ websites paid to churn out propaganda, including by masquerading as objective or impartial local news sites. The Washington Post was bought in 2013 by Amazon’s Jeff Bezos, the world’s richest man, with no need or expectation to make a profit. Then there is the archipelago of conservative think-tanks that have, for decades, worked to influence political life and the news agenda by functioning as sources of news, ‘expert’ opinion, policy research and ideas. These institutions often work hand-in-glove with right-wing media.
Their dependence on the market means commercial news organisations already catered more to the affluent because the more affluent you are, the more you can afford to pay for a digital subscription and the more valuable a target you are for advertising. All nonprofit news has done is to reorganise the way in which American journalism is ultimately answerable to the wealthy. It has not weakened that relationship; indeed, it may have strengthened it. Where once the editorial content of American newspapers was regulated by a combination of private ownership, addressable markets structured and stratified by class and race, and overwhelming dependence on serving businesses by supplying them with advertising space, today nonprofit news organisations are simply regulated by massive dependence on the discretionary support of the wealthy and the foundations they have endowed. And while a portion of the American elite wants classic liberal civic journalism of the ProPublica kind, other parts of the elite want moderately conservative, elite journalism of the Washington Post kind, and still other parts want reactionary propaganda like Breitbart.
Nonprofit journalism comes to the UK
There have been some attempts to emulate the US nonprofit model in the UK. Two of the most notable are openDemocracy, a foundation established in 2001, and the Bureau of Investigative Journalism, a nonprofit news organisation established by the David and Elaine Potter Foundation in 2010. However, the UK has far fewer large philanthropic foundations than the US. There is simply far less foundation money around to support the development of a nonprofit journalism sector. Compare the budgets of some of the largest journalism nonprofits set up in the US and the UK over the last twenty years. openDemocracy’s budget was £2.21m in 2020 and the Bureau’s was £1.3m in 2019, whereas ProPublica’s was £22.4 million in 2020, The Marshall Project’s £5.4 million.
As a result, many nonprofit sites in the UK are community media organisations, and often co-operatives, that have had to rely less on foundation money and more on community support. Probably the most notable example is the Bristol Cable, a democratically-run worker co-operative whose board of non-executive directors is directly elected by the more than 2,500 people who pay a minimum of £3 a month to be members. But even in the Cable’s case, 63% of its £209,000 annual budget in 2019 came from funding and grants and only 32% from membership income. And over half of the Cable’s budget came from a single foundation: Pierre Omidyar’s Luminate.
The Cairncross Review
In May 2018, in the course of trying to persuade the House of Commons not to vote for an amendment that would have forced the Government to commence Part Two of the Leveson Inquiry, the then-Culture Secretary Matt Hancock argued that the real problem facing British journalism was no longer the abysmal journalistic standards prevailing in parts of the national press, the massive failures of press corporate governance that enabled industrial-scale criminality to take place in the 2000s, or the fact that the entire national press had chosen to boycott the system to monitor their self-regulation that was set up by Parliament following the recommendations of the Leveson Report. Instead, the new problem was now ‘fake news’ online. The national press was no longer poisoning our national life. In fact it was now the antidote. The pressing problem was no longer press standards or corporate governance but the press’s lack of profitability. He therefore established the Cairncross Review to consider the ‘commercial sustainability’ of the press. That is, to find out why newspaper profitability had collapsed, whether it might revive at some point, and whether there was anything the government could do about it – somehow without violating the press’s insistence after Leveson that there be no ‘state intervention’ in the press.
The Review reported to the Government in February 2019. Its report recognised the scale of the collapse in the British press: a quarter of journalism jobs in the UK lost between 2007-2017, hundreds of local titles closed, many local areas now ‘news deserts’, a widespread lack of investigative journalism and local civic reporting. But while it correctly registered the scale of the problem, its recommendations were minuscule in comparison.
On the one hand, the Review, guided the classic liberal belief that the press ought to fulfil essential democratic functions, saw how alarming it was that British journalism’s performance of those democratic functions was in decline everywhere, and in many local areas now non-existent. On the other hand, the Review could not countenance any kind of large-scale public intervention in the provision of news because its framework was limited by the other classic liberal belief about the news media: that private ownership and dependence on the market is an essential guarantee of the press’s quality, accountability and independence.
In reality, while dependence on the market offers some independence from control by the state (although an independence heavily qualified by journalists’ routine dependence on state sources), it ends up leaving journalism controlled by other priorities: those of private owners, private consumers and advertisers – all stratified by inequalities which the market does not correct for, but transmits and replicates, just as it does in other vital domains like education and healthcare, to similarly damaging effect. In addition, the production of journalism in the form of a commodity to be sold on the market inevitably biases production towards the kinds of journalism that the public will be prepared to buy, as individual consumers in the market. Yet much of the value of good journalism is public, not private: dispersed across society not concentrated in the subjective needs of the individual consumer. As a result, this value is often ‘invisible’ to private news producers because it does not add to their profit – except occasionally through reputational benefits, in much the same way that the environmental cost of their actions is ‘invisible’ to fossil fuel companies because it does not directly affect their profits. For this reason, it has been institutions relatively insulated from market pressures, like public broadcasters, that have tended, on the whole, to do more socially valuable journalism. Meanwhile, it was precisely the intensity of the competition in the tabloid newspaper market that led British journalists to routinely use illegal methods to acquire exclusive stories – stories that often centred on the private lives of celebrities and had no social value whatsoever. In short, the Review fell into the chasm that now exists between the traditional liberal belief in the compatibility of the press and the market, and the unavoidable fact that for decades now the market has been steadily destroying the press. Anyone in doubt about that need only look at the vampiric career of Alden Capital in American local newspapers.
Philanthropy is one means through which liberalism has sought to address the market’s most damaging failures; another is limited state provision administered by an enlightened elite: in short, the methods of Rowntree and Beveridge. The Cairncross Review’s main recommendations were for a combination of the two. First, it recommended the Charity Commission consider making it easier for journalism nonprofits to attain charitable status, with its attendant tax benefits. Second, it proposed a new ‘Institute for Public Interest News’ to raise money and then award grants for ‘public interest journalism’, Arts Council-style. The money would largely come from philanthropists, foundations or corporations like Google and Facebook. The Institute’s board would then award grants to organisations that could fill the biggest gaps in the provision of ‘public interest journalism’ left behind by the retreating commercial publishers. The two main areas identified by the Review were reports on local councils, and investigative journalism.
Neither of those two recommendations was of much use to the commercial news organisations that dominate the national and local press (and that have the ear of the Conservative Party). From their perspective, nonprofit news organisations presumably only seem likely to embarrass them, showing them up by doing the serious reporting they don’t find profitable enough to do themselves anymore. Parts of the commercial press are also pervaded by a belief that the BBC’s free News website is a major reason they find it so hard to sell digital subscriptions, so why would they support the creation of more free alternatives to their products? (Never mind that the more plausible explanation for their difficulties selling subscriptions is that we have the least trusted press in Europe.) Whatever the exact reasoning by press executives, the fact is that none supported the Review’s recommendations. What the press really want is most likely (i) more cuts to the BBC’s funding, (ii) tax breaks or credits, and (iii) help from Government to force Google and Facebook to reach commercial accommodations with them. Meanwhile, the Government long-grassed the idea of charitable status for nonprofit journalism and rejected the idea of an Institute for Public Interest News outright.
The Public Interest News Foundation
Since then, some people involved in IMPRESS, including its chief executive Jonathan Heawood, have taken forward Cairncross’s second recommendation independently of the government and set up the Public Interest News Foundation (PINF), which was awarded charitable status by the Charity Commission in September 2020.
The PINF has already, in response to the covid-19 crisis, disbursed an emergency fund of £60,000 in grants of £3,000 each to twenty independent news publishers in the UK, including The Ferret, gal-dem and Now Then (paid for by a grant from the Joseph Rowntree Reform Trust). It is now in the process of conducting a survey of nonprofit news organisations in the UK, and in December announced it had £250,000 in seed funding from Luminate, the JRRT and the Joseph Rowntree Charitable Trust. The PINF aims to become a distributor of grant funding to nonprofit journalism, as well as providing training, research and other support to assist the development of the sector.(In the interest of transparency, I should point out that the project of which this article is a part, the Media Influence Matrix report for the UK, is also funded by the JRRT.)
The PINF faces a number of challenges. Along with the relative lack of foundation funding in the UK, the Government’s total lack of interest in encouraging nonprofit journalism, and the hostility of parts of the national press, there is also the question of the UK’s legal framework for charitable status.
In the US, journalism is recognised as a charitable purpose and nonprofits established to produce journalism are eligible for tax exemption under Section 501(c)(3) of the Internal Revenue Code. In the UK by contrast, journalism itself has not hitherto been recognised as a charitable purpose in its own right by the Charity Commission, which has instead taken the view that companies carrying out journalistic activity should only be eligible for charitable status when such journalism aims at recognised charitable ends, like ‘promoting citizenship and civic responsibility’. A “clear link” must able to be drawn between journalism and the recognised charitable purposes it advances.
In order to receive charitable status, the PINF had to set out a definition of “public interest news” compatible with the Charity Commission’s definition of charitable purposes. Its definition was “news and other information” produced and distributed to the public “according to high standards of ethical conduct and best practice in journalism” providing one of the following four kinds of public benefit:
- informing the public about matters relevant to their roles as citizens
- enabling members of local communities to become aware of, and involved in, issues “of common concern” to them as a community and to promote their co-operation and cohesion
- enabling the public to participate in democratic processes in an informed manner
- promoting charitable educational outcomes by promoting public understanding of issues like health or environmental conservation
The PINF also specified what would not, in its view, count as “public interest news”: journalism which is “simply entertaining in nature” or which is “politically motivated, biased, inaccurate or which fails to observe a person’s right to privacy” because these are not forms of journalism carried out to “high standards of ethical conduct and best practice”.
There are a number of problems with this definition. First of all, plenty of journalism which contributes to the four kinds of public benefit the PINF hopes to provide is written by journalists strongly motivated by political convictions. Strong political motivations are wholly compatible with “high standards of ethical conduct and best practice”. It is obvious to anyone who has read the work of great investigative journalists that many are motivated by strong political convictions. That does not make their reporting any less true.
Secondly, journalism that affects to be impartial and objective can still have major biases – for example, a pro-government bias – and can still be poorly produced, for instance by treating government sources too uncritically. The BBC has both of these problems in spades. The clear danger is that the PINF’s definition of ‘public interest news’ incorporates a marked bias towards journalism that, while often noble in intention, is limited in its capacity to criticise the status quo, or to openly call for changes beyond moderate reform. Radical journalism risks being too ‘overtly political’.
Thirdly, both the PINF and the Charity Commission seem to view journalism that openly supports particular political causes and political parties as inimical to good citizenship. In my opinion, this is a mistake. Journalism animated by strong political convictions is entirely capable of a critical, independent relationship to the movements, political figures and parties it supports. Moreover, to be an informed public, citizens need accessible articulations of the full spectrum of political positions, and there is no reason why it should be only politicians, and not also (some) journalists, that do that work of articulation. Clearly, the right-wing press function as effective articulators of right-wing politics. But the problem with the news media in Britain is not that we have right-wing newspapers. It is that the terrain of media production is totally and unfairly stacked in favour of right-wing media because the newspaper industry reflects and even magnifies social inequalities of wealth and power as a result of its organisation on the basis of private ownership and production for sale on the market.
In summary, then, there are serious limits to the project of supporting ‘public interest news’ in the UK. The evidence from the US suggests that the bulk of funding would need to come from the very rich and their philanthropic foundations, which sets clear limits to the kinds of perspectives and causes such journalism can take up. And even there, such funding has compensated for less than a tenth of the job losses in American journalism caused by the rapid decline of commercial news organisations over the last two decades. The evidence from the UK suggests that the UK has far fewer rich people or philanthropic foundations willing to provide the kind of funding necessary to make a meaningful improvement to the provision of news. And the legal framework that regulates charitable giving in the UK puts even more limits on the contribution the philanthropic, ‘public interest news’ model can make to renewing journalism in the UK.
The central issue that the movement for nonprofit journalism or ‘public interest news’ does not confront is the fact that large-scale public funding is now needed to provide a supply of journalism adequate to our democratic needs. Traditional liberal concerns about large-scale public funding meaning dangerous state control over the news media have repeatedly precluded serious consideration of this option in the UK. And if such public funding were to be allocated either by government ministers or by public bodies with boards appointed by government – like the Arts Council – then those concerns would be valid. But that ignores the fact that there is an alternative: to let the public itself allocate public funding through a free and open process of democratic decision – one separate and distinct from the democratic selection of elected state representatives. The results could then be made freely available to all. That would give us journalism of a truly public kind.
This research is part of the UK component of the Center for Media, Data and Society’s Media Influence Matrix, set up to investigate the influence of shifts in policy, funding, and technology on contemporary journalism. The UK component is coordinated in partnership with the Media Reform Coalition and Goldsmiths, University of London and is funded by the Joseph Rowntree Charitable Trust. It is due to report in Summer 2021.