Good News

Meet the new journalism, funded by you.

by Ben Wofford

For one brief moment in 1967, Broadway met political journalism halfway. In the banter following Fiddler on the Roof’s “If I Were a Rich Man,” Tevye laments his daughter’s refusal to enter an arranged marriage for the money.

“But money is the world’s curse!” protests his daughter.

“Oy, may the Lord smite me with it,” responds Tevye, the indigent tailor of Anatevka. “And may I never recover.”

Ten years ago, we might well have eavesdropped on any editorial boardroom in America. The Internet age had arrived, and print journalism faced a grim future. For these news executives, marrying their journalistic ideals with the fiscal priorities of a declining business was like a fiddler on the roof, trying to stay balanced—wearing an anvil.

There was much to kvetch over. Opinion makers in print had weathered the calamitous Bush years, with the public’s trust in the media then at all-time lows. But the worst was coming. Millennials had begun graduating from college en masse and percolating into the white-collar job market, the life source of print media and so-called thought-leader magazines. The viability of an entire sector of public culture, it seemed, suddenly rested in the wallets of a generation that exhibited some seriously chronic issues with remuneration.

Along with Millennials’ second-nature dexterity for the web came the wide latitude to get stuff for free. When Hollywood obsessed over the Stop Online Piracy Act (SOPA) last year, it wasn’t for nothing: the movie industry loses billions every year through pirating, torrents and ripping. (Hollywood is one of the few U.S. industries doing extremely well, in case anyone was wondering.)

So by the mid-2000s, it seemed hard to overstate our deadbeat obsession for free Internet content. On the verge of bankruptcy, nearly every newspaper and magazine offered itself online at the turn of the century, free of charge. The result was not pretty.

The worst damage was for newspapers. The classical vanguards of black and white were soon red all over—millions in debt, imminent bankruptcy and a 90-degree plummet in revenue that left even the most cynical observers bewildered. The list of bankruptcies included former giants with many readers and Pulitzers to speak of.

Magazines didn’t fare much better. If newspapers were scooped by the unblinking gaze of online content, magazines had to deliver something especially revelatory once per week. They didn’t, and newsweeklies dived, the recession only intensifying the decline. Last year alone, The New Yorker fell 17 percent, TIME 30 percent and Newsweek folded in print. “In the fight for the American consumer, magazines are losing,” wrote media critic David Carr last year.

Magazines and newspapers are different animals, but the root of their decline is the same, a phenomenon that news analyst Paul Ivan calls the Krugman Paradox. When the Internet came, print advertising left at a rate-of-plummet roughly fifty times the paltry growth of digital dollars. Thus the paradox: when columnist Paul Krugman posts an online op-ed, it routinely garners millions of page-views—and one PetMeds ad. Despite attracting an enormous audience, online journalism continues to lack any reliable ad model.

“But here’s the rub,” observed Ta-Nahesi Coates in The Atlantic last year: “No one knew.” At the turn of the century, no one knew the future of online rates. Nobody knew about the rise of Google or the Krugman Paradox. Assuming the Internet would save them, news companies bet the farm blind.

Back in the proverbial boardroom, now, editors were bracing themselves. The Internet soon became Millennials’ number one source of information by the end of the decade, surpassing television in 2010. But the Krugman Paradox, clearly dictating an end to free-as-you-want content, jutted for attention more than the predilections of young readers. Circulation and ads were not going to cut it; somebody had to pay.

The riddle had two parts. First, how to charge for content that once was free. And second, how to make a generation morally averse to paying for anything, pay for anything. The media mavens were out to square an epochal circle. For years, they came up empty.

Print news had long banked on the emergence of “some nebulous future ‘free’ innovation,” wrote Ryan Chittum in 2012, when the search for the Great White Whale of political journalism was still underway. “Not one of 1,500 American newspapers has yet to find it in some 17 years of the web era.”

Until now.

During the fall of 2012, Andrew Sullivan had an idea. Something about the way media companies were trying to solve the Krugman Paradox was all wrong.

The thought must have been stewing for years at Sullivan’s popular blog, The Dish. But a decision from his boss, Tina Brown, set the spark when Sullivan and his colleagues at Newsweek/Daily Beast were told that Newsweek would fold in print, converting entirely to digital form. Commentators reacted predictably, ratcheting up their jeremiad for a weakening industry. But Sullivan was thrilled: for years he had been preaching the possibilities of digital, urging print magazines to convert.

Sullivan was looking at the Krugman Paradox upside-down. The problem was not that ads couldn’t rake in enough revenue, he reasoned. The problem was that the model required ads at all.

As a godfather of the modern blogging genre, Sullivan was the perfect candidate to attempt something out of the box and take his audience along with him. The primary advantage of The Dish is its 1.3 million readers, publishing their comments, questions and polemics, with Sullivan curating the ensuing repartee. It’s a monument to the democratizing power of online content, but also the ability to crowdsource consumer psychology. Sullivan was harpooning for the White Whale, what economists and analysts had debated for years: if readers would ever pay for online content. So, Sullivan decided, why not ask them?

In October, Sullivan initiated a thread, “Will Readers Finally Pay for Content?” The groupthink on the blog first deemed the online New York Times’ “porous paywall” a success—named a “paywall” for the website’s requirement to subscribe, and “porous” for the ability to view limited numbers of articles, as well as re-links from outside sites, for free.

Then the thread tackled TPM Prime, a new, exclusive VIP forum for loyal readers of online news and journalism blog Talking Points Memo (TPM) to discuss issues with founder and indie journalist superstar Josh Marshall, while the news site in general remained free. In essence, Prime created a way for TPM to leverage Marshall as its most marketable asset. That development must have made Sullivan, who has garnered one of the most dedicated followings in the blog world, take notice.

“If The Dish succeeds, it will be partly because Sullivan has cultivated the loyalty of a readership,” wrote Conor Friedersdorf, a columnist at The Atlantic.

That’s roughly where Sullivan conceived the formula that could take his blog into financial independence. If The Dish went ad-free, readers might perceive the gesture as a symbol of respect after years of loyal readership. Cutting ads, in other words, might be a profit-raiser. Even in a “mutualized model,” a term coined by The Guardian editor Alan Rusbridge to describe journalism in which readers are active participants, turning a profit would still prove a tall order—staff salaries, health care, operating costs—and Sullivan was going for the grand slam: absolutely zero advertisements.

Finally, The Dish rolled out its new model last January, the first of its kind to charge readers for a blog. The Dish utilizes a new payment paradigm Sullivan calls a “freemium-based meter.” Its “metered” component resembles The New York Times, limiting extended reads for non-subscribers but allowing unlimited access through links or social media. And its focus on core readers for subscription revenue clearly resembles TPM Prime. Sullivan estimates he’ll need $900,000 by year’s end to stay profitable; one month into the initiation of the meter, The Dish raised just over two-thirds of that.

“The real test is whether people re-subscribe,” said Sullivan, meaning his payment experiment will require years, not months.

The new Dish’s success has the potential to disrupt the narrative that media mavens have construed around the centrality of ads. Because while Sullivan is shunning advertising, the rest of online journalism is making exactly the opposite bet, assuming that readers will simply never pony up and aggressively doubling down on inventive ad models.

Exhibit A: the rise of “advertorials,” dummy articles actually written by advertisers. Advertorials are so much more profitable than conventional online ads that media companies like BuzzFeed think they’ve found their own solution to the Krugman Paradox. Last February, Sullivan found himself seated next to BuzzFeed editor-in-chief Ben Smith, sparring over the ethics of advertorials.

“You’re clearly trying to trick people,” Sullivan said of the deceptive appearance of advertorials, a tense silence growing in the audience. “One has to ask, can we trust you?”

“Unless readers think we have someone on staff named Sony,” countered Smith, referring to the by-line of advertorials, “I don’t think anyone will be confused.”

One thing is clear: both men are leading their media companies into uncharted cultural territory, a decadal courtship for the future traffic of young readers. And eventually, only one can win.

If you parsed through the faces of VIPs behind Obama at his Inauguration, you first noticed Beyoncé, and a few rows down, billionaire Chris Hughes and his recent husband, Sean Eldridge ’09. The power couple plainly appeared rich, magnetic, and incredibly good-looking. And they should.

Hughes, one of the quieter profiles of Facebook’s founding four, with a net worth south of a billion, left in 2007 to lead the Obama campaign’s social media strategy. And in 2012, at age 28, he bought The New Republic, hiring himself as editor-in-chief.

At 28 years, he’s the youngest since Sullivan to become editor—not the only detail they share. Throughout the marathon year of publicity following his purchase, Hughes showed a tendency to reach for the star-crossed idioms of profitability and idealism and wind them into a single tenor. And like Sullivan, Hughes places the romantic ideal of good journalism at the center of breaking even. “I believe in the power of great writing to shape how we see the world,” says Hughes in one breath, and in the next, “It’s our challenge to prove…to the world that we can find a profitable model.”

So far, Hughes’ leadership has demonstrated most of the changes you might expect from a founder of Facebook. Alongside an elite cadre of bloggers, the revamped site is a coding masterpiece, rendering each article an interactive wonderland in which every word can be tweeted, posted to Tumblr or shared on Facebook. A dynamic bar paces your completed percentage of the article, as if to affirm that your precious online minutes are as important to you as they are to the magazine’s bottom line.

If you didn’t know better, you might guess this was an overture to a generation with a strong habit for doing lots of things besides reading, and social media is likely the next shoe to drop. The percentage of consumers who read news through social media doubled between 2010 and 2012, now at 20 percent, and the next big puzzle will be how to convert Facebook’s power to derail your homework into making you read an article at The New Republic.

That is clearly Hughes’—and Sullivan’s and Marshall’s—objective: to adapt to the behaviors of the next wave of news consumers, not change them. While 70 percent of users click news links on Facebook from family or friends, only 13 percent do so for news organizations. The genius of Sullivan’s scheme, then, is to blur the line between the first category and the second. Suddenly, the use of advertorials becomes a starkly different path: making a dime to stay afloat, versus losing the trust vital to making mutualized journalism click.

“The real parallel here is not to media paywalls so much as Kickstarter,” explains Reuters news analyst Felix Salmon of these new models. “It feels good to support something you love and admire.” Ditto for Josh Marshall’s Prime, or the link to The New Republic you’ll get from your mom and read on your tablet. This is the new journalism: a network of “mutualized” online reporting and elite blogging, all stewed in the same social media pot—funded by you.

Back in Anatevka, news traditionalists have chosen to grapple with the tide of change by more or less going nuts.

“All of my life, developing credentials,” NBC “Nightly News” anchor Brian Williams complained recently. “Now I’m up against a guy named Vinny who hasn’t left the efficiency apartment in two years.”

What Williams didn’t mention is that in the epic showdown against Basement Vinny, Williams is losing. Network TV audiences continue to shrink by about 2 percent annually, the Internet nipping at its heels in second place, and Millennials accounting for most of the decline in the last five years.

“Everything about old media and mainstream media organizations is based on monopolies, like the national networks,” Marshall told me, but “when people talk about the decline of newspapers, all of that is a loss of monopoly power.”

Williams and Vinny are the perfect metaphor, then, for a familiar generational archetype. Print is barely profitable, and until the moment that it isn’t, the old guard will continue to rip into “uninformed” young people who “think news is garbage.” That seems hard to reconcile with Millennials’ claim to the most educated generation in human history. What print vanguards mean is that we don’t read the news their way—walking to the bus, buying the paper and tipping a fedora.

But the future is mutualized, and so are the consequences: last year, 68 percent of readers under age 34 responded that they believe technology has improved media. But only 30 percent in that age range said they trust the opinions of a magazine editor. Between a monolithic Cronkite who hopes we buy from Sony, and a Vinny that tugs on our heartstrings ad-free, we’ll choose Vinny any day of the week.

None of this will be comfortable. In Rusbridge’s manifesto, he makes clear that he wishes his industry could revel in the comfort—and profits—of a former era. That’s what makes inaction, perhaps, so tempting. “A failure to experiment is more dangerous than trying new things,” Rusbridge wrote.

If Sullivan, Marshall, Hughes and the revolution they lead are still standing in one year, the choice for media executives will be, well, dramatic. After he breaks tradition and allows his daughter to marry the goy, our friend Tevye realizes he must leave Anatevka behind. The success of journalism might just hinge on how quickly news organizations can muster the same courage, and never look back.

Art by Gabrielle Hick