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Why the 20th century had such celebrated local journalism

Profit. That’s where the experimentation and funding for long-term projects came from.

As the near monopoly on the distribution of information that powered the advertising business that kept newsrooms well-stocked has faded, so too has the profitability of the companies that back them. And it has coincided with tightened budgets and, therefore, fewer commercially viable journalism products.

Showing a snapshot of 12 newspaper company profit margins via Pew
Showing a snapshot of 12 newspaper company profit margins via Pew

Newspaper companies in the post-war 1950s to the mid-1990s saw net profit margins soar between 20 and 30 percent but had fallen to an average of 14 percent in 1998, according to Newspapers in the Digital Age. Of publicly traded newspaper companies, operating margins are now more likely between five and 10 percent, according to data from CSI Market, though smaller niche companies can still vie for margins in the teens. Look at this report from 2012, where the above graph came from. (Right now, we at Technically Media are showing a less than five percent margin) The troubles for many newspaper companies were accelerated by the recession, during which the debt obligations many took on before.

The only reason there was great journalism was that there were hefty enough profits to experiment and insulate from the risks of doing so.

So I am thrilled by the growth of institutions and foundations and fundraised nonprofit journalism groups in recent years. A $20 million endowment to help support a local newspaper company could throw off $1 million a year to support capital expenses (assuming a healthy five percent rate of return), which is clearly meaningful.

But I believe anyone who cares about journalism needs, too, to care about experimentation in mixed model media companies that partially fund their work by providing value to the communities they serve. That’s sustainability. Don’t give up on the value and importance of independent news and all that are funded by the market: we have to be more responsive to our communities.

We simply need to find greater efficiencies, like every other industry that is disrupted. We need to grow the next generation of digital media companies that have journalism DNA.

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