I spent an afternoon reading Julia Cagé’s Saving the Media: Capitalism, Crowdfunding, and Democracy. Would that she at last offered the salvation that tablets, pay walls, native advertising, and other quick-fix false messiahs have failed to deliver for news. Sadly, her proposal is shocking in its naive economics — from an economist! — and in the basic business questions it fails to address.
“The news media must somehow transcend the laws of the market.”
That line sums up Cagé’s wish and worldview, which is shared by too many journalists I know: Surely, they pray, there is some promised land for news outside of the economic reality of profit and loss, earnings and cost, value and worth. “To put it bluntly,” she declares, “shares of news media companies should not be publicly traded. This is particularly true in the United States, where publicly held companies have a fiduciary responsibility to their stockholders to maximize profits. This legal obligation conflicts with their moral responsibility to ‘serve the general welfare.’”
Cagé opposes public ownership and profit.
She addresses the former — the market — by proposing a complex structure of “crowdfunding and power-sharing. I hope that it may serve as a new economic and legal template for the media of the twenty-first century, a template that combines aspects of both a company and a foundation. Let us call this new entity a nonprofit media organization (NMO).”
She addresses the latter — revenue and profit — not at all. Cagé decides that innovations in advertising “will never work, and existing ad revenue is destined to dry up.” Oh, my.
Having eliminated a primary revenue stream for news media, Cagé proposes nothing to replace it, save for this passing, glib homage to the God Pay Wall: “paid content is undoubtedly the future.” Oh, I doubt. She also salutes — not surprisingly given the book’s origins in France — government subsidy, arguing that “subsidies would go only to general-interest newspapers.” But it is irrelevant, general-interest publications that are dying and Cagé would do nothing to increase the diversity of news voices. These two revenue wishes aside, Cagé does nothing to analyze the P&L of a news company. As an economist, how can she get away with this?
Instead, she spends much of her thin volume proposing a complex structure of ownership via crowdfunding with much discussion of voting rights for the rich who can give more than 1% of a news organization’s capital needs and societies of readers and journalists who band together to get voting rights. Get this: She expects the journalists to pay for their influence. Tell that to all the whiners who complain that Huffington Post doesn’t pay them for their precious blather.
Here’s what’s ludicrous about her plan: The only way to make contributions work as a business model is by building an endowment that throws off enough cash each year to cover operating expenses. Say, for the sake of round figures, that your operation requires $100 million a year (five years ago, The New York Times was spending twice that on its newsroom). At a five percent annual return, that would require building an endowment of $2 billion.
Good fucking luck with that. Who would donate money to such an endowment with no promise of a return on the “investment”? No one.
Cagé’s odd analysis continues with her definitions of journalism. First, she insists that journalism must be produced by journalism (we pretty much moved past that argument in the U.S. a few years ago). “It is journalistic labor that turns mere ‘facts’ into news,” she says. “In the digital age, where news is transmitted in real time via blogs and social networks, it is sometimes said that every web surfer is a journalist, but this is incorrect. Journalism is a profession.” Sniff.
In France, by the way, journalism is a profession that “entitles the journalist to tax deductions.” I find this ethically appalling, just as I remain shocked that journalists in Germany get discounts on everything from phones to cars. Watchdogs get payoffs from those whom they are meant to dog. But I digress.
Unsurprisingly, Cagé laments the shrinking of the professional journalistic corps — according to her numbers, in the U.S., journos account for 0.12 percent of the population — without celebrating how the net has opened publishing and democratic voice to so many new voices. Instead, she rolls her eyes at “employees assigned to web maintenance duties….Print journalists have been replaced by computer specialists and Java experts who are given no opportunity to leave their screens to do shoe-leather reporting.” Prisoners with web mops and Java buckets. Of course, she also dismisses the value of net platforms. “Google News acts as editor-in-chief for newspaper websites,” she contends. In no universe is that true.
It gets better: Cagé — an economist, remember — tries to quantify the quality of journalism on the number of pages and — get this — the font and page size of newspapers. Our problem in news, Lord knows, is not fewer words.
Being French, Frédéric Filloux got a beat on me criticizing Saving the Media. He is no less kind:
When reading her book, one can but wonder what sort of investor, even the best-intentioned kind, would seriously be willing to put money in a system in which most of the decision power would be transferred to non-investing shareholders (society of readers, groups of individuals donors, staff, and so on…). Every manager in a news organization, wether she operates in the newsroom or in the C-suite, knows that a kolkhoz-like structure where everyone has a say in management decisions is the worst possible option. It prevents any reactivity to unforeseen circumstances (a normal occurrence in today’s fast-changing environment); it hinders risk-taking and the ability to make swift and harsh business decisions if risk-taking is punished; it encourages settling for the lowest common denominator and septic demagoguery, especially when it comes to appointing an editor. It is admittedly difficult to quantify, but my experience says that letting a board of trustees (such as Schibsted’s or others) appoint an editor is a much safer bet than resorting to a “democratic” staff vote that ends up binding the elected editor in a straightjacket of electoral promises.
Right. Germany’s Der Spiegel is majority owned by its print staff, which has caused such disaster of governance that the not-long-ago-great magazine has subjected itself to its own sadomasochistic innovation report. There are plenty examples of such anarchy in French publications.
No, news organizations are not meant to be anarchic democracies run by journalists — who, for too long, have disdained the business of journalism. No, news needs to be a business that builds value for the communities it serves and sustains itself as a result of that value. That is why I teach entrepreneurial journalism. And that is why I wonder why Harvard published this waste of precious ink.