Tag: IRS

The good, the bad and the ugly of the new news ecosystem

Is this a new golden age of journalism? It all depends on who’s getting the gold.

For consumers of news, these are the best of times. Thanks to the Internet, we are awash in quality journalism, from longstanding bastions of excellence such as The New York Times and The Guardian to start-ups that are rising above their disreputable roots such as BuzzFeed and Vice News.

For producers of news, though, the challenge is to find new ways of paying for journalism at a time when advertising appears to be in terminal decline.

The optimistic and pessimistic views got an airing recently in a pair of point/counterpoint posts. Writing in Wired, Frank Rose gave the new smartphone-driven media ecosystem a thumbs up, arguing that mobile — rather than leading to shorter attention spans — has actually helped foster long-form journalism and more minutes spent reading in-depth articles. Rose continued:

Little wonder that for every fledgling enterprise like Circa, which generates slick digests of other people’s journalism on the theory that that’s what mobile readers want, you have formerly short-attention-span sites like BuzzFeed and Politico retooling themselves to offer serious, in-depth reporting.

That Rose-colored assessment brought a withering retort from Andrew Leonard of Salon, who complained that Rose never even mentioned the difficulties of paying for all that wonderful journalism.

“The strangest thing about Rose’s piece is that there isn’t a single sentence that discusses the economics of the journalism business,” Leonard wrote, adding: “If you are lucky, you might be able to command a freelance pay rate that hasn’t budged in 30 years. But more people than ever work for nothing.”

To support his argument, Leonard linked to a recent essay on the self-publishing platform Medium by Clay Shirky, a New York University professor who writes about Internet culture. Shirky, author of the influential 2009 blog post “Newspapers and Thinking the Unthinkable” as well as books such as “Here Comes Everybody” and “Cognitive Surplus,” predicted that advertising in print newspapers is about to enter its final death spiral. That’s because Sunday inserts are about to follow classified ads and many types of display ads into the digital-only world, where retailers will be able to reach their customers in a cheaper, more targeted way. Here’s how Shirky put it:

It’s tempting to try to find a moral dimension to newspapers’ collapse, but there isn’t one. All that’s happened is advertisers are leaving, classifieds first, inserts last. Business is business; the advertisers never had a stake in keeping the newsroom open in the first place.

There’s no question that print will eventually go away, though it may survive for a few more years as a high-priced specialty product for people who are willing to pay for it. The dilemma of how to pay for journalism, though, is not going away.

Free online news supported solely by advertising has not proven to be a reliable business model, although there are exceptions, including a few well-managed hyperlocals, like The Batavian in western New York, and sites that draw enormous audiences while employing very few people, like The Huffington Post.

Digital paywalls that require users to pay up after reading a certain number of articles have helped bolster the bottom lines of many newspapers, including The Boston Globe. But very few have been able to generate a significant amount of revenue from paywalls, with The New York Times being a notable exception.

It may turn out that the most reliable path for journalism in the digital age is the nonprofit model, with foundations, wealthy individuals and small donors picking up the tab. It’s a model that has worked well for public television and radio, and that is currently supporting online news organizations both large (ProPublica) and small (the New Haven Independent). But nonprofits are hardly a panacea. The pool of nonprofit money available for journalism is finite, and in any case the IRS has made it difficult for news organizations to take advantage of nonprofit status, as I wrote for The Huffington Post in 2013.

Journalism has never been free. Someone has always paid for it, whether it was department stores taking out ads in the Sunday paper or employers buying up pages and pages of help-wanted ads in the classifieds. Today, the most pressing question for journalists isn’t whether we are living in another golden age. Rather it’s something much blunter: Who will pay?

Pierre Omidyar’s dicey embrace of nonprofit status

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Pierre Omidyar

New York University journalism professor Jay Rosen, who’s part of the high-profile news project being launched by the tech entrepreneur Pierre Omidyar, writes that the operation’s journalism will be incorporated as a 501(c)(3) nonprofit.

But will it really be that simple? As I wrote earlier this year, the IRS has cracked down on 501(c)(3) status for journalism, apparently (it’s not entirely clear) because the agency doesn’t consider journalism to be an approved “educational” activity.

Rosen calls the venture, to be named First Look Media, a “hybrid” that melds for-profit and nonprofit operations: there will also be a for-profit technology company that, if it becomes profitable, will subsidize the journalism.

But that’s not what we normally think of when discussing hybrid journalism models. The usual route is for a nonprofit of some kind to own a for-profit news organization. The example most often cited (including by Rosen) is the Tampa Bay Times, which is owned by the Poynter Institute, a journalism research and training organization.

The difference matters, because a nonprofit news organization is prohibited from endorsing political candidates and engaging in other activities that might be deemed partisan. By contrast, a for-profit enjoys the full protection of the First Amendment, even if it’s owned by a nonprofit.

Not that a nonprofit can’t do great journalism — nonprofits ranging from Mother Jones to the New Haven Independent have proved that. But it will be interesting to see how First Look and its high-profile contributors, including Glenn Greenwald and Laura Poitras, negotiate the tricky nonprofit landscape.

Photo via Wikipedia.

How the IRS is killing nonprofit media

This article appeared earlier at The Huffington Post.

Outrage over the Internal Revenue Service’s targeting of Tea Party and other right-wing groups continues to boil — yet a potentially more consequential IRS practice has scarcely gained any attention.

Over the past few years the IRS has virtually stopped approving 501(c)(3) status for nonprofit news organizations. Given the well-documented decline of traditional for-profit newspapers, nonprofit journalism can be a vital alternative, especially at the local and regional levels. But even when applications for 501(c)(3) status aren’t rejected outright, they are stacking up, unacted upon, for months and even years.

A recent Council on Foundations report titled “The IRS and Nonprofit Media: Toward Creating a More Informed Public” put it this way:

There is significant anecdotal evidence that the IRS has delayed the approval of nonprofit media, potentially slowed the development of those already created, and harmed communities by leaving them without essential coverage, due to the application of archaic standards.

Starting in the middle part of the last decade, a number of nonprofit entrepreneurs launched community websites that were built roughly on the public radio model, funded by grants, sponsorships and contributions from readers. Gaining 501(c)(3) status allowed donors to make make those contributions tax-exempt.

In researching “The Wired City,” my book on the New Haven Independent and other community news sites, I was struck that nearly all of the best-known nonprofits — the Independent, Voice of San Diego, MinnPost, the Texas Tribune, the Connecticut Mirror and others — had been started during the same time period, from 2004 to 2009.

“There was an initial bubble of nonprofit start-ups, but you haven’t seen that great wave spreading across the country,” Andrew Donohue, the then-editor of Voice of San Diego, told me in 2011. He saw that as potentially a good thing — a sign that journalists were trying a variety of models, for-profit as well as nonprofit. Since then, however, it has become increasingly apparent that the IRS is a principal agent in stifling that great wave.

Consider some of the consequences of the IRS’s actions and inaction:

• In February 2012, the Chicago News Cooperative went under, in part because of its inability to obtain 501(c)(3) status from the IRS, as Ryan Chittum reported in the Columbia Journalism Review.

• Because the IRS does not consider journalism to be among the educational activities covered by the 501(c)(3) rules, the agency told the Investigative News Network to remove the word “journalism” from its articles of incorporation. The INN complied and won approval, according to an article about the Council on Foundations report by Justin Ellis of the Nieman Journalism Lab.

• In a similar vein, according to the report, the Johnston Insider of Rhode Island received a message from the IRS telling it: “While most of your articles may be of interest to individuals residing in your community, they are not educational.” Because of that and other reasons, editor Elizabeth Wayland-Seal announced that she was suspending publication.

What adds to the absurdity of the IRS’s stance, as the report notes, is that we are already accustomed to relying on nonprofit, tax-exempt media for much of our news and information — not just from community news sites but from long-established outlets such as NPR and local public radio stations, “The PBS NewsHour” and magazines such as Mother Jones, Consumer Reports and National Geographic.

Here is how the media-reform organization Free Press, which has assembled a useful repository of information about the IRS and nonprofit news, describes the problem:

Nonprofit journalism is not a silver bullet for the future of journalism. But fostering a more diverse media system is. If the IRS decides against allowing nonprofit status for newsrooms, it will essentially be arguing that all journalism should be done for profit. The problem is, the market has shown it will not support the full extent and diversity of news and perspectives we need.

Four years ago, U.S. Sen. Ben Cardin, a Maryland Democrat, proposed a bill that would have allowed newspapers to become nonprofit organizations. At the time it struck me as superfluous. Now it appears that it warrants another look — not just for newspapers, but for other forms of media as well.

Absent legislation, President Obama should appoint a new IRS commissioner who understands that providing quality local journalism is indeed the sort of educational activity that should be covered by the provisions of 501(c)(3).

At a historical moment when it has become increasingly difficult for the traditional media to provide the information we need to govern ourselves in a democracy, the IRS shouldn’t stand in the way of promising alternatives.

A new scandal worthy of our outrage

The problem with getting all worked up over the IRS scandal is that we don’t have any outrage left over for the stories that really matter.

Tonight we learn that President Obama’s Justice Department “secretly obtained two months of telephone records of reporters and editors for The Associated Press in what the news cooperative’s top executive called a ‘massive and unprecedented intrusion’ into how news organizations gather the news.”

And here’s some context: a piece I wrote for the Huffington Post in February 2012 headlined “Obama’s War on Journalism.”

This is the one to watch.

The missing context in the IRS scandal

Here’s an assignment for some enterprising journalist: Try to find out how many conservative 501(c)(3) and 501(c)(4) groups were formed in, say, 2009 through 2011 and compare that to the number of liberal groups formed during the same time period.

Only then can we judge how outrageous it was for some IRS employees to be searching for terms like “tea party” and “patriot” in attempting to crack down on tax-code abuse.

You drop your line where the fish are, you know?