Federal bill would ease the way for nonprofit local news

A bill filed by U.S. Rep. Mark DeSaulnier, D-Calif., would make it easier for “written news organizations” to claim nonprofit status, “allowing them to focus on content instead of profit margins and reduce their tax burden.”

The bill, H.R. 3126, has been endorsed by the News Media Alliance, the National Newspaper Association, the American Society of News Editors, the Associated Press Media Editors, the Association of Alternative Newsmedia, the California News Publishers Association, Free Press Action and the Open Markets Institute.

Nonprofit news is nothing new — organizations ranging from public media to hyperlocal community websites have nonprofit status. Donors are able to write off contributions, and the news organizations themselves are exempt from most taxes.

But it’s not easy. Back in 2013, I wrote that the IRS had virtually stopped granting 501(c)(3) nonprofit status to startup news organizations as it wrestled with the question of whether journalism was among the educational activities envisioned under the tax code.

Though it’s my understanding that the agency has loosened up since then, questions remain. For instance, The Salt Lake Tribune recently announced that it would seek nonprofit status, which would make it the first regional newspaper to do so. Writing at the Nieman Lab, though, Christine Schmidt and Joshua Benton wondered whether the Tribune would run into trouble for its coverage of professional sports and the restaurant scene, which would appear to fall outside the IRS guidelines.

On the other hand, Paul Bass, the founder of the New Haven Independent, a 13-year-old nonprofit news project, told me recently that the only guidance he ever received was that the Independent could not endorse political candidates or lobby the government.

Presumably DeSaulnier’s bill will help clear up those issues. And a personal note: I played a very small role in crafting the legislation. DeSaulnier and I discussed his ideas last fall, and I suggested to his office — unsuccessfully — that the bill not be restricted to “written” forms of journalism.

The legislation is one of two stories in the news right now about the future of local journalism. The other is a proposal by the newspaper industry to suspend antitrust laws so that they may negotiate collectively with social media platforms in an attempt to obtain payment for the use of their content.

The News Media Alliance, the newspaper business’ principal lobbying group, released a study this week claiming that Google and Facebook made $4.7 billion in 2018 through its uncompensated use of material that originally was published on newspaper websites.

You can read the full text of Rep. DeSaulnier’s bill to encourage nonprofit journalism by clicking here. The text of his office’s press release is below.

June 6, 2019 | Press Release

Washington, DC – Today, Congressman Mark DeSaulnier (CA-11) announced the introduction of the Saving Local News Act (H.R. 3126), a bill to recognize newspapers as a public good and make it easier for written news organizations to become non-profits – allowing them to focus on content instead of profit margins and reduce their tax burden. The bill is supported by the News Media Alliance, the National Newspaper Association, the American Society of News Editors, the Associated Press Media Editors, the Association of Alternative Newsmedia, the California News Publishers Association, Free Press Action, and the Open Markets Institute.

“Local journalism has been a bedrock of American society for over 200 years. I remember when dedicated reporters sat in the front row of city council meetings to keep communities informed and to increase accountability. Today many local newspapers are dying out – penny pinching until they close or are bought up and sold off piecemeal by hedge funds. This bill would allow papers to renew their focus on quality content and flourish unencumbered by ever-increasing demands for greater profits,” said Congressman DeSaulnier.

“We commend Congressman DeSaulnier for introducing this important piece of legislation that recognizes the importance of nonprofit journalism to the American society. At a time when news deserts are a growing concern, we must ensure that we support all newsrooms in their efforts to provide high-quality journalism to their local communities. This journalism bill that would allow non-profit newsrooms to treat advertising revenue as nontaxable income could be helpful to a number of publishers,” said David Chavern, President and CEO, News Media Alliance.

“News organizations today must explore a wide array of avenues for sustainability, one of them being non-profit status. But the federal law lays many trip wires along this path, including the way advertising is taxed. The non-profit route could be attractive for some newspapers if and only if Congress recognizes that even a non-profit newspaper still needs good revenue sources. This proposal by Congressman DeSaulnier will open up new possibilities for sustaining quality journalism in American communities. We appreciate the concept and, even more, we welcome the interest from an important member of Congress in helping newspapers that are at risk to survive,” said Andrew Johnson, President, National Newspaper Association.

“This legislation carries the promise of helping news outlets large and small, in big cities and small towns, throughout the country. It will allow for innovation into new models of journalism and carries significant potential to address the growing problem of ‘news deserts’ around the country where the for-profit model is not sustainable,” said Angie Muhs, President, Associated Press Media Editors.

“The nonprofit model of journalism may well be one viable future of journalism, at least where smaller publications are involved. This is a constant topic of discussion among our membership which is why our organization welcomes this legislation as a means of increasing the likelihood that those who choose can convert themselves to non-profit status, while maintaining a strong journalistic enterprise,” said Molly Willmott, President, Association of Alternative Newsmedia.

“At a time when editors around the country continue to see newsrooms shrink in the face of financial constraints, we welcome every avenue to greater revenue. This legislation offers significant assistance that will allow news organizations to survive without constraining their actual journalism in any way,” said Nancy Barnes, President, American Society of News Editors.

“Community newspapers are woven into the fabric of American society and provide accurate and trusted information that improves the lives of individuals in the communities they serve. It is no secret that newspapers face an increasing number of existential threats from online competitors which have left them with a decreasing number of revenue opportunities. This measure would provide news organizations with the means to better rise to these challenges and continue to play a vital role in their communities by holding the feet of the powerful to the fire and giving voice to the powerless,” said Jim Ewert, General Counsel, California News Publishers Association.

Since 2017, estimated daily newspaper circulation fell 11 percent from the previous year (Pew Research Center). Congressman DeSaulnier recently established a working group of dedicated Members of Congress from areas affected by a drought of high-quality journalism. Together they have been working to highlight this crisis and bring attention to the need to promote local journalism, including by holding a Special Order on the floor of the U.S. House of Representatives and introducing the Journalism Competition and Preservation Act (H.R. 2054), a bill to create a temporary safe harbor from anti-trust laws to allow news organizations to join together to negotiate with dominant online platforms to get a fair share of advertising profits.

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How Gerry Lenfest morphed from reluctant publisher into a savior of journalism

Gerry Lenfest, second from left, in 2009. Photo by the Library Company of Philadelphia.

Previously published by the Boston Globe.

H.F. “Gerry” Lenfest didn’t want to run a newspaper. In 2014 the Philadelphia billionaire, who died last week at the age of 88, unexpectedly won an auction to buy the city’s paper of record, the Inquirer, and its sister properties, the Daily News and Philly.com, media outlets that he already owned in part and was hoping to unload. “He did not expect to have to write a check that day,” Joel Mathis, a former reporter for Philadelphia magazine, told me. “He thought he was going to be getting a check that day.”

Just a few weeks later, Lenfest’s business partner, Lewis Katz, was killed in a plane crash along with six others, leaving Lenfest as the sole, unhappy proprietor. Lenfest’s solution to his dilemma was an act of generosity that continues to reverberate, and that could serve as a possible blueprint for saving the shrinking newspaper business. In early 2016 he donated the properties to a nonprofit organization, the Philadelphia Foundation. And he endowed the institute that the foundation set up to run the properties — now known as the Lenfest Institute for Journalism — with an initial $20 million from his fortune.

“Of all the things I’ve done, this is the most important. Because of the journalism,” Lenfest said when the complicated transaction was announced.

As it happened, I had already scheduled interviews with a number of Philadelphia journalists for a book project. I arrived on the Amtrak in the aftermath of a monumental snowstorm. What I encountered was a warm sense of (to invoke a cliché) cautious optimism.

Bill Marimow, the respected editor who had been fired or demoted twice through years of musical-chairs ownership, was particularly enthusiastic about the structure Lenfest had set up. Though the three properties would be owned by a nonprofit, they would be run as a for-profit “public-benefit corporation,” which meant that they would not be legally required to serve the financial interests of shareholders or investors.

“There’s parity between the mandate to do great journalism and the mandate to have an economically viable business,” Marimow said. “But the priority is no longer maximizing profits. It’s having sufficient profits to keep producing good journalism.”

These days, of course, there’s no guarantee that newspapers will have the resources to cover the communities they serve even without the pressure to turn a profit. Newspaper advertising, both in print and online, plunged from a high of $49.4 billion in 2005 to an estimated $16.5 billion in 2017, according to the Pew Research Center. Full-time newsroom employment fell by nearly half during roughly the same period.

Here and there a few wealthy newspaper owners are trying to figure out ways to revive their struggling businesses. Jeff Bezos’s efforts at The Washington Post are the best-known, but he runs what he has repositioned as a national digital news organization. The economics of large regional papers like the Inquirer are very different — and much more difficult. For every paper like The Boston Globe, where billionaire owner John Henry has attempted to minimize newsroom cuts while figuring out a path to sustainability, there are dozens owned by hedge funds and corporate chains that have plundered their newspapers in order to squeeze out their last remaining profits.

The nonprofit/for-profit hybrid model that Lenfest set up in Philadelphia is not a panacea. Ultimately, the papers still have to break even, an enormous challenge in the current environment. Still, the Philadelphia experiment has brought stable ownership, community-minded oversight and a journalism-first mindset to the Inquirer and its sister properties after years of chaos. That is a commendable legacy — and one worth emulating elsewhere.

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The Guardian struggles with its free digital model

Screen Shot 2016-02-03 at 11.03.43 AMMedia observer Michael Wolff writes in USA Today about the difficulties facing any news organization that seeks to make all or most of its money from digital advertising. His example is The Guardian, a left-leaning British newspaper to which he and I both used to contribute.

The Guardian is proudly, aggressively digital. Its print edition is little more than a vestigial limb (especially outside the UK), and its executives refuse to implement a paywall. The result, Wolff says, is that the trust set up to run The Guardian in perpetuity is running out of money. As I wrote last week for WGBHNews.org, relying on digital advertising is a dubious proposition because its very ubiquity is destroying its value. Wolff puts it this way:

The reality is that the Guardian’s future is almost entirely dependent on advertising revenue in a medium where the price of a view heads inexorably to an increment hardly above zero. But the hope remains that, in ways yet to be imagined, some innovation will make large profits suddenly possible.

Digital paywalls are helping to bolster the bottom line at papers like The New York TimesThe Wall Street Journal, and The Boston Globe—but they are hardly a solution to the larger problems the newspaper business faces. Print advertising still brings in most of the revenue, but it’s on the wane.

Last week I visited The Philadelphia Inquirer, a major metro similar to the Globe that was recently donated to a nonprofit foundation. It’s a promising ownership model. The Inquirer still needs to break even, which is no sure thing. But local control, no pressure to meet the expectations of shareholders, and the possibility of some grant money being raised to pay for reporting projects may bring stability to the Inquirer after years of chaos. (The nonprofit New Haven Independent was the main focus of my 2013 book, The Wired City.)

One thing they’re not talking about at the Inquirer is free digital, even though the Inquirer and its sister paper, the tabloid Daily News, compete with a vibrant (though small) free digital-only project called Billy Penn, whose modest budget is paid primarily by sponsoring events. Though I remain skeptical about paywalls for reasons I laid out in my WGBH piece, the one thing I’m certain of is that the money has to come from somewhere.

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

220px-Pomidyarji
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.

Measuring the effectiveness of nonprofit news

New Haven Green
New Haven Green

Among the more difficult challenges I faced when I was researching “The Wired City” was trying to figure out the influence — and thus the effectiveness — of the New Haven Independent, the nonprofit online-only news site that is the major focus of the book. So I was intrigued when NPR reported last week that the folks who run Charity Navigator hope to unveil effectiveness ratings for nonprofits in 2016. I suspect it won’t be easy.

Nonprofit news presents special challenges. You can measure a food pantry’s effectiveness by how many families get fed, or an orchestra’s reach in terms of attendance, educational programs and the like. But how do you measure the effectiveness of a news organization?

The way I tried to answer that question was to look at numbers, but to look beyond the numbers as well. Certainly the numbers couldn’t come close to telling the whole story. The Independent’s main competitor is the regional daily newspaper, the New Haven Register, whose website receives considerably more traffic than the Independent’s (two to three times as much, according to Compete.com‘s very rough numbers) — and which, unlike the Independent, has a daily print edition. How can the Independent possibly exercise the same amount of influence?

It can’t. But that doesn’t mean that it’s ineffective. Since it’s not a mass-circulation outlet, the Independent relies on reaching civically engaged people — city leaders, neighborhood activists and anyone who takes an interest in what’s going on in New Haven on a daily basis.

In a 2009 interview, Michael Morand, an associate vice president at Yale, described the Independent’s readers as “active voters, elected and appointed officials, opinion makers, civic activists as measured by people who are on boards, leaders of block watches and other neighborhood organizations.” Mayor John DeStefano told me in 2011 that he considered the Register to be “the dominant media,” but added that the Independent serves “those that follow city government and community-based activities.”

One issue stood out for me as an example of how the Independent could be effective while reaching a niche audience. In the fall of 2010 the Independent — following the lead of the Yale Daily News — began reporting on incidents in which police officers ordered people not to video-record them while they were making arrests and engaging in other activities. The Independent reported on the story for months, and revealed that one man on a public sidewalk had his cellphone confiscated and the video erased; the man was charged with interfering with police.

The Independent’s reporting led to real reform. An investigation was conducted. Mayor DeStefano and the police chief at that time, Frank Limon, ordered that officers stop harassing people trying to video-record their actions as long as they weren’t interfering in police business. Mandatory training in how to respond to video-camera-wielding members of the public was added to offerings at the police academy — training that Independent founder Paul Bass and I observed during a visit to the academy. And state Sen. Martin Looney, a New Haven Democrat, introduced legislation to make it clear that such recording was legal.

The Independent also builds influence through public events — community forums such as political debates and other events that are webcast and covered by other media as well. A particularly prominent example was a school forum in late 2010 starring education-reform critic Diane Ravitch.

I don’t think numbers tell the story, but here are a few:

  • According to the Independent’s internal counts from Google Analytics and Mint, the site receives between 120,000 and 140,000 unique visitors a month.
  • The Independent’s Facebook page has been “liked” 3,443 times as of this morning.
  • The Independent’s Twitter feed, @NewHavenIndy, has 4,486 followers.
  • The site’s weekly news email has about 4,000 subscribers, according to Bass — up about 1,000 over the past year.
  • A separate arts email has about 5,000 subscribers.

And here’s a cautionary tale for publishers who rely on outside services like Facebook, which have their own agendas: Bass told me that a change in policy may be responsible for less traffic coming to the Independent from Facebook. “Now they don’t automatically show your posts to all your followers. They show them to a sample, hoping you’ll pay to reach more of your people,” Bass said in an email last week. “So we’ve seen a drop in Facebook traffic as a result. (Which maybe quite fair. We use them free as paperboys.)”

When I asked Bass how he thought funders and prospective funders could measure the effectiveness of nonprofit news, his response was that he wasn’t sure. So what attempts have his funders made? “They look at what we publish, how people interact with it, how they experience the site’s impact living and working in the area,” Bass said. “No one has asked us for numbers.”

According to the NPR story, reported by Elizabeth Blair, some nonprofits are resisting Charity Navigator’s attempt to measure how well they’re doing. And there’s no question it will be difficult — maybe impossible — to come up with a fair system that everyone will agree on.

But it seems worth trying, especially in journalism. With traditional for-profit news, the relationship between revenue and quality is only tangential. News organizations are judged by how well their advertising moves products and services. You’d like to think that advertisers would rather be associated with quality news than the alternative, but that’s not necessarily the case.

With nonprofit news, the better the journalism, the more influence it will have — and the more attractive it should be to funders.

Photo (cc) by Anne and published under a Creative Commons license. Some rights reserved.

In Batavia, a for-profit, locally owned news site

batavia-credit
Downtown Batavia

This article appeared earlier at the Nieman Journalism Lab. I’ll be reading from “The Wired City” this Saturday, July 13, at 11 a.m. at Present Tense Books, located in Batavia at 101 Washington Ave.

For those of a certain age, perusing the ads posted at The Batavian, a for-profit news site in Batavia, N.Y., can seem a lot like flipping through the pages of a weekly community newspaper a generation or two ago.

Which is to say there are a lot of ads — more than 140, every one on the home page, a practice that publisher Howard Owens believes is more effective than rotating them in and out. There are ads for funeral homes and pizza shops. For accountants and tattoo parlors. For auto-repair centers and ice-cream stands. For bars and baseball (the minor-league Batavia Muckdogs).

The success of The Batavian matters to the future of local journalism. In my book “The Wired City: Reimagining Journalism and Civic Life in the Post-Newspaper Age,” I devote most of my attention to the New Haven Independent, a nonprofit site that subsists on grant money, donations and sponsorships. At this early stage of online news, nonprofits like the Independent are often able to raise more money more quickly than for-profits. But not every community can support a nonprofit. Thus it is vital for the future of news that entrepreneurs like Owens figure out the for-profit side — which is why I also devote a fair amount of space in “The Wired City” to what’s going on in Batavia.

Owens launched The Batavian in 2008 as a demonstration project for GateHouse Media, where he was the director of digital publishing. When his position was eliminated in early 2009, he asked GateHouse if he could take the fledgling site with him. He was granted his wish.

The Batavian is free and covers not just the city of Batavia (population 15,000) but surrounding Genesee County (60,000) as well. It receives about 80,000 unique visitors per month, according to Quantcast. That’s roughly the same as the site’s newspaper competition, The Daily News, also based in Batavia. (Web analytics are imprecise, and Owens says his internal count, provided by Google Analytics, shows about 118,000 uniques per month.) Of course, The Daily, as the locals call it, depends mainly on print distribution. On the other hand, The Batavian covers just one county to The Daily’s three, making Owens’ online reach all the more impressive.

The Batavian’s 12-month projected revenues are currently about $180,000 a year — enough to provide Owens and his wife, Billie Owens, the site’s part-time editor, with a comfortable living, and to employ a part-time sales and marketing coordinator. Unlike AOL, with its struggling network of Patch sites, The Batavian is independent, and Owens aims to keep it that way. As the Authentically Local project, of which The Batavian is a part, puts it: “Local doesn’t scale.”

Howard Owens
Howard Owens

If a nonprofit like the New Haven Independent can raise more money than a for-profit (indeed, Independent founder and editor Paul Bass chose the nonprofit route in 2005 because he realized he couldn’t support himself with a for-profit), there are nevertheless certain advantages to for-profit online journalism. Let me outline three of the more obvious.

• Anyone can start a for-profit news site. The nonprofit route requires approval from the IRS and support from local foundations. In many cases, neither may be forthcoming — and as I recently wrote, the IRS has all but halted approval of 501(c)(3) status for nonprofit news sites, which they depend on so that donors can make tax-free contributions. By contrast, all it takes to launch a for-profit site is talent, experience and a willingness to work hard. That’s no guarantee of success, but the opportunity is there for all.

• Local ads enhance the vibrancy of a site. Owens likes to say that advertising is content. The ads at The Batavian give you a good feel for Genesee County — and provide a context for Owens’ coverage of everything from court news to traffic accidents, from school events to development proposals. Advertising and news work together to provide a well-rounded picture of the community. Yet you won’t see ads at a nonprofit site like the Independent, save for a few image-building “sponsorships” from local institutions such as college and hospitals.

• For-profit sites enjoy the full protection of the First Amendment. Like public radio and television stations, but unlike the vast majority of newspapers, nonprofit news sites are legally prohibited from endorsing candidates for public office. “Editorial endorsements — or the denial of them — are among the most powerful tools that newspapers have for holding political figures to account,” write the media scholar Robert McChesney and the journalist John Nichols in their 2010 book “The Death and Life of American Journalism: The Media Revolution that Will Begin the World Again.”  The Batavian hasn’t actually endorsed any candidates, but at least it’s not legally prohibited from doing so — and Owens takes strong stands on other local issues without having to worry about the federal government swooping in and threatening his livelihood.

***

When I visited Batavia in 2009, I rode along with Owens as he made sales calls and covered stories in Genesee County. It seemed like a hard slog. At one point, as we were driving through the tiny farm town of Stafford, he gestured to a well-manicured golf course. “If you find out that I’ve joined the Stafford Country Club,” he said, “then I’ve been successful.” Two years later, I asked him about the status of his country club aspirations. He laughed. “I’d love to join the Stafford Country Club and have time to enjoy the privileges thereof,” he said, “but we’re probably years away from doing that.”

Yet The Batavian keeps growing. Last week the site announced a new real-estate ad partnership. Recently Owens told me he now spends virtually none of his time on ad sales, having offloaded that task to his part-time employee. The Owenses are able to devote the bulk of their time to journalism — something that was not the case when I was researching “The Wired City.”

Owens likes to remind people that we’re at the very beginning of online news as a business, and that what appears not to add up economically today may look quite different a few years from now. As Owens asked in a provocative blog post four years ago: “If it took newspapers more than 100 years to build the business and content models that we all now cherish, why do we expect a fully formed online model to emerge in just 10 years?”

Photos (cc) 2009 by Dan Kennedy.

A venerable precedent for nonprofit journalism

Here’s something I completely forgot when I wrote recently about the IRS’s assault on nonprofit journalism: The Associated Press is a nonprofit. It’s time for the IRS to resume approving 501(c)(3) status for nonprofit news organizations.

CJR reviews “The Wired City”

The new issue of the Columbia Journalism Review includes a favorable review of “The Wired City” by Michael Meyer. Here is my favorite section:

“The Wired City” doesn’t have anything resembling a central thesis. (This isn’t a flaw. Way too many “future of journalism” books and reports waste their time trying to argue grand, overarching theses that almost always fall apart on closer analysis.)

One of my goals in writing the book was to return to the sort of in-depth, close-up reporting that drew me to journalism in the first place. Yes, I do some opinionating in the book, but mainly I try to let the story tell itself. I appreciate Meyer’s recognizing that and seeing it as a virtue rather than a shortcoming.

Meyer is critical of my argument that nonprofit news sites like the New Haven Independent tend to be better funded and capable of more ambitious journalism than for-profit sites — at least in these early years of the post-newspaper era.

Though I agree with Meyer that I could have done a better job of quantifying that observation, I nevertheless believe I was describing a situation that’s real. For-profits like The Batavian and CT News Junkie are doing better all the time — better than they were when I was researching the book.

But it’s still a hard slog. Given the low value the marketplace has assigned to online advertising, that’s likely to continue.

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.