Who'll fund journalism? Meet the new Medicis

With newspaper revenues falling billionaires are stepping in to fund reporting, either by buying existing media outlets or starting new ones.

Neil Barsky, a former Wall Street money manager, became the latest Medici of journalism this week [Feb. 12] when he hired Bill Keller, former executive editor of the New York Times, to head his new non-profit journalism enterprise, the Marshall Project.

The Marshall Project, which will scrutinize the criminal justice system, joins a busy flotilla of non-profit journalism organizations already patrolling the news beat.

Everywhere you look, a rich patron has founded, funded, or seeded a substantial non-profit journalism outfit in the last half-decade: Herbert Sandler and ProPublica, John Thornton and the Texas Tribune, Pete Peterson and Fiscal Times, the Koch brothers and the Franklin Center, John Arnold and WNET, scores of other local and regional operations funded by minor Medicis, and well-established enterprises, such as the Center for Investigative Reporting and the Center for Public Integrity.

If you expand the definition of non-profit journalism to include for-profit outlets that aren’t making any but depend on a reservoir of money earned elsewhere to keep them afloat, you’d factor in Jeff Bezos and his Washington Post, John Henry and his Boston Globe, the Scott Trust and the Guardian, Pierre Omidyar and the $50 million he has pledged to First Look, and Hamad bin Khalifa Al Thani and Al-Jazeera. Widening the definition to include state-sponsored or licensed outlets such as the BBC and NPR, both of which walk the investigative beat, and the pool of cash grows larger still.

What looks like a lurch of patronage money to investigative journalism has coincided with the newspaper death spiral. As economist Mark J. Perry noted in a much-reproduced chart, newspaper advertising revenue peaked at $65 billion in 2000, with the most dramatic and steady rise of revenue coming between the early 1970s and 2000. These years happen to overlap with the golden age of both investigative and “accountability reporting.”

It’s not that newspapers shunned watchdog journalism before 1971; they just didn’t do that much of it, as a visit to the newspaper microfilm archives of your public library will confirm. Reportorial dependence on government and corporate spokesmen in those ancient times would appall most modern readers, who have become accustomed to investigative and adversarial journalism in their newspaper diet.

Investigative journalism, like far-flung foreign, domestic, state, and regional bureaus were affordable only because newspapers had more money than they knew what to do with. Chains like Gannett used their profits to buy more newspapers, but papers like the Los Angeles Times, the New York Times, the Washington Post, and the Knight Ridder chain, to name a few, spent on journalistic expansion. (Don’t worry, the shareholders of these papers did okay, too, while the money poured in.)

But as newspaper advertising revenues fell from $65 billion in 2000 to about $20 billion in 2012, investigative journalism contracted, as did coverage of foreign news, statehouses, and localities. (I don’t want to reduce the popularity of investigative journalism to economics alone — see this learned paper (pdf) by Mark Feldstein on the role culture and politics have played.)

As economist Perry notes, the decline in newspaper advertising revenue is “not even close to being over.” Seeing as about 80 percent of newspaper revenue traditionally came from advertising, fewer and fewer newspapers will have the money to fund investigative projects. Investigative news, it is worth reminding, has always been high-cost content that produced a very low — if any — return in increased circulation and advertising revenue.

With less money to spend on investigations, newspaper editors have surrendered much of the beat, but not all, as worthy investigations by the New York Times, the Washington Post, my brothers and sisters at Reuters, and elsewhere attest. This has created a market opportunity — if that’s what to call the surefire opportunity to lose money — for those outside of traditional media to enter the investigation business.

Another economics-flavored vector has helped foster the entry of new investigative operations into the marketplace: The falling prices of communication technologies, which grow exponentially more powerful by the year, have made it easier and cheaper for investigative startups to do battle with established outlets. Consider this: the last big magazine launch — Condé Nast’s Portfolio in 2007 — took nearly two years from inception to mailbox and cost a reputed $125 million. Barsky’s Marshall Project has “been in the works” for about four months, will operate on about a $5 million budget, and will launch at mid-year.

Compared to newspapers, which launch investigations to procure bragging rights and Pulitzers, the new Medicis want primarily to save the world. Pierre Omidyar (First Look) has articulated his opposition to surveillance culture, the Kochs have their libertarian agenda, Neil Barsky is up-front about the Marshall Project’s goal being to “help make criminal justice reform an important part of the national debate by the 2016 presidential campaign,” and Pete Peterson (Fiscal Times) has always hollered about the need for debt reduction.

This issue-centricity is shared by many but not all of the non-profits. Most limit their activism to safe calls for “good government,” an informed electorate, and the value of public service. (These positions seem pretty empty when you consider that almost nobody ever campaigns for bad government, a stupid electorate, or public disservice. But that’s another column.)

If the money the new Medicis are throwing around seems huge to you, that’s probably because you’re a working stiff. Total philanthropic giving reached $316 billion in 2012, about 2 percent of GDP. In an entertaining series of tweets about the future of journalism last week, venture capitalist Marc Andreessen wrote: “I suspect total global quality investigative journalism expense budget = $20M/year? Maybe?”

Let’s recall that T. Boone Pickens once gave Oklahoma State University $70 million, $20 million of which was reserved for the expansion of its football stadium. Even if Andreessen’s estimate is off by a factor of three or four, I suspect that he’s right to believe that a combination of philanthropists, crowd-funders, and for-profit outlets can comfortably fund our future investigative needs.

Depending on the Medicis to fund investigative reporting has the same downsides as depending on them to fund painting, the ballet, the symphony, and football stadiums: Just as your tastes in the arts and athletics don’t always coincide with those of the billionaire givers, your tastes in investigative journalism might not coincide with those of the Medicis. In your mind, their investigations might constitute misinformation, subversion, agitprop, or stupidity.

If you’re strongly opposed to the sort of journalism the new Medicis are buying with their money, I’m sure you can find somebody who will do your kind for the right price.

What are you waiting for?

• Disclosure: Last year, I interviewed for the job of editor of the Columbia Journalism Review. Neil Barsky, chairman of the board of overseers of the magazine, was one of the interviewers. I was not offered the job. Interview me for a job (or shake me down for a donation to your investigative non-profit) via email: Shafer.Reuters@gmail.com. My Twitter feed occupies a third state of media, somewhere between for-profit and non-profit. Sign up for email notifications of new Shafer columns (and other occasional announcements). Subscribe to this RSS feed for new Shafer columns.