June 16, 2022

In California, at certain times of the year, a cadre of highly-paid corporate attorneys stays up until 3 a.m. Why?

They want to make sure that when their legal disclosures post, at 6 a.m. New York time, everything is correct — and no one gets in trouble for insider trading. Information is so vital to companies that failure to provide material information can mean investors lose millions of dollars.

Contrast that scene with what happens at most public meetings across the country: Officials decide how to divvy up public coffers — also worth millions of dollars — and make decisions that affect their local constituents, often in rooms alone.

Journalists used to cover thousands of local government meetings across the country, but because of newsroom cutbacks and shifting online priorities, no one is asking, “Why are we paying for this?,” or “Why didn’t we pay for that?” And the result has harmed our democracy.

One study found that “following a newspaper closure, municipal borrowing costs increase by 5 to 11 basis points, costing the municipality an additional $650 thousand per issue.”

And watching public sector budgets — nearly a fifth of the economy — is just one of the significant, measurable impacts journalism has on democracy.

Studies have shown that corruption increases when there is no one there to ask tough questions. When local outlets leave an area, there are fewer registered voters, those who do vote go to the polls less often, and municipalities have higher borrowing costs. Fewer candidates run for mayor, voting becomes more partisan, and elected officials become less responsive and more inefficient.

In one particularly clever experiment, The Desert Sun in Palm Springs, California, cut all national opinion pieces in July 2019. Online readership of opinion content nearly doubled. Yet polarization decreased: Editorials mentioning Trump dropped from a third of all content to zero, political parties were mentioned half as often, and discussion of local issues like traffic congestion and architectural preservation increased.

Fewer journalists in a community also means there are fewer people to fact-check those who are trying to promote a particular message.

For example, in 2016, a group called Heart of Texas promoted a protest against a local mosque opening. At the same time, a group called the United Muslims of America organized a counterprotest to “save Islamic knowledge.” Real protesters showed up at both rallies not realizing that both Heart of Texas and United Muslims of America were fake organizations — paid for by the same Russian misinformation campaign.

In news deserts, there’s no one double-checking press releases, either. There are now 6.4 public relations professionals for every reporter in the U.S. Smaller local newspapers looking to fill holes have been especially pressured to rework and publish press releases with minimal oversight.

Many national papers are great, but, for example, if you have a problem in Beaver County, Pennsylvania, good luck trying to get The Washington Post or The New York Times to care about it.

In the last 15 years, a quarter of all newspapers in the U.S. have closed their doors, and many more are ghosts of their former selves. A 2019 Cleveland Foundation study found that out of thousands of local articles, just 11% were original, local, and served a critical information need.

In 2020, during the height of the COVID-19 pandemic, visits to local news websites went up 89%. At the same time, ad revenues for Gannett, the nation’s largest newspaper publisher, fell 35%.

According to the Bureau of Labor Statistics, the number of journalists in the U.S. declined 60% between 1990 and 2016 while the population rose 29%.

Between 2004 and the end of 2019, approximately 2,100 local newspapers closed entirely, leaving more than 200 of the nation’s 3,143 counties with no newspaper at all. At major metro papers, circulation dropped by a median 41%.

Yet even in their shrunken form, newspapers are still keystone information sources in their communities. Despite being only 25% of the number of news outlets, they produce 60% of the stories that are local, original, and serve a critical information need.

Newspapers continue to be a vital source of information to their communities, and their dedicated reporters, though fewer now, have produced great coverage. For example, The Cincinnati Enquirer won a Pulitzer in 2018 for its opioid coverage. But the Enquirer only has about a quarter of the reporters that it had at its peak. How many other important stories are going untold? How can we stop the decline?

Understanding the structure, so we can understand how to change it

First, let’s look at the structure of news. Before the internet, news outlets essentially sold two products: exposure and knowledge. Advertisers paid money to access potential buyers. And readers paid to stay well-informed.

A well-informed public was the byproduct of a news business that needed content to put next to ads, and as that ad business declined in the wake of digital ads, so too did the money that paid for journalism.

Not only do digital ads provide less money for reporters, they actively incentivize misinformation over quality reported news, for several reasons.

First, digital ads have led to widespread fraud, as computers don’t often know if a click comes from a human or robot. There are thousands of sites dedicated to, essentially, laundering clicks. Taking a human out of the equation means ad servers are sending ads from American companies like Amazon, Geico, and Walmart onto Russian disinformation sites.

Second, advertisement algorithms¹ directly hurt internet information consumers because they are designed to optimize for the best clicks, not the best information. Content creators have an incentive to make up the wildest and most outrageous lies, because that is what drives better traffic to their sites — which drives clicks to their ads, which puts money in their bank account.

Facebook is the No. 1 source of news for Americans. Yet, according to a Pew survey, 62% of adults felt social media companies have too much control over the mix of news that people see, and 55% said this results in a worse mix of news.

Social media sells ads next to news content designed to drive engagement, not information, resulting in worse information for everyone else. This same ad money used to go to news outlets.

For example, one study found that vaccine news coverage among the 2.6 million U.S. articles it surveyed was particularly negative, because negativity garnered the most “engagement.”

Ad-supported businesses are subject to the whim of algorithm changes, which only account for their ad, and not their news value.

For example, information entrepreneurs Jen Jones and Cynthia Hornig built a huge following of 400,000 for their news site, “Women You Should Know.” The ad-supported site did very well until they suddenly got messages from readers complaining that their usually positive posts now were mostly about domestic violence.

Jones and Hornig were confused because they only wrote about abuse in about one out of every 20 posts. But the algorithm had chosen to serve first the stories that provoked the most intense — in this case negative — reactions. As Sally Hubbard points out in her book, “Monopolies Suck,” “Jen and Cynthia wanted to empower women, but Facebook made them afraid instead.”

Third, ad-supported models create friction between journalists and readers, viewers, and listeners because the business relies on gathering their personal information for private use. Supporters aren’t part of a community, their lives are a product.

In response to this growing public crisis, nonprofit news outlets have proliferated throughout the country, such as the one I lead: Eye on Ohio, the Ohio Center for Journalism.

The major benefit of being a nonprofit journalism outlet is that we can consider our public good first. Instead of trying to generate stories that garner the most clicks, we try the opposite tack. We try to think: What are the information needs of our readers, viewers and listeners, and how can we get them that information? We distribute our stories, for free, through other local outlets, we document our impact, and we go to local foundations asking them to support our mission.

But there are two main drawbacks to this model. The first is that — as journalism scholar Nikki Usher points out in her book, “News for the Rich, White, and Blue” — donor dollars don’t always flow to the areas where the need is greatest. Ohio was recently named the state with the most corruption, based on the scale and number of bribery cases. The Cincinnati City Council nearly reached a quorum in jail. Yet, the seventh-largest state is near the bottom in foundation donations.

The second drawback is the sheer scale. Nonprofit news is a $500 million-a-year business. Internet advertising is a $650 billion-a-year business. This means that realistically donation dollars cannot support the number of journalists we need.

Philanthropic efforts have buoyed the nonprofit news segment, and their grants have made a world of difference. But in 2019, the 109 outlets surveyed by the Institute for Nonprofit News had an average of 6.25 full-time staff members, compared to the dozens or even hundreds that were the norm just a couple decades ago.

Twenty years ago, The Plain Dealer in Cleveland had 340 journalists. They now have zero. Cleveland’s new Ohio Local News Initiative, which raised $6 million and will launch in late 2022, will have about 12. Even combined with other local outlets, like the Cleveland Observer, the Land, FreshWater Cleveland, Cleveland.com, and Eye on Ohio, there are far fewer people now covering the city than ever before.

Journalism is a public good

To fix this, we need a local news utility to address the structural problems inherent in the system.

The U.S. spent millions of dollars developing the internet, yet, when the system became overloaded in the 1990s, the government essentially sold it off to private corporations, without considering its total value. At the sale, one executive complained that selling the rights to the internet was like giving a park to a local Kmart.

“The solution wasn’t to preserve the park, however, but to carve it up into multiple Kmarts,” Ben Tarnoff wrote in his essay The Internet Should Be a Public Good.

A portion of all cable bills goes to C-SPAN. A portion of digital ads should go to journalists.

News is about understanding our world. And we need actual people to do that. It takes a person to interview witnesses and understand the nuance, motivation, and competence of the interviewee. It takes a person to write the code that can glean insights from public data sets.

A direct subsidy for news opens the possibility that Congress can pull the plug on coverage they don’t like. But a direct tax on digital ads would create a dedicated revenue stream for journalists.

Critically, nonprofits are a business structure, not a business model. If we establish a fund to pay journalists for the benefit of everyone, that money has to be publicly reported and can only be spent on the community mission. Nonprofits have to file detailed reports on where all their funds are spent, and can only spend money on their organization — no money goes back to shareholders.

Even if search engines and social media businesses wanted to give money to nonprofit news sites, they could not do that in the substantial amounts needed to fund thousands more journalists because they are required to consider their shareholders first.

This is a good thing. No one would invest if companies could take investor money and spend it on their favorite charities instead.

Instead of a journalism pipeline that favors those who can afford big city, no-pay internships, imagine a world where we could have thousands of new reporters who reflect the demographics of the communities they cover, who live in those communities, and who better understand their information needs.

Just as gas taxes go toward maintaining roads, a national tax on digital advertising could go to reporters who produce news for the public good. The information superhighway is useless without anyone filling in the potholes or maintaining the bridges.

Energy and banks give two examples of how this news utility could work.

Many states have a nonprofit that oversees deregulated energy utilities. Competition among energy providers is healthy — but turning the power on is also a public good. As we learned in 2021 in Texas, there needs to be some functioning body that will ensure you can at least turn the lights on.

The Federal Reserve is also a nonprofit. It doesn’t directly control other banks, and it gives all profits back to the U.S. government.

We need banks to compete. That helps to keep rates low. But we also need to make sure that we have a money supply, or our financial system will crater. That’s a public good.

The Fed’s funding comes directly from its market activities, which it uses to influence monetary policy.

And journalism has a multiplier effect. For example, one of the foremost philanthropists in education, Bill Gates, once famously called his entire work a rounding error: schools spend approximately $600 billion a year on education. At the point of his quote, all philanthropy had spent $10 billion on education ever.

Without a reporter there to ask policymakers, “Why aren’t we spending money on that?” improving education in America would be a much more difficult task.

How this would work — changing the game

By setting up a national nonprofit news utility to ensure money for the public good is spent wisely, we would realign the incentives we currently have so that quality journalism would be rewarded.

Part of the responsibility of this utility would be establishing transparent standards on how algorithms favor news. Saying, “This article is good because everyone likes it” is like saying, “We should teach comic books in English literature because kids like it more than Shakespeare.”

Obviously, what is good journalism is to a certain extent subjective. But if we had clear rules that people could vote on, then writers could tailor journalism to those metrics.

Maybe a story could go higher in the algorithm if the journalist who wrote it actually lives and works in the community mentioned. Points for more experience? Points for a journalism degree? Something like that.

The board of this nonprofit, responsible for giving out funds and rating algorithms, would of course have to be politically, demographically and geographically diverse. And it would help to drive reader/viewer/listener engagement if they could vote on a set of standards for what makes a good news story, instead of substituting the judgment of an algorithm.

Tweaking an algorithm alone isn’t the answer because it still doesn’t leave any funding mechanism for an actual person to go investigate a story lead. Neither censorship nor technology can fix the dumpster fire of the internet. It will take real people writing real articles, and better articles should be rewarded with better exposure.

Subscription models for news are fantastic, but limited. Being OK with a world where there’s no news for all because we have subscriptions for a few is like being OK with a world where there’s no libraries because bookstores still exist. It’s about the access.

Ohio has one of the best-funded libraries because, unlike in other states, people vote on them directly. And they are overwhelmingly popular.

In an era of declining journalism, what really grates on my soul is the many calls and emails from Eye on Ohio members — begging, pleading, for someone to help them. The disabled man with twin baby boys whose girlfriend just got COVID-19 and his unemployment was denied. The Air Force veteran making $40,000 a year who just got a surprise $20,000 bill from the state. The stepmother who called me crying after her stepson was shot, thanking us for our coverage. We simply don’t have enough resources to cover them all.

And that’s just the bare minimum. There are so many other things we should be covering — arts, events, culture. I refuse to believe that all great artists live in big cities when, after living in eight states, I’ve seen so much talent in other places.

I need 5,000 more eyes on Ohio. How do I do that?

The normal way to succeed in business is to be good at what you do. And so I do that. I send reporters off to write stories and it wins us lots of awards but, unfortunately, you can’t eat awards and they don’t pay your mortgage.

I am eternally thankful to the great foundations and donors who believe in what we do and who fund journalists to do important work. But I am also cognizant that we are being drowned out by an army of better-paid spin doctors.

Our reporters spend months on stories, meticulously researching them to bring the best information to our readers, listeners and viewers. And for our efforts, our content is ranked low because social media sites want more content for free.

This is not the first golden age of yellow journalism. In the early 1900s, New York City newspapers were famous for trying to sell more copies by stretching the truth. In response, in 1910, W.E. Miller of The St. Mary’s Star first proposed a code of ethics for newspapers, which became quickly adopted by newspapers throughout the country. It was still profitable, but now socially unacceptable, to keep sensationalizing stories.

We, too, could realign incentives to make it harder for sensationalists to profit off of misinformation and reward hard-working journalists who are trying to better inform their communities. But it won’t be as simple as getting a consensus among every internet publisher, even if we could possibly do that logistically.

Our greatest Founding Father, the journalist, politician, and scientist Benjamin Franklin, once said, “An investment in knowledge pays the best interest.”

By heavily investing in public interest journalism and enhancing algorithm transparency, we can empower democracy itself, which depends on these bedrock principles.

Correction: More than 200 of the nation’s 3,143 counties have no newspaper. 

¹ Additionally, in late 2020, the Department of Justice, the Federal Trade Commission, and 38 attorneys general, including Ohio, finally filed lawsuits against Google and Facebook, alleging numerous antitrust violations. They have claimed that the companies abused their monopoly market power to illegally fix prices, yet another hurdle that ad-supported businesses face. Google is also allegedly favoring the ad exchanges it owns over those owned by others.

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Lucia Walinchus is an award-winning journalist, attorney and ice hockey addict. She is currently the Executive Director at Eye on Ohio, the Ohio Center for…
Lucia Walinchus

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