Saving the Media: Capitalism, Crowdfunding and Democracy
As Peter Geoghegan wrote recently in the London Review of Books: “Scotland used to boast one of the highest concentrations of newspaper readers in the world. The Sunday Post sold 1.7 million copies every week in a country whose population was barely three times that. Still published in Dundee by D.C. Thomson, which is also responsible for the Beano, it now sells 163,000, close to the sales of the Observer. The glory days of Scottish journalism are long gone. When the Scottish Affairs Committee at Westminster discussed ‘the crisis in the Scottish press industry’ in 2009, the Herald was selling just under 60,000 copies a day; now that figure is less than 35,000.”
But it’s not just here. The media is in crisis everywhere.
Confronted by growing competition and falling advertising revenue,news operations in print, on radio and TV, and even online are struggling to reinvent themselves.
For many, the answer has been to lay off reporters, join conglomerates and lean more heavily on generic content. One of the most severely hit areas is investigative journalism, meaning the media is less able to hold politicians and government accountable. The result: in a world awash with information, news organisations provide citizens with less in-depth reporting and a narrowing range of viewpoints.
In her new book Julia Cagé explains the economics and history of the media crisis in Europe and America, and she presents a bold solution. The answer, she says, is a new business model: a non-profit media organisation, midway between a foundation and a joint stock company. Cagé shows how this model would enable the media to operate independently, relying instead on readers, employees and innovative methods of financing, including crowdfunding.Cagé’s prototype is designed to offer new ways to share and transmit power.
It meets the challenges of the digital revolution and the realities of the 21st century, inspired by a central idea: that news, like education, is a public good. Saving the Media will be a key document in a debate whose stakes are nothing less crucial than the vitality of democracy.
We interviewed her to find out more.
Bella Caledonia: What’s at the heart of the media crisis?
Julia Cagé : First of all, there is the decline in advertising revenues. This is a long-term decline, that began at the end of the 50’s. The continuous increase in media competition (today with Internet but historically first with radio and TV) has lead to an decrease in advertising prices. The media, in particular in the US where newspapers have relied much more than in other countries on advertising revenues, need to find a new business model.
Second, faced with the decline in advertising revenues, media outlets have made the choice to decrease the size of the newsrooms, even when they were still making profits. The race for higher profits – at the expense of the quality of information produced by newspapers – is also at the heart of the crisis. Media outlets have entered into a vicious cycle: less revenues – less expenses – less journalists – lower quality – less readers – less revenues (both from sales and advertising). But they could have made different choices, especially by choosing the nonprofit model.
Bella Caledonia: You outline a new model, the NMO, Non Profit Media organisation. Can you explain what that is and how it works?
Julia Cagé : The nonprofit media organization (NMO) I propose in the book is a hybrid model. It is inspired in part by the model of foundations used by many international universities, which combine commercial and noncommercial activities (they rely on a complex combination of tuitions, research grants, donations and government funding). But there is more to it than that. One goal is to secure permanent financing for the media by freezing their capital. A second goal is to limit the decision-making power of outside shareholders with constraining bylaws.
First, the NMO, as a nonprofit corporation, pays no dividends, and shareholders cannot recover their investments (as in the case of a foundation). Like a foundation, it can accept unlimited gifts. Any physical or moral person can contribute – in particular readers and employees. Such gifts are to be tax-deductible, as gifts to foundations currently are.
Second, in the NMO, some additional power is granted to small contributors, who are regarded as participants in the management of the firm and not mere donors. More precisely, the law should specify that any investment above a certain threshold of capital share of an NMO would bring a less than proportional share of voting rights. For example, investments above 10 percent of capital might yield only an additional one-third of a vote per share. Conversely, small investors, who contribute less than 10 percent of the company’s capital, would receive a proportionate boost in their voting rights so that the total is always 100 percent.
A major advantage of the NMO model is that it allows readers and employees to participate in the firm as crowdfunders and to exercise a voice in its management. Readers and employees obtain voting rights and act as true shareholders. Hence the media can be reappropriated by those who produce and consume the news rather than by those who seek to shape public opinion or to use their money to influence our votes and our decisions.
Bella Caledonia: You’ve been criticised for focusing too much on print journalism – how do you respond to that?
Julia Cagé : I don’t think that I focus too much in the book on print journalism. I rely a lot on history because I think that understanding the long-run history of the media is useful to make proposals for the future of the industry. And obviously historically, online journalism did not exist. But I discuss online journalism in the book, the necessity of introducing paywalls, the fact that Google, Facebook, Amazon and the others are capturing the main share of the online advertising market; the production of information in the online world… The proposal I make – the NMO – is also a digital proposal since I highlight the importance of crowdfunding. I think that those that reproach me with focusing too much on print think they can make a clean break with the history of the media. On the contrary, I believe that we need history.
Bella Caledonia: Isn’t there another possibility that, rather than an enlightened approach of subsidy and long-term investment we will just go down the road of increased sensationalism and celebrity culture, in addition to the media fragmentation of 1 billion blogs?
Julia Cagé : Yes, there is such a risk. And this is one of the reasons why I wrote this book and I called it “Saving the media”. Because if nothing is done we may just go down the road of increased sensationalism and celebrity culture, with less and less investment in high-quality journalism. Also because I think that media independence is increasingly at risk, which appears clearly when one investigates the new ownership structure of the main general information media outlets.
Bella Caledonia: Can you describe the media situation in France and how it difference from Britain?
Julia Cagé : A lot of things are different between the two countries! But they both suffer from the media crisis and it appears clearly not only when we look at the revenue figures, but also when we investigate the long-run evolution of the size of the newsrooms. The importance of Murdoch is obviously a Britain specificity. As well as the fact in Britain there is one media outlet that is a foundation, the Guardian. There is no foundation in the media industry in France. I could highlight a number of other important differences between Britain and France, for example the fact that newspapers are cheaper in Britain, with a much higher circulation per capita; also the fact that they tend to a be a little bit more “trashy”. But the risks I underline in my book – decline in quality, race for higher profits; risks for media independence,… – the media industry faces them in both countries. And so the solution I offer – the Nonprofit Media Organization – could also be used in both countries.