Organization Trends

Don’t Trust the Messenger: Market Failure Workarounds

Don’t Trust the Messenger (full series)
The Rise and Fall of Old Media | Market Failure Workarounds | Forget Profit
The “Right” Reporting? | Room for Improvement

Summary: Conservatives and right-leaning moderates know that in order to get the “full story” they should read not only the Wall Street Journal and National Review, but also the Washington Post and The Atlantic. After all, it’s important to know how the other half of America thinks and feels about the news of the day. However, the media landscape isn’t what it used to be—where once there were nominally nonpartisan broadcast and print media, new nonprofit newsrooms backed by big liberal foundation resources have risen, even as conservative platforms have folded. But that doesn’t mean conservative readers and writers should resign themselves to obsolescence: a combination of foundation giving and visionary leadership could breathe new life into conservative and even less-partisan journalism, while providing the stability and flexibility necessary for new outlets to thrive.

The Search for Alternative Modes of Revenue

In light of the decline in mass-market advertising revenue for written media, journalistic enterprises have gone looking for new (or adapted already-existing) business models to stay afloat.

The Nominal-For-Profit with a Benefactor

Operating a journalistic enterprise as an unprofitable (or not-as-profitable-as-an-alternative-use-of-the-benefactor’s-money) “for-profit” enterprise has a long history, especially in niche media. Perhaps most notable for using this model historically are ideological magazines, which have relatively low circulation and take controversial positions which frighten corporate advertisers.

National Review, the prominent national conservative magazine, operates as a notional for-profit company; its founder and longtime editor William F. Buckley, remarking on the publication’s finances, is rumored to have said, “National Review exists to make a point, not a profit.” National Review’s model—to which the magazine appended the National Review Institute, a nonprofit arm which now controls National Review, Inc., the C corporation which publishes the magazine—is somewhat unusual in that it does not rely on a principal known benefactor to supplement subscriptions and advertising to keep its lights on; most of NRI’s identified foundation contributors make grants of less than $100,000 per year.

More typical is the model of the late Weekly Standard, the conservative magazine which was shuttered by its corporate parent, Clarity Media Group, in a late-2018 reorganization. Clarity Media is owned by entertainment industry mogul Phil Anschutz, a conservative-leaning billionaire from Colorado; through Clarity, Anschutz controls a handful of local newspapers and the Washington Examiner. The Standard, like National Review, did not make money (its co-founder, Commentary editor John Podhoretz, said as much in his lament of its closure). Since its model relied on a deep-pocketed benefactor (first Rupert Murdoch of News Corporation, who sold the magazine to Anschutz), the Standard was almost always at risk of closure if its single controller tired of the project or changed his political leanings.

In recent years, the nominal-for-profit-with-benefactor model has expanded beyond the narrow world of ideological magazines and (back) into the mass-market media. Perhaps the most notable expansion of this model came when Amazon founder Jeff Bezos bought the Washington Post in 2013. While the Trump-era dividend to liberal-leaning publishing has likely improved revenue at the paper, it does not seem likely that Bezos’s principal interest in the capital’s paper of record is entirely pecuniary. As with the publishing barons and party-press-men of the nineteenth century, for Bezos, influence comes with newsprint and pixels. It also doesn’t hurt that Amazon’s HQ2 project will call the D.C. suburbs “home.”

Bezos is hardly alone. Laurene Powell Jobs, widow of former Apple CEO Steve Jobs and a major progressive activist and donor, bought a majority stake in The Atlantic in 2017, in addition to backing a number of other for- and not-for-profit media concerns. Marc Benioff, CEO of Salesforce and a sometime social-liberal activist, bought Time magazine in 2018.

Annex to a Larger Nonprofit

Ideological media expanded an alternative means of securing funding: Using existing nonprofit organizations to create ideological press outlets. The best-known nonprofit effort within an existing structure is probably the “ThinkProgress” network of blog sites published by the Center for American Progress Action Fund, the 501(c)(4) advocacy arm of the Democratic establishment-aligned think tank Center for American Progress (CAP).

According to CAP Action’s 2016 tax return, the organization spent $5.1 million on its “communications” which “advanced progressive ideas and messages,” including through ThinkProgress. CAP Action’s most notable funders include its corporate stablemate CAP, which provided the Action Fund with $3.5 million in support in 2016; the Service Employees International Union (SEIU) chipped in $359,073 in 2017; and even left-wing foundations including the Annie E. Casey Foundation, which made three six-figure contributions to CAP Action in 2011, 2012, and 2014.

Since the foundation of ThinkProgress, conservative non-profits have created similar side-line media projects. The Media Research Center, a right-of-center critic of media bias, operates Cybercast News Service, a wire-service-style online news and commentary outlet with a conservative perspective. The Heritage Foundation think tank added a news brand, the Daily Signal, in 2014.

Viral Content Mills

For projects more interested in profit than a point, the digital realm still offers the prospect of earned revenue, if one can harvest the vast number of clicks that lead to enough eyeballs on digital advertisements to make money. BuzzFeed, best known for its vapid “listicles” and quizzes for bored college students and cubicle drones, added a news division in 2011, hiring Ben Smith from the D.C. trade publication Politico to be its editor-in-chief. BuzzFeed News proved blatantly partisan: its ethics guide said “there are not two sides” on matters of “women’s rights, anti-racism, and LGBT equality.” Consequently, Buzzfeed News is best known for publishing an opposition research document compiled in 2016 against now-President Donald Trump without confirming the allegations made within the document—a practice reminiscent of Pulitzer and Hearst in the “yellow journalism” era.

Explicitly ideological media have followed the “clickbait” model. One of the earliest (and most notorious) such media outlets was Upworthy. Former executive director Eli Pariser co-founded Upworthy with funding support from (among others) Facebook co-founder Chris Hughes, who is also the spouse of unsuccessful Democratic Congressional candidate Sean Eldridge. The site pioneered the “curiosity gap” style of clickbait headline (one example: “Why Is a City That Can Barely Keep Its Schools Open Giving Millions to A Mega Corporation?”) in the service of metropolitan Millennial social liberalism.

In 2013, Upworthy recorded almost 90 million unique visitors per month; after Facebook tweaked its News Feed algorithms to favor what Facebook dubbed “higher quality” content, its monthly unique visits fell to one-fourth their peak level. Upworthy branched out into “sponsored content” or “native advertising” (advertisement posts made to resemble the organic content published by a website), raking in $10 million in nine months of 2014, per Adweek; big labor unions like the SEIU and AFL-CIO were buying advertising through its then-parent company, Cloud Tiger Media. By 2018, Upworthy had changed hands again (being bought by Good Media Group) and endured staff layoffs.

Conservatives have also tried the viral-content model; Daily Wire, the media outfit which distributes Ben Shapiro’s podcasts and produces viral-style stories, is perhaps the best known. A Vanity Fair profile of Shapiro and the Daily Wire reported that the media venture, which was seeded by a benefactor, has become profitable.

In the next installment of Don’t Trust the Messenger, learn about the rise of partisan nonprofit media and reporting.

Michael Watson

Michael is Research Director for Capital Research Center and serves as the managing editor for InfluenceWatch. A graduate of the College of William and Mary, he previously worked for a…
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