A Voucher System for Investigative Reporting

Dozens of proposals are floating around suggesting different ways to fix what seems to be the broken business model for newspapers. Michael Kinsley‘s Op-Ed, working backwards from the gross numbers, provides a devastating critique of the claim that micropayments on the Internet could save the industry:

Micropayment advocates imagine extracting as much as $2 a month from readers. The Times sells just over a million daily papers. If every one of those million buyers went online and paid $2 a month, that would be $24 million a year. Even with the economic crisis, paper and digital advertising in The Times brought in about $1 billion last year. Circulation brought in $668 million. Two bucks per reader per month is not going to save newspapers.

But the same result is strongly suggested by theory.

There’s no guarantee that private demand will produce the socially optimal quantity of investigative political reporting. Muckraking is a public good, and rational consumers would rather benefit from having the other guy pay for it. The same impulse that underlies the “rational ignorance” of voters may undercut the private market’s provision of political information.

Investigative reporting in the old days seemed like it was a loss-leader in the information bundle to which we subscribed. As a kid, I read the newspaper for the funnies, movie times, the sports scores, and for the classified ads. I still value this info, but I never get it from the printed page. Even a few years ago, I can remember feeding money into New Haven Register newspaper dispensers to learn the local movie times. But with an Internet-enabled cell phone, I almost never buy the Register anymore.

The bottom line is that we may need to publicly subsidize investigative reporting if we’re going to get enough of it. But the problem with subsidies lies in this question: who is going to decide what kinds of issues get investigated? It’s scary to think of having politicians decide the targets of journalism.

Bruce Ackerman and I have a solution (just published in the Guardian):

We urge democracies throughout the world to consider the creation of national endowments for journalism that are carefully designed to confront the impending collapse of investigative reporting.

The real concern is not the newspaper, but news coverage. It’s not clear that print news is a viable technology. Classified ads are more efficiently delivered by websites. Nobody under 50 waits to read all about stock prices or scores in the morning edition. The government should sit back and let the market decide the right way to distribute the news.

But there are huge costs to losing a vibrant core of investigative reporters covering local, national, and international stories. The Internet is well suited to detect scandals that require lots of bloggers to spend a little bit of time searching for bits of incriminating evidence. But it’s no substitute for serious investigative reporting that requires weeks of intelligent inquiry to get to the heart of the problem. Without Woodwards and Bernsteins, there will be even more Nixons and Madoffs raining mayhem and destruction.

It will take decades to revitalise investigative journalism if we allow the present corps of reporters to disintegrate. This is happening at an alarming rate. …

The problem with a BBC-style solution is clear enough. It is one thing for government to serve as one source of investigation, but quite another for it to dominate the field. A near-monopoly would mean the death of critical inquiry.

There are serious problems with private endowments as well. For starters, there is the matter of scale. Pro Publica, an innovative private foundation for investigative reporting, is currently funding 28 journalists. It is hard to make the case for a massive increase in private funding when university endowments are crashing throughout the world, imperiling basic research. More fundamentally, a system of private endowments creates perverse incentives. Insulated from the profit motive, the endowments will pursue their own agendas without paying much attention to the issues that the public really cares about.

Here is where our system of national endowments enters the argument. In contrast to current proposals, we do not rely on public or private do-gooders to dole out money to their favorite journalists. Each national endowment would subsidize investigations on a strict mathematical formula based on the number of citizens who actually read their reports on news sites.

Some might find this prospect daunting. Readers may flock to sensationalist tabloids that will also qualify for grants for their “investigations”. But common sense, as well as fundamental liberal values, counsels against any governmental effort to regulate the quality of news. So long as the endowment only subsidizes investigative expenditures, in-depth reporting will get a large share of the fund — provided that it generates important stories that generate broad interest.

The government provides the subsidy, but “the people” decide how it will be distributed. You vote with your eyes and ears. Bruce and I, in Voting With Dollars, suggest an analogous system called “Patriot Dollars” that would allow individual voters to decide how campaign-finance subsidies would be distributed. But here the voucher scheme is implemented by a less obtrusive choice architecture. The ordinary act of reading or listening to a piece of journalism tells government that this is the organization that should be subsidized.

The endowment must monitor media hits and circulation counts. This is doable. Advertisers already rely on independent audits. So can the government. Some governmental monitoring of financial matters is also necessary. News organizations would otherwise be tempted to obtain subsidies for marketing and business operations. Without minimizing the problems involved in institutional design, the creation of an effective and disciplined national endowment seems entirely realistic.

Instead of influencing the content of what will be reported on, government can empower readers by subsidizing the news organizations that have succeeded in the past.


David Cohn

Why do you need the government to put up the money? Why not just let people choose the stories they want to donate to directly with their own money?

ala: http://spot.us (blatant self-promotion, but it's fundamentally the same idea).

The public sets the news agenda. They fund it with their own money. Otherwise - it's a bailout. Even gov. money directed by the public is a bailout. That's just a spoon full of sugar. It does help the medicine go down - but I think there is a way to keep this out of the gov's control.

Best

Avi Rappoport

There are significant technical problems to counting readers of a story. Web ad networks have a lot of unsolved problems with this already. I am not even vaguely a hacker, and the following come to mind:

1) Move On and the equivalent on the Right sending readers to stories that support their political positions.

2) search spam - using black hat search engine optimization techniques to get links to stories at the top of search results

3) software agents or robots that can go to specified stories, this could include zombie nets, browser hacks, viruses...

4) misleading links (say one thing, go to another story)

5) hijacked links (random hacked pages take browsers to a story)

There is so much INCENTIVE to hack this system, I can't imagine it could ever work.

Take a look at the web comics economy. They give away the comics and sell books, t-shirts and stuff like that. It's not as easy as having a franchised comic strip, and it takes more marketing, but the barriers to entry are much lower.

Did you ever see the Courtney Love article about music and money? She was talking about this in 2000:

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blake

I think this line of thinking should be extended to almost all forms of media. Government enforced monopolies of intellectual property are a subsidy, and while they have worked fairly well in the past, monopolies are a terrible solution where the monopolist price is far from the marginal cost, which is basically zero nowadays. They should figure out some other way of subsidizing intellectual property creation that doesn't involve dead weight costs of over 50 or 60%(just guessing here, but I'm pretty sure that people who don't get intellectual property because it's priced by a monopoly have their value just destroyed.)

Merus

Micropayments have been tried before, by producers much more web-savvy than newspapers (I recall a lot of web comics discussing how to make micropayments work back in 2000), and there's a very simple principle in play that makes it fail: "free" is a very different proposition to "a small amount", no matter how small that amount is. The large amount of consumers who don't pay for a copy of the NYT don't value the NYT enough to pay ANYTHING for it when that content is available elsewhere.

The model web comics eventually settled on, that of monetising the true fans who consider it a point of pride to have spent money on something they like, is not a model that can sustain a news organisation either.

I'm not convinced that the "user pays" model will work for news at all. The PBS/NPR model of essentially whine-supported content is not one that engages viewers, especially when their content is things of public import but of little relevance to people's needs. Most investigative journalism is of public interest, but the public is generally more interested in things that require no investment of thought like celebrity gossip. News has to be more accessible to make up for the nature of its content.

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ole

Even though I support the notion of investigative reporting having positive externalities, I am sceptical about your suggested mathematical formula linking readers and government subsidies. Investigative stories are in themselves non-exclusive: Once Woodward and Bernstein had found out about Watergate, everybody could write and broadcast about it. So how do you want to find out how many (and how much) people are interested?

In Addition: How many people actually read the Watergate stories, how many people read about Blagojevich, and how much interest did the fatherhood of Anna Nicole Smith's baby generate? Where's the positive externalities?

econobiker

If newspapers could publish more than just reworded press releases by companies then this might work....

Having a little outrage and ability to manage more than soundbites seems like it couldn't hurt either...

Atty

Lets get to the hidden biases:

What makes you think the current level of investigative journalism is optimal? I think there is too much, and of what there is, 90% is biased towards the left. So I regard your attempt to keep the current level as asking me to subsidize your point of view. Maybe those investigative reporters are better off doing something for society that actually creates wealth, thereby allowing them to learn the facts of life that make you a conservative or a truly educated liberal.

Why is government involvement always the answer? Why do you think that something you would not pay for yourself is ok to force yourself and others (through taxation) to pay for? I think I am already paying for too many things through taxes that I object to, so I object to you trying to add something else to that list.

Reminds me of a quote: Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it. - Ronald Reagan (1986)

-Atty

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ada

Yay, more industries propped up that should undergo creative destruction.

My father was a basketball reporter for a few years for fun. He did the job part time as he had a full-time job as a contract lawyer. Even though he wasn't a "professional", he still points out what the commentators on TV say before they say it. People who have a passion for something will become experts in it regardless if it's their job.

I think sports, local interest stories, and editorials will become part-time bloggers, people who have a passion for their topic of interest. The future incarnation of newspapers will act as rankers for these blog posts, pointing out the ones that are most articulate or interesting or fit their agenda. They will probably have an element of group selection, with people voting stories up and down (like digg). More "newspapers" with a wide variety of agendas and interests will pop up as they'll just be linking not creating information and fairly inexpensive to maintain.

Gossip has always found a way of making money. Rather then selling to newspapers, they'll sell to Entertainment Tonight or magazines.

So the only issue is with "investigative journalism" in newspapers. First of all, television will still have all of their investigative shows. Magazines will also have their reporters for longer term stories.

If a newspaper wants to continue to have an investigative reporting section, it will need to investigate within the budge that it gets from advertisers or paying subscribers. Less hierarchy, less overhead (no presses and probably only a very small head office), and paying reporters by story rather than having staff reporters will be a big step in making news writing more competitive and more in line with what the public wants to read about.

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James McRitchie, CorpGov.net

I think this is an excellent idea. It differs only slightly from the model used by VoterMedia.org, They don't use vouchers, so the system is less likely to be co-opted by fringe groups.

Another main difference is that Mark Latham, who has also written substantially on the topic for several years, believes so much in its veracity that he has used his own money to fund prototypes.

Three years ago, he funded a contest at the University of British Columbia. Students liked the system so well, they are now funding it themselves. Latham has gone on to run contests at other universities and Vancouver elections. His next step is setting up a platform that will facilitate voter funded media worldwide. Download "Global Voter Media Platform" at VoterMedia.org.

Sue

You know that there are thousands that don't have a PC. What do these people do to get their news? I am out of work,my PC crashed & I don't get the paper for lack of funds.Had to make a priority list.Now I feel my citizenship has been taken from me.No link to the outside world so toss that problem around to come up with a solution.The 3 of us,my son (sports) his wife (shopping, people, classified) & myself (Front page,National,local news,Politics,Home,Health & Horoscopes) devide the paper just fine.What if each section was sold seperate.That could be a bit confusing yet big business still seems the way to go.They pay to advertise & write it off.They can do it. Sue