The Coming Era of “Civic News”

Empowering every American with a refundable tax credit for a subscription, membership, or donation to a local media outlet will revitalize the free press.

This story is part of a package exploring how to rescue and revitalize journalism. Read the rest of the pieces here. And, if you enjoy what you’re reading, please consider making a donation—we’re a nonprofit media organization and rely on the support of our readers.

Francis Wick’s family has been running local newspapers since 1926, when his grandfather Milton and his grand-uncle James took over the Niles Daily Times in Niles, Ohio. These second-generation Norwegian immigrants, and their children, gradually grew the company, and it now includes more than 25 small-circulation newspapers in 11 states. Although Wick Communications is not even among the top 25 newspaper chains, these publications are important in their communities. A typical homepage for the website of Wick-run Wenatchee World, in central Washington State, includes headlines like “Two More Fatalities from COVID-19 Reported in Chelan and Douglas Counties” and “Former Health Administrator Emails Reveal Infighting over Pandemic Response.” There are no big TV stations or metro dailies that provide this kind of coverage. If these newspapers went away, places like Wenatchee would become news deserts.

Even before COVID-19 hit, the Wick papers were seeing rapidly declining advertising revenue. It was clear to 39-year-old Francis, now the CEO, that they had to move rapidly to build up their digital subscriptions. But when the pandemic arrived, the floor fell out. Before the Paycheck Protection Program gave their company a few months of breathing room, the entire chain (like many others) was in danger of becoming insolvent. Wick fears that as PPP expires, and local economies struggle, the papers will continue to be in a dire situation. 

Their plight reflects a larger crisis. Journalism—the only profession mentioned in the Bill of Rights—is in a perilous state. Since 2004, the number of newspaper reporters has dropped by more than 60 percent. Some 200 counties and 1,800 communities have no local news source at all. Thousands of others have so-called ghost newspapers, which contain barely any local reporting. One study found that only 17 percent of the articles in local newspapers were about local matters. And that was all before COVID-19. 

Wick is still optimistic that chains like his can figure out permanent, sustainable models, but it will take time, so the government would need to help. He figures that the revenue of local news primarily comes from readers and advertisers, and wonders if there is a way to help newspapers through those primary stakeholders. This past April, he wrote to his local member of Congress, Ann Kirkpatrick of Arizona, suggesting a few ideas. First, provide a $250 tax credit with which Americans would buy newspaper subscriptions. Residents would become better informed, and news organizations would get more revenue, but only if they convinced people it’s worthwhile to subscribe.

Second, he proposed a $5,000 tax credit to help small businesses buy advertising in local media during the COVID-19 crisis, and a $2,500 credit after the pandemic passed. It was a clever twofer: Businesses would get needed economic assistance, and news organizations would get more income. 

Finally, he suggested a tax credit to news organizations that employ local journalists. 

Kirkpatrick’s office took a quick interest. Her staff tinkered with the jobs tax credit to make it more palatable to Republicans, and then recruited a Republican coauthor, Dan Newhouse of Washington State. They added a provision urged by the Rebuild Local News coalition, which I lead, allowing residents to use the tax credit to make a donation to local nonprofit news organizations, too.

From 2008 to 2018, newspaper revenue dropped from $37.8 billion to $14.3 billion. As a result, the number of newsroom employees fell from 71,000 in 2008 to roughly 35,000 today.

The result, after a few months of work, is the Local Journalism Sustainability Act, the single best approach to media policy in decades. As of this past Labor Day, an amazingly broad collection of representatives had signed on as cosponsors, including ultra-progressives like Bobby Rush and far-right conservatives like Louie Gohmert.

It is now possible to imagine a government strategy that would save local news without endangering editorial freedom. That’s crucial, because we are entering into a “third epoch” of local journalism, and the choices we make now—including about public policy—will determine what local news looks like for decades. The first period was what historians have called the era of the partisan press. During this time, which lasted from the nation’s founding years to roughly the Civil War, local newspapers relied on support from political parties and government for much of their revenue. This was followed by the era of commercial journalism, running into the early years of the 21st century, a time when local papers prospered from advertising and government support became less important. That era is over. 

While the situation is dire—for the local news sector and the democracy that depends on it—it also presents an opportunity. A new, better model for local journalism is developing. It consists of reconceived commercial news organizations, a much larger nonprofit news sector, and a greater role for small and large philanthropic donors. These new “ecosystems” could be better than what we’ve had for much of American history. 

But the federal government will need to play a key supporting role, as it did before. And it can, especially if we focus on putting financial power in the hands of individual citizens—just as Francis Wick suggested. In so doing, we may ensure that the third epoch of local journalism is the era of civic news.

The normal response when a vital industry is in free fall is for the government to help—as has happened repeatedly in the energy, auto, airline, finance, mortgage, and agricultural sectors. But journalists have not been clamoring for government intervention. This is due to a deep-seated, and quite reasonable, belief that it would be self-destructive for reporters to take money from the public institutions they hold accountable. 

The truth, however, is that for most of U.S. history, the government did support the press. The Founding Fathers, for instance, decided that publishers should get lower postal rates to mail their papers. This was quite a commitment by the government: Newspapers constituted 45 percent of the items mailed but covered only eight percent of the Postal Service’s costs. But the system worked. Though he forgot to mention the postal subsidy, Alexis de Tocqueville noted that “of all countries on earth, it is in America that one finds both the most associations and the most newspapers.”

On the other hand, the first business model for local news was ultimately built on partisanship. Newspapers aspired to propagandize and mobilize supporters of the early political parties. Subtlety, fairness, or accuracy were not primary goals. The Gazette of the United States, a Federalist paper, offered this analysis during the 1800 election: “GOD—AND A RELIGIOUS PRESIDENT . . . [OR] JEFFERSON AND NO GOD.” 

In 1850, more than 80 percent of the newspapers were aligned with a party, which directly and indirectly provided the bulk of their revenue. The party in power would provide lucrative government printing contracts to loyal newspapers and pay them to publish legal notices. Wealthy party donors kicked in funds. Editors were often hired to taxpayer-supported jobs as county clerks, or held positions on state or local party committees. 

In recent years, experts have complained that when the internet arrived the original sin was that news publishers didn’t charge for content. It turns out that this sin wasn’t all that original: In the partisan era, readers often didn’t pay for “content” either. One North Carolina editor in 1832 estimated that only 10 percent of his 600 subscribers paid. Papers persisted, nonetheless, because of subsidies from the parties and the government. 

After the Civil War, the partisan model faded away, replaced by what historians call the commercial era of journalism. During this grand epoch, which lasted all the way to the end of the 20th century, the biggest revenue source for local news was advertising (including, sometimes, government advertising). There were several causes for the shift to this model. Rising literacy rates led to greater demand for newspapers. Improvements in the technology of printing made it less expensive to pull off large press runs. Political parties became more professionalized and less reliant on newspapers as their primary mobilization vehicle. Urbanization made it cheaper to distribute high-circulation newspapers.

Most important, as the Industrial Revolution advanced, manufacturers needed to peddle consumer goods far and wide. Community newspapers were flooded with local advertisements—including from those newfangled consumer amusement parks called department stores—as well as from national companies marketing their products to new towns. By the turn of the 20th century, as best we can tell, most local newspapers got more money from advertising than from reader subscription fees. And since publishers earned more if they had more readers, they became less partisan. Why alienate half your potential audience? 

There were many flaws in this model—most especially that advertisers often expected the news pages to promote their businesses, and certainly to avoid criticizing them. Some literally bribed reporters. “Any concern of average size and importance would do well to pay a good newspaper a few dollars a week to look after their interests,” advised an article in the magazine Printers’ Ink in 1894. The newspaper industry sometimes took up campaigns that harmed their own readers but helped advertisers, as when publishers in the Progressive Era opposed efforts to regulate dangerous patent medicines. (My favorite old ad depicts two children playing in the yard next to the headline “COCAINE Toothache Drops—Instantaneous Cure.”) 

But this model also contributed to the growth of American society and democracy. Newspapers broadened the definition of news to include coverage of business, labor, crime, courts, accidents, arts, culture, life milestones, and community affairs. While a typical metropolitan newspaper in 1832 devoted 50 to 70 percent of their space to politics, in 1897 that proportion dropped to between 19 and 42 percent, according to the historian Gerald Baldasty. They hired more professional, full-time reporters to find out things. In 1860, The New York Herald had seven reporters and editors; by 1890, they had 100, plus freelancers and special correspondents. Journalists of that era invented a new and controversial technique: the interview. Most importantly, the rise of muckrakers showed that journalism could hold powerful people and institutions accountable. 

By the 20th century, the trade became a profession, with more journalists aspiring toward “objectivity.” While this notion was never universally accepted, local newspapers decided that it was better for business, and the community, to be relatively fair minded and neutral in their depiction of facts. After World War II, local news continued to evolve. As the historian Michael Schudson and the former managing editor of The Washington Post, Len Downie, wrote in 2011,

The civil rights movement taught journalists in what had been overwhelmingly white and male newsrooms about minority communities that they hadn’t covered well or at all. The women’s movement successfully asserted that “the personal is political” and ushered in such topics as sexuality, gender equity, birth control, abortion, childhood, and parenthood. Environmentalists helped to make scientific and medical questions part of everyday news reporting.

There remained huge blind spots. For instance, many newspapers in white-majority towns gave short shrift to Black communities. But in some of those cases, a vibrant system of ethnic newspapers—supported mostly by advertising—filled the gaps.

By the end of the 20th century, the business model of local journalism had entered its most ironic stage. As TV and radio audiences grew, fewer Americans turned to newspapers. Eventually, most communities could support only one newspaper, which was terrible—unless you happened to own that surviving paper. These monopoly papers grew quite profitable and often invested some of the surplus into hiring more reporters. 

Then came the internet. The big problem was not that news organizations lost readers to the internet but rather that they lost advertisers. At first, companies flocked to the lower costs and better targeting of niche sites like Craigslist, Monster.com, and Cars.com. Then search engines and social platforms became the dominant players. Facebook and Google now control 70 percent of local digital advertising, leaving less and less for newspapers and other content creators to live on. The result was stunning: From 2008 to 2018, newspaper revenue dropped from $37.8 billion to $14.3 billion. As a result, the number of newspaper employees fell from 71,000 in 2008 to roughly 35,000 today. While some publications, such as The New York Times and The Washington Post, have prospered by appealing to an increasingly national or global audience, local news organizations rarely have that option. Most of the people who care about last night’s meeting of the Sahuarita, Arizona, school board live in Sahuarita, Arizona. Ethnic newspapers, many of which have not pushed digital transformation aggressively, are in a particularly precarious state.

Local journalism has become what economists call a public good, meaning that it provides a civically essential service and yet businesses cannot make money providing it. Therefore, the core problem—insufficient funding for local, labor-intensive reporting—will not likely be solved through mere commercial innovation. 

Indeed, much of the recent economic “innovation” that has happened in for-profit local journalism has made matters worse. Increasingly, struggling local publications have become attractive targets for rapacious private equity firms and hedge funds. By 2018, some 1,102 newspapers—representing more than half of daily newspaper circulation—were owned or controlled by a handful of hedge funds, according to studies by the University of North Carolina at Chapel Hill. These owners limit new spending—including on strategies that would grow digital subscriptions—lay off thousands of reporters to cut costs, and then feast on the temporary profits. 

Alden Global Capital, one of the largest owners of newspapers, provides a case in point. In 2017, Alden’s Digital First Media had a 17 percent operating margin, and a profit of $160 million. In Colorado, the profit margin for Alden’s papers was $36 million, generated in part through massive layoffs. In 2013, the Denver Post received the Pulitzer Prize for breaking-news reporting for their coverage of the Aurora mass shooting. Since then, it has laid off more than 50 of the people who helped the Post win the award. 

This kind of behavior has wreaked havoc all across America. From 2004 to 2018, some 1,749 weeklies and 62 U.S. dailies closed as a result of mergers, according to UNC data. Consolidation is likely to accelerate because of the coronavirus pandemic, leaving local news systems even less competent, less inclusive, and less diverse. The second period of journalism—the era of commercialized journalism—is coming to a sad end. 

What will be the next epoch? The U.S. could see the rise of a “tribal press.” This would be a bit like the partisan press of the early 19th century, except that instead of government and political parties subsidizing local papers it would be ideological groups, political action committees, or individuals. There’s already movement in this direction. A recent study by the Duke University journalism department found more than 400 “hyper-partisan” websites masquerading as objective local news sites. Some are financed by progressives; more are backed by conservative groups like the U.S. Chamber of Commerce; some do not disclose their financial backers. Such a model would have the advantages of the partisan press (a clear source of revenue) but—going out on a limb here—would be bad for democracy. The toxic dysfunction of national politics and cable TV could be replicated on a local level. We’d get more polarization and less concern with truth. 

It’s also possible that communities end up replacing local newspapers with nothing. National media would fill the void. People would get plenty of news about the nation, less about their town and their neighbors. What local information—and misinformation—they did get about their schools, hospitals, and the workings of city hall would come from government press releases, their friends, and social media. This would likely lead to more corruption, less civic engagement, more paranoia, and greater paralysis on the local level.

That’s why we need to work, collectively and consciously, toward ushering in an era of civic news.

In this system, local news will look quite different. For starters, the nonprofit sector will have to provide much more coverage than it has in the past. Thankfully, it appears up to the challenge. Over the past decade, more than 300 nonprofit local news websites have sprung up, bearing names like VTDigger, Oklahoma Watch, Arkansas Nonprofit News Network, East Lansing Info, and the Texas Tribune. Many are doing fantastic local reporting. Philanthropic sources have increased funding to these groups, and last year a new organization called the American Journalism Project was created to help enlarge their number and viability. New national nonprofit organizations have also come forward to help with local news. Chalkbeat provides high-quality education reporting in eight cities. The Solutions Journalism Network provides training and financial support for journalism aimed at solving important problems. 

Finally, public radio stations have significantly beefed up their coverage of local issues. They have the potential to play a critical role because they already have proven business models—local memberships and philanthropy—as well as preexisting audiences. Some have wisely teamed up with some of these first-generation, nonprofit digital websites. 

Nonprofits can help existing print outlets, too. This June, Report for America, the organization I cofounded and run, placed 226 reporters into 163 local newsrooms around the country, about half of which are long-standing papers. We require that newsrooms raise a portion of the salary for reporters from the community, forcing them to develop philanthropic operations that many never had before. In the past year, the program helped stimulate 7,800 donations to local RFA partner news organizations. It helps educate local donors that, without local journalism, communities won’t make progress on health care, education, or political reform.

Some owners have charted an innovative new approach. In recent years, the owners of The Salt Lake Tribune and The Philadelphia Inquirer donated their newspapers to nonprofit organizations. The Tampa Bay Times (formerly the St. Petersburg Times) was donated to one in 2003. These outlets have maintained much better coverage and have a better path to sustainability than most commercial papers. 

Even if Laurene Powell Jobs woke up and decided to solve this problem by herself (which she could, by the way), it’s hard to get excited about democracy’s fate depending entirely on the fancies of a few billionaires.

There’s plenty more that the philanthropic sector must do. Although donors have increased their commitment to journalism from $123 million in 2009 to $370 million in 2018, newspaper revenue has dropped more than $23 billion. Despite that big number, the gap is manageable. If we added a reporter to follow each municipal government in the country, it would cost about $1 billion. By contrast, individuals, foundations, and corporations gave $450 billion to charitable causes in 2019, including $13 billion just to the top 20 elite (and mostly well-endowed) colleges and universities. 

But so far there is no evidence that donors are interested in investing this kind of money into the unsexy world of local journalism. As a result, nonprofit operations are rarely financially secure. In 2019, only one-third of the 300 local nonprofits had taken in at least $1 million in revenue, according to the Institute for Nonprofit News. 

So, an era of civic news would also need to include commercial newspapers that refocused on serving their communities. Sometimes a local benevolent billionaire reclaims a newspaper from one of the chains. Thanks to purchases by the rich, The Boston Globe, the Minneapolis Star Tribune, The Berkshire Eagle, and the Los Angeles Times have all been investing more in journalism than their chain-based peers. These publications have more runway to make the kinds of decisions that will help them in the long run—for instance, generating more of their revenue through digital subscriptions, rather than advertising, and eventually phasing down print publications. And even if they don’t get all the way into the black, the benefactor covers the gap, in effect offering accountability reporting to the community as a philanthropic donation. 

Others are experimenting with new corporate structures that maintain private ownership but increase the odds of community investment. The Philadelphia Inquirer became a public-benefit corporation (which was then acquired by a nonprofit). With a public-benefit corporation, investors can still invest and make a boatload down the road, but the company must commit to both making money and serving the community. This makes it easier for news organizations to fund-raise, and, should they ever be up for sale or go bankrupt, it becomes easier for community civic leaders to organize an acquisition.

But both increased philanthropy and a revitalized commercial press would rely heavily on the wealthy, which could lead to coverage that ignores lower-income communities. Anyway, even if Laurene Powell Jobs woke up and decided to solve this problem by herself (which she could, by the way), it’s hard to get excited about democracy’s fate depending entirely on the fancies of a few billionaires. 

For civic news to thrive, local journalism will need help from another group—the one implicitly summoned by Francis Wick: taxpayers.

What determines whether government involvement makes journalism worse or better? The postal subsidy of the 18th and 19th centuries worked because it was content neutral. These subsidies, which continued well into the 20th century, were formulaic, based on distance, not merit. It didn’t involve the presidentially appointed postmaster general reviewing grant applications. It lowered the postal fees for all newspapers, both scurrilous Jeffersonian rags and fulminating Federalist newspapers alike. 

Government support in the civic news era would need to be similarly impartial. The tax credit system established by the Local Journalism Sustainability Act would be. Rather than government officials sitting around a table or in a Zoom meeting deciding who got what, the choices would be made by Americans themselves—but with their preferences amplified. This would unleash a virtuous market dynamic. Local news organizations would need to convince residents that they are worthy of donations or subscriptions. Newspapers that continued to disinvest in reporting would become vulnerable to competition by other organizations. Ghost newspapers would ultimately lose out to living newsrooms. 

There would be some difficult policy questions, including what outlets qualified as local. The journalism world would need to mobilize to create a set of standards. And no matter how rigorous those standards were, some of this money would inevitably still end up with dubious publications. That’s how the postal subsidy worked, and how the deduction for charitable giving currently works. You decide which charity to support and the government subsidizes your choice, regardless of whether you’re helping the Red Cross or the First Church of Snake Handling. But just as Jefferson tolerated subsidies for Federalist lowlifes—for the greater good—we’d accept some bad edge cases to help build a system of subsidies that is robust and broadly accepted by the public.

While the Local Journalism Sustainability Act forms the core of a smart strategy, it is not sufficient. It currently provides a regular tax credit, but that needs to be a refundable tax credit, so that people who pay little or nothing in taxes can benefit. If made refundable and used by the same proportion of people as checked off the federal campaign finance credit, it would pump $5.5 billion into local media each year. 

The Rebuild Local News coalition recently proposed several other critical governmental changes that would help usher in an era of civic news. Congress should pass a set of tax incentives for chains or hedge funds that donate newspapers to nonprofit groups, replanting them in communities. The Justice Department should adopt a new approach to antitrust law that would block or slow down certain mergers. The government already has the authority to block mergers that undermine “localism,” the idea of media created by and for communities. The philanthropic sector should also create a new national nonprofit organization to help transition struggling newspapers into community nonprofits and public-benefit corporations. In some cases, the new fund would help with the logistics of the change—tax filings, legal bills, bankruptcy filings. In other cases, it would acquire newspapers for little money, or accept them as donated assets, and then hand  them over to local groups. Finally, it would provide expertise and operating capital to help newly reconstituted news organizations succeed.

Congress should also ensure that more government advertising spending goes to local media. The federal government already spends about $1 billion to advertise for the military, the census, and other purposes. Much of it goes to social media or national TV networks. Requiring them to put half of these advertisements through local media would pump $500 million into local news economies. 

This tax credit system would be content neutral. Rather than government officials sitting around a table or in a Zoom meeting deciding who got what, the choices would be made by Americans themselves.

Finally, Congress should help the local nonprofit sector increase the number of local newsrooms. There’s precedent for this in the construction of the public broadcasting system. Before 1967, there were 292 public radio stations—a number strikingly similar to the number of local nonprofit news organizations today. These stations had great energy and talent, but little money, with many run out of universities. Congress then passed the Public Broadcasting Act of 1967. Now there are more than 900 public radio stations and 356 public TV stations, including powerhouses that produce some of the best content out there. But while some of our favorite Ken Burns series feature Corporation for Public Broadcasting logos, the majority of CPB funding goes out to local stations, by formula—not for specific content, but for general operating support. In this vein, the government could help supersize the NewsMatch program, which has been set up by a range of foundations. In 2019, NewsMatch provided $3.37 million to news organizations that had raised money for themselves. It is popular, but the small war chest meant that newsrooms could get no more than $20,000 each. Imagine if they could earn $200,000 instead.

The government is, of course, perfectly capable of making matters worse. For instance, some have suggested creating a large fund inside the Department of Commerce or another government agency to dispense grants for local newsrooms. One needs to look no further than Voice of America or Stars and Stripes to see how a president might punish news outlets that don’t tow the line. But NewsMatch amplifies the choices of supporters rather than making the first judgments. This, plus a simplification of the IRS rules governing non-profit news
organizations, would transform the local news landscape.

Our rough estimates are that this package could triple the number of local reporters, while costing the federal government a few billion dollars in lost tax revenue and some direct expenditures. The price tag would be about the same scale as the tax deduction for business meals and entertainment. 

There you have it—a public policy strategy that could save local news but do it in a way that is future—and First Amendment—friendly. If there came a day when the nonprofits were clearly better than the for-profits, people could shift from subscribing to newspapers to donating to nonprofits—or vice versa. It would keep political appointees from being able to use these funds to manipulate local media. Best of all, it would reward and amplify efforts that treat local reporting as a public good. This era of civic news would become not so much a way to fill the gaps created by the collapse of the previous models, but a way to build a far better system of local news than we have ever had before.

Donate Now to the Washington Monthly and your gift will be doubled

Steven Waldman

Steven Waldman is the president and co-founder of Report for America, an initiative of The GroundTruth Project. He is the author of Sacred Liberty: America’s Long, Bloody, and Ongoing Struggle for Religious Freedom. As senior adviser to the chairman of the Federal Communications Commission, he was the prime author of the landmark report Information Needs of Communities.