Author: sally

2009 Chicago Media Future Conference

I found this fascinating quote today:

But in a discussion with a couple of other journalism educators, I heard one of journalism’s dirty little secrets — freelancers are second-class citizens. In a time when it is obvious that most of our students will spend large parts of their careers as freelancers, some mid-career journalists admitted that freelancers were looked down on in the news business. They were paid less. They didn’t command the same respect as “real” reporters who worked full-time. No one used to want to be a freelancer.2009 Chicago Media Future Conference, May 2009

“Freelancers are second-class citizens.” Dirty little secret? Hardly. many freelancers are successful. Many are not. I think the dirty little secret is really that once you are tossed from a news organization it is difficult to find your way back into another one.  And then a journalist takes on that blinking status – is he or isn’t he, really doing journalism? Could there perhaps be some PR clients sneaking into his story ideas?

The real “dirty little secret” that’s not so much a secret anymore is the amount of PR passing for journalism in newspapers and magazines these days, simple rewrite work for the “real” journalists on the payroll. 

I hope, as Barb says, that next newsrooms will hold a place of honor for its hard-working, clear-thinking creative freelancers who have the guts to stick to their calling. And even more than a place of honor, I hope next newsrooms have a big fat budget line for paying them.   

You should read the whole article.

State of Pay – a Chicago news-blog suspense story

Originally published in Huffington Post-Chicago
Veteran journalists I know really enjoyed seeing themselves played by Russell Crowe in the recent film State of Play.

Handsome, disheveled, world weary and all-knowing, worn down by the events he views and records, Cal is still honest to a fault. Me, I am not as veteran as most — so my favorite was the set design of Crowe’s apartment. He had way too many refrigerator magnets on his fridge. That’s where I am at.

These days, it’s best to decorate the fridge, rather than open it. The shelves aren’t bare exactly, but they’re not stocked either.

I’d have to say that’s due to the current “State of Pay” in the journalism field.

As new and unexpected methods of news delivery reveal themselves, systems of vetting and hierarchy will develop, and established journalism will find itself embedded somewhere in this news delivery ecosystem developed by Steven Berlin Johnson, one of the founders of Outsidein.

Our emerging newsrooms will be staffed in part by a generation of newshounds — yes, journalists — who’ve taken on the task of news delivery through the Web on their own.

You can learn more about this world of independent news bloggers at The Chicago Media Future Conference, a free afternoon event Saturday, June 13, put together by Scott Smith, a senior editor at Playboy.com, and fellow co-conspirators, Barb Iverson, teacher of all things digital and journalistic at Columbia College, and Mike Fourcher, founder of Purely Political Consulting.

Meawhile, read on. I talked to a sampling of these entrepreneurs and here’s their review of the current “State of Pay” in Chicago.

The Beachwood Reporter
Steve Rhodes

“We just added a fantasy sports columnist,” says Steve Rhodes, editor and publisher of the Beachwood, “in addition to a new horse-racing correspondent and auto-racing correspondent.”

“We just posted another YouTube parody song, Wee Love Q by Green Bay Bill, Tom LaTourette and Joe Dillo. It has already been played on the radio.”

This follows a notable success. The Society of Professional Journalists in April honored a joint investigation by Chicago Talks and The Beachwood Reporter with the SPJ’s 2008 national award for online investigative reporting by an independent media outlet. The Better Government Association assisted with the investigation into the activities of Chicago City Council committees.

“The award was nice because it is the second year in the row that we have won while working with (Journalism Professor) Suzanne McBride’s class,” Rhodes says. “If Beachwood can do this without any money at all, with just a little bit of money we could compete with the legacy media,” Rhodes says. “It’s not like the newspapers are the only ones who can do it.”

Named after Rhodes favorite Wicker Park bar, The Beachwood Reporter is unique among Chicago’s news blogs. Searing political commentary is Rhodes’ signature and the rest of the coverage — on music, TV, politics, sports, books and People, Places and Things — shimmers with humor and creativity.

Joining a stable of 20 contributors associated with The Beachwood are
new columnists Dan O’Shea on fantasy sports, Thomas Chambers on horse racing and Carely Lundin on auto racing. Each and every one is a volunteer.

Recently, Rhodes says, one feature is soaring in popularity: Ferdy On Films, a member site of the Beachwood Media Company, is getting 40,000 unique views per month.

Windy Citizen
Brad Flora

“WindyCitizen’s front page is a snapshot of what is new and most interesting in Chicago right now,” says Brad Flora, editor and publisher. “It will all be local and it will all be interesting.”

Flora was one vocal guy at the Chicago Journalism Townhall in February. We won’t repeat what he said, but it was passionate and angry. He’s calmed down since then, and focusing on the business side of his site.

“We are very similar to a Digg or a Reddit,” Flora says. “It’s a people-powered editorial approach to pulling together the news of the day.”

As a crowd-powered front page for Chicago, on any given day Windy Citizen will feature local blogging, video, photos, news reporting that contributors have brought to the site. Flora says Windy Citizen has 42 blogs in its network, who are compensated by enhanced visibility. But none of them are PR writers, he said.

It’s a central place where links can be shared and content can be voted up and down.

“The stuff that gets the most votes floats to the front page using an algorithm,” Flora says.
He’s currently running a fundraising drive and he’s making some money. But the general state of money things?

“It’s been paying my rent and Ramen noodle bill,” Flora says.

New Communities
Patrick Barry

“We have some fermenting going on here and pretty soon the cork’s going to pop,” said Patrick Barry, an editor and writer at NewCommunities.org. “I hope that when the cork does pop it will unleash a bubbly cascade of champagne.”

Barry works with Gordon Walek to put out a suite of news sites that report on Chicago neighborhoods at Newcommunities.org.

Recently Walek and Barry launched NeighborhoodSportsChicago.org. They pulled everything together — reporting, writing and graphic design — and published it in 11 days.

“It was our latest experiment in trying to create new avenues for underreported stories,” Barry says. “We got decent traffic during that week.”

Built almost five years ago, New Communities sheds light on media-neglected Chicago neighborhoods and the organizing and economic growth going on in those places. It’s the kind of coverage that was the bread and butter of Chicago’s newsrooms in the days when newspapers were more prone to report on stories relevant to the entire demographics of a city instead of the top 50 percent income demographic.

The sites have sustained funding from the MacArthur Foundation, so unlike the editors of many news sites, NewCommunities editors and writers get paid for their original reporting. But still, since they are a nonprofit, their search for operational revenue is never-ending.

“I don’t want to simply pass on something from somebody else,” Barry says. “I want to create original content that is not provided anywhere else and provide some insight into why it deserves to be up there.”

“That takes work,” Barry says.

“I think people really have very little understanding of what goes into putting out news. The layers and layers of editing, reporting, graphic support and now technology support.”

Barry says NewCommunities coverage brings alive the language of community development in a powerful way.

“It’s allowed people to understand what community development means,” Barry says. “We just showed them by running stories and photos. You can touch and feel it a lot more rather than some theoretical presentation of comprehensive community development theory.”

Barry says the sites have been successful because of the vacuum they’re filling.

“The search engines saw the stuff immediately,” he says. And once they started publishing the sites, the neighborhoods got involved and started building their own grassroots sites.

“They realized that they could have their own voice,” Barry says.

Gapers Block
Andrew Huff

“We are soldiering on,” said Andrew Huff, editor and publisher of Gapers Block, a Chicago-centric Web publication providing information on news and events around town.

“We are looking for some new contributors in art. Our editors get a small stipend as an indication that we do want to try and pay everybody.

Chicago’s network of news bloggers is “definitely collaborative, and extremely supportive, but unfortunately that doesn’t translate into financial success,” said Huff, who launched Gapers Block six years ago.

And that’s what’s holding everybody back.

“I believe that the future of journalism is a whole bunch of little sites,” he said. “The newspaper isn’t being destroyed. It’s being exploded.”

And everybody is flying out and doing their own thing — pay be damned.

“In the past, newsrooms were considered to be almost a community utility,” Huff says. “But since investors started expecting ever-increasing returns, the money equation for newsrooms hasn’t made sense.” In the old days it was a stable profit, not an ever-increasing profit.

“I don’t think money people know how to make money with news,” Huff said. What does that mean for Huff who writer for business blogs to make ends meet?

“If I left, the site would die,” he said.

Community Media Workshop
Gordon Mayer

Thom Clark and his Community Media Workshop are making a list and checking it twice to understand what is happening in Chicago’s online news streams as part of a Chicago Community Trust project.

“One of the things that we are doing is building a list,” says Gordon Mayer, vice president. “We know how to do directories.”

“We found 70-80 solid online news sites. There are a couple of questions about what does and doesn’t fit into this category. That’s what’s going to be in the report,” Mayer says. “It’s basically impossible for a single organization to come up with an authoritative list.”

Mayers says that In looking at newspapers, “what really shifted was their mission of who they delivered information to. The audience shifted from everybody in Chicago to an audience that was more monied.”

And the Internet is clobbering newspapers because of it, Mayers says.

The Community Media Workshop’s portal opens into a plethora of channels aimed at assisting nonprofit communicators and others who want to connect with the legacy broadcast and newspaper press. Its NewsTips service offers insight into the kinds of stories nonprofits are seeking to place in the press.

The CMW is doing the report for the Chicago Community Trust and planning to build its own newsroom, Mayer says.

CMW’s annual conference June 9-11, Making Media Connections this year on June 11 includes a session on social media and the news that’s free. But if you want to attend anything else at the conference the cost is $95 for the half-day workshops and $190 for full-day workshops.

Read More: Andrew Huff, Barb Iverson, Beachwood Reporter, Brad Flora, Chicago Blogs, Chicago Media Future Conference, Chicago News, Chicago Newspapers, Community Media Workshop, Future Of News, Future-Of-Newspapers, Gapers Block, LISC New Communities, Making Media Connections, Mike Fourcher, Patrick Barry, Scott Smith, Steve Berlin Johnson, Steve Rhodes, Windy Citizen, Chicago News

L3Cs on Chicago Tonight

When the Chicago Sun-Times declared bankruptcy March 31, 2009, I discussed the future of Chicago’s newsrooms on WTTW’s Chicago Tonight with colleagues Chi-Town Daily News Editor Geoff Dougherty and Northwestern Digital Media Professor Owen Youngman. They made some great points about what is to come here and I made a few points about the L3C business model and the Chicago Newsroom of the Future. Here’s the clip.

I also mentioned the L3C and Chicago’s Newsrooms of the Future on a segment on ABC Channel 7 News.

The Emerging Ecosystem of News Delivery

Steven Berlin Johnson over at OutsideIn, which I wrote about in June 2007 for the Chicago Sun-Times, brought wonderful clarity to the situation of legacy news operations yesterday at a presentation at South By Southwest. He envisions an evolving news ecosystem and with clarity places newspapers as a foundational gathering operation. He also cautioned that it is important to move forward to a vision rather than cling to the old.

But in times like these, when all that is solid is melting into air, as Marx said of another equally turbulent era, it’s important that we try to imagine how we’d like the future to turn out and set our sights on that, and not just struggle to keep the past alive for a few more years.

Steve says so well what I have been stumbling around trying to articulate here in Chicago. In evidence of the beauty of the Web, I was able to read his comments and see a video of him presenting the day after he did it – glorious access to information!

At a Poynter Institute event here in Chicago yesterday, the reality Steve describes was coming sharply into focus in the discussion. It is so sad that newspapers and some other legacy media do not see the preciousness of their brands and how important it is to preserve THAT so that they can have a place in the new ecosystem. Could be that they think their brand is a logo and marks, not something organic that emerges from the way that they operate.

Newspapers don’t need to go more deeply into the “swamp” of disinformation or useless eye candy to have a role in the new forest. They need to do a LOT more of what they do well — good local reporting — and spread cooperatively through their value systems to work with partners. Unfortunately, some newspapers like the Sun-Times where I used to work have been sucked dry of their newsroom resources by their business operating model. The Sun-Times is operated by a hedge fund, and all it wants is a dollar return. Hedge funds don’t value one bit the social return that is evident in a well-done newspaper newsroom.

It’s one reason why I am on the soap box for theL3C hybrid for news businesses. It’s great to hear Steve’s vision and here in Chicago, many of us are working to develop a healthy new ecosystem. Below is Steve’s flow chart for news delivery. You can watch a video of the presentation here.

Steven Berlin Johnson’s News Flow

Oh, News of the Future!

honeymooners.jpg

I have a new article on the Huffington Post about the death of newspapers, Newsrooms must die, Long Live newsrooms.

The point is the old ways have been dying, new ways have been emerging, and they will come together in something entirely new. Innovations from the web and old line practices that create credibility must inform each other. The split is perfectly expressed in the contingent ideas of Transparency and Image. Transparency sees a flattened hierarchy, and a community bubble up of ideas. Old line Image Makers see creation of experts from the top down by media giants. The new way recognizes that innovation bubbles up and is recognized. Image follows expert form. Imposition of Image (without the community bubbling up) will inevitably fail or be recognized as false.

I see a hybrid (NPO/For Profit) model of operation that will stabilize the staffing needs of newsrooms and deliver information to intended audiences through myriad distribution channels. Newsrooms will deliver by community-based mission and their staffing will be protected by the essential nature of their mission. Yet unlike mission-based non-profits that beg to sustain themselves, the new L3C newspaper will be self-sustaining through profits earned and investors.

Newsrooms must die! Long live newsrooms!

Does a social enterprise hold promise for the future of newsrooms in Chicago?

“Yes,” said Terry Mazany, President and Chief Executive Officer of The Chicago Community Trust.

It was hard to hear Mazany over the din of 400 chattering reporters, editors, bloggers, photogs, commentators and independents from all sectors of Chicago’s newsgathering world present at the Chicago Journalism Townhall (CJTH) Sunday, Feb. 22, organized by perpetual do-gooder Ken Davis and his wife Linda.

I am certain Mazany said “Yes” to the L3C idea because I caught him on tape, actually I recorded him in digital. But let’s not get lost in the analog vs. digital, paper vs. web, long-time pro vs. citizen journo, columnist vs. blogger, corner news box vs. click-through discussions that so-much dominated the conversation at the Townhall Sunday. Let’s just say Sunday’s gathering proved there’s reams of tactical knowledge to be exchanged, enough to forge a new cluster or two of media-savvy newsroom start-ups and connect the dots between the points until the Chicago region is a glorious virtuous circle of high-quality news and revenue streams. You can catch up on the sticky details articulated by writers and journalists far more informed and clever than I over at the CJTH blog.

Me? I am excited about the Chicago newsroom of the future, a journalist’s dream come true that could rise from a floor of foundation cash and be sustained by a stream of revenue and profit. My theoretical newsroom, let’s call it The Times Democrat, would be a new kind of company, an L3C, or Low Profit Limited Liability Company.

Mazany added currency to this idea when he said that Information has risen to the level of being a most pressing need for a community in our current democracy. More than ever, a newsroom must be a mission-based place.

Mazany’s comments are useful for anyone thinking big about the newsroom of the future. He said that not only is our democracy at stake, but so is the Chicago region’s competitive advantage in a shifting world. To better understand this viewpoint read Richard Florida on the rise of the Creative Class.

This conversation lifts the perspective up 10,000 feet and takes a shrewd look down. Let’s agree that journalism must live for the future of our democracy. Let’s also agree that the newsroom of The Times Democrat will be an amalgam of the best and most innovative practices we have online and in print, and that it will evolve to be something recognizable as newsgathering measured by a few key virtues. These include a culture of accountability and quality control that includes editors and fact checkers. And in fact, credibility and audience relevance will be the currency that moves the market of readers, or “news consumers,” from news org to news org locally and nationally. In this scenario, it’s likely everyone at the CJTH will get to play at The Times Democrat. Much revered will be those who have learned how to make money from the ads and play of the Web.

But to get there, journalism needs one thing more than anything else to operate well: that thing is money, specifically re-birthing cash. That’s what our L3C newsroom, The Times Democrat, is about.

So, what would the business model of The Times Democrat look like? It would simply be a modified Limited Liability Company that has the primary goal of serving a socially beneficial purpose and as such it could accept foundation money.

Americans for Community Development, a coalition sponsored by our nation’s first L3C – L3C Advisors — says that the L3C is the for-profit with a nonprofit soul. The nonprofit soul of a newspaper arises from the recognition that newspapers are the only business specifically recognized in the U.S. Constitution and that the information they provide is vital to the proper function of a democracy.

The Times Democrat L3C can operate as a business with a social purpose because its structure releases arcane IRS rules related to how foundations like The Chicago Community Trust, the John D. And Catherine T. MacArthur Foundation and the McCormick Foundation — all present at the CJTH Sunday — invest their considerable sums of money.

Red tape be gone! When The Times Democrat presents its business plan [drawn together by the savviest business people, investors, journos and web innovators far and near to Chicago], foundations will find it that much easier to invest because of the L3C.

A foundation like the Chicago Community Trust, having taken first position in the tranched investment, has also taken on most of the risk, making The Times Democrat a safer investment for others. Other investors like pension funds and private equity funds would more quickly follow suite. But you wouldn’t see venture capital firms. The returns aren’t fast enough or large enough, said Steve Miller of Chicago’s Origin Ventures.

The Americans for Economic Development website says this: Because the foundations take the highest risk at little or no return, it essentially turns the venture capital model on its head and gives many social enterprises a low enough cost of capital that they are able to be self sustainable. “Self sustainable,” two of the most beautiful words in existence today. Not filthy rich, but instead, enough.

And if filthy rich simply happens because The Times Democrat is great at meeting its mission, that’s OK, too. It can reinvest some profits to make the newspaper better.

That means the newspaper L3c won’t have to ask its reporters to work for free or its editors to limit their earnings to $30,000 per year. Unfortunately, we heard a lot of this kind of hope-crushing talk at the CJTH Sunday.

Obviously small newsrooms and no pay don’t sit well with Bernard Lunzer, president of The Newspaper Guild, which represents Chicago Sun-Times employees.

“The problem,” Lunzer said, “is academia and a lot of people are saying we will have these new operations of 10-15 people and that will replace what we formerly had as major newsgathering organizations.”

“We will keep pushing the conversation,” Lunzer said.

Lunzer has been visiting the Hill to forward Federal legislation related to the social purpose of newspapers and L3Cs.

Draft legislation called the Program Related Investment Promotion Act of 2008 is being considered by staff in the Senate Finance committee, and is currently looking for sponsors.
Here in Illinois, Bill SB 239 creating the L3C hybrid was introduced to the Illinois legislature Feb. 4 by Sen. Heather Steans (D-Chicago). I’ve not yet had an update on that.

“Our goal is to get our communities through to the other side,” Lunzer said. “We believe the L3C is an important vehicle.”

“The beauty of the L3C is its simplicity;” Lunzer said. “You accept that you will not have high profit but you will have some profit. And at some point [once a newsroom is recovering, it] could move back to a normal LLC.

“For democracy to work, we need transparency in government. We need credible info and that has always started on the news side with print,” Lunzer said.

Can a newsroom like the Sun-Times be reborn?

“For the Sun-Times, what’s got to happen is you have to find a way to separate the product that is the Sun-Times from the debt that was incurred by business owners,” Lunzer said.

That echoes something Mazany said at the CJTH. To be fair, organizer and moderator Ken Davis said it first, rather gruesomely.

“Is there a point at which someone could wait until the Sun-Times (or the Tribune) either dies or can no longer survive, [and then] plucks out the beating heart of the newsroom and makes that a separate company, a new newsroom?” Davis asked.

After some thought The Chicago Communty Trust’s Mazany answered in the affirmative. He rephrased it to me this way later.

“Is there a way of bringing in some intervention for the shuttering of a newspaper and creating some dollars that could go into an endowed fund or to support the transition to new forms of journalism and community information?” Mazany asked. “Yes.”

Could that happen despite the fact that the assets are not desks and chairs and buildings and paperclips, but instead intangible assets like institutional knowledge and people?

“Yes,” Mazany said.

So how can those of us who care help make that rebirth happen?

The Newspaper Guild’s Lunzer has some ideas.

“We need people to try and find real investment in the Sun-Times,” Lunzer said.

“It will take community will and political will but that is what must happen,” he said.

“And we might have to open ourselves up to the idea that government could flow money into newspapers. It may well be that we see a situation where we see some government aid to get through the worse of this.”

Lunzer said that all over the country, newsrooms are emerging in different forms.
Certainly the L3C would allow foundation money to flow in, he said. But it’s just one of many ways including co-ops and ESOPs that The Guild is working with.

Read More: Bernard Lunzer, Bloggers, Chicago Journalism Townhall, Chicago Sun-Times, Chicago Tribune, Chicago-Illinois, Death Of Newspapers, Democracy, Future Of Journalism, Heather Steans, Journalism, Ken Davis, l3c, Low Profit Limited Liability Company, Main Stream Media, Newspaper Industry, Newspapers, Social Enterprise, Terry Mazany, The Chicago Community Trust, The-Newspaper-Guild, Chicago News

Chicago Journalism Townhall and L3Cs

p1020049.JPGTo the Panel of the Chicago Journalism Townhall:

A low-profit limited liability company (L3C) is not a non-profit (NPO). An L3C is a for-profit business that gets a kick-start from foundation funding and then welcomes investors to follow in, or vice versa. It has rules around making a profit and those rules include the fact that if you are getting foundation money to meet your social mission, you cannot neglect your social mission to make a bigger profit. That would mean in the case of a newsroom, that you could not lay off the staff because they cost too much, not as long as the staff is meeting their social mission.

The panel of expert journalists at the Townhall Sunday — sage and talented as they all are — would benefit from expanding their thinking. The non-profit model works well when it has achieved scale and is able to tap into the passion of the news consumers – good example WBEZ.

But in an L3C, passion is built into the model. It is initially monetized by the presence of foundations and investors who expect a return in money and mission. Unlike the NPO mode, profits are welcomed and encouraged. But mission trumps profits.

I will be writing about this more in the Huffington Post tomorrow.

Meanwhile read through these excellent materials American for Community Development.

And as I said a few weeks ago in my article on L3CsHuffPo article, the Peoria papers are looking at it.

How to save newsrooms

Chicago’s newspapers could find a lifeline to solvency and a return to social purpose in a new kind of business structure called an L3C, or low-profit limited liability company.

Why is that?

Illinois foundations have $350 billion in assets and they are required to invest 5% of that, or $17 billion, in programs that serve a social purpose each year. If the Chicago Sun-Times and the Chicago Tribune were to be reborn as L3Cs — a structure that encourages foundation investment while allowing a profit –they could tap into some of that $17 billion. With foundation heavyweights on board, other investors seeking a decent, but not excessive, return might contribute to the coffers.

Bill SB 239 creating the L3C hybrid was introduced to the Illinois legislature Feb. 4 by Sen. Heather Steans (D-Chicago). Prospects for the bill are good, supporters say.

The L3C structure was signed into law in Vermont in 2008, and into law in Michigan and the Crow Nation in January. Legislatures in Georgia, Montana, North Carolina and Oregon are also expected to pass L3C legislation this year.

In Washington, D.C., draft legislation called the Program Related Investment Promotion Act of 2008 is being considered by staff in the Senate Finance committee. While many types of businesses–from community yoga centers to affordable housing–could benefit from L3Cs, the successful creation of newspaper L3Cs is largely contingent on passage of the Federal law, which would effectively expand charitable purposes to include newspapers.

The L3C structure plays well in Peoria where the Peoria Newspaper Guild, and a coalition of
Journal Star employees and community leaders have been quietly looking for two years at alternatives including co-ops and employee stock ownership plans (ESOPs) to operate the Peoria Journal Star.

The one idea that really clicked was the L3C.

“We are looking at long-term ownership that puts journalism first,” said Jennifer Towery, President of the Peoria Newspaper Guild and also Neighbors Editor for the Peoria Journal Star. “[The L3C] just resonated. It has so much potential.”

Because it can tap into foundation money, an L3C is sustainable, and because an L3C business must meet a social purpose, it realigns newspapers with their mission of community service.

“It insists that serving the readers is your mission,” she said. “If it doesn’t serve the readers to cut your newsroom staff you can’t do it.”

While good news judgment is essential to accomplishing the social return, the L3C structure has significant sweeteners to generate returns for investors.

“The participation of the foundation, which is seeking high social return but low monetary return serves as a catalyst for high investor return,” said Marc J. Lane, a Chicago-based attorney who authored the Illinois L3C legislation and last year launched Chicago’s chapter of the Social Enterprise Alliance, which believes in investing in businesses that do well by doing good. “You can end up with a blended financial return that is fairly modest but skewed toward the private sector investor.”

“Capital is formed,” Lane said. “Social purpose is achieved.”

The L3C is different from a typical nonprofit because it can earn a return, but the social purpose must trump the financial purpose.

Lane says that he expects the Illinois law will pass with little debate. “I see it sailing through,” he said. But even if it doesn’t, Illinois news gathering organizations could incorporate in Vermont or other states that have legalized L3Cs.

The creator of L3Cs, Robert Lang, CEO of the Mary Elizabeth & Gordon B. Mannweiler Foundation, says the Federal legislation is essential for any of these good news scenarios to play for newspapers.

Lang, an economist and businessman by trade, devised the L3C structure to address the problems he was having while trying to invest family foundation money in a sustainable and effective way.

“Historically, the IRS has not accepted newspapers as nonprofits,” Lang said. “The Federal legislation mentions L3Cs specifically and it lists newspapers specifically.”

The problem newspapers are dealing with today is that investors turned news-gathering into Wall Street product.

“The Peoria paper still makes money,” Lang said. “The problem is it cannot make enough profit for all the games normal for-profits get involved in.”

But in the L3C scenario, newspapers can make “enough” money.

“What we are looking at is the newspaper as a self-sufficient entity,” he said.
“It will not be a high profit entity.”

The idea of the Newspaper L3C is to bring back those journalistic contributions like neighborhood reporting, music reviews and book sections and make them part of the community service. And ads are part of the mix too.

“I think there is a lot of viability to newspapers still,” Lang said.

Could the L3C save Chicago’s newspapers?

“Somewhere you still need a newsgathering organizations,” Lang said. Newspapers still drive much of the news circulating on the web, he added.

“I’m not saying that we can save the Chicago Tribune and make it what it was 10 years ago,” he said. “But at least the money that’s made today can go toward improving the product not paying off leveraged debt.”

Meanwhile back at the Journal Star, which has an owner and is not for sale, Peoria Guild President Towery says, “We are all interested in finding models that others can replicate. It’s not saving the paper, it’s saving journalism. ”

“One of the bright spots is that [newspapers] have lost so much value that it is now feasible for communities to buy their newspapers.”

Read More: Americans For Community Development, Chicago Sun-Times, Chicago Tribune, Doing Well By Doing Good, Heather Steans, Jennifer Towery, Journalism, l3c, Low-Profit Limited Liability Company, Marc J. Lane, Mary Elizabeth And Gordon B. Mannweiler Foundation, Newspaper Industry, Newspapers, Oregon, Peoria Journal Star, Peoria Newspaper Guild, Program Related Investment Promotion Act Of 2008, Robert Lang, Saving Newspapers, Social Enterprise Alliance, Chicago News

How to save newsrooms [papers]

Published in the Huffington Post – Chicago.

By Sally Duros
Chicago’s newspapers could find a lifeline to solvency and a return to social purpose in a new kind of business structure called an L3C, or low-profit limited liability company.

Why is that?

Illinois foundations have $350 billion in assets and they are required to invest 5% of that, or $17 billion, in programs that serve a social purpose each year. If the Chicago Sun-Times and the Chicago Tribune were to be reborn as L3Cs — a structure that encourages foundation investment while allowing a profit –they could tap into some of that $17 billion. With foundation heavyweights on board, other investors seeking a decent, but not excessive, return might contribute to the coffers.

Bill SB 239 creating the L3C hybrid was introduced to the Illinois legislature Feb. 4 by Sen. Heather Steans (D-Chicago). Prospects for the bill are good, supporters say.

The L3C structure was signed into law in Vermont in 2008, and into law in Michigan and the Crow Nation in January. Legislatures in Georgia, Montana, North Carolina and Oregon are also expected to pass L3C legislation this year.

In Washington, D.C., draft legislation called the Program Related Investment Promotion Act of 2008 is being considered by staff in the Senate Finance committee. While many types of businesses–from community yoga centers to affordable housing–could benefit from L3Cs, the successful creation of newspaper L3Cs is largely contingent on passage of the Federal law, which would effectively expand charitable purposes to include newspapers.

The L3C structure plays well in Peoria where the Peoria Newspaper Guild, and a coalition of
Journal Star employees and community leaders have been quietly looking for two years at alternatives including co-ops and employee stock ownership plans (ESOPs) to operate the Peoria Journal Star.

The one idea that really clicked was the L3C.

“We are looking at long-term ownership that puts journalism first,” said Jennifer Towery, President of the Peoria Newspaper Guild and also Neighbors Editor for the Peoria Journal Star. “[The L3C] just resonated. It has so much potential.”

Because it can tap into foundation money, an L3C is sustainable, and because an L3C business must meet a social purpose, it realigns newspapers with their mission of community service.

“It insists that serving the readers is your mission,” she said. “If it doesn’t serve the readers to cut your newsroom staff you can’t do it.”

While good news judgment is essential to accomplishing the social return, the L3C structure has significant sweeteners to generate returns for investors.

“The participation of the foundation, which is seeking high social return but low monetary return serves as a catalyst for high investor return,” said Marc J. Lane, a Chicago-based attorney who authored the Illinois L3C legislation and last year launched Chicago’s chapter of the Social Enterprise Alliance, which believes in investing in businesses that do well by doing good. “You can end up with a blended financial return that is fairly modest but skewed toward the private sector investor.”

“Capital is formed,” Lane said. “Social purpose is achieved.”

The L3C is different from a typical nonprofit because it can earn a return, but the social purpose must trump the financial purpose.

Lane says that he expects the Illinois law will pass with little debate. “I see it sailing through,” he said. But even if it doesn’t, Illinois news gathering organizations could incorporate in Vermont or other states that have legalized L3Cs.

The creator of L3Cs, Robert Lang, CEO of the Mary Elizabeth & Gordon B. Mannweiler Foundation, says the Federal legislation is essential for any of these good news scenarios to play for newspapers.

Lang, an economist and businessman by trade, devised the L3C structure to address the problems he was having while trying to invest family foundation money in a sustainable and effective way.

“Historically, the IRS has not accepted newspapers as nonprofits,” Lang said. “The Federal legislation mentions L3Cs specifically and it lists newspapers specifically.”

The problem newspapers are dealing with today is that investors turned news-gathering into Wall Street product.

“The Peoria paper still makes money,” Lang said. “The problem is it cannot make enough profit for all the games normal for-profits get involved in.”

But in the L3C scenario, newspapers can make “enough” money.

“What we are looking at is the newspaper as a self-sufficient entity,” he said.
“It will not be a high profit entity.”

The idea of the Newspaper L3C is to bring back those journalistic contributions like neighborhood reporting, music reviews and book sections and make them part of the community service. And ads are part of the mix too.

“I think there is a lot of viability to newspapers still,” Lang said.

Could the L3C save Chicago’s newspapers?

“Somewhere you still need a newsgathering organizations,” Lang said. Newspapers still drive much of the news circulating on the web, he added.

“I’m not saying that we can save the Chicago Tribune and make it what it was 10 years ago,” he said. “But at least the money that’s made today can go toward improving the product not paying off leveraged debt.”

Meanwhile back at the Journal Star, which has an owner and is not for sale, Peoria Guild President Towery says, “We are all interested in finding models that others can replicate. It’s not saving the paper, it’s saving journalism. ”

“One of the bright spots is that [newspapers] have lost so much value that it is now feasible for communities to buy their newspapers.”