Zero and Counting: Pulitzers, Circulation and USA Today

Over at Gawker, Nick Denton decries the news industry's fixation on the Pulitzers.

Too bad the payout is only $10,000 per prize: the Pulitzers aren't going to finance American journalism; in fact, one can make the argument that these self-congratulating awards, and the attention devoted to them, are symptomatic of the decline of the newspaper industry.

Denton argues that the American news business should look to the Brits for an example of what works:

...the British newspaper industry is in much more robust health. To be sure, circulations are in gradual decline. And standards of journalism are as sloppy as ever. But newspapers such as The Guardian have a much greater share of the online audience than their American counterparts. And the papers, while lacking much of the worthy reporting that wins Pulitzers, are way livelier.

The connection? The respect of peers is a luxury that US newspapers have enjoyed because, for much of the second half of the 20th century, they were local monopolies. They could afford to be respectable, because they didn't need to pander to readers. In the UK, by contrast, 12 national dailies are in vicious competition. Editors fear the loss of their jobs, not their honor.

There are three problems with this argument. First is geography: There was a reason Google and Yahoo, two of the news industry's biggest competitors, were founded in the U.S. and not the U.K. The profit opportunity here is much higher (perhaps that's why, as a good capitalist, the British Denton started up his business here), so it's not necessarily the case that U.K. papers have a greater share of the online audience because of their web strategies. The British web audience is likely not large enough for the big web players to care about when compared to other opportunities.

Second, there are plenty of other U.S. outlets that supply entertainment news. Is there a guarantee, or even a reasonably good chance, that today's newspapers can compete against these celeb-news outlets, especially online?

And third, it's actually been shown that Pulitzers do raise circulation. This 2004 paper published in the Atlantic Economic Journal found that papers with recent Pulitzers had 55 percent higher circulation than similar papers without recent prizes. The large unknown is whether the dollars put into producing Pultizer-worthy stories are more than offset by circulation and advertising gains. (Anybody want to take a shot at calculating if this is the case?)

In their 2001 book, The Elements of Journalism, Bill Kovach and Tom Rosenstiel claim "history over a longer term suggests that the organizations that tip toward the information end of the spectrum tend to prevail over those that tip toward the entertainment end." I'm not aware of any research which tests their assertion, but if we take it as true, then a news organization's competitive advantage is the information it gathers and disseminates. If, with the increased competition from new players, the costs of producing high quality news are greater than what readers are willing to pay for, then there seem to be three options:

- News organizations could do as Denton implies and cut back on delivering higher quality, expensive news, and focus on more bang-for-the-buck coverage, whatever that may be.

- More news companies could go private.

- If the situation is seen as being dire enough, and the political will exists, the U.S. could move towards a government-funded BBC model.

The path of least resistance -- hence the most likely one -- seems to be the first.

But the case of USA Today is an interesting counter example. This is one big news organization that doesn't seem to be Pulitzer-obsessed: The Gannett-owned daily and the nation's largest paper by circulation has yet to win a Pulitzer in its 25-year history and has been a finalist only twice. What's more, the beaten-down stock of NYT has actually outperformed Gannett stock in recent years (thanks in large part to a pickup since February). So it's hard to make the argument that Pulitzer obsession is negatively correlated with business success.

I recently came across a niche news company called Harrison Scott Publications which delivers information primarily to hedge funds and private equity firms through five weekly newsletters. (Including one with my favorite name ever: Asset-Backed Alert). Their selling point is that they only publish news that they broke themselves. Could this potentially be a model that replaces the current one where every news site has the same stories?

Related:
Convergence Calls: Multimedia Storytelling at British News Websites