I bring you two insights. Your assignment is to accept the idea that in the newspaper world they could count as insights, not as self-evident truisms that managers of a more farsighted industry would have been honoring for decades.

(1) There is a direct correlation between the amount of money spent on a newsroom and the quality of the news it produces.

(2) News of high quality is good for the news business.

When taunters shriek that the American press deserves to go under for ignoring such obvious business principles, my visceral response has always been: surely it’s not so simple. But researcher Esther Thorson has me wondering if maybe it is. When times were good, she says, the press barons slashed their editorial budgets and turned seed corn into corn syrup. And today, when times are terrible, they’ve doubled down on the same “myopic” strategy. Her research would tell them it’s a bad idea, but “they don’t know research, they’ve never supported research.” Instead of studying data, “they throw things against the wall and see what happens.”

Thorson is associate dean for graduate studies at the University of Missouri School of Journalism and director of research for the school’s Donald W. Reynolds Journalism Institute, whose mission is to “develop and test ways to improve journalism through new technology and improved processes.” A paper she wrote with two colleagues for next week’s convention of the Association for Education in Journalism and Mass Communication recalls that the present collapse was preceded a few years ago by “a major outcry from professionals and academics alike who warned that the ongoing product investment cuts for the sake of increasing profits were destroying the quality and integrity of newspaper news.” As an example she cites the family-owned Des Moines Register, where before-tax profits in 1985 were about $6 million. But that year the Gannett chain bought the Register, and in the next three years the profits rose to $11 million, then $17 million, and then $20.5 million. “Most of these profit increases,” Thorson writes, “came at the expense of cuts in the newsroom.”

The tale was originally told in Newspaper Research Journal in 2004 by Geneva Overholser, who’d been the Register‘s editor in the late 80s and early 90s. After Des Moines, Overholser spent several years on the journalism faculty at Missouri. Thorson remembers her “going on about ‘Why doesn’t anybody look at the horrible mess newspaper finances are in?’ But there wasn’t any data.”

Thorson says Overholser saw the “giant tragedy” coming. So did Tom Rosenstiel, the director of the Project for Excellence in Journalism and vice chairman of the Committee of Concerned Journalists, which is affiliated with Missouri’s journalism school. Thorson tells me Rosenstiel liked to say that “if you don’t define quality and don’t know what it is, you are powerless to protect it against cutbacks.” And Rosenstiel believed it should be possible to define quality monetarily.

In 2003 Rosenstiel got his hands on the data—five years of proprietary financials from the Inland Press Association of some 300 member papers, their circulations ranging from 5,000 to 85,000. Thorson began crunching the numbers. She correlated newsroom budgets with quality, with readership, and with profits and even devised an algorithm she claims can show any individual paper the optimal way to make money by spending it. In general, she says, newspapers get by far “the biggest bang for their buck” by investing in their newsrooms. Doing this has a “huge impact, much more than the dollars that go into advertising and the dollars that go into circulation.”

By the same token, in what her paper for the AEJMC calls “an era of cutbacks,” it’s newsroom cuts that have the greatest adverse impact on revenues. “We find that a 1% cutback in the newsroom is 3 times worse than the same percentage cut in distribution investment, and 7 times worse than the same percentage cut in sales force investments.” (Those are her italics.) “Second, we find that as reductions increase from 1 to 10%, the adverse effects of newsroom cutbacks become even more pronounced.”

“News isn’t just a do-gooder thing,” Thorson says. “News is a moneymaker—quality news.”

Rosenstiel touted Thorson’s work at the 2004 meeting of the American Society of Newspaper Editors. “It’s a model based on historical analysis. It’s a tool,” he said. “If you make certain levels of investment in the newsroom, in advertising and circulation, what is the financial impact likely to be over time? If you put in your own market particulars, you can predict with some empirical basis. . . . Where’s the limit? How much is too much? Is our market robust enough, where any investment in the newsroom is going to pay off? Or is it a market where, as [Oregonian editor] Sandy Rowe once said, ‘We have given this market all the quality it will absorb’? You know what communities you live in.”

The papers paid no attention, Thorson tells me. Because they’d been fat and happy for so long, they’d forgotten, or never learned, to mine data—like prospectors who don’t know how to pan for gold because for so long they just picked nuggets off the ground. Says Thorson, “If you’re a monopoly and people say you need to do research you say, ‘Shut up. I’m a monopoly.’ With Johnson & Johnson and Procter & Gamble it’s cutthroat. You better know how to make money and they do—down to the last nickel.”

Thorson continues to receive Inland Press financials. She tells me the papers she monitors spend on average about 35 percent of their budgets on the newsroom, 35 percent on advertising, and 30 percent on circulation.

“They probably need to move 5 to 15 percent more into the newsroom,” she says. “I’d take most of it from circulation, and maybe a tiny bit from advertising. And then—and this is crucial—what you want to do with the extra revenue is hire more reporters. Do a content analysis, and make sure that when you hire them your quantity and quality go up.”

The public needs to see the improvement at once. So Thorson calls for “a much bigger paper, not this skinny little thing that rolls under a bush and you can’t find it,” and a lot of new beat reporters. “And after they’re making more money I’d go for more depth—and that would be my investigative team.”

Thorson hasn’t been completely ignored. She’s advising the Morris Publishing Group, a family-owned regional chain of 13 dailies based in Augusta, Georgia. Like everybody else, Morris is in trouble—as of this April its debt load of almost $470 million was twice the value of its assets. “They’re making money—everybody is making money—but they have a huge debt problem,” says Thorson. “They bought properties like everyone else did. Newspapers bought like drunken sailors.”

But Thorson says Morris isn’t throwing the usual suspects overboard. “We’ve had to cut everywhere,” says Billy Morris, who runs the company. “No department is exempt from downsizes and from layoffs, but we’ve tried to do as little as we could in the newsroom. The newsroom is the heart of what we do.”

Thorson just spent several days at the largest paper in the Morris chain, the Florida Times-Union in Jacksonville, where she says “they’ve made cuts, but they’ve got a lot going on in that newsroom.” She admires Frank Denton, the Times-Union‘s editor. “He’s pretty analytical—he gets research, applied research,” she says.

Denton went back to school for a doctorate in marketing. That’ll lose him points with some of my readers, I tell Thorson.

“That’s why Frank is really good, in my opinion,” she replies. What newspapers need and too few have right now are “some friggin’ PhDs.”

Esther Thorson came to my attention thanks to Laura Frank, the latest tragic heroine of the national soap opera The Perils of the Press.

A year ago the the Rocky Mountain News published Frank’s “Deadly Denial,” a series of stories that exposed the incompetence and cruelty of a federal program created for workers who’d suffered devastating illnesses serving the nation’s nuclear weapons program. Frank focused on Charlie Wolf, a chemical engineer in Denver who’d spent 20 years cleaning up radioactive waste at federal facilities and the last six years of his life dying of brain cancer while fighting the Department of Energy for the benefits he believed he had coming.

This April Exposé: America’s Investigative Reports, a syndicated series produced by public TV station WNET in New York, told the story of the “Deadly Denial” investigation. The Exposé report, called “As Likely as Not,” ended with a double dose of poignancy: Wolf’s death in January and the Rocky‘s death a month later.

Exposé asked the newly unemployed Frank if there was anything she’d like to do for them. Well, yes, said Frank: it was high time for a look at what’s happening to investigative journalism in America.

Without the Rocky there’d have been no “Deadly Denial,” there’d have been no “As Likely as Not,” and almost certainly there’d have been no Charlie Wolf Nuclear Workers Compensation Act, a bill Senator Mark Udall of Colorado introduced in March to amend the Radiation Exposure Compensation Act.

And now there is no Rocky.

Part one of “The Withering Watchdog,” Frank’s three-part series on investigative journalism, has been posted on the Exposé Web site. In the past two years, she reports, more than 25,000 journalists have vanished from the newsrooms of American newspapers. And investigative journalism“generally the most expensive work the news media undertakes”has made an especially inviting target. But Frank argues that her story began “long before the current economic collapse. The crisis that has pundits worried about the survival of serious journalism in America began with what the journalism industry did to itself.”

And that’s where Thorson comes in. It’s conventional wisdom, but Thorson backs it up with numbers.   

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