[Senate Hearing 111-428]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 111-428
 
                        THE FUTURE OF JOURNALISM

=======================================================================

                                HEARING

                               before the

      SUBCOMMITTEE ON COMMUNICATIONS, TECHNOLOGY, AND THE INTERNET

                                 of the

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 6, 2009

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation




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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

            JOHN D. ROCKEFELLER IV, West Virginia, Chairman
DANIEL K. INOUYE, Hawaii             KAY BAILEY HUTCHISON, Texas, 
JOHN F. KERRY, Massachusetts             Ranking
BYRON L. DORGAN, North Dakota        OLYMPIA J. SNOWE, Maine
BARBARA BOXER, California            JOHN ENSIGN, Nevada
BILL NELSON, Florida                 JIM DeMINT, South Carolina
MARIA CANTWELL, Washington           JOHN THUNE, South Dakota
FRANK R. LAUTENBERG, New Jersey      ROGER F. WICKER, Mississippi
MARK PRYOR, Arkansas                 JOHNNY ISAKSON, Georgia
CLAIRE McCASKILL, Missouri           DAVID VITTER, Louisiana
AMY KLOBUCHAR, Minnesota             SAM BROWNBACK, Kansas
TOM UDALL, New Mexico                MEL MARTINEZ, Florida
MARK WARNER, Virginia                MIKE JOHANNS, Nebraska
MARK BEGICH, Alaska
                    Ellen L. Doneski, Chief of Staff
                   James Reid, Deputy Chief of Staff
                   Bruce H. Andrews, General Counsel
   Christine D. Kurth, Republican Staff Director and General Counsel
                  Paul Nagle, Republican Chief Counsel
                                 ------                                

      SUBCOMMITTEE ON COMMUNICATIONS, TECHNOLOGY, AND THE INTERNET

JOHN F. KERRY, Massachusetts,        JOHN ENSIGN, Nevada, Ranking
    Chairman                         OLYMPIA J. SNOWE, Maine
DANIEL K. INOUYE, Hawaii             JIM DeMINT, South Carolina
BYRON L. DORGAN, North Dakota        JOHN THUNE, South Dakota
BILL NELSON, Florida                 ROGER F. WICKER, Mississippi
MARIA CANTWELL, Washington           JOHNNY ISAKSON, Georgia
FRANK R. LAUTENBERG, New Jersey      DAVID VITTER, Louisiana
MARK PRYOR, Arkansas                 SAM BROWNBACK, Kansas
CLAIRE McCASKILL, Missouri           MEL MARTINEZ, Florida
AMY KLOBUCHAR, Minnesota             MIKE JOHANNS, Nebraska
TOM UDALL, New Mexico
MARK WARNER, Virginia
MARK BEGICH, Alaska


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on May 6, 2009......................................     1
Statement of Senator Kerry.......................................     1
Statement of Senator Inouye......................................     5
    Prepared statement...........................................     5
Statement of Senator Udall.......................................     6
    Prepared statement...........................................     6
Statement of Senator Thune.......................................     6
Statement of Senator Cantwell....................................     7
    Prepared statement...........................................     7
    Prepared statement of Frank A. Blethen, Publisher, The 
      Seattle Times submitted by Hon. Maria Cantwell.............     8
Statement of Senator Hutchison...................................    63
Statement of Senator McCaskill...................................    65
Statement of Senator Pryor.......................................    72
Statement of Senator Klobuchar...................................    74
Statement of Senator Nelson......................................    86

                               Witnesses

Hon. Benjamin L. Cardin, U.S. Senator from Maryland..............    13
    Prepared statement...........................................    15
Marissa Mayer, Vice President, Search Products and User 
  Experience, Google.............................................    17
    Prepared statement...........................................    19
Steve Coll, President and CEO, New America Foundation and Former 
  Managing Editor, The Washington Post...........................    21
    Prepared statement...........................................    23
David Simon, Former Reporter, The Baltimore Sun (1982-95) and 
  Blown Deadline Productions, (1995-2009)........................    28
    Prepared statement...........................................    31
    Article, dated January 20, 2008, from The Washington Post, 
      entitled ``Does the News Matter to Anyone Anymore''........    35
    Article, dated March 1, 2009, from The Washington Post, 
      entitled ``In Baltimore, No One Left to Press the Police''.    37
    Article, dated March 2008, from Esquire Magazine, entitled 
      ``A Newspaper Can't Love You Back''........................    40
Alberto Ibarguen, President, John S. and James L. Knight 
  Foundation.....................................................    47
    Prepared statement...........................................    49
James M. Moroney III, Publisher and Chief Executive Officer, The 
  Dallas Morning News............................................    51
    Prepared statement...........................................    53
Prepared Statement of Arianna Huffington, Co-Founder and Editor-
  in-Chief, The Huffington Post..................................    56
    Prepared statement...........................................    58

                                Appendix

Hon. John D. Rockefeller IV, U.S. Senator from West Virginia, 
  prepared statement.............................................    93
Carl Shapiro, Deputy Assistant Attorney General for Economics, 
  Antitrust Division, U.S. Department of Justice, prepared 
  statement......................................................    93
George Tedeschi, President, Graphic Communications Conference, 
  International Brotherhood of Teamsters, prepared statement.....    96
National Newspaper Association (NNA) by John W. Stevenson, 
  Publisher, The Randolph Leader, and NNA President, 2008-09 and 
  Reed Anfinson, Publisher, Swift County Monitor-News, and NNA 
  Government Relations Chair, 2008-09, prepared statement........    97
Letter, dated May 5, 2009, from David K. Rehr, President and CEO, 
  National Association of Broadcasters to Hon. John F. Kerry and 
  Hon. John Ensign...............................................    99
Bernard Lunzer, President, The Newspaper Guild, Communications 
  Workers of America, prepared statement.........................   100
Jennifer Towery, President, Peoria Newspaper Guild, prepared 
  statement......................................................   102
Bob Cohen, Ph.D., President and CEO, Scarborough Research, 
  prepared statement.............................................   105
Letter, dated April 30, 2009 from Michael Langley to Hon. John F. 
  Kerry..........................................................   107
Response to written questions submitted to Marissa Mayer by:
    Hon. Daniel K. Inouye........................................   109
    Hon. Maria Cantwell..........................................   109
    Hon. Mark Warner.............................................   110
    Hon. Tom Udall...............................................   111
Response to written questions submitted to Steve Coll by:
    Hon. Daniel K. Inouye........................................   112
    Hon. Maria Cantwell..........................................   112
    Hon. Frank R. Lautenberg.....................................   112
    Hon. Tom Udall...............................................   113
Response to written questions submitted to David Simon by:
    Hon. Daniel K. Inouye........................................   114
    Hon. Maria Cantwell..........................................   115
    Hon. Frank R. Lautenberg.....................................   116
Response to written questions submitted to James M. Moroney III 
  by:
    Hon. Daniel K. Inouye........................................   117
    Hon. Maria Cantwell..........................................   117
    Hon. Frank R. Lautenberg.....................................   118
    Hon. Mark Warner.............................................   118
Response to written questions submitted to Arianna Huffington by:
    Hon. Daniel K. Inouye........................................   119
    Hon. Maria Cantwell..........................................   119
    Hon. Frank R. Lautenberg.....................................   119
    Hon. Mark Warner.............................................   120
    Hon. Tom Udall...............................................   120


                        THE FUTURE OF JOURNALISM

                              ----------                              


                         WEDNESDAY, MAY 6, 2009

                               U.S. Senate,
Subcommittee on Communications, Technology, and the 
                                          Internet,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 3:15 p.m. in 
room SR-253, Russell Senate Office Building, Hon. John F. 
Kerry, Chairman of the Subcommittee, presiding.

           OPENING STATEMENT OF HON. JOHN F. KERRY, 
                U.S. SENATOR FROM MASSACHUSETTS

    Senator Kerry. This hearing will come to order. I apologize 
to all for the fact that we are running a little bit behind 
schedule. But, hopefully the fact that the Senate got four 
votes out of the way will give us a little bit of a breather 
here so that we can have some uninterrupted moments, here, 
which we want to try to have.
    Welcome, all, to a brave new world. This hearing is 
genuinely geared to examine, to understand what we don't know, 
to try to figure out, from various people in these fields of 
expertise of new media and the existing media, of where we're 
going.
    Some people might ask, sort of, Why the Committee--why is 
the government interested in this, and what are we looking at? 
Well, the fact is that we do have a responsibility for the 
licensing of broadcasts, we have a responsibility for the 
regulatory oversight of ownership of cable, satellite, other 
issues with respect to communications. And needless to say, how 
the American people get their information, what the structure 
of ownership is, is of enormous interest to all of us, because 
it is the foundation of our democracy.
    A brass plaque on a wall at Columbia University's School of 
Journalism bears the words of the legendary newspaper publisher 
Joseph Pulitzer, ``Our republic and its press rise or fall 
together.'' If we take seriously this notion that the press is 
the fourth estate or the fourth branch of government, then we 
need to examine the future of journalism in the digital 
information age, what it means to our republic and to our 
democracy.
    Americans once counted on newspapers to be the rock on 
which journalism, the best sense of the word ``journalism,'' 
was based. As Princeton University communications professor 
Paul Starr notes in the most recent issue of Columbia 
Journalism Review, ``More than any other medium, newspapers 
have been our eyes on the state, our check on private abuses, 
our civic alarm systems.''
    Most of us in this room probably begin our day, still, with 
a newspaper, maybe two or three. Newspapers have been a part of 
our daily lives since we were old enough to read, and we 
learned our neighborhoods, about our country, our world, from 
newspapers. They entertained us, sometimes they enraged us, but 
always they informed us.
    But, today it is fair to say that newspapers look like an 
endangered species, and many people in the industry and outside 
of it are so writing. The latest circulation figures released 
just last week show that the largest metro newspapers are 
continuing to lose daily and Sunday readers, a long-time trend. 
I might add, a trend that began before the economic downturn in 
the country. But, it is a trend that is accelerating to record 
rates.
    In the 6-month period ending March 31, major metro dailies 
in great cities, like Boston, San Francisco, Houston, Miami, 
and Atlanta, all saw double-digit-percentage decreases in daily 
circulation. The 150-year-old Rocky Mountain News ceased 
publishing altogether this year. The 146-year-old Seattle Post 
Intelligencer and the 100-year-old Christian Science Monitor 
shifted completely to the Web. And the Detroit Free Press cut 
home delivery to only 3 days.
    It took a week of negotiations before a tentative deal 
between the New York Times Company and the Boston Newspaper 
Guild could be reached to prevent The Boston Globe from 
shutting its doors. Let me emphasize that this hearing is not, 
and never was intended to be, a hearing about the Boston 
newspaper, it's about our Nation's newspapers, and the concept 
and timing of this hearing was set well before we even knew 
about the issues with respect to Boston.
    If you look at the stock market, the fortunes of the 
newspaper industry are tough. Earlier this year, a share of The 
New York Times sold for less than the $4 it cost for a Sunday 
edition of the Times, though I've seen that those prices now 
probably go up. In 2008, newspaper stock prices fell an 
astounding 83 percent. The New York Times bought The Boston 
Globe for $1.1 billion in 1993, but the value of all of the 
Times stock today is less than $800 million now. And this past 
weekend the oracle of Omaha himself, Warren Buffett, gave 
newspapers a vote of no confidence when he said that he 
wouldn't invest in newspapers at any price. These are stark 
numbers that the newspapers face. The numbers for broadcast 
journalism are not much better.
    So, we're here today to talk, not only about the conditions 
that have led to these jolting statistics, but about what they 
mean to us, what they may mean to a country that appears to be 
reading less or that finds information in snippets rather than 
whole pieces. We need to understand what it means about news 
delivery during a time of great creative turmoil and transition 
within the market for news delivery, and how we might preserve 
the core societal function that is served by an independent and 
diverse news media.
    We saw a sign of the times just this morning, when Amazon 
introduced a new larger version of its e-book reader, Kindle, 
as an alternative to the newspaper in an effort to salvage the 
challenged print media. As a means of conveying news in a 
timely way, paper and ink are less in vogue, eclipsed by the 
power, efficiency, and technological elegance of the Internet.
    But, just looking at the erosion of newspapers is not the 
full picture. It's just one casualty of a completely shifting 
and churning information landscape. Most experts believe that 
what we are seeing happen in newspapers is just the beginning. 
Soon, perhaps in a matter of a few years, some predict that 
television and radio will experience what newspapers are 
experiencing now.
    One of the reasons I think we find this important is, I can 
remember sitting right here in this room in 1996, when, under 
the stewardship of Senator Inouye and Senator Hollings and 
others, we rewrote the Telecommunications Act of the country, 
and we had long debates all through 1996 about telephony. 
Little did we know that almost within 5 months or 6 months of 
the signing of the bill and the passage of the reordering of 
telephony in America, telephony was almost obsolete, eclipsed 
by data. And we had barely had a discussion of data during that 
time.
    It's really based partly on that lesson that we're having 
this hearing today so that we try to figure out ahead of time 
what may be occurring and think rationally, carefully, and 
obviously with some sensitivity to all of the issues, which 
we'll get into today, about what the future will look like.
    The rise of newspapers and broadcast news was made possible 
by the fact that they served as market intermediaries. That is, 
they connected buyers and sellers through advertising. But, the 
Internet makes it possible for buyers and sellers to connect at 
virtually no cost and with no need to attract either to that 
effort with a general-interest news presentation. It's no 
surprise, then, that with advertising dollars going elsewhere, 
these are hard times for what is now being called the legacy 
media.
    But, these are times of great innovation as journalists 
both inside and outside of the mainstream media are 
collectively searching for an economic support system for good, 
solid reporting. Journalists laid off or bought out by the old 
media are fast becoming entrepreneurs, building up Web-only 
news sites in cities throughout the country to make up for the 
shrinking newsrooms of local newspapers or to reach specialized 
audiences. Obviously, one of the questions is, Is this just a 
natural transformation, where that is going to be replaced in a 
natural way? As the economic model continues to shift, 
important questions require answers. As advertising revenues 
continue to vanish, will there be room in the budget for the 
great investigative journalism that marked the last half of the 
20th century? Will the emerging news media be more fragmented 
by interests, financial interests, other interests, political 
partisanship?
    There also is the important question of whether online 
journalism will sustain the values of professional journalism 
the way the newspaper industry has. The new digital environment 
certainly is more open to citizen journalism, bloggers, and the 
free expression of opinions.
    In the last 8 years, we've gone from zero bloggers to more 
than 70 million, and news is broken over Twitter feeds and cell 
phones instead of on local broadcast networks. Just look at the 
way that Janis Krumms, a New York City ferry passenger, broke 
the news that Flight 1549 out of LaGuardia had landed in the 
Hudson River. He took a picture of himself and Tweeted the feed 
to an audience of thousands.
    Consider this. Google topped $21.7 billion in advertising 
revenue in 2008, but the news it provides is an aggregate from 
free news services. Craigslist, which provides free classified 
list online, gets about 1 billion visits a month, costing 
newspapers billions of dollars a year. YouTube has more than 
100 million viewers each day and about 65,000 new items, 
videos, uploaded daily. Its ad revenue reportedly totals 
somewhere between $120 million and $500 million a year. 
Facebook, the free access social networking website, now has 
200 million users and is adding 700,000 new users a day. It 
reportedly had $300 million in ad revenue last year. 
Ironically, The New York Times has a paid circulation of 1.45 
million, but on Facebook the newspaper has 447,926 friends. 
Mobile subscribers total some 250 million in the United States 
and send more than a billion text messages each day. This two-
way interactive media is getting more and more attention from 
advertisers. It's estimated that the mobile advertising 
industry already exceeds 2 billion annually.
    The words of Joseph Pulitzer are still true, I believe, 
``Our republic and its press will rise or fall together,'' 
certainly the quality of the dialogue in the republic will. We 
are just talking about a new kind of press, a new media, one 
that Pulitzer and all the other newspaper barons of this 
country never envisioned. This new kind of press, this new 
media, is going to require a new economic model, and that is 
something that everyone is still trying to figure out. That's 
why I wanted us all to sit down and talk about it and try to 
figure it out together. Is there even any government role at 
all? I don't know the answer to that. But, we want to try to 
understand it. Is this simply a normal transition in the 
marketplace? And will everything turn out just fine?
    We're going to hear from some very, very interesting people 
who are on the vanguard in the middle of this transformation in 
various ways. Let me just mention one quick thing before we 
begin. While we're searching for answers to these questions, 
one thing we can do today is recognize this transition somewhat 
in our own lives, and that is to understand the contributions 
of online journalists who shoulder the responsibility that 
comes with covering Congress. And we ought to make sure that 
the rules for credentializing congressional reporters are 
modernized. I intend to work with the Senate Rules Committee 
Chairman, Chuck Schumer, and the Standing Committee of 
Correspondents to make sure that we do that. The Standing 
Committee of Correspondents was created in 1877 as a way to 
organize and regulate media access to the Halls of Congress. It 
was created to rid the press galleries of lobbyists--I guess 
things haven't changed----
    [Laughter.]
    Senator Kerry.--or claims agents, as they were once called. 
And it was created to replace a system of questionable 
journalism practices. Before the Committee was created, in 
fact, Mark Twain worked as a secretary to Senator William 
Stewart of Nevada at the same time he was also a letterwriter 
to two newspapers, the Alta California of San Francisco and the 
Chicago Republican. The Congressional credentializing system 
has actually worked well for more than 130 years, so we want to 
be careful how we change it, but the rules have undergone some 
changes over the years, and, in the last 3 years, the Committee 
has struggled with how to address the Digital Information Age. 
Now is the time to make sure we treat online reporters fairly, 
and we're going to work to try to do that.
    Senator Inouye?

              STATEMENT OF HON. DANIEL K. INOUYE, 
                    U.S. SENATOR FROM HAWAII

    Senator Inouye. Mr. Chairman, I wanted to be here 
personally to commend you for scheduling this hearing. Without 
question, it's a very important matter before us. The 
Constitution guarantees it. Our democracy cries for it. Your 
statement has covered the landscape.
    I have a statement, but I don't wish to be redundant, so--
--
    Senator Kerry. I'll put in the record, without any 
objection.
    [The prepared statement of Senator Inouye follows:]

 Prepared Statement of Hon. Daniel K. Inouye, U.S. Senator from Hawaii
    The Constitution of the United States guarantees us all a free 
press. Capitalism, however, does not. For the past century or so, this 
has not been a problem. A combination of classified advertising and 
subscriber revenues provided sufficient cash-flow and profitability to 
allow our Nation's newspapers to disseminate the news in an efficient 
and low-cost manner.
    Today, subscriber revenue is falling and websites such as Craig's 
List are contributing to a dramatic reduction in classified advertising 
dollars. The current recession only serves to magnify the economic 
challenges facing the industry.
    Nearly 40 years ago, the Congress passed the Newspaper Preservation 
Act of 1970 to help struggling newspapers. In fact, the ability to 
enter into Joint Operating Agreements, as authorized in the Act, helped 
bolster the two major newspapers in Hawaii, the Honolulu Advertiser and 
the Star Bulletin.
    The agreement allowed both papers to share publishing, advertising 
and circulation departments, but at the same time to maintain editorial 
independence. This creative solution enabled Hawaii's major dailies, as 
well as those in 27 other cities and states, to survive the temporary 
crisis and continue to serve their communities. But our past successes, 
sadly, do not translate directly to today's environment of falling 
revenues and increasing competition from new technologies.
    I remain committed to the proposition that our communities need 
multiple newspapers providing healthy competition and a good home for 
the reporters who are out there every day, doing the basic 
investigative reporting that is at the heart of quality journalism. I 
look forward to the testimony of our witnesses today as we explore the 
current state of journalism and of the newspaper industry.
    As American culture continues to evolve, as technology continues to 
advance, we must ensure that the promise of a free press enshrined in 
our Constitution remains an everyday reality in the lives of our 
citizens.

    Senator Inouye. But, congratulations, sir, and thank you 
very much for what you're doing.
    Senator Kerry. Well, thank you, Senator Inouye, for your 
leadership over so many years in this role.
    And I failed to comment, this is the first meeting, 
actually, of the Subcommittee on Communications, Technology, 
and the Internet. And we're going to--we have a lot of work to 
do, actually, in terms of privacy, Internet neutrality, and 
other issues. And we look forward to doing it.
    Senator Thune? I'm sorry, I think Senator Udall was here. 
Let me come back.
    Senator Udall?

                 STATEMENT OF HON. TOM UDALL, 
                  U.S. SENATOR FROM NEW MEXICO

    Senator Udall. Thank you, Mr. Chairman. And thank you for 
that excellent statement. I--like Senator Inouye, I would put 
my opening statement in the record and just say that the 
crisis, Mr. Chairman, that you talked about is hitting New 
Mexico. We've had a large newspaper in Albuquerque--The 
Albuquerque Tribune, has folded in the last couple of years. 
The largest newspaper in our second largest city has had to lay 
people off. And so, what Senator Cardin is trying to do, look 
at solutions--I think all of us feel that we are being pressed 
to the limits, in terms of what we're doing on good, strong 
investigative journalism. And so, I would like to see some 
progress.
    And I know my friend Ben Cardin is here to testify. And he 
has one proposal, and I hope our witnesses will come up with 
many more, and we can proceed down the road on this.
    So, I'd put my statement in the record, with your consent, 
Mr. Chairman, and proceed to the witnesses as quickly as 
possible.
    [The prepared statement of Senator Udall follows:]

   Prepared Statement of Hon. Tom Udall, U.S. Senator from New Mexico
    Picking up the local paper at a newsstand or off the front doorstep 
used to be a daily ritual which sparked conversations--at kitchen 
tables, around office water coolers, or inside barber shops--about the 
important events of the day.
    After the historic election and inauguration of President Obama, I 
saw lines of people waiting to buy newspapers, which is strong evidence 
of the medium's enduring popularity.
    Yet good journalism is much more than simply recording events. 
Investigative journalism plays an essential role in American democracy 
by exposing those who violate the public trust.
    Today, the rise of the Internet should only improve journalists' 
ability to be public watchdogs and inform us about important events. 
Unfortunately, our newspapers have had difficulty adapting to the rise 
of the Internet, and the current economic climate has only made matters 
worse.
    In New Mexico, the Albuquerque Tribune was forced to shut down, and 
the Las Cruces Sun-News, which serves our second largest city, has laid 
off reporters. These are just a few examples of a nationwide crisis 
that also hits close to home for me.
    I am also concerned that the move from print to online media will 
leave behind many citizens, especially in rural areas, who do not have 
computers and Internet access. We should not forget about those 
Americans who face a growing ``digital divide'' as we consider the 
future of journalism in an online era and examine what that future 
means for preserving our democracy.
    I want to extend my thanks to our witnesses today for sharing their 
views and insights with this Committee today.

    Senator Kerry. Thank you very much, Senator Udall.
    Senator Thune?

                 STATEMENT OF HON. JOHN THUNE, 
                 U.S. SENATOR FROM SOUTH DAKOTA

    Senator Thune. Thank you, Mr. Chairman.
    I, too, want to thank our witnesses and our colleague from 
Maryland for presenting his legislation today. We all know the 
important role that newspapers and the press have played in the 
development of our Nation and our democracy. And I think 
wherever you live in the country, whether you read The 
Washington Post or my hometown newspaper, the Murdo Coyote, all 
of those newspapers make an invaluable contribution to their 
communities. But, I think what we're seeing today is that 
they're looking at dramatically different forms of delivering 
news than they ever have before, and I think that's something 
that is with us, and with us permanently.
    I have two teenaged daughters, both of--I shouldn't say--
one's not a teenager--both are in college, neither of whom 
reads the newspaper, but they all live on the Web, And between 
Internet and blogs and mobile handheld devices, 24-hour cable 
news coverage, satellite news programs, and there are so many 
other ways that people are getting, now, their information, and 
fewer and fewer even adults, I think, are reading newspapers 
these days, so it does present some very distressing challenges 
for newspapers in the form of decreasing subscribership and 
falling revenue from advertisements and classifieds. So, as you 
see more and more of the larger newspapers that are having to 
go out of business and declare bankruptcy or look for buyers, 
it's a great concern, I think, to all of us. And I'm not sure I 
have any--I know what the answers are, either, but I'm anxious 
to hear from some our panels today about what their views are 
on the state of the industry and what might be done to preserve 
this important part of our heritage and our democracy.
    So, with that, Mr. Chairman, I would yield back.
    Senator Kerry. Thank you very much, Senator Thune.
    Senator Cantwell, did you have anything you wanted to say 
before we start?

               STATEMENT OF HON. MARIA CANTWELL, 
                  U.S. SENATOR FROM WASHINGTON

    Senator Cantwell. Mr. Chairman, I will enter my statement 
for the record, because I'm anxious to hear the witnesses, as 
well. And I'd like to, if I could, enter some testimony from 
the Seattle Times.
    Senator Kerry. Absolutely, we will----
    Senator Cantwell. Thank you.
    Senator Kerry.--we'll receive that in full, as if read in 
full.
    [The prepared statement of Senator Cantwell follows:]

Prepared Statement of Hon. Maria Cantwell, U.S. Senator from Washington
    Mr. Chairman, thank you for holding this important hearing.
    In 1997, a group sponsored by the Pew Project for Excellence in 
Journalism held 2 years of public forums to identify and clarify the 
principles that underlie journalism. They concluded ``the central 
purpose of journalism is to provide citizens with accurate and reliable 
information they need to function in a free society.'' Unfortunately, 
newspapers' current business model won't sustain the industry so that 
they can provide us with accurate and reliable information.
    I know the way I prefer to obtain my news has changed over the 
years. Now I see it as being similar to how I obtain digital 
entertainment. It is what I want, when I want it, where I want it, and 
the format I want it in.
    I see the challenges facing the newspaper industry as partly 
structural, partly a reflection of our current economy, and in some 
instances, self-inflicted. And as with all industries, successful 
companies can develop viable business models that evolve over time to 
profitably meet customer needs.
    Most of us on the Committee have newspapers in our states that are 
in trouble. In Washington state, the Seattle P.I. ceased print 
operations after 150 years and is now only available on-line; the 
Vancouver Columbian has declared bankruptcy; and the Seattle Times has 
had to make significant cuts.
    Clearly, newspapers need to adapt their business model. And I look 
forward to hearing the views of the panel.
    Government can buy the industry a little more time by passing 
legislation on some temporary tax relief.
    But I want to make it clear that the fix to the newspaper 
industry's financial difficulties is not to further relax the media 
cross ownership ban.
    I would like to include a statement by Mr. Frank Blethen, the owner 
of the Seattle Times for the record.
    Thank you.
                                 ______
                                 
  Prepared Statement of Frank A. Blethen, Publisher, The Seattle Times
Reclaiming America's Independent Press
    About 60 years ago journalist Walter Lippman said he was secure in 
his belief that American democracy would endure precisely because

        ``. . . there is, I believe, a fundamental reason why the 
        American press is strong enough to remain free. That reason is 
        that American newspapers, large and small, and without 
        exception, belong to a town, a city, at the most to a region.''

        The secret of a truly free press, he then said, is

        ``that it should consist of many newspapers decentralized in 
        their ownership and their management, and dependent for their 
        support upon the communities where they are written, where they 
        are edited and where they are read.''

        Lippman concluded by saying

        ``There is safety in numbers, and in diversity, and in being 
        spread out, and in having deep roots in many places. Only in 
        variety is there freedom.'' Only in variety is there freedom.

    America is in crisis. Our economy is in crisis. Our quality of life 
is at risk. Our free press is in freefall. Our self-government is 
closer to failing than any time since the late 1700s. Our local 
communities have had their economic vitality drained from them and we 
have become disconnected from our neighbors and from our community. Few 
democracies have lasted 200 years. Most often they implode from within, 
just as America is beginning to implode. Our way of life and our self-
government is living on borrowed time.
    But there is hope. We do have the power to stop the implosion and 
renew the American Dream. The question is: do we have the will, the 
information and the knowledge to do so?
    The power of individual citizens is based on knowledge and 
understanding, and on the willingness to speak up at both the local and 
national level. Our power as a society is based on our collective will 
to insist our elected leaders focus on good public policy--good for 
citizens and good for their communities. And, that our leaders also 
begin to ignore the lobbyists, the corporations, the labor unions, and 
the special interest groups who have all actively participated in the 
demise of our free press, the erosion of our local economies and the 
destruction of our national economic system.
    Fundamental to restoring the health of our local communities is 
Reclaiming our Independent Free Press. Our collective goal must be to 
return to Walter Lippman's belief from six decades ago that American 
democracy would survive because of a truly free press, with variety and 
diversity, spread across the Nation.
    What qualifies me to address these issues? My family represents one 
of the very last independent, metro newspapers that Lippman so 
appropriately identified as the foundation for a secure democracy. I 
have 35 years experience as an ``independent'' newspaper publisher 
whose family passionately embraces our public service obligations. I 
have studied/spoke on these issues from a local community and public 
policy perspective for three and a-half decades. My family's 
stewardship has become one of the last canaries in the coal mine. If 
the few remaining independents like us fail, it will be one of the 
final nails in the coffin of America's bold experiment in democracy.
    Our future depends on public policy which enables the replication 
of the independent newspaper ownership/stewardship model like ours.
    How bad is it? Today, there are fewer than six metropolitan 
newspapers left in America that have local stewardship and are private. 
Which means they are still connected with community, care about public 
service and not dancing to the tune of short term financially focused 
conglomerates and leveraged buyout opportunists.
    In newspapers and for the survival of a free press, ownership does 
matter. Both where ownership resides--locally vs. absentee--and what 
motivates ownership--public service, community and long-term investment 
vs. maximum short-term profit. During my career, our Nation transformed 
from Walter Lippman's view with about 1,700 daily newspapers, almost 
all locally and privately owned, to a nation where absentee giant, 
often-faceless corporations control 70 percent of American newspaper 
circulation and most of our leading news websites.
    These absentee corporations now control most of what we know and 
what stories we are told. However, the bigger danger than controlling 
what we know, is they control what we don't know. The greatest danger 
to democracy is, and has always been, the ``untold stories'' whether 
due to disinvestment in journalism or corporate office intimidation.
    When I began my career, the press, led by newspaper journalism, was 
our Nation's watchdog, locally and nationally. Today, my fear is that 
it shows signs of being a toothless lapdog of powerful corporate and 
Wall Street interests.
    None other than Founding Father Thomas Jefferson warned us about 
the ``rapacious capitalists.'' He believed that a free press, combined 
with an elegant constitution, was necessary to protect us against the 
natural inclination of the powerful and the elite to increase their 
power and control at the expense of the people and against the 
interests of good self-government and democracy. Jefferson saw the twin 
evils of potential abuse being the capitalists and the government.
    Our free press and Constitution were crafted as the bulwark against 
abuses of these two groups, but with the flexibility to adapt, to 
monitor, and, keep under control other powerful special interest groups 
who would evolve. Our free press and Constitution were essential to 
creating the most free and economically vibrant society the world has 
yet seen.
    Our path out of today's darkness and back into the light of good 
public policy and government of, for, and, by the people--and to a 
renewal of localism and community, is to reclaim our free press and 
vigorously enforce the checks and balances in our Constitution. There 
is an old saying that ``power corrupts.'' The Founding Fathers 
understood this and addressed it through the Constitution and by 
creating an elegantly simply foundation for a free press which could 
shine a bright light on abuses and simultaneously unite a nation and 
create vibrant local communities.
Three Critical Questions
    With this background, it is worth considering three critical 
questions.

   Is the daily American newspaper worth saving?

   Does it have a future?

   Does its business model work in regard to sustaining the 
        local business enterprise and adequately funding journalism?

    The answer to all three is an emphatic ``YES.'' I will share high-
level answers to these questions followed by a brief overview of our 
Founding Fathers' amazing insights in creating the foundation for the 
most free and diverse press in the world's history. I'll conclude with 
some thoughts on newspaper-based public policy solutions.

        I. Is the American Newspaper Worth Saving? Absolutely. More 
        than that, it is essential to our survival as a nation and for 
        the renewal of our local communities. There are two primary 
        reasons it must be saved.

        First, most of our credible and professionally vetted news 
        still comes from the newsrooms of our newspapers. And it will 
        for a long time. Yes, there is a proliferation of new 
        communications and information-sharing and social devices and 
        systems, but the vast preponderance of professional reporting 
        comes from newspapers' newsrooms. To the degree professional 
        fact-based reporting can be found on the Internet, TV or radio, 
        it invariably originates in a newspaper newsroom. 
        Unfortunately, usually with context and background edited out. 
        Without the journalism from our Nation's newspaper newsrooms we 
        lack the breadth and depth of news and journalism required for 
        self-government and community.

        The second reason we must save our newspapers is localism and 
        community. Community is an essential part of a healthy society 
        and of a healthy economy. Across the country, in communities 
        large and small, the loss of local newspaper stewardship and 
        the massive content and staff disinvestment of the absentee 
        owners has left most Americans with a failing sense of 
        community and a lost connection with their neighbors.

        II. Does The American Newspaper Have A Future? Of course it 
        does. The original reporting, local storytelling, watchdog 
        journalism and professionalism, which only newspapers provide, 
        are essential to our society and our communities. Without this 
        we fail as a democracy and as a capitalist economy. To be sure, 
        newspapers are transforming the ways we distribute and share 
        our journalism as we embrace the Internet.

        A major misperception is that nobody reads newspapers; that we 
        are losing our readers to the Internet. To the contrary--
        newspaper readership is very strong and our industry's embrace 
        of the Internet has added readers and given us the largest 
        audiences ever.

        Consider The Seattle Times' experience. From 2000 to 2007 we 
        grew paid circulation. It was only by 1 percent, but that 
        contrasts with 15 percent losses industry-wide and deep 
        audience losses in other media, especially TV and radio. Why 
        did we gain? The answer is simple but expensive. A commitment 
        to quality local content and the best home delivery service in 
        the country--5:30 a.m. on your doorstep.

        And consider this: each day of the week The Seattle Times 
        reaches from 46 percent to 21 percent of every adult in the 
        four zones of our core market. Over a week, this reach jumps to 
        63 percent to 34 percent. This penetration will increase 
        substantially now that our metro competitor has closed down. Or 
        consider this: our online sites, led by Seattletimes.com, add 
        to our print readership an audience of 578,000 or 29 percent of 
        our primary market.

        Indeed, our total print and online audience reach is 70 percent 
        of our prime market or 1.4 million every month. Each month we 
        engage 5 million unique visitors and 50 million page views. Our 
        readership and audience penetration is both the largest, and 
        has the best demographics in Seattle and Washington State.

        People who regularly vote are also regular readers and paid 
        subscribers. Our highest penetration is 75 percent of people 65 
        and older and, 77 percent of household income of $150,000 or 
        more. This may cause some to jump to the common misperception 
        that younger people aren't reading newspapers and that we don't 
        reach the less affluent. Well in Seattle, we reach 67 percent 
        of 18 to 24 year-olds and 61 percent of people of household 
        incomes below $25,000.

        The size, breadth and depth of our print and online audiences 
        are a testament to the value of what we provide and to the 
        foundation of our long-term future as both a business and as 
        our State's essential provider of professional journalism.

        III. Does the Business Model Work? Yes, it does. What doesn't 
        work is what has become the dominant ownership model through 
        the last two decades--absentee corporate control by short-term 
        financial players--corporate owners who have abused their First 
        Amendment responsibilities and abused good business stewardship 
        principles.

        First, these corporate owners milked their newspapers--which 
        they refer to as ``properties'', for obscene cash-flow margins 
        and profits, and then they undertook egregious disinvestment in 
        journalism, content and service. Finally, they larded 
        newspapers up with unmanageable debt and turned many into pure 
        financial plays and leveraged buyouts.

        The newspaper bankruptcies you see today are not the result of 
        a broken business model, but the inevitable consequence of a 
        failed ownership model and failed stewardship. To be sure, the 
        newspaper business model has gone through significant 
        transformation the past decade but is now poised for success 
        when this terrible recession ends.

        A newspaper is fundamentally a local business. Our financial 
        success is based on local advertising attracted by our large 
        and engaged local audiences, in print and online.

                Four Transformations
                There have been, or are in process, four major 
                structural transformations in metro newspapers.

                I. Classifieds
                One has been the structural change driven by the rise 
                and fall of newspaper classified advertising. Prior to 
                the early to mid `80s, metro newspapers were solid 
                local businesses, generating consistent mid-to-lower 
                double digit cash-flow margins with classified about 20 
                percent of our ad revenue base. Then, driven by urban 
                and suburban growth, we experienced a classified bubble 
                which grew classified revenue to about 50 percent of 
                our ad base by 2000. Today, it has plummeted back to 
                its normal level of about 20 percent.

                II. Ownership Model
                Another major transformation which was driven by and 
                parallels the classified bubble was the change in our 
                dominant ownership model. The loss of diverse, local, 
                independent owners in favor of the absentee corporate 
                consolidations. With the classified revenue bubble the 
                financial consolidators found that they could milk 
                newspapers during this period for obscene cash margins 
                of 20-35 percent.

    Unfortunately, in an example of bad public policy which yields 
significant unintended negative consequences--the corporate welfare 
gift, the Federal Death Tax, virtually forced local stewards to sell 
out to the corporate raiders who were enticed by the classified revenue 
bubble.

                III. Internet
                The Internet has been another major transformation for 
                metro newspapers.

                Metro newspapers have embraced and capitalized on the 
                Internet better than most. We dominate the Nation's 
                traffic for news and information sites. In terms of 
                audience and content, newspaper websites are doing a 
                superb job.

                Just in this decade our online revenue has grown from 
                zero to 10 percent of our ad revenue stream, and in 
                most markets about 30 percent additional audience has 
                been added. Like everyone else, we are still learning 
                about where the evolving consumer and advertising 
                behavior will take us. Short-term, we do know online 
                revenue will be a major growth area for us coming out 
                of the recession.

                IV. Cost Structure
                The fourth major transformation we are going through is 
                adjusting our cost structure to the future; a painful 
                but necessary process.

                The return of metro newspapers to historical normal 
                classified levels has been a massive structural change 
                for the business model to digest. But it has been 
                digested. And, we are on top of the online evolution, 
                rationalizing the cost structure, and the broken 
                dominant ownership model is fast fading.

        In the midst of these profound transformations, the business 
        model still works. The remaining publicly traded newspaper/
        website companies were reporting 15-25 percent cash-flow 
        margins going into the recession and through 2008. Even in the 
        middle of this recession with massive revenue cyclical drops, 
        most medium and small newspapers are still profitable and most 
        metros are still cash-flow positive on an operating basis. (And 
        incidentally, there are plenty of good business models in every 
        industry which are losing money due to this unprecedented 
        economy.)

        When consumer spending recovers we will see newspaper revenues 
        and profits recover. Local retail and local online will be the 
        drivers. Margins will be back to normal, high single to low 
        double digit pre-classified bubble levels.

        What is needed is the assistance of good public policy so that 
        we can return to Lippman's world of a secure democracy 
        supported by a wide variety of ownership connected to their 
        local communities and regions. To be sure, we need to find 
        public policy solutions to nurture newspaper journalism through 
        the recession and into the future. This will take new laws, new 
        regulations and new government subsidies to replicate the 
        concept of the Post Office subsidy 250 years ago.
The Creation of our Free, Independent Press
    One of the most elegant acts of our Founding Fathers was the 
foundation they created for what became the freest, most independent 
press the world has ever seen. A free press, which united the Colonies 
and enabled the establishment of the best democracy the world has yet 
seen.
    To create this foundation, they had to address two problems.

   First, that only the elite and powerful will pay for news 
        and information.

   Second, that unless they found a way to unite the 13 
        Colonies, there would be no democracy.

    Their two-prong solution was elegant and included both the First 
Amendment and the U.S. Post Office.
First Amendment
    We think of the First Amendment as protecting free speech, and it 
does. But its true elegance rests in the fact that the government not 
only sought to protect free speech but to protect all voices. They did 
not make choices about party affiliation or ideology. The opening quote 
from Walter Lippman speaks to this notion--``In variety, there is 
freedom.''
The U.S. Post Office
    Protecting voices and free speech was essential. But dissemination 
of news and information from these many voices to the masses who were 
not going to pay for it and creation of an information network to unite 
the 13 colonies was a significant challenge.
    At its inception, the U.S. Post Office's primary duty was the free, 
ubiquitous distribution of newspapers and periodicals. And the 
government supplemented this subsidy with lucrative government printing 
contracts. It is instructive to think about what this means. The 
success of our free press rests on good public policy, where the 
government both protects free speech and multiple voices and subsidizes 
the distribution and production of journalism and content. In other 
words, the government chooses to subsidize journalism without having a 
say over what content would be. This is profound and as essential today 
as it was 200-plus years ago.
Advertising Subsidy
    Through time, local advertising came to pretty much replace the 
government subsidy for the funding and distribution of journalism. This 
proved to be a good funding mechanism to support newspapers and 
adequately fund journalism throughout the 20th century--at least until 
this decade.
    The end of the classified bubble, corporate disinvestment, and the 
unprecedented recession reduced the funding for newspaper journalism to 
dangerous levels. To survive this recession and several years of 
recovery, we need to revisit the idea of public policy similar to the 
thinking of the Founding Fathers' subsidy principles to ensure 
newspaper journalism survives at adequate levels to serve our 
democratic needs.
    Post-recovery, we will see the growth of local newspaper print and 
online revenue and the profitability of newspapers practicing good 
journalism and local community-building. At regular intervals it is 
appropriate to revisit subsidies to ensure they are needed and to 
mitigate any unintended consequences. But right now a critical part of 
our imperative is to reclaim the media and assure public policy 
provides a framework encouraging and supporting independent journalism.
Solutions for Consideration
    Up until recently, most of the ideas for funding journalism on a 
large scale national basis have not been realistic; they frequently 
demonstrate little appreciation of how our free press was created and 
how to sustain the independent journalism necessary for our local 
communities to thrive and our national democracy to survive.
    There are three areas of public policy that should be addressed:

   Newspapers and newspaper journalism in print and online

   Broadcast and the FCC

   The Internet

    As my focus is the newspapers business, I will speak to a few 
solutions that are specific to this arena.
    In priority order, I believe the following public policy agenda 
should be implemented.

   Tax Incentives.

    Embrace and quickly implement incentives which will help fund 
        journalism and enhance distribution and access.

    The two such ideas that are currently being discussed should be 
        done immediately.

    --a 50 percent tax credit for the pay of every daily newspaper 
        journalist.

    --a $200 annual tax credit for daily newspaper subscribers.

    These proposals have been advanced by two of the country's most 
        respected students of free press: University of Pennsylvania 
        Professor Ed Baker and University of Illinois Professor Bob 
        McChesney.

   SBA or other government loans and government guaranteed bank 
        loans.

    Long-term, low interest loans to existing daily newspapers that are 
        private and locally or regionally owned. Such loans would also 
        be made available to private local buyers who are willing to 
        step up to acquiring papers which are being spun off by the 
        financial investors. Not as LBOs, but at realistic prices based 
        on the sustainable business model.

   Return the Post Office to its original mission.

    1We need to return the Post Office to its original mandate to help 
        subsidize the creation and distribution of newspaper 
        journalism. Today the Post Office does just the opposite. 
        Through a relationship between its unions, management and the 
        direct mailers lobby, the Post Office has created rates which 
        are actually below their costs. These rates are a gift to the 
        direct mail industry and take millions of dollars in 
        advertising revenue out of newspapers every year. The Post 
        Office has no business aligning itself with one sector of 
        advertisers at the expense of another--especially as it relates 
        to newspapers, given the important role newspaper journalism 
        plays in building civic engagement and community and in 
        sustaining our democracy.

   Restrict newspaper control.

    Stop the harmful excessive control of recent years by severely 
        limiting the number of newspapers and/or amount of circulation 
        any one person or corporation can own.

   Provide a 50-cent subsidy for each dollar a privately owned 
        newspaper spends on journalists.

    In the midst of our , radio and the Internet. These are powerful 
mediums appropriate for the origination and dissemination of 
independent robust news and information. Currently, public policy as it 
relates to these media is failing to support diverse news and 
information in the public interest.
    Time is running short. I urge the Commerce Committee to act quickly 
to begin implementing these reforms and to examine other sound ideas 
that sustain robust coverage of our government and institutions. Our 
democracy cannot afford to see journalistic coverage erode any further.
    Reclaiming the media is our collective responsibility and must 
happen quickly.

    Senator Kerry. Senator McCaskill, I'm sorry I passed you 
by. Did you have anything you wanted to add?
    Senator McCaskill. No, I----
    Senator Kerry. All right, thanks.
    Senator McCaskill.--just--I want to wait and ask questions. 
Thank you.
    Senator Kerry. Thanks, I appreciate it. We look forward to 
that.
    Senator Cardin, thanks very much for taking time to be here 
with us today. You've had some interesting thoughts on this, 
and we really look forward to hearing your testimony.

             STATEMENT OF HON. BENJAMIN L. CARDIN, 
                   U.S. SENATOR FROM MARYLAND

    Senator Cardin. Well, Chairman Kerry, thank you very much.
    Senator Kerry. Is that working?
    Senator Cardin. The light is on.
    Senator Kerry. There you go, pull that a little closer. 
Thanks.
    Senator Cardin. Thank you very much for conducting this 
hearing. I do have a statement that I'll make available for the 
record.
    I share your concern about the future of journalism. Our 
metropolitan newspapers are our prime source of journalism, of 
investigative reporting, of news sources for radio, TV, and the 
Internet, and they're going out of business, they're closing 
their operations, they're slashing their staffs. You gave a 
list of those newspapers that are--either have terminated their 
traditional operations or are in bankruptcy. If I could just 
add one more to that list, and that's The Baltimore Sun, my 
hometown paper, that's in bankruptcy and is in danger of 
whether it can stay in business or not.
    It's clear to me that our newspapers are a check on, not 
just local government and the Federal Government, but on 
corporations, on businesses, on community activities. It's a 
prime part of our democratic system. And yes, I do think that 
Google and Yahoo! and blogs are important. I do. But, when it 
comes to in-depth reporting and the source for much of our news 
that we see echoed in blogs and in--and on the Internet, we 
rely upon the news bureaus of our newspapers. It's important to 
have timely video, as you pointed out, of a particular news 
event, and analytical journalism is important, but 
investigative journalism, where we get most of our breaking 
news, comes from our local newspaper bureaus, and we're in 
danger of losing that.
    Newspaper reporters forge relationships with people, they 
build a network, which creates avenues to information. It's 
essential to a free and democratic society.
    A 2003 study published by Law, Economics, and Organization 
found a direct relationship between the free circulation of a 
daily newspaper per person and corruption. The lower the 
circulation, the higher the corruption.
    Princeton University reported on the closure of the 
Cincinnati Post, the local elections were less competitive. And 
I quote from that report, ``If voter turnout, a broad choice of 
candidates, and accountability for incumbents are important to 
democracy, we side with those who lament newspapers' decline.''
    Simply put, the current model doesn't work. Advertising, as 
you pointed out, Mr. Chairman, is not the type of financial 
support that papers traditionally could rely upon. 
Subscriptions are significantly reduced, because people are 
getting their news off of the Internet or from the radio or TV.
    By early 2008--this is before the current recession really 
started--59 percent of our newspapers had reduced their staffs, 
61 percent had less space devoted to news, and over half of our 
states did not have a news coverage of what was happening 
directly in Congress, they had to rely on third-party sources.
    So, I introduced the Newspaper Revitalization Act to find a 
different way. As you point out, we need to explore different 
economic models. It was filed in an effort to create a national 
debate as to how we can preserve our local news operations. I--
my legislation uses the 501(c)(3) model, similar to what a 
church would use or what an educational institution would use, 
or public broadcasting and other nonprofits.
    Now, this may be an advantage for some papers to be able to 
continue. Why? Because it gives an avenue for local supporters, 
whether they be individuals, whether they be foundations, 
whether they be educational institutions, to be able to come 
together under a 501(c)(3) model and preserve the tradition of 
their local newspaper.
    Let me say what it doesn't do. What it does do is allow the 
communities to come together to save a local newspaper. What it 
doesn't do, and what I do not support, is government 
interference with the free press. Government does not interfere 
with our churches. They are nonprofits. I do not want to see us 
do anything that could compromise the independence of the 
newspaper. That's critically important.
    I also would oppose any government direct bailout to our 
newspapers. I don't think that's an appropriate way for us to 
move forward. This bill--my recommendation would not do that. 
There are no Federal funds.
    And I might say most newspapers aren't paying any Federal 
taxes, so by making them a nonprofit, we're not going to be 
giving up any government revenues. The only restriction would 
be that they could not endorse specific candidates. They still 
could editorialize, as I think they should. It gives a choice 
to a community to preserve their local paper, and I do 
encourage the other suggestions that have been made.
    Thomas Jefferson, a man who was vilified by newspapers 
daily, once said, ``If I had a choice between government 
without newspapers and newspapers without government, I 
wouldn't hesitate to choose the latter.'' Like Jefferson, I 
believe that a well-informed public is essential to our 
democratic society. We need to save our community newspapers 
and the investigative journalism that they provide. And I 
believe this hearing is an important step forward in exploring 
how to do that.
    Thank you very much, Mr. Chairman.
    [The prepared statement of Senator Cardin follows:]

            Prepared Statement of Hon. Benjamin L. Cardin, 
                       U.S. Senator from Maryland

    Chairman Kerry, Ranking Member Ensign, and Members of this 
Subcommittee, thank you for the opportunity to appear before you today.
    Today, newspapers across the country are closing their doors, 
slashing their staff, and shuttering bureaus in the United States and 
around the world. The Philadelphia Inquirer, The Seattle Post-
Intelligencer, the Rocky Mountain News, the Philadelphia Daily News, 
the San Francisco Chronicle, The Boston Globe and my own Baltimore Sun 
are either in bankruptcy, or facing bankruptcy and closure. Newspapers 
and the investigative journalism they provide play a critical role in 
our society. Watergate. AIDS. Tobacco. ENRON. AIG. These are all news 
stories, uncovered by journalists, which brought the most important 
stories of our Nation's history to the front page and into public 
debate. Newspapers provide a form of accountability. They provide a 
``check'' on local governments, state governments, the Federal 
Government, elected officials, corporations, school districts, 
businesses, individuals and more.
    Despite the 24/7 availability of news from print, broadcast and 
digital sources, there remains one clear fact: when it comes to 
original in-depth reporting that records and exposes actions, issues, 
and opportunities in our communities, nothing has replaced a newspaper. 
Google, Yahoo!, blogs and even most local and national broadcasters, 
pull their original news from the laborious and expensive work of 
experienced newspaper reporters diligently working their beats over the 
course of years, not hours. Newspaper reporters forge relationships 
with people; they build a network, which creates avenues to 
information.
    These relationships and the information that follows are essential 
in a free, democratic society. Without it, accountability is lost. In a 
2003 study published in the Journal of Law, Economics, and 
Organization, the relationship between corruption and ``free 
circulation of daily newspapers per person'' was examined. The study 
found that the lower the circulation of newspapers in a country, the 
higher it stands on the corruption index. Just recently, Princeton 
University released a report, entitled ``Do Newspapers Matter? Evidence 
from the Closure of the Cincinnati Post'' This report found that while 
``The Cincinnati Post was a relatively small newspaper, with 
circulation of only 27,000 when it closed . . . its absence appears to 
have made local elections less competitive along several dimensions: 
incumbent advantage, voter turnout and the number of candidates for 
office.'' The Princeton University study concluded that ``if voter 
turnout, a broad choice of candidates and accountability for incumbents 
are important to democracy, we side with those who lament newspapers' 
decline.''
    The economy has caused an immediate problem for newspapers, but 
their business model, based on circulation and advertising revenue, has 
been weakening for years. At the end of 2008, advertising revenue was 
down by about 25 percent and according to a December forecast by 
Barclays Capital, advertising revenue will drop another 17 percent in 
2009. According to the Pew Project for Excellence, during 2008, U.S. 
newspapers eliminated 5,000 newsroom jobs, approximately 10 percent of 
total newsroom jobs in the industry. Circulation is down 13.5 percent 
daily and 17.3 percent on Sunday since 2001. The Project for Excellence 
in Journalism surveyed 259 newspapers in early 2008 and found that 59 
percent reported reductions in staff, but even more disturbing was that 
61 percent said that less space was being devoted to news. The impact 
has had an especially severe effect on overseas bureaus, in state 
capitals, and in Washington. Half the states no longer have a newspaper 
covering the U.S. Congress.
    While the newspaper industry is in the midst of major transition, 
we need to protect and nurture the information gathering abilities that 
currently reside with newspapers. The Newspaper Revitalization Act 
could help some in the news industry continue their vital role of 
newsgathering and investigative reporting. My bill would allow 
newspapers who choose to operate as non-profit organizations under 
501(c)(3) status for educational purposes. It would create a new 
category under the Internal Revenue Code for a ``qualified newspaper 
corporation.'' This would be the same IRS status that is utilized by 
churches, hospitals, educational institutions, public broadcasting and 
other non-profit entities. Advertising and subscription revenue would 
be tax exempt and contributions to support coverage or operations could 
be tax deductible.
    A change to non-profit status would not mean government control of 
the media. It would not bring about the end of the First Amendment and 
free speech. Religious and educational groups operate as non-profits 
without government interference. A newspaper operating as a non-profit 
would continue to freely report on all issues, including political 
campaigns, it just would refrain from making political endorsements. 
Whether conservative, liberal, or middle-of-the-road, each newspaper 
would maintain its editorial voice and be able to clearly state its 
position on issues affecting their community--local and national.
    I also want to make this point very clear--this is not another 
government bailout of a failing industry. Taxpayer funds will not be 
used to buy shares or an interest in any media corporation. This 
legislation should cause minimal revenue loss to the Federal Government 
as most newspaper profits have been falling for years.
    While this may not be an optimal choice for some major newspapers 
or corporate media chains interested in profit, it should be an option 
for many smaller, local newspapers fast disappearing in our states, 
cities and towns. In this economic climate, and with the real 
possibility of losing community newspapers, this would be a voluntary 
option for owners to save their paper. It is also a model that could 
enable local citizens or foundations to step in and preserve their 
local papers. However, this is only an option that would be made 
available, not a requirement. The decision would be made by the paper 
and the members of the community who are interested in preserving the 
paper as a non-profit entity.
    Thomas Jefferson, a man who was vilified by newspapers daily, once 
said, ``If I had to choose between government without newspapers, and 
newspapers without government, I wouldn't hesitate to choose the 
latter.'' Like Jefferson, I believe that a well-informed public is 
essential in our democratic society. We need to save our community 
newspapers and the investigative journalism they provide.

    Senator Kerry. Well, thank you, Senator, for a clear, 
concise, and brief summary of both your position and of the 
predicament. We appreciate that input very much. It's a 
thoughtful, obviously provocative concept, and it's one that 
we'll think about and talk about, and obviously engage with our 
panel on. So, we're very grateful to you for coming today. 
Thank you.
    Senator Cardin. Thank you.
    Senator Kerry. If I could invite the members of the second 
panel to come up; let me introduce them, as they do.
    We have Ms. Marissa Mayer, the Vice President, Search 
Products and User Experience, Google, who's come here today 
from California to testify; Mr. Steve Coll, former Managing 
Editor of The Washington Post; Mr. David Simon, Author, 
Television Producer, and former Newspaperman, from Baltimore, 
Maryland; Mr. Alberto Ibarguen, the President and Chief 
Executive Officer of John S. and James L. Knight Foundation, 
from Florida; Mr. James Moroney, Publisher/CEO of The Dallas 
Morning News; and Ms. Arianna Huffington, Co-Founder and 
Editor-in-Chief of The Huffington Post, from California.
    Thank you, each and every one of you, for taking time to 
come here. We're really delighted to see you here.
    Ms. Mayer, can I ask you to lead off, and we'll just run 
right down the line? And if you want to turn the mike on and 
pull it up very close to you so everybody can hear, that would 
be helpful.

          STATEMENT OF MARISSA MAYER, VICE PRESIDENT, 
          SEARCH PRODUCTS AND USER EXPERIENCE, GOOGLE

    Ms. Mayer. Chairman Kerry, Members of the Committee, thank 
you for inviting me to contribute to this discussion. As Vice 
President of Search & User Experience at Google and Co-Chair of 
the----
    Senator Kerry. Do me a favor, just pull the mike a little 
closer, if you can. I think everybody----
    Ms. Mayer.--and as Chairman--Co-Chairman of the Knight 
Commission on the Information Needs of the Communities in a 
Democracy, I'd like to speak to the intersection of democracy 
and technology.
    In my testimony today, I would like to cover three main 
points. First, how Web Search acts as a conduit for journalism 
by connecting individuals to the news stories they are seeking. 
Second, how Google creates economic opportunity for publishers 
and provides tools to create more engaging online experiences. 
And finally, I'll talk about the very structure of the Web and 
how it represents some of the challenges and opportunities for 
the future of journalism.
    Let's first look at Search as a conduit for journalism. 
Every day, millions of people search the Web for relevant 
answers to their questions. Those answers can come in a variety 
of forms, such as Web pages, an image, a video, or a news 
story. Search engines like Google play the role of connecting 
users with high-quality content, ultimately sending traffic to 
the publisher's website. In addition to Web Search, Google News 
is our service that's designed for users who are looking for 
news articles.
    Together, Google News and Google Search provide a valuable 
free service to online newspapers specifically by sending 
interested readers to their sites at a rate of more than 1 
billion clicks per month. Newspapers use that Web traffic to 
increase their readership and generate additional revenue. Just 
as importantly, Google's policy is to respect the rights of 
content owners. Publications have the right and ability to 
control whether or not their content appears in Google Web 
Search or Google News.
    Now let's turn to the economic opportunities that Google 
creates for publishers. Because our mission is to organize the 
world's information and make it universally accessible and 
useful, high-quality content is incredibly important to Google 
and to our users. From an economic perspective, the Google 
AdSense platform helps publishers generate revenue from their 
content. By providing relevant ads on the publisher's site, 
Google AdSense creates billions of dollars in annual revenue 
for publishers. In fact, in 2008 that figure exceeded $5 
billion in revenue for publishers using AdSense. Users get more 
useful ads, and these more relevant ads generate higher returns 
for advertisers and publishers.
    Google also offers many tools for sharing information that 
are being used by newspapers. For example, the Los Angeles 
Times website last year followed the path of the Southern 
California wildfires through Google Maps. Our Web technologies 
are powerful information tools, and we hope to continue to 
empower content creation through them.
    Finally, I'd like to offer some observations on how the 
presentation of news online should be fundamentally different 
than it is in print. Let's start with a look at the basic unit 
of consumption, the atom, of sorts. The atom for existing media 
is often disrupted by emerging media. For example, digital 
music caused consumers to think about their purchases as 
individual songs rather than full albums. Similarly, the 
structure of the Web has caused the basic unit, the atom of 
consumption for news, to migrate from the full newspaper to the 
individual article. With online news, a reader is much more 
likely to arrive at a specific article rather than, say, the 
home page.
    That means the publisher must assume that a reader may be 
viewing an article on its own, independent of the rest of the 
publication. To make a standalone article effective requires 
providing sufficient context for first-time readers while 
clearly calling out the latest information for those following 
a story over time. It also requires a different approach to 
monetization. Each individual article must be self-sustaining. 
These types of changes will require innovation and 
experimentation in how news is delivered online and how 
advertising can support it.
    Because of the Web's ability to operate in realtime, it 
offers an opportunity for journalists to publish and update 
changing and evolving stories as they happen, to create living 
stories. Today in online news, journalists frequently publish 
several static articles on the same topic, sometimes with 
identical or closely related content. The result is parallel 
Web pages that compete against each other in terms of authority 
and in terms of placement in links and search results. 
Consider, instead, the authoritativeness of a news article and 
how it might grow if the evolving story were published as a 
single living, changing, updating entity. We see this practice 
today in Wikipedia's entries and in the topic pages of The New 
York Times. The result is a single authoritative page with a 
consistent reference point that gains clout and a following of 
users over time.
    Chairman Kerry and Members of the Committee, let me 
conclude by thanking you for having me here to participate in 
this important discussion today. Preserving robust and 
independent journalism at the national and local levels is an 
important goal for the United States. Google is doing our part 
by driving significant traffic to online publishers, by helping 
them generate revenue through advertising, and by providing 
tools and platforms enabling them to reach millions of people. 
There certainly are many challenges in adapting the long 
tradition of journalism to the online world. I am hopeful, 
though, that innovation and experimentation will preserve 
journalism.
    Thank you.
    [The prepared statement of Ms. Mayer follows:]

         Prepared Statement of Marissa Mayer, Vice President, 
              Search Products and User Experience, Google

    Chairman Kerry, Ranking Member Ensign, and Members of the 
Subcommittee.
    Thank you for inviting me to contribute to this discussion. My name 
is Marissa Mayer, and I work as Vice President of Search and User 
Experience at Google. I manage Google's efforts in search--including 
Web search and Google News--and I also guide user interaction design 
across Google's products. In addition, I co-chair the Knight Commission 
on the Information Needs of Communities in a Democracy. In both roles, 
I've reflected on the intersections of journalism and technology and I 
will speak to that this afternoon.
    In my testimony today, I would like to cover three main points:
    First, I'd like to discuss how Web search acts as a conduit for 
journalism by connecting individuals to the news stories they are 
seeking.
    Second, I'll address our commitment to create economic opportunity 
for publishers and to provide tools to create more engaging 
presentations of their content.
    And finally, I'll talk about how the very structure of the Web 
itself represents some challenges to, but also opportunities for, the 
future of journalism.
Search: a Conduit for Online Publishing
    Every day, millions of people search the Web for relevant answers 
to their questions. In response, search engines strive to connect each 
user with the right results, and those results can come in any number 
of different forms: a Web page, an image, a video, a map, or a news 
story--something of particular relevance to today's hearing. In each of 
those cases, search engines play the role of connecting users with 
high-quality content--often journalistic--ultimately sending traffic to 
the publisher's website. Google is one such search engine that people 
use to find answers online.
    Another service we offer is Google News, our specialized service 
that's designed specifically for users who are looking for news 
articles. Stories on Google News are selected and ranked by computers 
based on the freshness, location, relevance, and diversity of their 
content. As a result, these stories are sorted without regard to 
political viewpoint or ideology, and users can choose from a wide 
variety of perspectives on any given story. We offer links to several 
articles covering a topic so that users can choose to read the story 
from the publishers and sources they prefer.
    Both Google search and Google News connect users to answers and 
information as quickly as possible. We show people just enough 
information to invite them to read more--the headline, a line or two of 
text, and a link to the news publisher's website. A user clicks on the 
headline of interest and is taken directly to the site that published 
the story.
    Together, Google News and Google search provide a valuable free 
service to online newspapers specifically by sending interested readers 
to their sites at a rate of more than 1 billion clicks per month. 
Newspapers use that Web traffic to increase their readership and 
generate additional revenue.
    In terms of publications appearing in search indexes, we believe 
they have the right to control their content. That's why we allow site 
owners to choose whether or not Google can index their sites. Using 
what's called a ``robots.txt'' file, which has been an industry 
standard for many years, a publisher can block its Web content from any 
search engine's crawl. As a result, that site will not show up in Web 
search results.
    Effective use of ``robots.txt'' and other metatags gives publishers 
control over how their content is searched at a number of levels by 
allowing publishers to restrict: search across the entire site, 
individual directories, pages of a specific type, or individual pages 
only. So, while we think inclusion in a search engine can drive a lot 
of beneficial traffic, our policy first and foremost is to respect the 
wishes of content owners.
Creating Economic Opportunity for Publishers
    Because our mission is to organize the world's information and make 
it universally accessible and useful, high-quality content is 
incredibly important to Google. Our most basic goal is to connect users 
with high-quality and reliable information. Credible, factual, 
trustworthy content--that is, journalism--is critical to the millions 
of users who search for news stories on Google.
    Google connects Internet users to journalists' work while at the 
same time helping journalists generate income to support their work, 
and providing tools to make news more compelling to readers and 
viewers.
    Most importantly from an economic perspective, once readers arrive 
at publication sites, our Google AdSense advertising platform helps 
publishers generate revenue from their content. By providing relevant 
ads and improving the connection between advertisers and our users, 
Google AdSense creates billions of dollars in annual revenue for 
publishers. In fact, in 2008, that figure exceeded $5 billion in 
revenue for AdSense publishers. Users get more useful ads, and these 
more relevant ads generate higher returns for advertisers and 
publishers. We recently launched interest-based advertising, which we 
believe will be particularly helpful to publishers as it takes into 
account each individual user's interests in the hopes of making 
advertisements even more relevant.
    In addition to providing revenue opportunities, Google also offers 
many tools for sharing information that are being used by newspapers. 
For example, the Los Angeles Times website last year followed the path 
of Southern California wildfires using Google Maps at the site. Google 
Image Search brings the Life Magazine photo archive to light for a 
whole new generation of readers. National Geographic and The Holocaust 
Memorial Museum have created interactive educational content layers in 
Google Earth. And NASA has partnered with us to allow anyone to 
virtually travel the stars in Google Sky. Our Web technologies are 
powerful information tools, and we hope to continue to empower content 
creation through them.
The Structure of the Web and its Impact on Publishers
    The structure of the Web itself requires the presentation of news 
in a way that's fundamentally different from its offline predecessor. 
The Web has caused some parts of the news to be presented more easily 
and effectively. For example, Web pages can link to voluminous 
supporting materials without worrying about column inches. In addition, 
the always-on, always-updating nature of the Web means that real-time 
news updates can appear throughout the day without being tied to print 
production deadlines. However, other aspects are more challenging, 
particularly in regard to how users arrive at a news story, and how 
authority on a particular topic is established. I'd like to offer a few 
observations on what I call the ``atomic unit of consumption'' for 
online news, the prospect of creating living stories online, as well as 
a few simple steps online publishers can take to keep readers engaged.
The Atomic Unit of Consumption
    The atomic unit of consumption for existing media is almost always 
disrupted by emerging media. For example, digital music caused 
consumers to think about their purchases as individual songs rather 
than as full albums. Digital and on-demand video has caused people to 
view variable-length clips when it is convenient for them, rather than 
fixed-length programs on a fixed broadcast schedule. Similarly, the 
structure of the Web has caused the atomic unit of consumption for news 
to migrate from the full newspaper to the individual article. As with 
music and video, many people still consume physical newspapers in their 
original full-length format. But with online news, a reader is much 
more likely to arrive at a single article. While these individual 
articles could be accessed from a newspaper's homepage, readers often 
click directly to a particular article via a search engine or another 
website.
    Changing the basic unit of content consumption is a challenge, but 
also an opportunity. Treating the article as the atomic unit of 
consumption online has several powerful consequences. When producing an 
article for online news, the publisher must assume that a reader may be 
viewing this article on its own, independent of the rest of the 
publication. To make an article effective in a standalone setting 
requires providing sufficient context for first-time readers, while 
clearly calling out the latest information for those following a story 
over time. It also requires a different approach to monetization: each 
individual article should be self-sustaining. These types of changes 
will require innovation and experimentation in how news is delivered 
online, and how advertising can support it.
The Living Story
    The Web by definition changes and updates constantly throughout the 
day. Because of its ability to operate in real-time, it offers an 
opportunity for news publishers to publish on changing and evolving 
stories as they happen. Web addresses (known as URLs--uniform resource 
locators such as http://www.google.com) were designed to refer to 
unique pieces of content, and those URLs were intended to persist over 
time. Today, in online news, publishers frequently publish several 
articles on the same topic, sometimes with identical or closely related 
content, each at their own URL. The result is parallel Web pages that 
compete against each other in terms of authority, and in terms of 
placement in links and search results.
    Consider instead how the authoritativeness of news articles might 
grow if an evolving story were published under a permanent, single URL 
as a living, changing, updating entity. We see this practice today in 
Wikipedia's entries and in the topic pages at NYTimes.com. The result 
is a single authoritative page with a consistent reference point that 
gains clout and a following of users over time.
Keeping Users Engaged
    A much smaller but important factor for online newspapers to 
consider in today's digital age is the fundamental design and 
presentation of their content. Publishers should not discount the 
simple and effective navigational elements the Web can offer. When a 
reader finishes an article online, it is the publication's 
responsibility to answer the reader who asks, ``What should I do 
next?'' Click on a related article or advertisement? Post a comment? 
Read earlier stories on the topic? Much like Amazon.com suggests 
related products and YouTube makes it easy to play another video, 
publications should provide obvious and engaging next steps for users. 
Today, there are still many publications that don't fully take 
advantage of the numerous tools that keep their readers engaged and on 
their site.
Conclusion
    Chairman Kerry, Ranking Member Ensign, and Members of the 
Subcommittee, thank you for having me here today to participate in this 
important discussion.
    Preserving robust and independent journalism at the national and 
local levels is an important goal for the United States. Google is 
doing its part by driving significant traffic to online news 
publishers, by helping them generate revenue through advertising, and 
by providing tools and platforms enabling them to reach millions of 
people.
    There are certainly many challenges to face in adapting the long 
tradition of journalism to the online world. I am hopeful, though, that 
innovation will help preserve journalism and its vital function in our 
society.
    Thank you.

    Senator Kerry. Thank you very much, Ms. Mayer.
    Let me just say that I mistaken gave the order earlier. 
What we'd like to do is--we began with online and we're going 
to end with online--I'd like to go to Mr. Coll, then Mr. Simon, 
Mr. Ibarguen, Moroney, and we'll end with you, Arianna 
Huffington. Is that OK? Thanks.
    So, Mr. Coll, you're next.

    STATEMENT OF STEVE COLL, PRESIDENT AND CEO, NEW AMERICA 
   FOUNDATION AND FORMER MANAGING EDITOR, THE WASHINGTON POST

    Mr. Coll. Thank you, Chairman Kerry, for the opportunity to 
testify.
    I've prepared a written statement, which I'll offer for the 
record, and in that I've tried to assess what I think is at 
stake in the crisis facing American newspapers, and where the 
public interest is located in that crisis, and I'll try to 
summarize that here and offer a few policy suggestions.
    American journalism has entered a phase of what the 
economist Joseph Schumpeter called ``creative destruction,'' 
and it's an apt framework in this case, because both creative 
and destructive forces are at work on American journalism 
simultaneously and at a stunning pace.
    On the creative side, there's much to celebrate. The World 
Wide Web has collapsed the barriers to entry in publishing and 
broadcasting, and, by doing so, opened American public 
discourse to countless new voices. In journalism since the late 
1990s, we've witnessed the advent of skilled new public-minded 
Web publishers and entrepreneurial journalists across the 
United States, some working in for-profit settings and others 
in nonprofit settings. No doubt, these and other new iterations 
of journalism and its consumption ushered in by the Digital 
Revolution will continue to expand and will make many important 
contributions to our public culture and constitutional system.
    Unfortunately, at present, the rate of destruction of 
professional journalism, by which I refer to the independent 
reporting on government corporations and international affairs 
produced mainly by newspapers during the last four decades, is 
far outpacing the ability of new institutions to reproduce what 
is being lost.
    This independent reporting--complex investigations using 
public records, the identification and vetting of 
whistleblowers, the tracking of legislative debates, and 
lobbying at the local, State, and national level, and 
independent, transparent witness reports of important events 
here and overseas--has played a very important role in shaping 
American governance and foreign policy since the 1960s, at 
least. Its sudden diminishment seems to me an urgent matter of 
public interest.
    In time, perhaps new journalistic institutions and 
practices will make up the current losses of independent 
reporting, but even the most optimistic practitioners of the 
new models tend to accept that the world in which--a world in 
which Web-based publishers or aggregators could afford, for 
example, to simultaneously fund and operate professional 
journalism bureaus in Baghdad, Kabul, Islamabad, Europe, and 
Asia is simply not foreseeable, at present. These new 
practitioners do hope to fill some of the gap at the local and 
State levels, but even there it is clear that their replacement 
reporting, as it were, will be, at best, a small fraction of 
what is now being destroyed for the foreseeable future.
    So, where do solutions lie? It's uncomfortable and even 
counterintuitive for a journalist to suggest, even loosely, 
that Congress might consider a crisis in journalism as a venue 
for legislative action. The independence of journalism from 
government is an obvious strength of our constitutional system, 
and one in which I believe deeply.
    But, nonetheless, Chairman Kerry, as you said at the 
outset, in limited but important and appropriate ways, Congress 
already shapes the environment in which American journalism is 
practiced. For example, in the authorizing--in authorizing the 
licensing of scarce broadcasting spectrum, Congress has 
correctly insisted that the public interest be considered in 
those processes alongside private interests. Also, for four 
decades, year in and year out, through the Corporation for 
Public Broadcasting and through the National Endowment for the 
Humanities, Congress has overseen arms-length systems of 
Federal funding that touch upon journalistic institutions and 
activity, albeit with mixed results.
    And in the tax code governing public charitable activity, 
Congress and the Internal Revenue Service have appropriately 
designated as charitable the activities of some educational and 
nonprofit journalistic institutions, although they have done so 
without an adequate degree of clarity. And I think Senator 
Cardin's bill is an excellent step to clarify those rules.
    So, an old order is dying in journalism, and a new one is 
rising, and I think the question is, Are there ways to 
reinforce a stronger bridge between these eras, a bridge that's 
constructed in the public interest?
    So, what are some specific suggestions? I would offer these 
really just as a framework. I haven't thought about all of the 
possible ideas that might be responsive in this way, but I 
think I can offer a few to complement Senator Cardin's 
legislation.
    First, I do believe in his legislation. Clarifying section 
501(c)(3) of the Internal Revenue Code so as to ease the 
potential conversion of for-profit newspapers and newspaper 
divisions of corporations to charitable status is a very 
constructive step. It's not a panacea, but if even a handful of 
newspapers find the vision and community support of the kind 
Senator Cardin described to adapt their newsrooms in this 
manner, their survival and more gradual evolution into the new 
media world could preserve important independent reporting, 
especially at the local level.
    I think there's room to reform and strengthen the 
Corporation for Public Broadcasting so that its investments in 
public broadcasting stations more fully and successfully 
address the losses in independent reporting on public 
institutions and even international affairs experienced by for-
profit newspapers and broadcasters, particularly by promoting 
investments in reporting distributed through new media.
    A third idea is to reform and strengthen the National 
Endowment of the Humanities so that its arms' length 
competitive peer-reviewed grantmaking helps to incubate the 
skills, careers, and new media forums necessary to fill the 
reporting gaps created by retreating old media. The Knight 
Foundation's News Challenge Grants is an example of what I 
consider a successful program of this kind that a reformed and 
expanded NEH might try to support or replicate.
    And finally, I would suggest considering instructing the 
Federal Communications Commission to strengthen the public-
service requirement for broadcasters operating with licensed 
spectrum, perhaps allowing this requirement to be satisfied by 
contributions to a fund that would be used to finance reporting 
on public institutions and public issues, perhaps through the 
CPB or by other means.
    In conclusion, you know, obviously the Federal Government 
cannot and should not try to solve the crisis in newspapers or 
the transition in journalism that I've tried to summarize, 
but--and ultimately the next era of journalism, like the last 
one, will be shaped, first and foremost, by private investment; 
second, by philanthropic and educational institutions; and only 
in a tertiary way by Federal policy. Nonetheless, the public 
interest that is located in the current crisis should move 
Congress to creatively reconsider the role that it already 
plays. I think this can make a significant difference.
    Thank you.
    [The prepared statement of Mr. Coll follows:]

   Prepared Statement of Steve Coll, President and CEO, New America 
       Foundation and Former Managing Editor, The Washington Post

    Thank you for the opportunity to testify before the Committee about 
the rapid changes unfolding in American journalism and what steps 
Congress might consider in response.
    American journalism has entered a phase of what the economist, 
Joseph Schumpeter, called ``creative destruction.'' It is an apt 
framework in this case because both creative and destructive forces are 
at work on American journalism simultaneously--and at a stunning pace.
    On the creative side, there is much to celebrate. The World Wide 
Web has collapsed the barriers to entry in publishing and broadcasting, 
and by doing so opened American public discourse to countless new 
voices. In journalism, since the late 1990s, we have witnessed the 
advent of skilled new public-minded Web publishers and entrepreneurial 
journalists across the United States, some working in for-profit 
settings, and others in nonprofit settings; the spread of new 
technologies that aid investigative reporting; the development of low-
cost documentary and video journalism of excellent quality; and a new 
era in which American readers can directly access reporting by 
courageous journalists working in their own national systems, from 
Pakistan to Indonesia to South Africa. No doubt these and other new 
iterations of journalism and its consumption ushered in by the digital 
revolution will expand innovatively, and will make many important 
contributions to our culture and constitutional system in the years 
ahead.
    Unfortunately, at present, the rate of destruction of professional 
journalism--and its output of independent reporting on American public 
institutions and on international affairs--is far outpacing the ability 
of new institutions to reproduce what is being lost, particularly in 
its civic functions. Secular and cyclical economic forces have suddenly 
combined to dismantle the business models that have for decades 
supported independent, public-minded reporting for large general 
audiences about local and state government, Congress, the executive 
branch, and international affairs. According to one organization that 
tracks newspaper job losses, the industry shed an estimated 15,970 jobs 
in 2008 and 8,484 through April of this year. The rapid and large-scale 
loss of independent reporting by many of these professionals, without 
any prospect of its replacement by new institutions in the foreseeable 
future, is an urgent matter of public interest.
    It is uncomfortable, even counterintuitive, for a journalist to 
suggest that Congress might consider a crisis in journalism as a venue 
for legislation. The independence of journalism from government is an 
obvious strength of our constitutional system. For a free press to 
remain free and to carry out its constitutionally sanctioned role of 
informing the public and holding private and public power to account on 
behalf of citizens, journalists and the institutions that house them 
must retain and protect this independence.
    Nonetheless, in limited but important and appropriate ways, 
Congress already shapes the environment in which American journalism is 
practiced. For example, in authorizing the licensing of scarce 
broadcasting spectrum, Congress has correctly insisted that the public 
interest be considered in those licensing processes, alongside private 
interests. Also, for four decades, year in and year out, through the 
Corporation for Public Broadcasting, and through the National Endowment 
for the Humanities, Congress has overseen arms-length systems of 
Federal funding that touch upon journalistic institutions and practice, 
albeit with mixed results. And in the tax code governing public 
charitable activity, Congress and the Internal Revenue Service have 
appropriately designated as charitable the activities of some 
educational and nonprofit journalistic institutions, although they have 
done so without an adequate degree of clarity.
    The essential question is whether the current crisis in journalism 
has brought forward matters of public interest sufficient to warrant 
review and adjustment of those journalism-shaping policies that 
Congress already oversees--and whether those reforms can be undertaken 
without reducing the distance between government and journalism.
    There are opportunities of this character. The principles for 
congressional action and the specific suggestions I would like to make 
all involve areas of policy where Federal law and appropriations 
already touch upon journalism. The standard against which these and 
other comparable suggestions for reform should be judged is whether, in 
a period of upheaval in a sector of our economy that is part of our 
constitutional design, the reformed policies will advance and protect 
the public interest better than current policies do.

Where Does the Public Interest Lie in Crisis of Newspapers and 
        Journalism?
    Uniquely in the history of journalism, the United States witnessed 
the rise of large, independently owned, constitutionally protected, 
civil service-imitating newsrooms, particularly after the 1960s. These 
newsrooms and the culture of independent-minded but professional 
reporting within them were in many respects an accident of history.
    At newspapers, demographic, economic and technological factors 
created an era of quasi-monopolistic business models; to preserve their 
quasi-monopolies, owners of these properties had incentives to create 
journalism that would be seen as credible and attractive by the 
greatest numbers of readers. Thus the owners invested in ``objective,'' 
politically neutral reporting. They also enjoyed high profit margins 
that allowed the more public minded among them to invest in expensive 
foreign bureaus, national bureaus, and investigative teams. Then, too, 
newspapers' unassailable profit margins encouraged owners to support 
journalism that reported without fear or favor on powerful interests, 
public and private.
    In broadcasting, something similar evolved during the pre-cable, 
pre-digital period of licensed spectrum. Here the culture of large, 
professional newsrooms was more explicitly influenced by Congress, 
which insisted that recipients of scarce spectrum incorporate notions 
of fairness, objectivity and the public interest in their news and 
public affairs operations.
    At the same time, more broadly, the United States witnessed during 
the postwar period a rise in self-conscious ``professions'' and the 
codification of professional standards, such as in law, accounting, 
teaching, medicine, and so on. This civil service-influenced culture 
and aspiration of professionalism leached into journalism, and 
strengthened its practices. Similarly, there was an increased emphasis 
on scientific method in all areas of the social sciences--this trend, 
too, migrated into journalism and generally strengthened its practices 
by fostering an emphasis on peer review, editing, and evidence-based 
reporting.
    As in law, accounting, and medicine, the results have been far from 
perfect, and yet, in the aggregate, journalism during the postwar 
period achieved higher standards of professional performance, and 
produced more independent and constitutionally relevant reporting on 
public institutions and public issues, than ever before. We tend to 
memorialize the role of journalism through examples involving national 
episodes such as the civil rights movement, Vietnam, Watergate, and the 
Global War on Terror, but arguably, it was through the less visible 
role of independent reporting at the local and state levels--the 
constant and increasingly sophisticated watch-dogging of local school 
boards, zoning boards, mayors and state legislatures--that the postwar 
era of professional journalism made its greatest contributions.
    The institutions that that have nurtured this accidental era of 
large-scale, well-resourced professional journalism at every level of 
American governance are now contracting at a remarkable rate of speed. 
For example, according to a recent report by the Pew Center's Project 
for Excellence in Journalism, the number of newspapers accredited to 
cover Congress has fallen by two-thirds since the 1980s. Newspaper 
chains and television networks have closed or drastically reduced staff 
in their Washington bureaus. There have been similar reductions in 
overseas bureaus and in the numbers of professional foreign 
correspondents reporting independently on the countries where the 
United States is making or considering large, risky investments of 
blood and treasure. At the state and local level, the picture is, if 
anything, even worse; newspapers have dramatically reduced their 
coverage of state capitals, school boards, utility regulators, medical 
licensing boards, city councils and other institutions whose decisions 
shape the lives and welfare of every citizen.
    The loss such reporting cannot be rationalized as merely the result 
of the free market's role in arbitrating economic winners and losers. 
The current crisis in journalism has many causes, and failures by 
newspaper owners and journalists alike are certainly factors--but in 
reference to the sudden loss of so much independent reporting, these 
failures are only minor factors. It is important to be clear: 
Technological change and its impact on advertising markets, compounded 
by a steep recession, are much greater factors than reader preferences 
in the crisis that has produced these losses of independent reporting. 
The current crisis in journalism is not fundamentally a crisis in 
readership--it is a crisis of profitable readership.
    In time, perhaps new journalistic institutions and practices will 
make up these sudden, yawning deficits of independent reporting on 
public institutions. But even the most optimistic practitioners of the 
new journalistic models tend to accept that a world in which Web-based 
publishers or aggregators could afford, for example, to simultaneously 
fund and operate professional journalism bureaus in Baghdad, Kabul, 
Islamabad, Europe and Asia is simply not foreseeable at present. These 
new practitioners do hope to fill some of the gap at the local and 
state levels, but even there it is clear that their replacement 
reporting, as it were, will be at best a small fraction of what is now 
being destroyed.
    By far the most important reason that new institutions have not yet 
been able to replace the independent reporting of the old institutions 
is cost. A single foreign bureau operating to the highest professional 
standards may cost $500,000 per year; in a war zone, many multiples of 
that amount. A veteran Statehouse reporter trained in public records 
research and experienced enough to sift through the complexity of 
public policy formation would typically be qualified for government 
jobs at the level of a GS-12 to GS-15 level; private sector pay scales 
in newspaper journalism have generally been similar, with regional 
variations. The new business models of Web-based publishing and content 
aggregation, with rare exceptions, simply cannot yet afford such costs, 
even if they might see value in such reporting and investigation. We 
can posit that new media publishers will commission such reporting when 
their business models permit it, since American news consumers 
demonstrate an undiminished--arguably, a growing--appetite for 
professional journalism.
    How long it may take for such business models to emerge is simply 
unknown. It could be 5 years; it could be 15; it is unlikely to be 25. 
In the meantime, we face the prospect of a lost generation of American 
journalism and the collapse of its civic function--and at a time when 
the country is facing a grave economic crisis; inflective changes in 
government activity, in response to that crisis; and a complex 
international scene where American power, lives and treasure are at 
risk.

What Should Congress Do?
    In this narrative of the crisis of journalism lies a definition of 
the public interest that should frame and galvanize Congressional 
attention. At issue here is a sudden, disruptive, shock-producing 
transition from journalism's old, dying order to a rising, new one. 
Congress should consider how it might review and reshape the policies 
it already oversees to reinforce a stronger bridge from the old order 
to the new one--a bridge constructed to serve the public interest.
    Some of these bridging policies involve shaping technology to 
ensure that public access and the public interest are protected in the 
emerging new media order. For example, in the stimulus legislation, 
Congress has shaped investments that may, if well implemented, insure 
that disadvantaged and rural communities can compete to win greater 
access to broadband technology, and through that access, develop new 
roles as publishers, broadcasters and enfranchised citizens. More 
generally, to shape the digital revolution in the public interest, and 
to ensure that monopolizing private interests do not capture the 
revolution, Congress should enact policies that promote open access to 
both the public airwaves and to non-discriminatory broadband networks, 
open source technology, and inclusion of underserved populations to the 
greatest possible degree.
    Other bridging policies, however, can more directly address the 
sudden loss of independent, professional reporting on public 
institutions and international events, at least for a temporary period. 
The policy suggestions I have to offer should be seen only as a 
framework for further investigation and development. In addition to 
this list, there are undoubtedly other ideas of a similar character 
that I have failed to think about, but which members and expert 
advisers could develop.
    Congress should consider impaneling a commission or review body to 
consider its options for constructive action in greater depth. Such 
policy refinement should be guided by two questions: (1) Without 
reducing the distance between government and journalism, how can 
Congress support independent reporting in the public interest during 
the temporary but disruptive transition in journalism now underway? (2) 
What policies does Congress already oversee that could be reviewed and 
reformed to address this goal?
    In the meantime, here are some specific suggestions:

   Clarify section 501(c)3 of the Internal Revenue code so as 
        to ease the potential conversion of for-profit newspapers and 
        newspaper divisions of corporations to charitable status.

        The question of whether existing for-profit newspapers could be 
        converted successfully to nonprofit status, and to enjoy the 
        tax benefits accorded to public charities, is in some respects 
        untested. Senator Benjamin Cardin has already introduced the 
        Newspaper Revitalization Act which is intended to fully clarify 
        this question, and by doing so, make it easier for individuals 
        or foundations to convert newspapers or newspaper divisions to 
        501(c)3 status, so that they could operate as many nonprofit 
        magazines and publishers do today. Congress might also consider 
        whether there are mechanisms in the tax code or otherwise that 
        could temporarily provide incentives to encourage such 
        conversions and the establishment of supporting endowments.

        There has been much public discourse about whether newspapers 
        might rescue themselves by converting to nonprofit status and 
        developing endowments or other charitable funding, similar to 
        the strategies of many public broadcasters or nonprofit 
        publishers. This approach certainly is no panacea. There are 
        dozens of newspapers with large circulations threatened by 
        changing technology and the bad economy; even in the best case, 
        very few of them can be expected to make this transition to 
        nonprofit strategies. Also, in the end, only the owners of 
        these newspapers are in a position to decide whether to pursue 
        this avenue, and only philanthropists can decide whether to 
        support them; in this sense, a marketplace function, rather 
        than government policy, will ultimately determine the outcomes, 
        as is appropriate.

        However, Congress can at least reduce the barriers in the tax 
        code that may be sources of hesitation for these independent 
        decision-makers. In the end, if even a handful of newspapers 
        find the vision and support necessary to attempt to protect and 
        adapt their newsrooms in this manner, their survival and more 
        gradual evolution into the new order will preserve some 
        independent reporting; help to preserve professional reporting 
        standards during journalism's period of transition; and by 
        doing so, serve the public interest.

   Reform and strengthen the Corporation for Public 
        Broadcasting so that its investments in public broadcasting 
        stations more fully and successfully address the losses in 
        independent reporting on public institutions and international 
        affairs experienced by for-profit newspapers and broadcasters.

        Created by the Public Broadcasting Act of 1967, the Corporation 
        for Public Broadcasting is an independent entity that has been 
        the principal vehicle for Federal investments in American 
        public broadcasting and journalism. Since its formation, CPB's 
        investments have been miniscule compared to those made by the 
        governments of many other industrialized democracies. Still, 
        the corporation offers a significant and tested vehicle for 
        congressional action. Although debates about the CPB's 
        activities have sometimes become politicized, there has long 
        been a bipartisan commitment to the corporation's independence, 
        evident in special funding mechanisms that allocate its 
        budgetary resources 2 years in advance. Today, CPB describes 
        its mission as the promotion of ``an educated and informed 
        civil society through significant, high-quality content and 
        services.'' However, neither CPB's funding levels nor 
        Congress's support for its mission are today adequate to 
        address the losses of independent reporting at newspapers and 
        elsewhere.

        In its next round of appropriations to CPB, Congress should 
        increase its investments in the corporation substantially, and 
        in tandem, it should order the Corporation's leadership to 
        undertake a strategic review designed to direct those increased 
        investments to support independent reporting about public 
        institutions and issues at the local, state, national and 
        international levels, consistent with CPB's statutory mission. 
        This strategic review should consider, among other things, how 
        to direct CPB's investments so that they more purposefully 
        support innovative Web-based strategies that emphasize 
        independent reporting on public matters, based at local public 
        stations. Unburdened by the legacy costs of newspapers, local 
        public broadcasters could develop cost effective strategies for 
        Web-distributed, multi-media, networked independent reporting 
        on local and state government that could at least partially 
        replace the loss of such reporting for general audiences by 
        newspapers. Congress should also consider new measures to 
        further insulate CPB from political interference.

   Reform and strengthen the National Endowment of the 
        Humanities so that its arms-length, competitive, peer-reviewed 
        grant making helps to incubate the skills, careers and new 
        media forms necessary to fill the reporting gaps created by 
        retreating old media.

        NEH was created as an independent agency in 1965 to fund social 
        sciences, humanities and public culture that served the public 
        interest but which did not find adequate support from private 
        institutions. At the time, there was no need to consider 
        journalism or journalists as part of its mission. That has 
        changed.

        Congressional appropriations to NEH's grant making are small, 
        currently in the range of $85 million annually. Congress should 
        consider substantial increases in that amount, and in tandem, 
        it should order NEH or an independent, bipartisan advisory body 
        to consider how these increased investments could best be 
        managed to provide competitive, peer-reviewed grants to enhance 
        independent, nonpartisan, evidence-based reporting about public 
        institutions, public issues, and international affairs. The 
        Knight Foundation's News Challenge Grants, a $5 million 
        competitive grant making program designed to ``improve local 
        online news, deepen community engagement [and] bring Web 2.0 
        tools to local neighborhoods'' is one example of what a 
        redirected and expanded NEH might support.

   Instruct the Federal Communications Commission to strengthen 
        the public service requirement for broadcasters operating with 
        licensed spectrum, perhaps allowing this requirement to be 
        satisfied by contributions to a fund that would be used to 
        finance reporting on public institutions and public issues.

        With this suggestion I am relying on policy work that has been 
        developed by a group of journalism school deans, as described 
        by Alex Jones, director of the Joan Shorenstein Center on the 
        Press, Politics and Public Policy at Harvard University. I 
        understand that the deans' particular idea involves using the 
        contemplated fund to support reporting by journalism school 
        graduates in state capitals, initially in North Carolina, 
        Texas, and California.

        Obviously, there are potential variations on a theme here. The 
        particular forms of independent, nonpartisan reporting 
        supported by this mechanism could come in many flavors, and the 
        financing mechanism could also be integrated with reform and 
        reinvestment at the CPB, in particular. Most appealing about 
        this formulation is that it essentially creates a user's fee on 
        self-selecting licensees of public spectrum and directs that 
        revenue to support independent reporting in the public 
        interest. The user's fee model is potentially attractive both 
        as public policy and as a mechanism to further insulate the 
        financing of independent reporting from political influence.

    Some of these ideas are ripe for immediate consideration in the 
current session. Others might be developed by a more deliberately, 
perhaps by commissioning the nonpartisan, expert review referred to 
above. Obviously, the Federal Government cannot and should not by 
itself ``solve'' the crisis in newspapers and the loss of independent 
reporting this crisis is creating. Even the most expansive portfolio of 
reforms of the sort outlined here would only make a partial 
contribution to the loss of independent reporting that has shaped 
American politics, governance and foreign policy since the Second World 
War.
    Ultimately, the next era of journalism--like the last one--will be 
shaped first and foremost by private investment; second by 
philanthropic and educational institutions; and only in a tertiary way 
by Federal policy and a handful of relatively modest direct 
investments. Nonetheless, the public interest that is located in the 
current crisis should move Congress to creatively reconsider the role 
it already plays. It can make a significant difference.

    Senator Kerry. Thank you very much, Mr. Coll. That's very 
helpful.
    Mr. Simon?

                    STATEMENT OF DAVID SIMON

          FORMER REPORTER, THE BALTIMORE SUN (1982-95)

          AND BLOWN DEADLINE PRODUCTIONS, (1995-2009)

    Mr. Simon. Thank you, Senator.
    I'd also like to say I'm proud to be following Mr. Coll, 
whose work with the Post and The New Yorker, and in his books, 
represents the highest standards of craft. I endorse the last 7 
minutes of testimony.
    My name's David Simon, and I used to be a newspaperman in 
Baltimore. What I say will likely conflict with what 
representatives of the newspaper industry will claim, and I can 
imagine little agreement with those who speak for new media.
    From the captains of the newspaper industry, you may hear a 
certain martyrology, a claim that they were heroically serving 
democracy, only to be undone by a cataclysmic shift in 
technology. From those speaking on behalf of new media, Web 
blogs, and that which goes Twitter, you will be treated to 
assurances that American journalism has a perfectly fine future 
online and that a great democratization is taking place.
    Well, a plague on both their houses. High-end journalism is 
dying in America. And unless a new economic model is achieved, 
it will not be reborn on the Web or anywhere else. The Internet 
is a marvelous tool, and clearly it is the information delivery 
system of our future. But, thus far, it does not deliver much 
first-generation reporting. Instead, it leaches that reporting 
from mainstream news publications, whereupon aggregating 
websites and bloggers contribute little more than repetition, 
commentary, and froth. Meanwhile, readers acquire news from 
aggregators and abandon its point of origin; namely, the 
newspapers themselves. In short, the parasite is slowly killing 
the host.
    It's nice to get stuff for free, of course, and it's nice 
that more people can have their say in new media. And, while 
some our Internet community is rampantly ideological, 
ridiculously inaccurate, and occasionally juvenile, some of 
it's also quite good, even original.
    Understand, I'm not making a Luddite argument against the 
Internet and all that it offers, but you do not, in my city, 
run into bloggers or so-called citizen journalists at city hall 
or in the courthouse hallways or at the bars where police 
officers gather. You don't see them consistently nurturing and 
then pressing others--pressing sources. You don't see them 
holding institutions accountable on a daily basis. Why? Because 
high-end journalism is a profession. It requires daily full-
time commitment by trained men and women who return to the same 
beats, day in and day out. Reporting was the hardest and, in 
some ways, most gratifying job I ever had. I'm offended to 
think that anyone anywhere believes American monoliths as 
insulated, self-preserving, and self-justifying as police 
departments, school systems, legislatures, and chief 
executives, can be held to gathered facts by amateurs, 
presenting the task--pursuing the task without compensation, 
training, or, for that matter, sufficient standing to make 
public officials even care who it is they're lying to or who 
they're withholding information from.
    Indeed, the very phrase ``citizen journalist'' strikes my 
ears Orwellian. A good--a neighbor who is a good listener and 
cares about people is a good neighbor. He is not in any sense a 
citizen social worker. Just as a neighbor with a garden hose 
and good intentions is not a citizen firefighter. To say so is 
a heedless insult to trained social workers and firefighters.
    Well, so much for new media, but what about hold media? 
While anyone listening carefully may have noted that--I'm 
sorry. Cut that part. While anyone listening carefully may have 
noted that I was brought out of my reporting in 1995, that's 
well before the Internet began to threaten the industry, before 
Craigslist and department store consolidation gutted the ad 
base, before any of the current economic conditions applied. In 
fact, when newspaper chains began cutting personnel and 
content, the industry was one of the most profitable yet 
discovered by Wall Street.
    We know now, because bankruptcy has opened the books, that 
The Baltimore Sun was eliminating its afternoon edition and 
trimming nearly 100 reporters and editors in an era when the 
paper was achieving 37-percent profits. Such shortsighted 
arrogance rivals that of Detroit in the 1970s, when automakers 
offered up Chevy Vegas, Pacers and Gremlins without the 
slightest worry that mediocrity would be challenged by better-
made cars from Germany or Japan. In short, my industry 
butchered itself, and we do so at the behest of Wall Street, in 
the same unfettered, free-market logic that has proven so 
disastrous for so many American industries. Indeed, the 
original sin of American newspapering lies in going to Wall 
Street in the first place.
    When locally based family owned newspapers like the Sun 
were consolidated into publicly owned newspaper chains, an 
essential dynamic, an essential trust, between journalism and 
the community served by that journalism was betrayed.
    Economically, the disconnect is now obvious. What did 
newspaper executives in Los Angeles or Chicago care whether 
readers in Baltimore have a better newspaper, especially when 
you can make more money putting out a mediocre paper than a 
worthy one? Where family ownership might have been content with 
10 or 15 percent profit, the chains demanded double that and 
more, and the cutting began long before the threat of new 
technology was ever sensed.
    Editorially, the newspaper chains also brought an ugly 
disconnect into the newsroom and, by extension, to the 
community. A few years after the A.S. Abell family sold the Sun 
to Times Mirror, fresh editors arrived from out of town to take 
over the reins of the paper. They looked upon Baltimore, not as 
a essential terrain to be covered with consistency, to be 
explained in all its complexity, year in and year out, for 
readers who had and would live their whole lives in Baltimore. 
Why would they? They had arrived from somewhere else, and 
they--if they won a prize or two, they would be moving on to 
bigger and better opportunities within the chain.
    So, well before the arrival of the Internet, as veteran 
reporters and homegrown editors took buyouts, news beats were 
dropped, and less and less was covered with rigor or 
complexity. In a city in which half the adult black males are 
without consistent work, the poverty and social services beat 
was abandoned. In a region where unions are imploding and the 
working class eviscerated, where the bankruptcy of a huge steel 
manufacturer meant thousands lost medical benefits and 
pensions, there was no longer a labor reporter. And though it's 
one of the most violent cities in America, the Baltimore 
criminal courts went uncovered for more than a year.
    Meanwhile, the out-of-town editors used manpower to pursue 
a handful of special projects, Pulitzer-sniffing as one does. 
The self-gratification of my profession does not come, you see, 
from covering a city, and covering it well, from explaining an 
increasingly complex and interconnected world to citizens, from 
holding basic institutions accountable; it comes from someone 
handing you a plaque and taking your picture.
    And so, buyout after buyout, from the first staff reduction 
in 1992 to the latest round last week in which nearly a third 
of the remaining newsroom was fired, the newspaper that might 
have mattered enough to charge online for content simply 
disappeared. Where 500 men and women once covered central 
Maryland, there are now 140.
    I don't know if it's too late already for American 
newspapering, but if there's to be a renewal of the industry, a 
few things are certain and obvious. First, the industry is 
going to have to find a way to charge for online content. Yes, 
I've heard the postmodern rallying cry that information wants 
to be free. But, information isn't. It costs money to send 
reporters to London, to Fallujah, to Capitol Hill, and to send 
photographers with them, to keep them there day after day. It 
costs money to hire the best investigators and writers, and 
then back them up with the best editors. And how anyone can 
believe that the industry can fund this kind of expense by 
giving its product away online to aggregators and bloggers is a 
source of endless fascination to me. A freshman marketing major 
in any community college can tell you that if you don't have a 
product for which you can charge people, you don't actually 
have a product.
    Second, Wall Street and free-market lodging, having been a 
destructive force in journalism over the last few decades, is 
now not suddenly the answer. Raw, unencumbered capitalism is 
never the answer when a public trust or public mission is at 
issue.
    Similarly, there can be no serious consideration of public 
funding for newspapers. High-end journalism can and should bite 
any hand that tries to feed it, and it should bite a governing 
hand most viciously.
    Moreover, it's the right of every American to despise his 
local newspaper for being too liberal or too conservative, for 
covering X and not covering Y, for spelling your name wrong 
when you do something notable, and for spelling it correctly 
when you do something dishonorable. As love-hate relationships 
go, it's a pretty intricate one, and an exchange of public 
money would prove unacceptable to all.
    But, a nonprofit model intrigues, especially if that model 
allows for locally based ownership and control of news 
organizations. Anything the government can do in the way of 
creating nonprofit status for newspapers should be seriously 
pursued. And further, anything that can be done to create 
financial or tax-based incentives for bankrupt or near-bankrupt 
newspaper chains to transfer or donate unprofitable 
publications to locally based nonprofits should also be 
considered.
    Last, I would urge Congress to consider relaxing certain 
antitrust prohibitions so that The Washington Post, The New 
York Times, and various there newspapers can openly discuss 
protecting copyright from aggregators and plan an industrywide 
transition to a paid online subscriber base. Whatever money 
comes will prove essential to the task of hiring back some of 
the talent, commitment, and institutional memory that has been 
squandered.
    Absent this basic and belated acknowledgment that content 
matters--in fact, content is all--I don't think anything can be 
done to save high-end professional journalism.
    Thanks for your time and your kind invitation.
    [The prepared statement of Mr. Simon follows:]

 Prepared Statement of David Simon, Former Reporter, The Baltimore Sun 
         (1982-95) and Blown Deadline Productions, (1995-2009)

    Thank you all for the invitation and opportunity to speak on this 
issue today, but I start by confessing reluctance.
    My name is David Simon and I used to be a newspaperman in 
Baltimore. Head and heart, I was a newspaperman from the day I signed 
up at my high school paper until the day, eighteen years later, when I 
took a buyout from The Baltimore Sun and left for the fleshpots of 
Hollywood.
    To those colleagues who remain at newspapers, I am therefore an 
apostate, and my direct connection to newspapering--having ended in 
1995--means that as a witness today, my experiences are attenuated.
    Ideally, rather than listening to me, you should be hearing from 
any number of voices of those still laboring in American journalism. I 
am concerned that the collective voice of the newsroom itself--the 
wisdom of veteran desk editors, rewrite men and veteran reporters is 
poorly represented in this process. But of course newspapers are 
obliged to cover Congress and its works, and therefore the 
participation of most working journalists in today's hearing would 
compromise some careful ethics. I know your staff tried to invite 
working journalists but were rebuffed on these grounds. And so, 
tellingly, today's witness list is heavy with newspaper executives on 
the one hand, and representatives of the new, Internet-based media on 
the other.
    And so, I've accepted the invitation, though to be honest, I'm 
tired of hearing myself on this subject; I've had my say in essays that 
accompany this testimony, and in the episodes of a recent television 
drama, and I would be more inclined to hear from former colleagues if 
they were in a position to speak bluntly.
    I am glad, at least, to be testifying beside Steve Coll, who 
labored at The Washington Post for two decades and whose coverage of 
complex issues upholds the highest journalistic standards. And I will 
leave to Mr. Coll a more careful and considered analysis of where 
journalism and newspapering must travel. I fully agree with his 
fundamental argument that non-profit status is the industry's last 
hope, and I believe his thoughts on the subject are more advanced and 
detailed than my own.
    If Mr. Coll can be prescriptive, I will do my best to be 
diagnostic. I'll set him up by concentrating on what went wrong in 
American newspapering.
    What I say will likely conflict with what representatives of the 
newspaper industry will claim for themselves. And I can imagine little 
agreement with those who speak for new media. From the captains of the 
newspaper industry, you will hear a certain martyrology--a claim that 
they were heroically serving democracy to their utmost only to be 
undone by a cataclysmic shift in technology and the arrival of all 
things web-based. From those speaking on behalf of new media, weblogs 
and that which goes twitter, you will be treated to assurances that 
American journalism has a perfectly fine future online, and that a 
great democratization in newsgathering is taking place.
    In my city, there is a technical term we often administer when 
claims are plainly contradicted by facts on the ground. We note that 
the claimant is, for lack of a better term, full of it. Though in 
Baltimore, of course, we are explicit with our nouns.
    High-end journalism is dying in America and unless a new economic 
model is achieved, it will not be reborn on the web or anywhere else. 
The Internet is a marvelous tool and clearly it is the informational 
delivery system of our future, but thus far it does not deliver much 
first-generation reporting. Instead, it leeches that reporting from 
mainstream news publications, whereupon aggregating websites and 
bloggers contribute little more than repetition, commentary and froth. 
Meanwhile, readers acquire news from the aggregators and abandon its 
point of origin--namely the newspapers themselves.
    In short, the parasite is slowly killing the host.
    It is nice to get stuff for free, of course. And it is nice that 
more people can have their say in new media. And while some of our 
Internet commentary is--as with any unchallenged and unedited 
intellectual effort--rampantly ideological, ridiculously inaccurate and 
occasionally juvenile, some of it is also quite good, even original.
    Understand here that I am not making a Luddite argument against the 
Internet and all that it offers. But democratized and independent 
though they may be, you do not--in my city--run into bloggers or so-
called citizen journalists at City Hall, or in the courthouse hallways 
or at the bars and union halls where police officers gather. You do not 
see them consistently nurturing and then pressing sources. You do not 
see them holding institutions accountable on a daily basis.
    Why? Because high-end journalism--that which acquires essential 
information about our government and society in the first place--is a 
profession; it requires daily, full-time commitment by trained men and 
women who return to the same beats day in and day out until the best of 
them know everything with which a given institution is contending. For 
a relatively brief period in American history--no more than the last 
fifty years or so--a lot of smart and talented people were paid a 
living wage and benefits to challenge the unrestrained authority of our 
institutions and to hold those institutions to task. Modern newspaper 
reporting was the hardest and in some ways most gratifying job I ever 
had. I am offended to think that anyone, anywhere believes American 
institutions as insulated, self-preserving and self-justifying as 
police departments, school systems, legislatures and chief executives 
can be held to gathered facts by amateurs pursuing the task without 
compensation, training or for that matter, sufficient standing to make 
public officials even care to whom it is they are lying or from whom 
they are withholding information.
    The idea of this is absurd, yet to read the claims that some new 
media voices are already making, you would think they need only 
bulldoze the carcasses of moribund newspapers aside and begin typing. 
They don't know what they don't know--which is a dangerous state for 
any class of folk--and to those of us who do understand how subtle and 
complex good reporting can be, their ignorance is as embarrassing as it 
is seemingly sincere. Indeed, the very phrase citizen journalist 
strikes my ear as nearly Orwellian. A neighbor who is a good listener 
and cares about people is a good neighbor; he is not in any sense a 
citizen social worker. Just as a neighbor with a garden hose and good 
intentions is not a citizen firefighter. To say so is a heedless insult 
to trained social workers and firefighters.
    So much for new media. But what about old media?
    When you hear a newspaper executive claiming that his industry is 
an essential bulwark of society and that it stands threatened by a new 
technology that is, as of yet, unready to shoulder the same 
responsibility, you may be inclined to empathize. And indeed, that much 
is true enough as it goes.
    But when that same newspaper executive then goes on to claim that 
this predicament has occurred through no fault on the industry's part, 
that they have merely been undone by new technologies, feel free to 
kick out his teeth. At that point, he's as fraudulent as the most self-
aggrandized blogger.
    Anyone listening carefully may have noted that I was bought out of 
my reporting position in 1995. That's fourteen years ago. That's well 
before the Internet ever began to seriously threaten any aspect of the 
industry. That's well before Craig's List and department-store 
consolidation gutted the ad base. Well before any of the current 
economic conditions applied.
    In fact, when newspaper chains began cutting personnel and content, 
their industry was one of the most profitable yet discovered by Wall 
Street money. We know now--because bankruptcy has opened the books--
that The Baltimore Sun was eliminating its afternoon edition and 
trimming nearly 100 editors and reporters in an era when the paper was 
achieving 37 percent profits. In the years before the Internet deluge, 
the men and women who might have made The Sun a more essential vehicle 
for news and commentary--something so strong that it might have charged 
for its product online--they were being ushered out the door so that 
Wall Street could command short-term profits in the extreme.
    Such short-sighted arrogance rivals that of Detroit in the 1970s, 
when automakers--confident that American consumers were mere captives--
offered up Chevy Vegas, and Pacers and Gremlins without the slightest 
worry that mediocrity would be challenged by better-made cars from 
Germany or Japan.
    In short, my industry butchered itself and we did so at the behest 
of Wall Street and the same unfettered, free-market logic that has 
proved so disastrous for so many American industries. And the original 
sin of American newspapering lies, indeed, in going to Wall Street in 
the first place.
    When locally-based, family-owned newspapers like The Sun were 
consolidated into publicly-owned newspaper chains, an essential 
dynamic, an essential trust between journalism and the communities 
served by that journalism was betrayed.
    Economically, the disconnect is now obvious. What do newspaper 
executives in Los Angeles or Chicago care whether or not readers in 
Baltimore have a better newspaper, especially when you can make more 
putting out a mediocre paper than a worthy one? The profit margin was 
all. And so, where family ownership might have been content with 10 or 
15 percent profit, the chains demanded double that and more, and the 
cutting began--long before the threat of new technology was ever 
sensed.
    But editorially? The newspaper chains brought an ugly disconnect to 
the newsroom, and by extension, to the community as well.
    A few years after the A.S. Abell Family sold The Sun to the Times-
Mirror newspaper chain, fresh editors arrived from out of town to take 
over the reins of the paper.
    They looked upon Baltimore not as essential terrain to be covered 
with consistency, to be explained in all its complexity year in and 
year out for readers who had and would live their lives in Baltimore. 
Why would they? They had arrived from somewhere else, and if they could 
win a prize or two, they would be moving on to bigger and better 
opportunities within the chain.
    So, well before the arrival of the Internet, as veteran reporters 
and homegrown editors took buyouts, newsbeats were dropped and less and 
less of Baltimore and central Maryland were covered with rigor or 
complexity.
    In a city in which half the adult black males are without 
consistent work, the poverty and social services beat was abandoned. In 
a town where the unions were imploding and the working class 
eviscerated, where the bankruptcy of a huge steel manufacturer meant 
thousands were losing medical benefits and pensions, there was no 
longer a labor reporter. And though it is one of the most violent 
cities in America, the Baltimore courthouse went uncovered for more 
than a year and the declining quality of criminal casework in the 
state's attorney's office went largely ignored.
    Meanwhile, the editors used their manpower to pursue a handful of 
special projects, Pulitzer-sniffing as one does. The self-gratification 
of my profession does not come, you see, from covering a city and 
covering it well, from explaining an increasingly complex and 
interconnected world to citizens, from holding basic institutions 
accountable on a daily basis. It comes from someone handing you a 
plaque and taking your picture.
    The prizes meant little, of course, to actual readers. What might 
have mattered to them, what might have made The Baltimore Sun 
substantial enough to charge online for content would have been to 
comprehensively cover its region and the issues of that region, to do 
so with real insight and sophistication and consistency.
    But the reporters required to achieve such were cleanly dispatched, 
buyout after buyout, from the first staff reduction in 1992 to the 
latest round last week, in which nearly a third of the remaining 
newsroom was fired. Where 500 men and women once covered central 
Maryland, there are now 140. And the money required to make a great 
newspaper--including, say, the R&D funding that might have anticipated 
and planned for the Internet revolution--all of that went back to Wall 
Street, to CEO salaries and to big-money investors. The executives and 
board chairman held up their profit margins and got promoted; they're 
all on some golf course in Florida right now, comfortably retired and 
thinking about things other than journalism. The editors took their 
prizes and got promoted; they're probably on what passes for a 
journalism lecture circuit these days, offering heroic tales of past 
glory and jeremiads about the world they, in fact, helped to bring 
about.
    But the newspapers themselves?
    When I was in journalism school in the 1970s, the threat was 
television and its immediacy. My professors claimed that in order to 
survive, newspapers were going to have to cede the ambulance chasing 
and reactive coverage to TV and instead become more like great 
magazines. Specialization and detailed beat reporting were the future. 
We were going to have to explain an increasingly complex world in ways 
that made us essential to an increasingly educated readership. The 
scope of coverage would have to go deeper, address more of the world 
not less. Those were our ambitions. Those were my ambitions.
    In Baltimore at least, and I imagine in every other American city 
served by newspaper-chain journalism, those ambitions were not betrayed 
by the Internet. We had trashed them on our own, years before. 
Incredibly, we did it for naked, short-term profits and a handful of 
trinkets to hang on the office wall. And now, having made ourselves 
less essential, less comprehensive and less able to offer a product 
that people might purchase online, we pretend to an undeserved 
martyrdom at the hands of new technology.
    I don't know if it isn't too late already for American 
newspapering. So much talent has been torn from newsrooms over the last 
two decades and the ambitions of the craft are now so crude, small-time 
and stunted that it's hard to imagine a turnaround. But if there is to 
be a renewal of the industry a few things are certain and obvious:
    First, cutting down trees and printing a daily accounting of the 
world on paper and delivering it to individual doorsteps is 
anachronistic. And if that is so, then the industry is going to have to 
find a way to charge for online content. Yes, I have heard the post-
modern rallying cry that information wants to be free. But information 
isn't. It costs money to send reporters to London, Fallujah and Capitol 
Hill, and to send photographers with them, and to keep them there day 
after day. It costs money to hire the best investigators and writers 
and then to back them up with the best editors. It costs money to do 
the finest kind of journalism. And how anyone can believe that the 
industry can fund that kind of expense by giving its product away 
online to aggregators and bloggers is a source of endless fascination 
to me. A freshman marketing major at any community college can tell you 
that if you don't have a product for which you can charge people, you 
don't actually have a product.
    Second, Wall Street and free-market logic, having been a 
destructive force in journalism over the last few decades, are not now 
suddenly the answer. Raw, unencumbered capitalism is never the answer 
when a public trust or public mission is at issue. If the last quarter 
century has taught us anything--and admittedly, with too many of us, I 
doubt it has--it's that free-market capitalism, absent social 
imperatives and responsible regulatory oversight, can produce durable 
goods and services, glorious profits, and little of lasting social 
value. Airlines, manufacturing, banking, real estate--is there a sector 
of the American economy where laissez-faire theories have not burned 
the poor, the middle class and the consumer, while bloating the rich 
and mortgaging the very future of the industry, if not the country 
itself? I'm pressed to think of one.
    Similarly, there can be no serious consideration of public funding 
for newspapers. High-end journalism can and should bite any hand that 
tries to feed it, and it should bite a government hand most viciously. 
Moreover, it is the right of every American to despise his local 
newspaper--for being too liberal or too conservative, for covering X 
and not covering Y, for spelling your name wrong when you do something 
notable and spelling it correctly when you are seen as dishonorable. 
And it is the birthright of every healthy newspaper to hold itself 
indifferent to such constant disdain and be nonetheless read by all. 
Because in the end, despite all flaws, there is no better model for a 
comprehensive and independent review of society than a modern 
newspaper. As love-hate relationships go, this is a pretty intricate 
one. An exchange of public money would pull both sides from their 
comfort zone and prove unacceptable to all.
    But a non-profit model intrigues, especially if that model allows 
for locally-based ownership and control of news organizations. Anything 
that government can do in the way of creating non-profit status for 
newspapers should be seriously pursued. And further, anything that can 
be done to create financial or tax-based incentives for bankrupt and 
near-bankrupt newspaper chains to transfer or even donate unprofitable 
publications to locally-based non-profits should also be considered.
    Lastly, I would urge Congress to consider relaxing certain anti-
trust prohibitions with regard to the newspaper industry, so that The 
Washington Post, The New York Times and various other newspapers can 
sit down and openly discuss protecting their copyright from aggregators 
and plan an industry wide transition to a paid, online subscriber base. 
Whatever money comes will prove essential to the task of hiring back 
some of the talent, commitment and institutional memory that has been 
squandered.
    Absent this basic and belated acknowledgment that content has 
value--if indeed it still does after so many destructive buyouts and 
layoffs--and that content is what ultimately matters, I don't think 
anything else can save high-end, professional journalism.
    Thank you for your time and again, for your kind invitation.
                                 ______
                                 
                              Attachments

             The Washington Post--Sunday, January 20, 2008

                Does the News Matter To Anyone Anymore?

                             By David Simon

    Is there a separate elegy to be written for that generation of 
newspapermen and women who came of age after Vietnam, after the 
Pentagon Papers and Watergate? For us starry-eyed acolytes of a 
glorious new church, all of us secular and cynical and dedicated to the 
notion that though we would still be stained with ink, we were no 
longer quite wretches? Where is our special requiem?
    Bright and shiny we were in the late 1970s, packed into our 
bursting journalism schools, dog-eared paperback copies of ``All the 
President's Men'' and ``The Powers That Be'' atop our Associated Press 
stylebooks. No business school called to us, no engineering lab, no 
information-age computer degree--we had seen a future of substance in 
bylines and column inches. Immortality lay in a five-part series with 
sidebars in the Tribune, The Sun, the Register, the Post, the Express.
    What the hell happened?
    I mean, I understand the economic pressures on newspapers. At this 
point, along with the rest of the wood-pulp Luddites, I've grasped that 
what was on the Internet wasn't merely advertising for journalism, but 
the journalism itself. And though I fled the profession a decade ago 
for the fleshpots of television, I've heard tell of the horrors of 
department-store consolidation and the decline in advertising, of 
Craigslist and Google and Yahoo. I understand the vagaries of Wall 
Street, the fealty to the media-chain stockholders, the primacy of the 
price-per-share.
    What I don't understand is this:
    Isn't the news itself still valuable to anyone? In any format, 
through any medium--isn't an understanding of the events of the day 
still a salable commodity? Or were we kidding ourselves? Was a 
newspaper a viable entity only so long as it had classifieds, comics 
and the latest sports scores?
    It's hard to say that, even harder to think it. By that premise, 
what all of us pretended to regard as a viable commodity--indeed, as 
the source of all that was purposeful and heroic--was, in fact, an 
intellectual vanity.
    Newsprint itself is an anachronism. But was there a moment before 
the deluge of the Internet when news organizations might have better 
protected themselves and their product? When they might have--as one, 
industry-wide--declared that their online advertising would be 
profitable, that their websites would, in fact, charge for providing a 
rare and worthy service?
    And which, exactly, is the proper epitaph for the generation that 
entered newspapering at the very moment when the big-city dailies--the 
fat morning papers, those that survived the shakeout of afternoon 
tabloids and other weak sisters--seemed impervious, essential and 
ascendant? Were we the last craftsmen prepared for a horse-and-buggy 
world soon to prostrate itself before the god of internal combustion? 
Or were we assembly-line victims of the inert monopolists of early 
1970s Detroit, who thought that Pacers and Gremlins and Chevy Vegas 
were response enough to Japanese and European automaking superiority?
    My own experience is anecdotal, I admit. I was hired out of college 
by The Baltimore Sun in 1983 and worked there until the third round of 
newsroom buyouts 12 years later. When I came to Baltimore, The Sun was 
a dour gray lady, but one of unquestioned substance, and there were two 
competing evening papers. When I left in 1995, we were the last game in 
town, and the newsbeat-by-newsbeat attrition of veteran talent was well 
underway.
    City to city, paper to paper, your mileage may vary. But I'm 
willing to trust in the Baltimore story enough to offer it up as an 
argument for the Detroit analogy.
    Here's Baltimore in the mid-1980s:
    The family-run A.S. Abell Co. owns The Sun and its sister 
publication, the Evening Sun--an afternoon edition that is in direct 
competition with the dying Hearst paper, the News-American.
    In terms of circulation and advertising, the morning Sun is 
ascendant, as all morning papers seem to be, and it's clear that the 
publishers are holding on to the evening edition just long enough to 
drive the last nails into the Hearst coffin. Sure enough, once the 
News-American folds, The Sun undertakes to lure as much circulation as 
possible to its evening edition before combining the two news staffs 
and making the Evening Sun merely a late edition of the morning paper.
    Similarly, The Sun spends the 1980s publishing, in every 
surrounding county, a ``zoned'' tabloid--a locally oriented insert 
largely devoid of hard news or sophisticated storytelling, but filled 
with the hope that more people will subscribe to a newspaper that 
manages now and then to run a photo of someone's kid at the county 
fair.
    The ``tab'' inserts are the last piece of the monopoly puzzle--an 
effort to mitigate against the growth of smaller county papers, and 
ultimately, when they don't achieve all they should, The Sun simply 
sets about buying up smaller papers in Baltimore, Howard and Harford 
counties.
    At the apogee of its power and influence, The Baltimore Sun, with 
the Evening Sun and the tabloid Suns, employs close to 500 newsroom 
personnel. It is a massive operation, and as the monopoly is 
consolidated, it is profitable.
    So there we sat.
    Then came the key moment in the early 1990s, when The Sun junked 
its tabloids and merged the evening and morning staffs, and the 
prevailing wisdom became that the newsroom of the remaining morning 
edition was now too large, that attrition was the order of the day. And 
so it began--a buyout of newsroom veterans, then a second buyout of 
older editors, then a third buyout of more veterans.
    It was, I will argue, the precise moment when the post-Watergate 
future of newspapers--the one that so many of us had sold ourselves--
was made a lie. When I was in J-school, the argument was that the 
siren-chasing would be ceded to television, but newspapers, to thrive, 
would become magazines--thoughtful, stylish, comprehensive. And 
magazines? To compete with newspapers they were going to be recruiting 
literary and investigative giants.
    Better was the watchword. Chevrolets would become Buicks, and 
Buicks were soon to be Cadillacs. And all of them were going to be 
well-built, well-tuned automobiles, offering readers more each day. In 
order to provide something more than the simple immediacy of 
television, newspapers would become organs of sophisticated, unique 
storytelling. They would need to deliver a complex world, to explain 
that world, challenge and contend with it. That's what they told us in 
the Introduction to Journalism lectures, anyway.
    Yet here were the veterans--the labor reporter, the courthouse 
maven, the poverty-beat specialist, the second medical beat guy and the 
prisons and corrections aficionado--damned if they weren't walking out 
the door forever. There would be fresh hires, and some serious players 
would remain, of course. But no longer would it be practical to argue 
that newspapers were going to become more comprehensive, and better 
written--the product of experienced and committed people for whom print 
journalism was a life's calling.
    At the moment when the Internet was about to arrive, most big-city 
newspapers--having survived the arrival of television and confident in 
their advertising base--were neither hungry, nor worried, nor 
ambitious. They were merely assets to their newspaper chains. Profits 
were taken, and coverage did not expand in scope and complexity.
    In my newsroom, I lived through the trend of zoning (give the 
people what's happening in their neighborhood), the trend of brevity 
(never mind the details, people don't read past the jump) and 
ultimately, the trend of organized, clinical prize-groveling (we don't 
know what people want, but if we can win something, that's validation 
enough), not to mention several graphic redesigns of the newspaper.
    I did not encounter a sustained period in which anyone endeavored 
to spend what it would actually cost to make The Baltimore Sun the most 
essential and deep-thinking and well-written account of life in central 
Maryland. The people you needed to gather for that kind of storytelling 
were ushered out the door, buyout after buyout.
    So in a city where half the adult black males are unemployed, where 
the unions have been busted, and crime and poverty have overwhelmed one 
neighborhood after the next, the daily newspaper no longer maintains a 
poverty beat or a labor beat. The city courthouse went uncovered for 
almost a year at one point. The last time a reporter was assigned to 
monitor a burgeoning prison system, I was a kid working the night desk.
    Soon enough, when technology arrived to test the loyalty of 
longtime readers and the interest of new ones, the newspaper would be 
offering to cover not more of the world and its issues, but less of 
both--and to do so with younger, cheaper employees, many of them 
newspaper-chain transplants with no organic sense of the city's 
history.
    In place of comprehensive, complex and idiosyncratic coverage, 
readers of even the most serious newspapers were offered celebrity and 
scandal, humor and light provocation--the very currency of the Internet 
itself.
    Charge for that kind of product? Who would dare?
    Is there still high-end journalism? Of course. A lot of fine 
journalists are still laboring in the vineyard, some of them in 
Baltimore. But at even the more serious newspapers in most markets, 
high-end journalism doesn't take the form of consistent and 
sophisticated coverage of issues, but of special projects and five-part 
series on selected topics--a distraction designed not to convince 
readers that a newspaper aggressively brings the world to them each 
day, but to convince a prize committee that someone, somewhere, 
deserves a plaque.
    And so here we are.
    In Baltimore, the newspaper now has 300 newsroom staffers, and it 
is run by some fellows in Chicago who think that number sufficient to 
the task. And the locally run company that was once willing to pay for 
a 500-reporter newsroom, to moderate its own profits in some basic 
regard and put money back into the product? Turns out it wasn't willing 
to do so to build a great newspaper, but merely to clear the field of 
rivals, to make Baltimore safe for Gremlins and Pacers. And at no point 
in the transition from one to the other did anyone seriously consider 
the true cost of building something comprehensive, essential and great.
    And now, no profits. No advertising. No new readers. Now, the great 
gray ladies are reduced to throwing what's left of their best stuff out 
there on the Web, unable to charge enough for online advertising, or 
anything at all for the journalism itself.
    Perhaps it was all inevitable. Perhaps the Internet is so profound 
a change in the delivery model that every newspaper--even the best of 
the best--is destined to face retrenchment and loss. Perhaps all of 
this was written in stone long before I was ever wandering around a 
student newspaper office with a pica ruler sticking out my back pocket. 
Perhaps everything written above is merely Talmudic commentary.
    Well, what do I know? I have a general studies degree, I didn't 
even meet the J-school requirements, and this HBO gig I've got now 
doesn't exactly qualify me for a grad program at the Wharton School of 
Business.
    But one thing I do know:
    A great newspaper is a great newspaper. And a good newspaper isn't 
great. And a Chevy Vega by any other name is, well, a Chevy Vega.
                                 ______
                                 

               The Washington Post--Sunday, March 1, 2009

             In Baltimore, No One Left to Press the Police

                             By David Simon

    BALTIMORE--In the halcyon days when American newspapers were feared 
rather than pitied, I had the pleasure of reporting on crime in the 
prodigiously criminal environs of Baltimore. The city was a wonderland 
of chaos, dirt and miscalculation, and loyal adversaries were many. 
Among them, I could count police commanders who felt it was their duty 
to demonstrate that crime never occurred in their precincts, desk 
sergeants who believed that they had a right to arrest and detain 
citizens without reporting it and, of course, homicide detectives and 
patrolmen who, when it suited them, argued convincingly that to provide 
the basic details of any incident might lead to the escape of some 
heinous felon. Everyone had very good reasons for why nearly every fact 
about a crime should go unreported.
    In response to such flummery, I had in my wallet, next to my 
Baltimore Sun press pass, a business card for Chief Judge Robert F. 
Sweeney of the Maryland District Court, with his home phone number on 
the back. When confronted with a desk sergeant or police spokesman 
convinced that the public had no right to know who had shot whom in the 
1400 block of North Bentalou Street, I would dial the judge.
    And then I would stand, secretly delighted, as yet another police 
officer learned not only the fundamentals of Maryland's public 
information law, but the fact that as custodian of public records, he 
needed to kick out the face sheet of any incident report and open his 
arrest log to immediate inspection. There are civil penalties for 
refusing to do so, the judge would assure him. And as chief judge of 
the District Court, he would declare, I may well invoke said penalties 
if you go further down this path.
    Delays of even 24 hours? Nope, not acceptable. Requiring written 
notification from the newspaper? No, the judge would explain. Even 
ordinary citizens have a right to those reports. And woe to any fool 
who tried to suggest to His Honor that he would need a 30-day state 
Public Information Act request for something as basic as a face sheet 
or an arrest log.
    ``What do you need the thirty days for?'' the judge once asked a 
police spokesman on speakerphone.
    ``We may need to redact sensitive information,'' the spokesman 
offered.
    ``You can't redact anything. Do you hear me? Everything in an 
initial incident report is public. If the report has been filed by the 
officer, then give it to the reporter tonight or face contempt charges 
tomorrow.''
    The late Judge Sweeney, who'd been named to his post in the early 
1970s, when newspapers were challenging the Nixonian model of imperial 
governance, kept this up until 1996, when he retired. I have few heroes 
left, but he still qualifies.
    To be a police reporter in such a climate was to be a prince of the 
city, and to be a citizen of such a city was to know that you were not 
residing in a police state. But no longer--not in Baltimore and, I am 
guessing, not in any city where print journalism spent the 1980s and 
1990s taking profits and then, in the decade that followed, impaling 
itself on the Internet.
    In January, a new Baltimore police spokesman--a refugee from the 
Bush administration--came to the incredible conclusion that the city 
department could decide not to identify those police officers who shot 
or even killed someone. (Similar policies have been established by 
several other police departments in the United States as well as by the 
FBI.)
    Anthony Guglielmi, the department's director of public affairs, 
informed Baltimoreans that, henceforth, Police Commissioner Frederick 
Bealefeld would decide unilaterally whether citizens would know the 
names of those who had used their weapons on civilians. If they did 
something illegal or unwarranted--in the Commissioner's judgment--they 
would be named. Otherwise, the Baltimore department would no longer 
regard the decision to shoot someone as the sort of responsibility for 
which officers might be required to stand before the public.
    As justification for this change, Bealefeld, in a letter to the 
City Council, cited 23 threats in 2008 against his officers. Police 
union officials further wheeled out the example of the only Baltimore 
police officer killed as an act of revenge for a police-involved 
shooting--a 2001 case in which the officer was seen by happenstance in 
a Dundalk bar, then stalked and murdered.
    Bealefeld didn't mention that not one of the 23 threats against 
officers came in response to any use of lethal force. Nor did he 
acknowledge that 23 threats against a 3,000-officer force in a year is 
an entirely routine number; that the number of such threats hasn't 
grown over the past several years, according to sources within the 
department.
    And union officials were comfortable raising the 2001 case without 
being forced to acknowledge that the officer in that instance most 
probably would have been killed had no newspaper ever printed his name; 
he had testified in open court against the relatives of those who later 
encountered him at the bar and killed him. So the case has scant 
relevance to the change in policy.
    The Commissioner was allowed to stand on half-truths. Why? Because 
The Baltimore Sun's cadre of police reporters--the crime beat used to 
carry four and five different bylines--has been thinned to the point 
where no one was checking Bealefeld's statements or those of his 
surrogates.
    On Feb. 17, when a 29-year-old officer responded to a domestic 
dispute in East Baltimore, ended up fighting for her gun and ultimately 
shot an unarmed 61-year-old man named Joseph Alfonso Forrest, The Sun 
reported the incident, during which Forrest died, as a brief item. It 
did not name the officer, Traci McKissick, or a police sergeant who 
later arrived at the scene to aid her and who also shot the man.
    It didn't identify the pair the next day, either, because The Sun 
ran no full story on the shooting, as if officers battling for their 
weapons and unarmed 61-year-old citizens dying by police gunfire are no 
longer the grist of city journalism. At which point, one old police 
reporter lost his mind and began making calls.
    No, the police spokesman would not identify the officers, and for 
more than 24 hours he would provide no information on whether either 
one of them had ever been involved in similar incidents. And that's the 
rub, of course. Without a name, there's no way for anyone to evaluate 
an officer's performance independently, to gauge his or her 
effectiveness and competence, to know whether he or she has shot one 
person or 10.
    It turns out that McKissick--who is described as physically 
diminutive--had had her gun taken from her once before. In 2005, police 
sources said, she was in the passenger seat of a suspect's car as the 
suspect, who had not been properly secured, began driving away from the 
scene. McKissick pulled her gun, the suspect grabbed for it and a shot 
was fired into the rear seat. Eventually, the suspect got the weapon 
and threw it out of the car; it was never recovered. Charges were 
dropped on the suspect, according to his defense attorney, Warren 
Brown, after Brown alleged in court that McKissick's supervisors had 
rewritten reports, tailoring and sanitizing her performance.
    And so on Feb. 17, the same officer may have again drawn her weapon 
only to find herself again at risk of losing the gun. The shooting may 
be good and legally justified, and perhaps McKissick has sufficient 
training and is a capable street officer. But in the new world of 
Baltimore, where officers who take life are no longer named or subject 
to public scrutiny, who can know?
    In this instance, The Sun caught up on the story somewhat; I called 
the editor and vented everything I'd learned about the earlier 
incident. But had it relied on the unilateral utterances of Baltimore's 
police officials, The Sun would have been told that McKissick had been 
involved ``in one earlier shooting. She was dragged behind a car by a 
suspect and she fired one shot, which did not strike anyone. The 
shooting was ruled justified.''
    That's the sanitized take that Guglielmi, the police spokesman, 
offered on the 2005 incident. When I asked him for the date of that 
event, with paperwork in front of him, he missed it by exactly 6 
months. An honest mistake? Or did he just want to prevent a reporter 
from looking up public documents at the courthouse? (Attempts to reach 
McKissick, who remains on administrative leave, were unsuccessful.)
    Half-truths, obfuscations and apparent deceit--these are the wages 
of a world in which newspapers, their staffs eviscerated, no longer 
battle at the frontiers of public information. And in a city where 
officials routinely plead with citizens to trust the police, where 
witnesses have for years been vulnerable to retaliatory violence, we 
now have a once-proud department's officers hiding behind anonymity 
that is not only arguably illegal under existing public information 
laws, but hypocritical as well.
    There is a lot of talk nowadays about what will replace the 
dinosaur that is the daily newspaper. So-called citizen journalists and 
bloggers and media pundits have lined up to tell us that newspapers are 
dying but that the news business will endure, that this moment is less 
tragic than it is transformational.
    Well, sorry, but I didn't trip over any blogger trying to find out 
McKissick's identity and performance history. Nor were any citizen 
journalists at the City Council hearing in January when police 
officials inflated the nature and severity of the threats against 
officers. And there wasn't anyone working sources in the police 
department to counterbalance all of the spin or omission.
    I didn't trip over a herd of hungry Sun reporters either, but 
that's the point. In an American city, a police officer with the 
authority to take human life can now do so in the shadows, while his 
higher-ups can claim that this is necessary not to avoid public 
accountability, but to mitigate against a nonexistent wave of threats. 
And the last remaining daily newspaper in town no longer has the 
manpower, the expertise or the institutional memory to challenge any of 
it.
    At one point last week, after the department spokesman denied me 
the face sheet of the shooting report, I tried doing what I used to do: 
I went to the Southeastern District and demanded the copy on file 
there.
    When the desk officer refused to give it to me, I tried calling the 
Chief Judge of the District Court. But Sweeney's replacement no longer 
handles such business. It's been a while since any reporter asked, 
apparently. So I tried to explain the Maryland statutes to the shift 
commander, but so long had it been since a reporter had demanded a 
public document that he stared at me as if I were an emissary from some 
lost and utterly alien world.
    Which is, sadly enough, exactly true.
                                 ______
                                 

                      Esquire Magazine--March 2008

                    A Newspaper Can't Love You Back

                        An Essay By David Simon

    The new season of The Wire tackles the world of media, specifically 
The Baltimore Sun, generating a firestorm of controversy around series' 
creator David Simon. In this sneak peek at his essay from Esquire's 
March 2008 issue, Simon offers a tribute to the newsroom he once loved.
    HBO's The Wire has been labeled by many (including us) as the best 
TV drama ever made. The show's fifth and final season began this month 
and it focuses, in part, on the struggles of a daily newspaper in 
decline. That part of the story is set at The Baltimore Sun, and it has 
generated plenty of ink about the strained relationship between creator 
David Simon and The Sun, where he worked as a reporter for 13 years. In 
this advance look at an essay from Esquire's March issue, Simon makes 
his case.
    ***
    TO THIS DAY, I CAN--if I suffer to think on it--stand apart from 
the moment, watching as I try to slip my own skin, to disappear myself.
    I have hair and forty less pounds. I'd pressed my pants for the 
first time all semester, even worn a tie, though I took it off in the 
car, thinking it made me look presumptuous. Shit, I am in that newsroom 
looking like the college kid I am, a fifth-year senior anyway, 
surrounded by the battle-hardened professionals of a delicate, precise 
craft.
    They know I am ridiculous.
    They've read it, in fact.
    At the four o'clock meeting in the conference room, there is 
revelry--at my expense no doubt. From my perch on the metro desk, I 
hear Phelps, the state editor, say something, his words followed by a 
burst of laughter. Fuck, shit, fuck.
    That week--my first as a Baltimore Sun stringer--I had done 
something remarkable. I had managed to declare that oral sex was no 
longer a crime in Maryland. I felt sure of this when I wrote such and 
had it published in my state's largest newspaper. Having edited the 
campus daily the year previous, I was confident in The Diamondback's 
reporting and comfortable using it as boilerplate for Sun articles I 
wrote about the university. And in covering a rape trial involving a 
student victim, I misinterpreted an appellate decision and single-
handedly liberated the blowjob from the shackles of Old Line State 
tyranny.
    The first phone call came from a member of a gay-rights group, and 
while I abhor stereotype as much as the next man, I confess he lisped 
at me in disgust: ``Check your facts, mister. When I suck cock, it's 
very much a crime in Maryland. . . .''
    The second call, somewhat more restrained, came from John 
Bainbridge, The Sun's man at the court of appeals and a lawyer in his 
own right: ``Listen, I read your article today, and I'm not sure you've 
got the appeals decision correct. . . .''
    So it's my first correction--an ugly one. And my secret, sacred, 
wafer-thin plan to write my way onto a major metropolitan daily had 
been rendered ridiculous in a solitary blow. All that remained was a 
Bushido-like end to it, a slow, ceremonial evisceration on the newsroom 
floor.
    Listening to my excuses, Phelps had been short and blunt: ``Write 
the correction and call it in to rewrite.''
    The rewrite man--the legendary Jay Spry--took the time to re-
explain my obvious failings in the matter, all the while addressing me 
as Mr. Simon, as if decorum required the condemned be granted one last 
comic honorific.
    So journalism was out. And I was still about forty credits short of 
an academic degree. Options: I had been a busboy. I had played guitar 
in bad bar bands. I had edited my college newspaper, and now, given the 
chance to report for one of the great gray ladies of American 
newspapering, I was a fucking joke.
    ``What are you going to do?'' my girlfriend asked.
    ``Tend bar, maybe.''
    ``How do you make a grasshopper?''
    ``Rum and coke?''
    A day later and Phelps called again. Some kid had goose-stepped 
down the hall of a campus dormitory and fired a BB pellet into a coed's 
leg a few months back. Seems he was going to be sentenced to community 
service in Upper Marlboro. I hung up the phone, wondrous that my shame 
had not been referenced, then drove to the circuit court the next 
morning.
    And now, with about twenty-five inches filed and sent to the state 
desk, I have come to rest, waiting while editors in the four o'clock 
shape the next day's local front. I am sweating profusely, unsure what 
to do with my hands, my face, my soul. A Styrofoam cup of water sits in 
front of me, untouched. More laughter from the conference room, and 
finally they emerge--Phelps and the others.
    He looks at me, pulls on his mustache, frowns.
    Dead. I am dead to him.
    And then Phelps turns and whispers something to the tall editor 
beside him, something about me, clearly, because the tall guy is 
heading my way. I rise and actually drop my eyes. It will be fast, I 
tell myself. It will be fast and then I can go.
    ``You're Simon?''
    ``Yes.''
    ``Good story today.''
    I wait.
    ``I like the way you held back some of what you had, the quote from 
the Anti-Defamation League guy at the end. Too many people write the 
top of the story and then have nowhere to go.''
    He extends a hand.
    ``I'm Steve Luxenberg. The metro editor.''
    ``The correction,'' I blurt.
    ``Yes,'' he nods, ready for it. ``You can't rely on other people 
for your boilerplate. You need to report everything.''
    He pauses.
    ``But that's a good story going tomorrow.''
    He leaves and I stand there for a long moment, looking around the 
newsroom: Phelps at the state desk, twisting that god-awful mustache, 
editing. Spry and Ettlin on rewrite, catching dictation from Paris or 
Washington. Bainbridge, Banisky, and two dozen others I couldn't yet 
name banging out copy at the deadline rush. An expanse of computer 
terminals and battered desks so vast that it can only belong to one of 
America's great newspapers.
    I have a story in The Baltimore Sun tomorrow. At five that morning, 
I drive to an all-night drugstore, buy six copies, return to bed wide-
eyed, alert.
    ``Good?'' my girlfriend asks.
    ``Local front. Stripped, with art.''
    She gives a small sound, buries her face in a pillow.
    ``The metro editor knows my name.''
    I HAD READ MY MENCKEN. I knew what he said about newspapering, what 
he claimed for the profession. ``The life of kings,'' he called it. And 
for an adolescent growing up in the mid-1970s, it appeared exactly 
that.
    Emerging from childhood, I had seen Halberstam and Hersh take apart 
the fraudulent premises and practices of Vietnam, then followed daily 
as my hometown paper brought down Nixon for stealing an election and 
lying about it. My father, a public-relations man with latent ambitions 
as a newsman, took all the local papers and The New York Times on 
Sundays, as well as every newsmagazine. When I was twelve, he took me 
to Arena Stage for a Front Page revival. ``Who the hell's going to read 
the second paragraph?'' wailed Walter Burns.
    I laughed until I hurt and left the theater oversold. I would be a 
newspaperman. I would join the great gray line of ink-stained hacks, a 
character of the kind that my father knew and loved. From the Swopes to 
the Runyons, from Broun to Pegler to Mencken, then back again to Hecht 
and MacArthur, Homer Bigart and Meyer Berger.
    I was an angry kid, by and large, with a cynic's wariness of 
authority that was in harness with a good newspaperman's contempt of 
cant and hyperbole. I loved a snide turn of phrase. I edited my high 
school paper, pissed off the faculty advisor, who thought about firing 
me, won some awards. I edited my college rag, pissed off the media-
board chairman, who thought about firing me, won some awards.
    I spent the fifth year of college pulling more than a hundred 
bylines in The Sun. They hired me to fill in for a reporter on leave, 
and when that reporter returned, Luxenberg gave me a permanent 
position. At twenty-three, I was the youngest reporter on staff, 
covering ghetto murders, drug raids, and four-car fatals. And while The 
Baltimore Sun might not be the greatest name in major dailies, it was a 
solid, serious enterprise, a second-tier paper with a national 
presence. It was carrying seven foreign bureaus, a twelve-reporter 
Washington bureau, a national desk with its own general-assignment 
staff. And here was the thing in 1983: The Sun was going to get better. 
Most all of America's newspapers were going to improve, except maybe 
for those afternoon editions already being butchered on the altar of 
television news. There was some consolidation still to come, a shaking 
out of the weaker rags in multipaper markets, but on the whole, the big 
market dailies were monopolies, providing the only serious, consistent 
coverage of their cities.
    Watergate and Vietnam had shown how essential a sophisticated 
newspaper could be, had proven that while the daily chase of sirens 
might belong to television, the examination of real issues would demand 
smarter, comprehensive coverage. Television would be the new tabloids, 
but newspapers would hire more and better writers and transform 
themselves into the new magazines. And magazines? Shit, they were going 
to be publishing masterworks if they wanted to compete with the best 
newspaper writing. Twenty-five years ago, newspapers--the big ones at 
least, those controlling their markets--were unrivaled in their 
relevance.
    So The Sun would also rise. This much I knew.
    I AM SITTING in a car on the 900 block of Baylis Street in 
southeast Baltimore, engine off, watching a door and waiting. Zorzi is 
beside me, checking his notes.
    ``Black family? On this street?'' He shakes his head.
    ``Doesn't seem right, does it?''
    It didn't. Baylis ran through Highlandtown, an all-white working-
class neighborhood. But the address is all we have left on the string.
    ``You want to hit the door?''
    ``I don't want to go up there cold,'' I say. ``Let's wait and 
watch. See what's up.''
    And so we settle in. The address has come from the police computer, 
listed as the last location on a twenty-something black guy with a 
particular name. I got that much by convincing a plainclothesman to 
sign into the system and do a search for me.
    The name itself? That came from an old court case, a file Zorzi dug 
from the courthouse basement. Not satisfied with the docket alone, he'd 
found the court reporter and had the full proceedings transcribed, and 
sure enough, a kid named Dontay Carter had used this name and D.O.B. as 
an alias, pretending to be someone else at his sentencing on a gun 
charge.
    So on a hunch, my plainclothesman runs the alias, and we come up 
with a minor arrest 8 years back on Greenmount Avenue and a request for 
a gun permit to work a security job. The permit request gives us this 
Baylis address.
    And the Carter kid? He'd killed a guy, carjacked and abducted a 
couple others--a salesman, a Hopkins physician, taxpayers, white 
people. For a week or so, he was a one-man crime wave until police 
finally ran him down and charged him, identifying him as simply Dontay 
Carter, of no fixed address.
    And so this was journalism. A scavenger hunt--from A to B to Z on a 
patchwork of known facts and guesses. It was not the most important 
story I'd report on, nor my best work. There were stories to be written 
that would argue for social change, stories that might challenge the 
institutional status quo, stories that might win prizes. Many of them 
would be legitimate and some would be manufactured, and, yes, there is 
stuff in my yellowed clip book that creeps into those categories. But 
when I think back on what I love about newspapers, I think of sitting 
in that car, waiting with Bill Zorzi.
    For me, the religion was in the chase, the pursuit of accumulated 
fact and quote, the rush to deadline, and the arrogance of standing up 
like the village griot at the campfire and running down a story that 
hadn't yet been heard. And then the next day, maybe, doing it again.
    For that alone, I can have no regrets. Nah, son, fuck law school. 
And fuck the M.B.A. I'll never have. And fuck all that Chaucer and 
Cervantes and Proust I might never get around to reading. On a given 
day, I learn something that you didn't know and then, my authority 
drawn only from scrawl on pages of a pocket notebook, I write it up 
clean so the rest of you can get your hands filthy with ink, reading my 
righteous shit. In the less fevered lobes of my brain, it was as pure 
as that. I swear it was.
    Never mind the clouds on the horizon. Never mind that the paper was 
sold by the Abell family after a century and a half of local ownership. 
Besides, everyone in the newsroom is congratulating one another on 
having gone to the L.A. newspaper chain, rather than, say, Gannett. If 
you had to get bought, everyone says, Times Mirror was the way to go.
    And yes, there's talk of some buyouts, but the rumors were talking 
about no more than twenty or thirty positions across the newsroom. If 
that happened, it wouldn't cut too deep.
    And then there's the new management coming in. Fresh faces with 
great reps and resumes--John Carroll from Lexington, a Sun veteran, and 
Bill Marimow from Philadelphia. These guys were ascendant, their 
reputations preceding them. Would they be signing on in Baltimore if 
the future here is anything but bright?
    When the first buyout offer was finally on the table--a year's 
salary to anyone who left The Sun voluntarily--I interviewed with The 
Washington Post and was offered a job on their metro desk's 
investigative unit. I turned it down before talking money with anyone, 
telling The Post M.E. I was staying in Baltimore.
    ``I actually resent the notion that everyone thinks there are 
eventually only going to be four papers worth reading.''
    He was polite: ``Let us know if you change your mind.''
    And even after the first buyouts, there was still a lot of talent 
in the newsroom, a reservoir of beat knowledge and institutional memory 
and ethical ballast.
    Beside me in the car that night, Bill Zorzi is the most dogged, 
most wonderfully neurotic reporter I know. To work a story with him is 
to double your reach, and if there is a fact that needed to be known 
and could be known, he would eventually bring it back and lay the 
notebook page in front of you like a house cat offering up a murdered 
mouse.
    And while we sit on Baylis Street, I know that Eileen Canzian--
having covered social services and poverty for years--is quietly 
working sources, pulling Dontay Carter's juvenile files and copying 
each relevant page.
    If I needed mayoral quotes, I had Banisky, who owned City Hall. And 
Warmkessel is over at the city courts if we needed anything else from 
the clerk's office there, just as Ettlin or Jane Smith is on rewrite if 
we need to throw last-minute calls.
    And when it finally comes together and it's time to write, it would 
be Rebecca Corbett moving it to the desk, and she will protect the 
copy. Shit, she'll make it 20, 30 percent better--graf by crafted graf.
    We are good and we are still getting better. And good things come 
to the patient and faithful, to those who sit and wait. Like the black 
guy rolling down the street--age, height, and weight to match the 
police-computer readout. Sure enough, he's pulling on the screen door, 
using his key.
    ``Bill, I have an erection.''
    ``Me too.''
    At the door minutes later, I use the guy's name as if I'd known him 
my whole life, talking fast, leaving no spaces for him to argue or 
usher us out. Dontay Carter pretended to be you in court some years 
back, using your name and D.O.B. Why?
    ``I'm his half-brother.''
    Of course you are.
    ``Do you happen to know where his mother lives?''
    ``No, but my mother might.''
    ``Can we call her? Right now?''
    And after rushing across town and interviewing the stepmother, we 
learn more about the life of a violent young man but that, no, she has 
no idea where Dontay had been staying or where his birth mother can be 
found.
    ``I know she was in the hospital. She got burnt with lye.''
    ``Burnt?''
    ``Someone threw lye on her. Dontay said so.''
    Rebecca is telling us that we have to start writing, that the piece 
needs to be early if it has any chance at The Sunday front. I go back 
to the newsroom, where a full take of Carter's history in foster care, 
along with careful, annotated notes from Canzian, greets me. I leave 
Zorzi on the street, telling him we have to locate the mother, that the 
piece can't run without quotes from the woman who brought Dontay Carter 
into the world.
    He calls every area hospital. He asks for a computer check on ambo 
runs for burn victims going back weeks. He checks with the patrolmen 
working the neighborhood where she's last seen. Nothing.
    Eventually, he remembers that the city fire department had started 
billing for ambulance runs. The communications unit has no record of 
ambo calls for service going back more than a few weeks, but did the 
billing unit, by chance, keep records for longer?
    He pulls a name and an address on Lennox Street.
    ``How the hell did you find me?'' asks the mother as Zorzi comes 
through her door, notepad and pen akimbo.
    ``We got the mother,'' I tell Rebecca minutes later, doing my best 
to make it sound inevitable. We were Baltimore's newspaper, and we were 
writing about a kid who had terrorized Baltimore. And that kid had a 
mother. In Baltimore. Of course we got her.
    As I say, it was not an important story or the best story. It 
doesn't much matter to anyone past The Sunday when it ran. But it sits 
in my mind today as the moment when I was, if not living the life of 
kings, then at least among the princes of my city.
    I AM AT LUNCH with the new managing editor as I prepare to return 
to the newspaper after a second book leave. The first book, Homicide, 
had done well and been made into a television show.
    I co-wrote a script for the drama, won a screenwriting award, and 
was offered a television gig for more money than The Sun could ever 
pay. Instead, I returned to the newsroom and, employing everything I'd 
learned about crime, violence, and nonfiction narrative from the book 
project, managed to become a better reporter.
    After 2 years, I'd gone back on leave to report a second book, a 
year in the life of a city drug corner. I now had an even better sense 
of the city, of the drug war and its frauds, and I was saving string to 
write a four-part series on what ailed the city police department.
    It was complicated: The B.P.D. was caught in a crossfire of bad 
practices, bad policies, and simple circumstance. But complicated was 
what could make the series strong and fresh; complicated was the good 
part. I try to explain, but the M.E. wants to ask instead about 
newsroom morale.
    ``What are people saying?''
    ``About what?''
    ``About me.''
    ``About you? I guess they're waiting to see where you go with it. 
The new hires certainly believe in you and John. You hired them. The 
veterans are waiting to see.''
    I take a breath, venture further: ``You and John came in and said a 
lot of things publicly about the paper being weak, and naturally that's 
taken to heart by the people who were here, working hard. There is some 
deadwood, I know. But there are people doing fine work, and I guess 
they're worried that this isn't acknowledged.''
    ``Who is saying this?''
    I tell him that he's asked me for a general sense of what was being 
said in his newsroom and I had provided such.
    ``Who is saying these things?'' he asks again. ``You can tell me, 
and I won't reveal the source.''
    ``Bill,'' I reply, ``I'm not a snitch.''
    We finish the meal in near silence. On the walk back to the 
newspaper, he asks me again, and I tell him that it is unfair of him to 
ask me to betray the confidence of coworkers.
    ``It's not personal,'' I add.
    He cites Mario Puzo's Godfather, the passage where Tom tells 
Michael that it's business, it's not personal. ``Everything,'' he 
assures me, ``is personal.''
    And for the most part, he will be proved right.
    No, it won't be personal when The Sun closes its evening edition 
and combines staffs, making it a one-newspaper town. And it isn't going 
to be personal when Times Mirror puts together a couple more buyouts to 
reduce the number of reporters and editors on the paper that remained.
    To most, the staffing reductions of the 1990s will seem inevitable, 
almost sensible given the loss of The Evening Sun. But in retrospect, 
this would be the moment when we finally gave up the pretense of being 
even a great regional entity, of transforming The Sun into a newspaper 
with enough resources and authority to truly address modern 
complexities.
    At the very edge of being rendered irrelevant by the arrival of the 
Internet--at the precise moment when their very product would be 
threatened by technology--newspapers will not be intent on increasing 
and deepening their coverage of their cities, their nation, the world. 
They will be instead in the hands of out-of-town moneymen offering 
unfeeling and unequivocal fealty to stockholders and the share price. 
And when the Chicago Tribune Company buys Times Mirror and more buyouts 
follow, the tipping point will be reached. Instead of a news report so 
essential to the high-end readers that they might--even amid the 
turmoil of the Internet--still charge for their product online and off, 
American newspapers will soon be offering a shell of themselves in a 
market unwilling to pay for such and then, in desperation, giving the 
product away for free. The window will close; newspapers will not be 
getting better, stronger, more comprehensive. Not ever again.
    In Baltimore, the response will be to drop beats, to abandon the 
pretense of actually covering the city in detail, to regard 
institutional memory and the need to look at the city's problems 
systemically as, well, quaint. The newsroom culture will instead 
emphasize impact.
    No longer would the journalism be rooted in the organic work of 
reporters sent into the streets to learn new things and then pull 
smart, balanced stories through the keyhole. Impact means prizes. Now 
you pick a target and, to the exclusion of all complexity, you hammer 
on that target, story after story. Most especially, you write 
additional accounts highlighting the ``impact'' that The Sun's coverage 
has achieved--covering your own coverage--the better to show that the 
newspaper has effected change.
    If the newspaper cares about something in December, it cares 
nothing about it in January; the prize cycle follows the calendar year. 
If you can source something to The Sun's reporting--to documents 
obtained by The Sun or The Sun has learned--it reads better than to 
simply cite the facts, even if they are from the public record. If a 
politician fails to respond to your reporting by scheduling a hearing 
or issuing a position paper, you bang on him until he does so.
    And worse still, in the newsroom where I grew up--a semi-
intellectual environment where everyone once seemed to be arguing about 
everything all the time without actually impairing their careers--
dissent will become problematic.
    This is the personal part.
    Because the new way of doing business apparently leaves no place in 
the newsroom for fundamental disagreements about content, about 
reportage, about the substance of what we are doing or not doing. 
Arguments over quotidian matters such as the slant of Mideast coverage, 
or an ethical debate over attribution, or the use and overuse of a 
stylistic device will soon bring transfers and demotions until, 
finally, an exodus begins. And it will not be the deadwood; those 
taking the buyouts or simply leaving outright will be the ones with 
options: Struck, Alvarez, Robinson, Zorzi, Thompson, Wooton, Lippman, 
among far too many others--the departures will be the veteran voices of 
a good newsroom. When they come for Littwin--our best columnist--it 
will involve their anger at a Guild bulletin written during contract 
negotiations.
    ``Bill,'' he tells the managing editor, ``it's not personal.''
    And in response: ``Have you ever read The Godfather?''
    The divide between new hires who embrace the prize culture and the 
old guard, many of whom find it a little shameful, will be exacerbated. 
And old against new is senseless. For the paper to get better, it needs 
to retain the talent it has and add more. They won't be chasing the 
weaker reporters; they'll be alienating the core of the institution, 
leaching as much talent as they hire.
    So I write a memo to the top editor, arguing this privately, urging 
him to reconsider this self-defeating mythology in which no one here 
knew a thing about newspapering until the new regime. Old and new 
together can build this paper into something greater than the sum of 
its parts; new set against old cannot.
    No response, not a word, except the editor manages to spike my next 
story without explanation or comment. I go to see him.
    ``I was disappointed in that story,'' he says.
    ``How so?''
    ``It was trying too hard not to be a newspaper article.''
    ``John, I happen to know the feature editor you brought in here to 
encourage narrative writing--she read the story in the kill basket and 
then came in here and told you she couldn't see why you spiked it. She 
told you that was the kind of story you brought her here to do.''
    He says nothing to that, so I press him: ``That's some of my best 
work, John. If you spiked it because you were mad at my memo, we can 
talk about that. But if you spiked it and you're telling me that kind 
of journalism has no place at The Sun, then I guess I have no place at 
The Sun.''
    ``That,'' he says, ``may be the case.''
    I get up to go, feeling as if I'd cut my right arm off with a 
butter knife. Before I leave, though, I do one last thing: I speak up 
for some people in the newsroom, honest players who had watched as 
standards had changed and who are too scared to complain openly. You've 
hired a lot of good new people, I tell the editor, and I've happily 
worked with many of them.
    But there's a fellow here who is cooking it. He's trying too hard 
to write impact stories and he's making it up and John, we've retracted 
a couple stories already. ``You might win a Pulitzer with a guy like 
that. You might also have to give it back.''
    ``Who?'' he asks.
    I give him the name.
    ``Well,'' he says, ``one bad hire out of twenty-five is a pretty 
good record, don't you think?''
    I allow that it is. Then I go to see Rebecca, who is editing one of 
my last stories. It's about a couple of homicide detectives--smart, 
competent players--who are working a last week before taking 
retirement.
    Her cursor rolls down the screen and she highlights a quote from 
one: ``My friends are all gone now and the place doesn't seem the same 
to me. It's just time.''
    She moves on to some of my own verbiage: ``. . . it isn't the 
casework they plan on remembering; it's the time spent doing that 
work--the camaraderie, the banter, the strange things that a cop sees 
every time he goes out on the street . . .''
    Rebecca Corbett gets it. She starts to cry and I am secretly 
delighted. It's always good when you get your own editor.
    ``You wrote a goodbye,'' she says. ``Didn't you?''
    I tell her that I am, in my mind, a newspaperman still. I just 
don't work for a newspaper anymore. I tell her that I will go to 
television on a lark, learn a new skill set, but I'll eventually get 
back to what it is I'm supposed to be doing.
    Four years later, I am in an editing suite in New York, working on 
an HBO miniseries. And I get a call from an old friend, a veteran of a 
newspaper that once lacked for impact but gave good weight to getting 
it right.
    ``He did it again.''
    ``Who?''
    He gives me the name. And immediately I know.
    This time, the newspaper had been required to apologize privately 
to the Governor. A story--part of a series of articles tailored for a 
prize campaign--claimed that the Governor visited with black ministers 
in Baltimore, solely in response to the power of The Sun's coverage.
    Except it hadn't happened. Not any of it. The meeting was about 
something else entirely. The ministers--one of whom was quoted at 
length about the righteous things he told the Governor about The Sun's 
Pulitzer-worthy issue--had uttered nothing of the sort.
    I am a free agent at that point, clear of any newsroom politics or 
careerist worries. Fuck it, I call the publisher and leave a message. 
But it's the editor who returns the call.
    ``An honest mistake,'' he explains.
    ``John, there's nothing honest about it. This bullshit about having 
impact and winning prizes? It leads to shit like this. The guy's making 
up meetings that never happened. There are quotes that no one ever 
said.''
    ``It was a misunderstanding.''
    ``It's the third time you've retracted one of this guy's stories. 
Not corrections--I'm talking about the very premise of the story having 
to be retracted.''
    ``What were the other two?''
    It took me a long moment to regroup.
    ``John,'' I said finally, ``if I was the editor of a major 
metropolitan daily and I had to retract three stories by the same 
reporter, I would remember it until the day I fucking died.''
    I'm not prescient. At that moment, I can't yet fathom all the 
still-to-come Tribune Company cost cutting at The Sun, the Kafkaesque 
reductions in staffing, the slow-motion demolition of the Washington 
bureau, the shuttering of the foreign bureaus.
    And I am still as clueless as the captains of the newspaper 
industry when it comes to the Internet, still mistaking the Web as 
advertising for the product when, in fact, it is the product. I don't 
yet envision the steep declines in circulation, the indifference of 
young readers to newsprint, the departure of display advertising to 
department-store consolidation and classified space to Craigslist.
    Admittedly, I can't even grasp all of the true and subtle costs of 
impact journalism and prize hunger. I don't yet see it as a zero-sum 
game in which a serious newspaper would cover less and less of its 
city--eliminating such fundamental responsibilities as a poverty beat, 
a labor beat, a courthouse beat in a city where rust-belt unemployment 
and crime devour whole neighborhoods--and favor instead a handful of 
special select projects designed to catch the admiring gaze of a prize 
committee.
    I have no way of knowing that for all of its claims to renewed 
greatness, The Sun will glean three Pulitzers in twelve years, as 
compared to, uh, three Pulitzers awarded to The Sun and its yet-to-be-
shut-down evening edition during the twelve years prior--a scorecard 
that matters only to a handful of resumes and means nothing to the 
thousands of readers soon asked to decide whether they need a newspaper 
that covers less of their world.
    I can't yet see that what ails The Baltimore Sun afflicts all 
newspapers, that few, if any, of the gray ladies are going to be better 
at what they do, that most will soon be staring at a lingering slide 
into mediocrity.
    I only know, as I hang up the editing-suite phone, that I've lost 
my religion, that too much of what I genuinely loved is gone. I turn to 
David Mills, my coproducer on the HBO project. He'd worked with me on 
the college paper, then at The Wall Street Journal, The Washington 
Times, The Washington Post. But we wrote that first television script 
together, and when I returned to the metro desk, he went to Hollywood, 
never looking back.
    ``Brother,'' I say, ``we got out just in time.''
    True enough. But the other day, I saw a column of black smoke due 
east of I-95 just above Eastern Avenue--dark and thick enough that I 
drove there. It was a roadside car fire, no injuries. Nothing worth a 
call to the desk. Good thing, too, because Spry is long dead, and 
Ettlin retired last year. Who I was gonna call it in to, I have no 
clue.

    Senator Kerry. Thanks for your terrific testimony. We 
appreciate it very, very much.
    Mr. Ibarguen?

           STATEMENT OF ALBERTO IBARGUEN, PRESIDENT, 
             JOHN S. AND JAMES L. KNIGHT FOUNDATION

    Mr. Ibarguen. Thank you, Mr. Chairman and Members of the 
Committee, for inviting me to testify.
    Senator Kerry. Pull the mike up close, please.
    Mr. Ibarguen. Oh, I'm sorry. Thank you.
    For the first time in the history of the Republic, it's 
easier for a high school student to learn about the crisis in 
Darfur online than about corruption in local government in many 
local papers. Until recently, the circulation area of a 
newspaper or the reach of a local television or radio signal 
roughly coincided with the physical boundaries of cities and 
counties from which we elected mayors and school boards and 
Members of Congress. Even if we didn't know what was happening 
halfway around the world, for us all politics was local, and so 
was daily news coverage, and it was the news coverage that was 
shared generally, connecting buyers and sellers, as you pointed 
out, Senator, but also citizens to other citizens. Our 
information systems helped define American communities and 
helped give them individuality and character. Those systems 
have changed. The new systems are digital and mobile and not 
bound by geography. The citizen is a user of information more 
than a passive consumer.
    I'm not here to lament the past--that past, which excluded 
many Americans, especially women and minorities, from the main 
pages of newspapers or the evening television broadcasts. On 
the contrary, I welcome the democratization of media and its 
possibilities. The question in my mind is not how to save the 
traditional news industry, but how to meet the information 
needs of communities in a democracy so that the people might, 
as Jack Knight used to put it, ``determine their own true 
interests.''
    The stunning clarity of the First Amendment, that Congress 
shall make no law abridging basic freedoms, including free 
speech and free press, should inform every action you take. 
Nevertheless, there seem at least four areas where 
congressional action might properly and significantly support 
our national transition to digital:
    Number one, I believe nothing Congress can do is as 
important as providing universal, affordable digital access and 
adoption. If the future of democracy's news and information is 
online, then we must ensure that everyone is online and bring 
technology training, digital literacy, and higher-quality 
networks to our local communities.
    Three great divides block that goal, and they are economic, 
generational, and geographic. In an age where entry-level jobs 
at McDonald's or Wal-Marts require online applications, access 
must be general and available and affordable. Rural areas are 
notoriously underserved, and should be the focus of your 
concern to provide equal access to the whole nation. And age is 
the third great divide. Groups like AARP are already focusing 
on this issue and might be willing partners in training and 
outreach.
    Federal stimulus money for universal digital access is a 
smart initial investment. Support should also be given to media 
literacy programs that already have trained thousands of 
students to be more sophisticated media users.
    Number two, this is a time for experimentation, and 
government should support that. The examples of experiments 
that Knight Foundation has funded and that I cited in my 
written testimony were offered as illustrations of what one 
organization, small by comparison to government, can do to 
support the imagination of people who will eventually figure 
out what will work. Through funding of universities and other 
not-for-profit groups, I believe there is a role for government 
in spurring innovation in news delivery.
    Number three, newspapers and broadcasts are not dead, and 
there may be ways to support their extended usefulness. There 
are implications in the decline of newspapers, separate from 
the delivery of information, of course. In many communities, 
including my own hometown of Miami, newspapers mean good jobs, 
not just for the writers, but for truckdrivers, press 
operators, and the large sales force. Congress might seek to 
encourage the creation of not-for-profits or L3Cs, local news 
organizations--I agree with Mr. Simon--and perhaps encourage 
the conversion of for-profit news businesses into not-for-
profit community-based, mission-driven organizations. These 
measures will, unfortunately, not solve the revenue shortfalls 
of traditional media, nor turn around current economic 
conditions. But by relieving profit pressures, it might help 
them extend their useful life until we figure out what's next 
and what online model can afford professional journalists.
    And number four, I believe there's a role for public media. 
Public media reaches the entire nation. That has enormous 
educational, news, and security implications. Contemplating new 
technologies to distribute information, the Obama transition 
team discussed a concept they called ``Public Media 2.0,'' an 
approach that would make PBS and NPR more inclusive and 
engaging of their audiences. I believe that should be 
encouraged.
    We're living a moment of extraordinary creativity. We will 
be a nation of media users, not consumers. We're going from the 
information model of one to many, of ``I broadcast, you 
listen'' to many all made possible by technology.
    Before Gutenberg, the monks copied illustrated manuscripts 
and were the keepers of information. Long after Gutenberg, 
there was the Renaissance, when society had more or less 
figured out how to handle information. But, those uncertain 
years in between, when Gutenberg's technology broke the old 
rules and allowed something new, called ``literacy,'' are like 
the years we live in today. Congressional action to determine 
what news and information gets to our citizens is certainly not 
your intent, and I agree with you, but I hope this is the 
beginning of great new serious action by Congress leading to 
the encouragement of experimentation to enable markets to find 
their way, to promote the evolution of Public Media 2.0, and, 
most urgent of all, to provide affordable, digital access to 
every American.
    Thank you for this opportunity.
    [The prepared statement of Mr. Ibarguen follows:]

          Prepared Statement of Alberto Ibarguen, President, 
                 John S. and James L. Knight Foundation

    Thank you, Mr. Chairman and Members of the Committee, for inviting 
me today.
    For the first time in the history of the Republic, news and 
information is being delivered on platforms far broader than the 
geographic boundaries of our democratic institutions. Until recently, 
the circulation area of a newspaper or the reach of a local television 
or radio signal roughly coincided with the physical boundaries cities 
and counties--of districts from which we elected mayors, school boards 
or Members of Congressmen, and in which we sent our children to 
schools, the places where we knew our neighbors, worked and shopped.
    We're already in an era where it is more likely that a high school 
student can more easily access information about swine flu or the 
crisis in Darfour than corruption in city government or decisions about 
education in his town.
    Mine is not a lament for a past that excluded many in our society, 
especially women and minorities, from the main pages of a newspaper. 
Nor do I pine for the symbolic authority of three, broadcast 
television, white male anchors. I enthusiastically welcome the 
democratization of media and am thrilled by its possibilities.
    At the same time, it's important to note that the information 
systems, print and broadcast, that helped define American communities, 
that helped give them individuality and character, has changed 
dramatically and continues to change rapidly. The end result may be a 
more informed national and international audience but I am concerned 
that it not be at the price of an insufficiently informed local 
electorate.
    So the focus of our concern should be to meet the information needs 
of our communities. Our health, our security and our prosperity, depend 
on meeting the needs of a democracy built, as ours is, on the 
assumption of an informed electorate.
    I commend you for taking on this issue.
    This question is not, of course, how to save the newspaper and 
broadcast news industries. It is a matter of ensuring that the 
information needs of communities in a democracy are met to a sufficient 
degree that the people might, as Jack Knight put it, be informed so 
they might ``determine their own true interests.''
    I confess to great qualms about the role of government in this 
arena.
    The stunning clarity of the First Amendment, that Congress shall 
make no law abridging five basic freedoms, including free speech and 
free press, should inform every action you take. My own sense is that 
you have a role--even a duty--to protect free speech and free press, 
perhaps even as an enabler, as in the case of public broadcasting. But 
not as a participant or controller of information, not if we believe in 
the Jeffersonian idea of checks and balances that has served this 
Nation well.
    With respect, we at Knight Foundation believe that there are at 
least four areas where Congressional action might properly and 
significantly help our transition from paper and local broadcast to 
digital.

        1. Nothing Congress can do is as important as providing 
        universal digital access and adoption.

        If the future of democracy's news and information is online--
        then we must ensure everyone is online. Otherwise, we 
        disenfranchise millions of our fellow citizens.

        Even today, if you're not digital, you're a second class 
        citizen in the United States. You're second class politically, 
        economically and even socially. There are three great digital 
        divides and they are economic, geographic and generational.

        Poor people, by and large, do not and cannot have access today. 
        As low as the price has gotten, it is still too high for too 
        many Americans. In an age where application for an entry level 
        job at MacDonald's or Wal-Mart must be made online, the 
        economic divide is real and there is a role for government in 
        bridging it. The focus should be not just on universal access 
        and lowering prices. It should also be on universal adoption by 
        increasing the perceived value of Internet access by bringing 
        technology training, digital literacy and higher quality 
        networks to our local communities.

        Rural areas are notoriously underserved and American citizens 
        who live outside of urban do not have access to the same 
        information as urban dwellers. They are simply being treated as 
        second-class.

        Age is the third great divide. The ever-changing digital world 
        naturally appeals to the ever-changing young. That said, groups 
        like the AARP are already focusing on this issue and would be 
        willing partners in training and outreach.

        These are daunting divides, but America possesses great 
        institutions and innovations--from libraries to wireless 
        technologies--that can help.

        Already, universities like Texas, the City University of New 
        York, Duke, UCLA, the Cronkite School at the Arizona State, to 
        name just a few, are studying the matter and sponsoring 
        conferences. Knight Foundation was created to focus on these 
        issues, so it's no surprise that we're active in the area and 
        support many of these initiatives. But I'm glad to report that 
        others, like MacArthur Foundation have seriously engaged in the 
        field and more are joining, including a recent grant from 
        Atlantic Philanthropies to support investigative journalism at 
        the Huffington Post.

        Groups like One Community in Cleveland, Ohio are actively 
        assisting local and regional communities reach their broadband 
        potential.

        Next Thursday, the organization, Free Press, based here in 
        Washington, will hold a seminar on this issue at the Newseum. 
        They will gather more than 400 citizens from around the country 
        to debate the issue and propose government policy and citizen 
        action.

        Next Wednesday, Aspen Institute will convene a further meeting 
        of its Knight Commission on the Information Needs of 
        Communities in a Democracy, a group of citizens ably co-chaired 
        by my fellow panelist, Marissa Mayer and former Solicitor 
        General, Ted Olson. The Knight Commission will issue its 
        findings later this year but already has received hundreds of 
        comments from the public, which we will be glad to share with 
        the Committee's staff.

        Greater use of Federal stimulus money for universal digital 
        access should be encouraged. Support should also be given to 
        media literacy programs like the ones developed by State 
        University of New York at Stony Brook, where thousands of their 
        students emerge from an intensive course far more sophisticated 
        media users.

        2. This is a time for experimentation.

        At Knight Foundation, we've decided to fund dozens of 
        experiments seeking to find ways to use digital platforms to 
        provide communities with information they want and need. Our 
        work has ranged from funding experiments like Spot.us, 
        Everyblock.com, and the Media Lab at MIT to supporting online 
        dailies like the Voice of San Diego, ChiTown Daily News in 
        Chicago, Gotham Gazette in New York, Village Soup in Maine and 
        MinnPost in Minnesota. We've also funded World Wide Web 
        inventor, Sir Tim Berners-Lee's efforts to bring fact-checking 
        programs to the web and to start the WWWeb Foundation to 
        support further experimentation with news on the web.

        I cite these not as definitive examples but as illustrative of 
        what one organization, small by comparison to government, can 
        do to support the imagination of the people who will eventually 
        figure out what will work . . . what will be the ``killer app'' 
        that will substitute for newspapers and local broadcast news. A 
        worthy area of exploration is what role government can play in 
        encouraging the experimentation that is so natural to American 
        markets.

        3. Newspapers and broadcast are not dead and there may be ways 
        to support their extended usefulness.

    With respect, Congress should review laws that prohibited the 
combination of print and broadcast operations. At the time those laws 
were passed, the people's interest lay in preventing the concentration 
of power and to encourage a democratic diversity of voices. One might 
question whether, given the trends accelerated by the current 
recession, this is still a valid concern and whether the bankruptcy of 
a news organization that is not allowed to merge to survive serves the 
democracy. I acknowledge the deep philosophical divide that has existed 
on this issue and question whether, with the decline of broadcast, it 
makes sense to combine two challenged businesses. But I think it is at 
least worth a fresh look under current circumstances to see if a 
resulting combination, perhaps combined with stronger use of new and 
social media, can help to survive traditional news operations that 
still have such great expertise in reporting and presenting news in 
ways that make sense to the American public.

        Congress might also seek to make easier or more inviting the 
        creation of not-for-profit local news organizations, or the 
        conversion of for-profit news businesses into non-profit, 
        community-based, mission-driven organizations. In that 
        connection, the L3C proposals encouraging limited profit 
        organizations might also help the transition. These will not 
        solve overall revenue issues of traditional news operations but 
        will almost certainly help them extend their useful life until 
        we, as a society, figure out what will be next.

        4. There is a role for public media.

        The Obama transition team discussed a document called Public 
        Media 2.0. An approach to public media that requires the rapid 
        transition to a different kind of PBS and NPR, more inclusive 
        and engaging of their audiences, should be encouraged. The 
        challenges of changing those traditional organizations are 
        great but the leadership is willing and able.

        It is important to note that public media has the capacity to 
        reach the entire nation. That has enormous security 
        implications, in addition to its role as educator and news 
        producer. Using new technologies to distribute information and 
        to store vast repositories of searchable, public media content, 
        the new generation of public journalism and education has 
        enormous potential.

    We're living a moment of extraordinary creativity. I like the 
analogy of our time to the years just after Guttenberg invented the 
printing press. Before Guttenberg, the monks who copied illustrated 
manuscripts were the keepers of information and there was order. Long 
after Guttenberg, there was the Renaissance, when society more or less 
figured out how to handle information. But those crazy years in-
between, when Guttenberg's technology allowed something new called 
literacy, are like the years we're living in today, when the World Wide 
Web allows a form and kind of communication we did not know even as 
recently as the 1980s.
    The media that we're going to and that is going to be effective is 
not only digital but mobile and the object is going to be a media user, 
not a passive consumer. We will be a nation of media users, not 
consumers.
    We're going from the information model of one-to-many, of ``I 
broadcast/You listen'' to many-to-many and even many-to-one made 
possible by technology. We're moving from slower form print and film 
delivered through stationary furniture or transmission monitors to 
digital transmission of images on portable devices that are clear and 
allow interactivity.
    Congressional action that will determine the news and information 
allowed to our citizens is certainly not the object of your inquiry and 
I agree with you. I hope this is the beginning of great and serious 
action by Congress to encourage experimentation, to enable markets to 
find their way, to promote the evolution of public media 2.0 and, most 
urgent of all, to provide digital access to every American.
    Thank you for the opportunity to share these observations.

    Senator Kerry. Thank you for that thoughtful statement. 
Appreciate it.
    Mr. Moroney?

    STATEMENT OF JAMES M. MORONEY III, PUBLISHER AND CHIEF 
           EXECUTIVE OFFICER, THE DALLAS MORNING NEWS

    Mr. Moroney. Good afternoon. Chairman Kerry and Members of 
the Subcommittee, I want to thank you for holding this hearing 
today on the future of journalism.
    I'm appearing today in my role as Publisher and CEO of The 
Dallas Morning News, and also as a member of the Executive 
Committee of the Newspaper Association of America.
    In communities of all sizes throughout our country, daily 
newspapers play an indispensable role in informing our citizens 
about local issues and newsworthy events, which is critical to 
the functioning of a vibrant democracy. The reason newspapers 
are so essential to a well-informed public is simple; in most 
markets, newspapers have far and away the most extensive news-
gathering resources of any local media. At The Dallas Morning 
News, for example, we spend more than $30 million per year in 
our news-gathering operation, and we have more reporters on the 
street than the ABC, NBC, CBS, and FOX affiliates in our market 
combined.
    It has been well documented that the newspaper is in a very 
real crisis. In the past several months alone, one major market 
daily has folded, another is surviving only as a scaled-down 
online news service, and a handful of others have cut back 
their printing operations.
    Since December, five of the major newspapers companies have 
declared bankruptcy. Virtually all publishers in every market, 
large and small, have been forced to lay off highly valued 
journalists and other employees, and take other drastic cost-
saving measures. Unfortunately, we have not been immune to 
these trends at The Dallas Morning News.
    The problem, ironically, is not really a loss of audience. 
Newspaper readership remains very strong. In fact, more people 
read a newspaper the Monday after this year's Super Bowl than 
actually watched the big game on Sunday. And that doesn't 
include all the people who go online to read what newspapers 
published.
    The problem is that, because of the intense competition for 
advertising, particularly from Internet-based companies, the 
newspaper share of the overall advertising market has dropped 
dramatically. If the current downward trend continues--and we 
have seen it this way for the first 4 months of this year--
newspapers will have experienced as much as a 50-percent drop 
in advertising revenues over a 3-year period, revenues that 
represent 80 percent of newspapers' total revenue.
    Even online advertising, which has often been hailed as the 
industry's most promising future growth engine, declined in 
2008 and accounted for less than 10 percent of overall 
newspaper revenues.
    The end of the recession--and there will be one--will not 
necessarily mean that these advertising revenues will return to 
newspapers. Newspapers are in the midst of a secular shift that 
is posing a serious long-term threat to the revenues that make 
it possible for the public-service journalism that is done by 
newspapers across this country each and every day.
    So, what can Congress do to help newspapers? Here are three 
things:
    First, as a means of providing newspaper publishers with a 
critical and immediate infusion of capital, Congress should 
pass the Baucus-Snowe bill that would extend the carryback 
period for net operating losses from 2 to 5 years for all 
businesses, not just newspapers. A similar provision was 
included in the economic stimulus package, but, unfortunately, 
this relief was limited to only small businesses.
    Second, Congress should act quickly on legislation 
providing a limited antitrust exemption that will allow 
newspapers some breathing room to share ideas and jointly 
explore innovative business models. This relief, with proper 
but expedited review at the Justice Department, would help 
newspapers transition to the future.
    Third, Congress should ensure that newspaper publishers 
have the means to obtain reasonable compensation from Internet 
companies that reproduce their content for their own commercial 
gain. Some Internet operators routinely free-ride on the 
investments that newspapers are making in local journalism by 
copying or summarizing newspaper content in order to drive 
audiences to their websites, and then gain revenue through the 
selling of advertising. Congress could consider the 
establishment of a consent or content principle that would 
apply to breaking news. This principle bears an interesting 
similarity to the system of retransmission consent adopted by 
this Committee and the Congress in the 1992 Cable Act.
    Again, I want to thank you for the opportunity to appear at 
this hearing today, and I hope that these discussions will lead 
to practical actions that will help maintain the type of 
journalism that our local communities deserve, expect, and 
need.
    [The prepared statement of Mr. Moroney follows:]

              Prepared Statement of James M. Moroney III, 
     Publisher and Chief Executive Officer, The Dallas Morning News

I. Introduction
    Good afternoon, Chairman Kerry, Ranking Member Ensign, Committee 
Chairman Rockefeller, Committee Ranking Member Hutchison and other 
Members of the Subcommittee. My name is Jim Moroney. I am the Publisher 
and Chief Executive Officer of The Dallas Morning News, which serves a 
readership of more than 1.5 million and is the leading newspaper in 
Texas. My company, A. H. Belo Corporation, also owns newspapers in 
Providence, RI and Riverside, CA. I am a member of the Board of 
Directors and Executive Committee of the Newspaper Association of 
America (``NAA''), a nonprofit organization representing nearly 2,000 
newspapers in the U.S. and Canada.
    I would like to thank you for holding this hearing today on the 
critically important topic of the future of journalism in this country. 
Daily newspapers are the Nation's preeminent source of local news and 
investigative journalism. In order to continue serving in these all-
important capacities, newspapers will need both the resources to 
weather these perilous economic times and the flexibility to adjust 
their business models in response to more enduring changes in the 
industry. While there is no silver-bullet solution to the complex 
problems our industry is confronting, there are several steps that 
Congress can take to assist newspapers--the foundation of local 
journalism.

II. Daily Newspapers Are an Indispensable Source of Public Information
    In communities of all sizes throughout the country, daily 
newspapers provide the most comprehensive and highest caliber news and 
information available. As such, newspapers play an indispensable role 
in informing our citizens about local issues and newsworthy events and, 
ultimately, in safeguarding our democracy.
    The reason newspapers are so essential to a well-informed citizenry 
is relatively simple. In most markets, they have far and away the most 
extensive newsgathering resources of any local media. At The Dallas 
Morning News, for example, we spend more than $30 million in our 
newsgathering operation and have more reporters on the street than the 
local ABC, CBS, NBC and FOX affiliates combined. Daily newspapers also 
have an unparalleled dedication to in-depth reporting, analysis and 
investigative journalism. If daily newspapers were unable to continue 
their time-honored practice of pouring extensive time and resources 
into lengthy and costly investigations, we currently see no other 
comparable news provider with the resources and resolve to step into 
this watchdog role, especially at the local level.
    Additionally, it's evident to all that daily newspapers are the 
primary source of information for other media outlets. TV and radio 
stations depend on newspapers for much of their local news. Similarly, 
while online news sources certainly compete with daily newspapers and 
may add personal perspective, much of the commentary on the Internet 
originates from information initially reported by newspapers. Thus, 
without vigorous and financially healthy newspapers, a critical link 
would be missing from the news reporting value chain.
    For all of these reasons, it is not surprising that a growing body 
of empirical evidence confirms that newspapers can have a substantial 
and measurable impact on public life. For example, a study released by 
Princeton University earlier this year examined communities that lost 
newspaper coverage due to the closing of The Cincinnati Post in 
2007.\1\ The study concluded that, in towns that previously had been 
covered by the Post, voter turnout dropped, fewer people ran for public 
office, and more incumbents were re-elected after the paper ceased 
publication. While the study was small in scope, it suggests that the 
absence of daily newspapers could have far-reaching negative effects on 
some of our core democratic principles.
---------------------------------------------------------------------------
    \1\ Sam Schulofer-Wohl and Miguel Garrido, Woodrow Wilson School of 
Public and International Affairs, Do Newspapers Matter? Evidence from 
the Closure of The Cincinnati Post (March 2009).
---------------------------------------------------------------------------
III. Daily Newspapers Are Facing Unprecedented and Acute Financial 
        Pressures
    There can be little question that the newspaper industry is in the 
midst of a monumental retrenchment. In the past several months alone, 
one major market daily has folded, another is surviving only as a 
dramatically scaled down online service, and a handful of others have 
cut back their printing operations substantially. Since December, five 
major newspaper publishers have declared bankruptcy. Virtually all 
publishers in every market--large and small--have been forced to lay 
off journalists, and take other drastic cost-saving measures. Industry-
wide, nearly 9,000 newspaper employees already have lost their jobs in 
the first 4 months of this year.\2\
---------------------------------------------------------------------------
    \2\ See Paper Cuts, at http://graphicdesignr.net/papercuts/.
---------------------------------------------------------------------------
    We have not been immune to these trends at the The Dallas Morning 
News. We have been forced to lay off highly-valued newsroom employees 
during the past 12 months. In addition, we have experienced a number of 
cost-saving measures that have been implemented by our parent company, 
A. H. Belo Corporation, including company-wide salary and benefits 
reductions. Taking these actions has been very difficult for our 
company, but they were done with the ultimate goal of maintaining our 
long-term ability to be the leading provider of local news and 
information in the markets we serve.
    While it is important to discuss the reasons behind the current 
crisis, it is equally important to note one factor that is not causing 
it: a decline in readership. In fact, newspapers today have more 
readers than ever, and their content never has been more popular--even 
among many young people. Although print circulation generally has been 
falling, the audiences of newspaper websites continue to grow at a rate 
that outpaces these losses. Just last week it was reported that print 
circulation dropped 7 percent industry-wide during the past year, but 
online readership of newspaper websites jumped 10.5 percent during the 
same period.\3\
---------------------------------------------------------------------------
    \3\ See Time Arango, ``Fall in Newspaper Sales Accelerates to Pass 
7 percent,'' NY Times, at B3 (Apr. 28, 2009).
---------------------------------------------------------------------------
    Rather, the driving force behind the current downturn in the 
newspaper industry has been a dramatic and relentless drop in 
advertising revenues, which traditionally have accounted for 
approximately 80 percent of newspaper revenues. Over the past 2 years 
alone, advertising revenues have declined 23 percent, and recent 
reports predict an additional 30 percent drop in the first quarter of 
this year alone. This means that, if this downward trend continues, 
newspapers could experience a 50 percent drop in advertising revenues 
over a 3-year period. Even online advertising--which often has been 
hailed as the industry's most promising future growth engine--declined 
in 2008 and accounted for less than 10 percent of overall revenue.\4\
---------------------------------------------------------------------------
    \4\ See PEJ, 2009 State of the News Media (note 2, supra).
---------------------------------------------------------------------------
    The economic recession surely has exacerbated these troubles. 
Advertisers across the country dramatically have cut spending to stem 
their own revenue losses, and this trend has had an inordinate impact 
on newspaper publishers. However, the end of the recession will not 
necessarily mean that these advertising revenues will return. 
Newspapers also have been subject to intense and growing competition 
for consumers and advertising dollars from Internet companies and other 
``new media'' in addition to that from traditional sources such as 
television, radio, cable, yellow pages and direct mail. As a result, 
newspapers are in the midst of a secular shift that is posing a 
serious, long-term threat to the revenues that make their cost-
intensive, public service-oriented journalism feasible.
    If there were an easy fix to this fundamental problem, it already 
would be in the works. Unfortunately, the industry has a lot of work 
ahead of it to create and implement new strategies that will ensure 
that newspapers remain viable and able to continue serving as our 
Nation's foremost providers of news and information long into the 
future.

IV. Newspapers Will Need Assistance from Lawmakers as They Seek to 
        Emerge from the Current Crisis and Reevaluate Their Business 
        Models
    The Dallas Morning News and our fellow NAA members believe that 
there are several steps that Congress and regulators can take that will 
both provide short-term relief to the industry and ensure that, over 
the long term, newspaper publishers will have the flexibility they need 
to explore and implement new business models. These actions consist of: 
(1) temporary tax relief that would extend the carry-back period for 
net operating losses; (2) affording newspapers greater antitrust 
flexibility; and (3) ensuring that publishers are fairly compensated 
for their content. We do not seek a direct subsidy of any kind.
    Temporary Tax Relief: First, as a means of providing newspaper 
publishers with an immediate lifeline, we support legislation (S. 823) 
introduced by Senators Baucus and Snowe, which would extend the 
carryback period for net operating losses (NOLs) from 2 years to 5 
years. In essence, this proposal would enable publishers and other 
businesses to offset losses incurred in tax years 2008 and 2009 against 
earnings over the past 5 years. This bill would provide newspapers with 
a critical infusion of cash that would enable them to better navigate 
through the current economic crisis. It also would help newspapers 
preserve the jobs of journalists and other highly-valued newspaper 
employees, continue providing topnotch in-depth and investigative 
reporting, and invest in initiatives to ensure long-term viability.
    Greater Antitrust Flexibility: Second, the newspaper industry 
should be accorded more flexible antitrust treatment. The antitrust 
laws are essential to fostering competition and protecting consumer 
choice, but when it comes to daily newspapers the enforcement of these 
laws does not reflect current marketplace realities. The application of 
the antitrust laws to newspaper publishers is premised on the now 
outdated view that daily newspapers compete exclusively with one 
another. As the advertising revenues that are the lifeblood of the 
industry increasingly are being siphoned off by the Internet and a host 
of other competitors, it has become painfully apparent that this 
premise no longer holds true.
    Congress should provide critical assistance to newspapers by acting 
quickly on legislation that would provide newspapers with a limited 
antitrust exemption to experiment with innovative content distribution 
and cost savings arrangements. This limited antitrust relief, with 
proper but expedited review at the Department of Justice, would enable 
newspapers to reduce costs and achieve other efficiencies that, in 
turn, would help them maintain the high-quality journalism that is so 
important to our democracy. Such legislation also would provide 
newspapers with some essential breathing room to share ideas and 
jointly explore innovative business models that will help newspapers 
transition for the future.
    Fair Compensation for Newspaper Content: Third, aggregators, search 
engines, and other online news forums routinely receive a free ride on 
the investments that newspapers are making in local journalism. 
Newspaper publishers should be able to obtain reasonable compensation 
from Internet companies that reproduce newspaper content for a 
commercial purpose. Many of these operators copy or summarize a link to 
newspaper content in order to drive search or audience to websites, 
then sell advertising wrapped around this newspaper content. The 
concern here is not the personal use of newspaper-generated content, 
which the majority of newspaper publishers willingly offer for free to 
individual Internet users, but the use of newspaper generated content 
for someone else's commercial gain. Perhaps it is time for Congress to 
establish a principle of ``consent for content'' for breaking news--
similar to the ``hot news'' doctrine recognized by a few states. Such a 
principle bears an interesting similarity to the system of 
retransmission consent adopted by this Committee and the Congress in 
the 1992 Cable Act. There, cable systems and others that carry, and 
profit from the carriage of, local broadcast signals need permission--
that is, ``retransmission consent''--to carry the signals. This system 
serves as a critical means for broadcasters to get a fair return on 
their content, and its underlying rationale could seemingly be extended 
to serve as a financial bulwark for local journalism.

V. Conclusion
    Once again, I appreciate the opportunity to appear before you 
today. Hopefully, these discussions will lead to practical actions that 
will help maintain the type of journalism that local communities 
deserve and expect.

    Senator Kerry. Thanks, Mr. Moroney. And thanks for 
referencing the retransmission concept, which I think does have 
some relevance in the conversation. So, we'll talk about it.
    Ms. Huffington, thank you.

   STATEMENT OF ARIANNA HUFFINGTON, CO-FOUNDER AND EDITOR-IN-
                   CHIEF, THE HUFFINGTON POST

    Ms. Huffington. Thank you, Chairman Kerry and Members of 
the Committee, for inviting me to be part of today's discussion 
on the future of journalism.
    Like any good news story, let me start with a headline. 
Journalism will not only survive, it will thrive. But, the 
discussion needs to move from, ``How do we save newspapers?'' 
to ``How do we save and strengthen journalism, however it is 
delivered?''
    Despite all the dire news about the state of the newspaper 
industry, we are actually in the middle of the Golden Age for 
news consumers who can surf the Net, use search engines, access 
the best stories from around the world, and be able to comment, 
interact, and form communities.
    Journalism plays an indispensable role in our democracy, 
but it's important to remember that the future of journalism is 
not dependent on the future of newspapers. The great upheaval 
the news industry is going through is the result of a ``perfect 
storm'' of transformative technology, the advent of Craigslist, 
dramatic changes in consumer habits, and the dire impact the 
economic crisis has had on advertising. And there is no 
question that, as the industry moves forward, we will need to 
have an enormous amount of experimentation with new revenue 
models and new devices, like the Kindle that you, Senator, 
mentioned at the beginning.
    But, what won't work, and what can't work, is to pretend 
that the last 15 years never happened, that we're still 
operating in the old content economy, as opposed to what Jeff 
Jarvis has called ``the link economy'' and that the survival of 
the industry will be found by protecting content behind walled 
gardens. We've seen that movie, and consumers have given it 
lousy reviews.
    As the Greek philosopher Heraclitus said 2,500 years ago, 
we cannot enter into the same river twice, despite Mr. Simon's 
wishes. No, the future is to be found elsewhere. It's a link 
economy. It's search engines. It's online advertising. It's 
citizen journalism. And the foundation-supported investigative 
funds. That's where the future is. And if you can't find your 
way to that, then you just can't find your way.
    Many online video providers are showing us how. Instead of 
sticking their finger in the dike, trying to hold back the flow 
of innovation by hoarding their content, smart companies have 
begun providing embeddable players that allow content to be 
posted all over the Web, accompanied by links and ads that help 
generate additional traffic and revenue, which is why many, 
many more people, millions more, saw Tina Fey impersonate Sarah 
Palin elsewhere, and not on Saturday Night Live.
    As advertising executive Linda Kaplan Thaler put it, ``We 
never know where the consumer is going to be at any point in 
time, so we have to find a way to be everywhere. Ubiquity is 
the new exclusivity.''
    When I hear the heads of media companies talking about 
restricting content, I can't help feeling the same way I did in 
2001, when I was one of the co-founders of the Detroit Project 
and watched as the heads of the auto industry decided that, 
instead of embracing the future, they would rather spend 
considerable energy and considerable amounts of money lobbying 
the government for tax loopholes for gas guzzling SUVs and 
fighting back fuel efficiency standards. And we saw, Mr. 
Chairman, how well that turned out.
    So, instead of similarly trying to hold back the future, I 
suggest that media executives read ``The Innovator's Dilemma'' 
by Harvard professor Clayton Christensen, and see what he has 
to say about disruptive innovation and the futility of 
resisting it instead of seizing the opportunities it provides.
    And that's why it's imperative, Mr. Chairman, that Congress 
and the FCC make sure they have in place smart policies that 
bridge the digital divide and protect innovators and consumers 
from attempts to undermine Net neutrality or impose, as we've 
recently seen, unjustified charges, like metering, on Internet 
users, and why it's also very important to update the press 
gallery credentialing rules.
    Digital news is a classic case of disruptive innovation. 
Even so, I think all the obituaries for newspapers are 
premature. Many papers are belatedly, but successfully, 
adapting to the new news environment. Plus, until those of us 
who came of age before the Internet all die off, there will be 
a market for print versions of newspapers, because it appears 
to be in our collective DNA. That's why I firmly believe in a 
hybrid future, where all the media players embrace the ways of 
new media, especially transparency, interactivity, and 
immediacy. And new media companies adopt the best practices of 
old media, especially fairness, accuracy, and high-impact 
investigative journalism.
    So, to conclude, this hybrid future will include nonprofit/
for-profit models, like the investigative fund that The 
Huffington Post recently launched, which is backed by nonprofit 
foundations and provides both staff reporters and freelance 
journalists who have lost their jobs the opportunity to pursue 
important stories. There are many other models like that--
ProPublica, the Center for Public Integrity, the Center for 
Investigative Reporting--and I'm sure there'll be many more to 
follow.
    And let's not forget that our current media culture failed 
to serve the public interest by missing, with many honorable 
exceptions, the two biggest stories of our time, the runup to 
the war in Iraq and the financial meltdown. We've had far too 
many autopsies and not enough biopsies. And online news is 
particularly well suited to obsessively follow a story until it 
breaks through the static.
    So, we need to also remind ourselves that the mission of 
journalism has always been truthseeking, not, as it has too 
often become, striking some fictitious balance between two 
sides.
    So, we stand on the threshold of a very challenging, but 
very exciting, future. Indeed, I'm convinced that the best days 
of journalism lie ahead so long as we embrace innovation and 
don't try to pretend that we can somehow hop into a 
journalistic way-back machine and return to a past that no 
longer exists and can no longer be resurrected.
    [The prepared statement of Ms. Huffington follows:]

               Prepared Statement of Arianna Huffington, 
          Co-Founder and Editor-in-Chief, The Huffington Post

    Chairman Kerry, Ranking Member Ensign, and Members of the 
Subcommittee. Thank you for inviting me to be a part of today's 
discussion on the future of journalism.
    Like any good news story, let me start with the headline: 
Journalism Will Not Only Survive, It Will Thrive.
    Despite all the current hand wringing about the dire state of the 
newspaper industry--well-warranted hand wringing, I might add--we are 
actually in the midst of a Golden Age for news consumers.
    Can anyone seriously argue that this isn't a magnificent time for 
readers who can surf the net, use search engines, and go to news 
aggregators to access the best stories from countless sources around 
the world--stories that are up-to-the-minute, not rolled out once a 
day? Online news also allows users to immediately comment on stories, 
as well as interact and form communities with other commenters.
    Since good journalism plays an indispensable role in our democracy, 
we all have a vested interest in making sure that our journalistic 
institutions continue producing quality reporting and analysis. But 
it's important to remember that the future of quality journalism is not 
dependent on the future of newspapers.
    Consumer habits have changed dramatically. People have gotten used 
to getting the news they want, when they want it, how they want it, and 
where they want it. And this change is here to stay.
    As my compatriot Heraclitus put it nearly 2,500 years ago: ``You 
cannot step into the same river twice.''
    The great upheaval the news industry is going through is the result 
of a perfect storm of transformative technology, the advent of 
Craigslist, generational shifts in the way people find and consume 
news, and the dire impact the economic crisis has had on advertising. 
And there is no question that, as the industry moves forward and we 
figure out the new rules of the road, there will be--and needs to be--a 
great deal of experimentation with new revenue models.
    But what won't work--what can't work--is to act like the last 15 
years never happened, that we are still operating in the old content 
economy as opposed to the new link economy, and that the survival of 
the industry will be found by ``protecting'' content behind walled 
gardens.
    We've seen that movie (and its many sequels, including 
TimesSelect). News consumers didn't like them, and they closed in a 
hurry.
    And the answer can't be content creators attacking Google and other 
news aggregators.
    No, the future is to be found elsewhere. It is a linked economy. It 
is search engines. It is online advertising. It is citizen journalism 
and foundation-supported investigative funds. That's where the future 
is. And if you can't find your way to that, then you can't find your 
way.
    Online video offers a useful example of the importance of being 
able to adapt. Not that long ago, content providers were committed to 
the idea of requiring viewers to come to their site to view their 
content--and railed against anyone who dared show even a short clip.
    But content hoarding--the walled garden--didn't work. And instead 
of sticking their finger in the dike, trying to hold back the flow of 
innovation, smart companies began providing embeddable players that 
allowed their best stuff to be posted all over the web, accompanied by 
links and ads that helped generate additional traffic and revenue.
    When I hear the heads of media companies talking about 
``restricting'' content or describing news aggregators as 
``parasites,'' I can't help feeling the same way I did in 2001, when I 
was one of the cofounders of The Detroit Project, and watched as the 
heads of the auto industry decided that instead of embracing the future 
they would rather spend considerable energy and money lobbying the 
government for tax loopholes for gas-guzzling behemoths, fighting back 
fuel efficiency standards, and trying to convince consumers through 
billions in advertising that SUVs were the cars that would lead America 
into the 21st century.
    Instead of trying to hold back the future, I suggest that media 
executives read The Innovator's Dilemma by Clayton Christensen, and see 
what he has to say about ``disruptive innovation'' and how, instead of 
resisting it, you can seize the opportunities it provides.
    And that's why it's imperative, Mr. Chairman, that Congress and the 
FCC make sure they have in place smart policies that bridge the digital 
divide, ensure competition among Internet service providers, and 
protect innovators and consumers from attempts to undermine net 
neutrality or impose unjustified charges--like metering--on Internet 
users.
    Digital news is a classic case of ``disruptive innovation''--a 
development that newspapers ignored for far too long.
    Even so, I think all the obituaries for newspapers we're hearing 
are premature. Many papers are belatedly but successfully adapting to 
the new news environment. Plus, it's my feeling that until those of us 
who came of age before the Internet all die off, there will be a market 
for print versions of newspapers. There is something in our collective 
DNA that makes us want to sip our coffee, turn a page, look up from a 
story, say, ``Can you believe this?'' and pass the paper to the person 
across the table. Sure, you could hand them your Blackberry or laptop . 
. . but the instinct is different (and, really, who wants to get butter 
or marmalade on your new MacBook Pro?).
    I firmly believe in a hybrid future where old media players embrace 
the ways of new media (including transparency, interactivity, and 
immediacy) and new media companies adopt the best practices of old 
media (including fairness, accuracy, and high-impact investigative 
journalism).
    This hybrid future will include nonprofit/for profit hybrids, like 
the Investigative Fund the Huffington Post recently launched.
    As the newspaper industry continues to contract, one of the most 
commonly voiced fears is that serious investigative journalism will be 
among the victims of the scaleback. And, indeed, many newspapers are 
drastically reducing their investigative teams. Yet, given the multiple 
crises we are living through, investigative journalism is all the more 
important. For too long, whether it's coverage of the war in Iraq or 
the economic meltdown, we've had too many autopsies and not enough 
biopsies.
    The Investigative Fund is our attempt to change this--backed by 
nonprofit foundations interested in giving freelance reporters, many of 
whom have lost their jobs, the ability to pursue important stories. 
Others, like ProPublica, The Center for Public Integrity, Spot.US, and 
The Center for Investigative Reporting are pursuing different not-for-
profit investigative models. More will follow.
    We will also see more citizen journalism--not as a replacement for 
traditional journalists, but as a way of augmenting their coverage.
    ``Citizen Journalism'' is shorthand for a collection of methods for 
producing content by harnessing the power of a site's community of 
readers, and making it a key element of the site's editorial output. 
These engaged readers can, among other things, recommend stories, 
produce raw data for original reported stories, write original stories 
themselves, record exclusive in-thefield video, search through large 
amounts of data or documents for hidden gems and trends, and much more. 
By tapping this resource, online news sites can extend their reach and 
help redefine newsgathering in the digital age.
    In the process, they will also expand their online community--
which, in turn, will attract more users and help build a more viable 
business model.
    For too long, traditional media have been afflicted with Attention 
Deficit Disorder--they are far too quick to drop a story--even a good 
one, in their eagerness to move on to the Next Big Thing. Online 
journalists, meanwhile, tend to have Obsessive Compulsive Disorder . . 
. they chomp down on a story and stay with it, refusing to move off it 
until they've gotten down to the marrow.
    In the future, these two traits will come together and create a 
much healthier kind of journalism.
    The discussion needs to move from ``How do we save newspapers?'' to 
``How do we strengthen journalism--via whatever platform it is 
delivered?''
    We must never forget that our current media culture led to the 
widespread failure (with a few honorable exceptions) to serve the 
public interest by accurately covering two of the biggest stories of 
our time: the run-up to the war in Iraq and the financial meltdown.
    That's why, as journalism transitions to a new and different place, 
the emphasis should not be on subsidizing what exists now but on how to 
rededicate ourselves to the highest calling of journalists--which is to 
ferret out the truth, wherever it leads. Even if it means losing our 
allaccess-pass to the halls of power.
    Unfortunately, this is a concept that has fallen out of favor with 
too many journalists who, like Pontius Pilot, wash their hands of 
finding the truth and instead are obsessed with a false view of 
``balance'' and the misguided notion that every story has two sides. 
And that the truth can be found somewhere in the middle. But not every 
story has two sides and the truth is often found lurking in the 
shadows. The earth is not flat. Evolution is a fact. Global warming is 
real.
    The most exciting thing for both journalists and news consumers, is 
the fact that technology will continue to give readers more and more 
control over what kind of information they get, and how that 
information will be presented. The days of publishing pooh-bahs 
dictating what is important and what is not are over. And thank 
goodness. As the legendary journalist I.F. Stone once said of a leading 
newspaper of his time: it's a particularly exciting paper to read 
because ``you never know on what page you will find a page-one story.''
    We stand on the threshold of a very challenging but very exciting 
future. Indeed, I am convinced that journalism's best days lie ahead--
just so long as we embrace and support innovation and don't try to 
pretend that we can somehow hop into a journalistic Way Back Machine 
and return to a past that no longer exists and can't be resurrected.

    Senator Kerry. Thank you very much, Ms. Huffington. Very 
important testimony.
    And we engage an interesting conversation, I think. Mr. 
Simon, you said, in the course of your testimony, you, 
interestingly, noted that some of these newspapers stripped 
away their capacity prior to--you know, over a number of years; 
and, as a consequence of that, they didn't have an entity that 
was fundamentally able to deliver and compete. But, is that, in 
fact, really true? I mean, the Wall Street Journal, others, 
have tried to model a for-subscription product that's been a 
pretty good product, by all accounts, competitive and still up 
to a high standard, yet they weren't able to make it. So, what 
it is about the current business structure that prohibits even 
a, you know, quality operation with a known reputation, with 
top-level reporters and columnists, from being able to make it 
on that?
    Mr. Simon. Well, I would argue that the newspapers, at a 
critical moment, when the money was there, traded away their 
birthright, tragically so. When I was in journalism school in 
the 1970s, they told us that--and the immediate threat was 
television and the loss of immediacy in our news coverage, 
the--we were going to have to cede the ambulance-chasing and 
overnight news to television--they told us we were going to 
become more sophisticated, more like magazines, that 
specialized beat reporting was going to become more important, 
that we were going to become more essential by explaining 
things in greater detail and with greater sophistication. That 
didn't happen, because when the money was there, when chains 
like the Tribune Company were earning 37-and-a-half-percent 
profit, the money went to CEO salaries and big-money investors, 
and it went right out of the profession. And this was--you 
know, Wall Street called the tune.
    And if you look at that 37 percent as the R&D money that 
any healthy industry might have applied, looking forward, 
contemplating the Internet, I mean, the naivete with which 
newspaper management perceived the Internet in the 1990s, as 
merely advertising for the product, when it was the product, is 
incredible.
    Senator Kerry. But, those who did go online and tried to 
sell the product that they had--
    Mr. Simon. If they don't do--
    Senator Kerry.--were not able to succeed.
    Mr. Simon. Right. If they don't do it industrywide, it 
can't work, because ultimately if everyone's an AP member or a 
Reuters member, and if the aggregators have membership in AP or 
Reuters, you know, for a paper like The Baltimore Sun or The 
Boston Globe or any individual to try to swim against the tide 
and maintain copyright when there--when, you know, at that 
point, it's not even a leaky glass; there's no glass at all.
    Senator Kerry. Well--
    Mr. Simon. Ultimately, the industry as a whole had to look 
this square in the eye and say, ``Wait a sec. If we don't have 
control over our product, if it's going to go elsewhere, if we 
can't bring people to our tent, what are we doing?''
    Senator Kerry. And that is the nub of the--I think that's 
really the--a major place of focus here. I'm interested in this 
concept of limited antitrust exemption, and I wonder, those of 
you who are online particularly, what you--what you think about 
what that does, in terms of creating some equilibrium here. I 
mean, I think--if you're the aggregator, if you're out there--
excuse me, not the aggregator--if you're out there doing the 
footwork and you've got a top-level reporter in a bureau 
somewhere in the world, or you're doing a major investigative 
story, and you put the pieces together, that takes money, it 
takes time, it takes skill. And once they've put it together 
and they've put their story up, if somebody comes to Google, 
for instance, and hits the subject matter, and they get various 
outsources, places where they can go, it's completely 
dissipated. They're not going to get remunerated for the level 
that they put into that, but everybody's going to have access 
to it. So, is there a fairer way to try to spread the cost, 
here?
    Ms. Mayer?
    Ms. Mayer. Well, I think it's important to recognize that 
snippets alone--what we show on Google, the--either in Google 
News or in Web Search, aren't a complete picture, and users do 
need to click through to actually read the story; and, in fact, 
they do; they click through at the rate of at least 1 billion 
clicks per month. And I do think that the benefit of the 
aggregation--
    Senator Kerry. But, once they click through--let me just go 
through this with you--they find it through you; they click 
through, through you; they come up with the story, which is 
currently free, so they're still not getting paid for it.
    Ms. Mayer. Well, there are usually advertisements on the 
page when they land there. So, in a free model, usually the 
page with the story on it will have advertisements that, in 
fact, do pay for the viewing of that article.
    Senator Kerry. But, they have not been able to find that 
that provides--they're not getting--in many cases, I don't 
think they're getting that advertising revenue, and it 
certainly isn't covering the cost of doing business.
    Ms. Mayer. My view is that it's still very early and that 
in--if you look at many mature business models, they often end 
up in a hybrid approach, where there's both either a 
subscription or a direct payment, in addition to advertising. 
Cable television, magazines, newspapers all operate on that 
model, where there's direct payment from the consumer and 
advertising.
    Senator Kerry. Well, when you say it's early--
    Ms. Mayer. The motive--
    Senator Kerry.--it's not early for the Denver Post or the 
Seattle Intelligencer or a bunch of folks who are facing 
bankruptcy today.
    Ms. Mayer. But, I do think it's early, in terms of the 
situation reaching an equilibrium and us having a product 
online that fills the needs of both the users and the 
monetization needs on--of the reporting.
    Senator Kerry. Ms. Huffington, you've been perhaps the most 
single successful person on the Internet, in terms of 
presenting an entirely new product, in almost newspaper form, 
which has become its own destination site. Share with--first of 
all, how many people put that together, at this point. How many 
people on staff are working, would you say, a part of your--
    Ms. Huffington. Right now, The Huffington Post employs 60 
people, and the investigative fund that we launched last month 
will employ 10 full-time people, and then hundreds of 
freelancers who will be assigned specific stories.
    But, a follow-on on Ms. Mayer's point, first of all, there 
are already laws in place, Mr. Chairman, fair-use laws. So, no 
aggregator can actually just take a story, they have to take a 
small part of the story to give a taste to the consumer of what 
the story is about. But, in order to read the full story, they 
would have to go to the content creator. And monetizing that is 
really the future as video producers, as many networks have 
done, cable companies have done, through embeddable players, 
where they put advertising, they put links to other stories on 
their network or the cable company.
    Senator Kerry. But, what you've done, essentially, is 
create a nonprofit entity under the umbrella of your for-profit 
entity, and the nonprofit entity will go out and do the 
investigative piece. Is that correct?
    Ms. Huffington. But the not-for-profit entity will be open-
source, which means that the content that the not-for-profit 
entity produces will be available to anybody at the same time 
as it is available to The Huffington Post. So, The New York 
Times could take it at the same time, anybody could. And the 
way we would all monetize that is, again, through advertising. 
And in a way, it is absolutely true that advertising has not 
moved online as fast as eyeballs have moved online. But, that's 
the period of transition that we are at, at the moment.
    Senator Kerry. Well, let me--this'll be my last question, 
then I want to turn to--if we can--clearly, the folks who are 
in what has been dubbed the legacy side of the industry are 
struggling, because they're not getting the revenue that they 
used to get to pay for the overhead for their type of 
operation. Now, admittedly, things are changing. And things 
change in the business world, and they have to change their 
business model. But, even assuming they adjust and change the 
business model and move, there's still a certain level of skill 
and quality and experience and standard and so forth that Mr. 
Simon and others have referred to, and deployment--I mean, 
putting people into Kabul, putting people into Islamabad, 
having people on the ground, building relationships. The--
there's not evidence, yet at least, of a--I mean, this parasite 
issue is real in the--to the degree that people feel that the 
Internet is providing their work without an adequate level of 
compensation for what it costs them to produce it.
    Ms. Huffington. Well, that's why, Mr. Chairman, I talked 
about a hybrid model. At The Huffington Post, for example, we 
have a licensing agreement with AP. We pay for that. We pay for 
the AP stories that we post on The Huffington Post. We also 
have over 3,000 bloggers on the site. You have kindly blogged 
on The Huffington Post. There's a lot of original content on 
the site.
    Senator Kerry. In my case, it--
    Ms. Huffington.--which is available--
    Senator Kerry.--was very original, but that's--
    [Laughter.]
    Ms. Huffington.--which is available to others to link to 
without charge.
    Senator Kerry. Well, I'm sure we're going to pursue this 
more. I want to let my colleagues have a chance.
    Senator Kay Bailey Hutchison is the Ranking Member of the 
entire Committee, so, in deference to her, if you don't mind, 
Claire, I want to allow her an opportunity to have her opening 
statement/questions, and then I'll come back to you.

            STATEMENT OF HON. KAY BAILEY HUTCHISON, 
                    U.S. SENATOR FROM TEXAS

    Senator Hutchison. Well, thank you very much, Mr. Chairman.
    This is such an appropriate and timely subject for us to 
discuss, especially after the newspaper of your State has just 
made an agreement at the very--4 o'clock this morning, I 
understand--to try to stay in business. But, the fact of the 
matter is, we're looking all over the country at newspapers 
that are going under, struggling, or making drastic cuts in 
order to continue service. And I asked that Jim Moroney be one 
of the witnesses, and I appreciate that you had him here. And I 
was chairing another hearing; that's why I'm late.
    But, I would like to just take your line of questioning and 
go forward and ask for the newspaper response, because I still 
have the same skepticism that you are exhibiting about how you 
can really do the in-depth necessary reporting and pay for that 
in any kind of a business model and continue to have that 
service, whether it is from a legacy newspaper or Associated 
Press or any other entity.
    But--and let me say I think that what has happened in the 
Internet world and The Huffington Post and Google and all of 
the new things that have exploded in the news business are 
fabulous. They are fabulous for so many different types of 
news-gathering and also the different types of people who are 
getting their news in different ways. But, I would like to also 
make sure there's a level playing field so that the investments 
that are made for the in-depth reporting and all of the costs 
of bureaus have the capability to succeed so that we continue 
to have that main outlet that we have had through the years of 
newspapers.
    So, I would like to ask Mr. Moroney if he would take the 
argument about how you can, with a business model, do the in-
depth reporting when you are not able to get what I assume is a 
sufficient revenue for your online versions, which you also 
have. And also how you would be able to get the fair return for 
the investment you're making so that a newspaper has a fair 
chance.
    Mr. Moroney. Well, as I mentioned in my oral testimony, The 
Dallas Morning News invests 30--over $30 million each year in 
its news-gathering operations. The idea that there might be a 
nonprofit model to support that is a little difficult for me to 
come to, quantitatively. I think about most charitable 
organizations that give out 5 percent of their income a year. 
To support $30 million of annual investment, it would take a 
corpus of $600 million dedicated nothing but to supporting the 
scale of news resources we employ in the Dallas/Fort Worth 
area. So, there may be some limited opportunities for nonprofit 
help, and I believe there are, but, at the scale of news 
resources, which is what I believe this is really about--not 
about saving newspapers, per se, but saving the scale of the 
newsrooms that newspapers employ across this country--is what 
we're trying to do.
    And the online model, the DallasNews.com, attracts over 50 
million page views a month and 6 million unique visitors a 
month, and it can't pay for two-thirds of the cost of the 
newsroom that the newspaper supports. The financial facts are 
just that the newspaper model today, the ink-on-paper print 
model is the one that can support the scale of these newsrooms 
we employ. So, finding a way for us to be able to get a fair 
return on the investment we're making on the content that we 
publish digitally, I think, is very important.
    I would agree with Ms. Mayer, there has been a different 
atomization of news. And she said it was down to the article 
level. I believe it's down to the first-four-lines-of-the-
article level, and that's why what she calls a fair use of our 
content, I don't believe is a fair use. They're making plenty 
of money off of those first four lines, and we have, as 
established in the ``hot news'' case that was done in the early 
part of the 19th century--of the 1900s, and reaffirmed in the 
New York State courts in the last year, that there is a quasi-
property right to breaking news, and I believe we need to look 
at that standard as for what it is that newspaper companies and 
how they can get a fair return for the investment they're 
making and the journalism we're publishing digitally.
    Senator Hutchison. Let me just ask either--anyone else on 
the panel who would respond, that--if there is a property right 
and some proprietary right for all of this investment, if there 
are other ideas about how there could be a fair compensation. 
Because you can't say that the advertising online would pay for 
that kind of investment. There's just--that just can't be said 
with a straight face, I don't think. So, what would be the fair 
way to compensate, then, for what would be used online that 
would be obtained either cheaply or free, so that you could 
keep that level playing field and continue to have the full 
array of news sources?
    Ms. Huffington? Ms. Mayer?
    Ms. Huffington. Well, already we see that advertising, 
because of this drop that everybody has mentioned here today at 
the print level, cannot by itself support newspapers. So, what 
needs to happen is to monetize traffic. And anytime Google or 
The Huffington Post or any news aggregator or news curator 
links to a story, it does drive traffic that can be documented. 
Hundreds of millions of page views are generated because of 
linking.
    So, what all the different content creators need to 
experiment with--and it's absolutely true that this is a 
transitional period--is monetizing that traffic. And those who 
are using embeddable players have found a lot of ways to do 
that, because they are actually following where the consumers 
are. Already we heard Senator Kerry talk about how many 
hundreds of thousands of friends The New York Times has on 
Facebook. These are real consumers of news. So, that content is 
free on Facebook, but it can be monetized through advertising.
    Ms. Mayer. I also would like--oh, I was also--I also wanted 
to chime in the fact that in 2008 more than $5 billion was 
earned through Google AdSense alone on publisher sites. That's 
not Google revenue, that's revenue that the publishers earned 
on their site. There's a lot of revenue that can be earned 
through online advertising. And when you couple that with a 
hybrid model, where consumers may pay directly or subscribe 
online, I think that monetarily we can get there.
    I think it's also important to point out that--I really 
need to push back on the notion that, with the first 200 
characters of a story, you get the complete information. And, 
in fact, the 1 billion clicks per month that we sent on to 
newspapers show that people need to click through to really get 
the full context.
    It's also important to point out that there are industry-
standard opt-outs. It's very easy to opt out of a search engine 
or opt out of Google News with a robot.txt file that simply 
says you don't want this content to be displayed there.
    Mr. Moroney. It would be helpful if Ms. Mayer could come 
back and tell us what percent of that $5 billion is going to 
newspaper publishers. I believe when she uses the term 
``publisher,'' she means anybody who's publishing any kind of 
content on the Internet, including bloggers and so forth. I 
don't think very much of it is coming back to newspaper 
publishers.
    Senator Kerry. Senator McCaskill?

              STATEMENT OF HON. CLAIRE McCASKILL, 
                   U.S. SENATOR FROM MISSOURI

    Senator McCaskill. Well, I want to hone in--first of all, 
I'm going to try not to gush, Mr. Simon. I'm a huge fan of The 
Wire. I--my son--I used to--I'm a former prosecutor, and I've 
always looked down my nose at crime drama on the television, 
and my son said, ``Mom, you've got to watch this, because I 
think you might appreciate it.'' Other than the fact that I had 
to translate most of it for my husband--he kept saying, ``Now, 
what's a package?''
    [Laughter.]
    Senator McCaskill. I had to--but, it--
    Mr. Simon. It can mean different things.
    Senator McCaskill. Yes, it can mean different things.
    [Laughter.]
    Senator McCaskill. That's an understatement.
    [Laughter.]
    Senator McCaskill. You know, two things that I think were 
missing in this discussion so far that I think Mr. Simon is 
very pained about, and I'm pained about, and that is the 
investigative journalist that is local.
    Mr. Simon. Right.
    Senator McCaskill. I understand, Ms. Huffington, that you 
are working on an investigative model, but for your audience 
there's not going to be a lot of stories about the cop that has 
been running the dice game on the side, or the cop who has 
been, you know, taking a hit of money from various people. The 
way you get those stories is by investing in people, because 
it's very labor intensive and it's about building relationships 
at a local level.
    I--it's like naming the good teachers that I had in my 
life. I can sit here right now and name the good journalists 
that I respect and that I fear and that I know that they'll 
continue asking the questions and building the relationships 
and hanging out in the places where the people that know the 
facts will ultimately give them to them. And, you know, it is 
incredibly important to our democracy, it is incredibly 
important to our local communities and to our States. And right 
now, where the journalists are fleeing, it's in courthouses and 
it's in police departments, and it's in State capitols. We 
still have a bunch around here, and that's great. We don't have 
as many as we used to. But, that's where there really are 
endangered species, the investigative journalist.
    And the other thing--and I--and, Mr. Simon or Ms. 
Huffington or Mr. Moroney--the editor. I mean, I know you hate 
them, journalists, good journalists. And I know--but, also 
there are good ones that you love. And I just had something 
happen to me, while we're sitting here, where someone published 
a story online in St. Louis, and they called me at 1 o'clock, 
called my press shop at 1 o'clock.
    We hadn't called back in an hour. They called again at 
2:30. And they had already put it up online 10 minutes earlier, 
without a response from me. Now, that wouldn't have happened in 
a newspaper, because an editor would have said, ``You've got to 
try again to get ahold of them before we print it.'' It 
wouldn't have happened. But, it happened, because--and, you 
know, obviously we think they've got the story wrong that they 
put up online, and we've yelled at them And this all happened 
on my BlackBerry while I'm sitting here. And I'm approving 
quotes as I sit here, trying to correct the story.
    And so, the--there are two things I'm worried about, the 
local investigative reporter and the editor. And how does this 
new model--how do we deal with that?
    Mr. Simon. I'd really like--I'd like to affirm that in 
every possible way. There has been an equivocation up here 
between people philosophizing about what's going to happen with 
journalism at the high end, covering Washington, covering--
    Senator McCaskill. Right.
    Mr. Simon.--national and international issues. There are--
there's already an economy of scale that allows for a politico 
online. What is dying and what is not being addressed up here 
by the people supporting new media is the fact that, at the 
State and local level, it's America's regional newspapers that 
are--
    Senator McCaskill. Right.
    Mr. Simon.--collapsing, that are imploding faster. And 
that--you know, and in some ways the industry itself has been 
oblivious to it, because--it's sort of like the shark was 
eating everybody from the bottom, and The New York Times and 
The Washington Post felt it last. When they have a buyout of 
100, 200 people, and they have a newsroom of 1300 people, it 
doesn't feel the same as 200 people walking out of a newsroom 
of 400 in a regional area. That means that all of a sudden 
there's nobody covering the cop shop, nobody covering the 
zoning board. The day I run into a Huffington Post reporter at 
a Baltimore zoning board hearing is the day that I will be 
confident that we've actually reached some sort of equilibrium. 
You know, there's no glory in that kind of journalism, but that 
is the bedrock of what keeps--
    You know, the next 10 or 15 years in this country are going 
to be a halcyon era for State and local political corruption. 
It is going to be one of the great times to be a corrupt 
politician.
    [Laughter.]
    Ms. Huffington. Well--
    Mr. Simon. You know, I really envy them. I really do.
    [Laughter.]
    Senator McCaskill. You know, I--and I know we giggle about 
it, but I've got to--I think it's very serious.
    And I--you know, Mr. Chairman, I'm glad you're having this 
hearing. And, you know, it's not that these reporters are 
expensive, in terms of what they make a year, it's just--it 
takes a long time for them to produce something. And if we 
could come to a not-for-profit model that was focused on that, 
the investigative journalism at the State and local level, I 
think that might be way more important than a not-for-profit 
model that's going to make sure we've got somebody else 
following Presidential politics.
    Ms. Huffington. Well, Senator McCaskill, actually if you 
look at, for example, Voice of San Diego, which is a not-for-
profit site that is exposing precisely what you and Mr. Simon 
are talking about, local corruption, and actually having real 
impact that is investigative journalism on the local level and 
it is beginning that is to happen around the country. And that 
is happening in precisely the way that you would like it to 
happen. And The Huffington Post is expanding into 12 cities, 
and we're going to make sure that Baltimore is included, Mr. 
Simon, for your sake.
    [Laughter.]
    Mr. Simon. Can't wait.
    Ms. Huffington. And in these cities, citizen journalists 
are incredibly important. I'm sorry to hear Mr. Simon dismiss 
them, because I'm sure you're familiar with the attorney 
general scandal. That was revealed because of citizen 
journalists working together all around the country. Josh 
Marshall, in Talking Points Memo, helped put it together, 
provided the platform, but the work was done by citizen 
journalists. They love that work. We can post all kinds of 
documents--a document dump, as we are calling it--to thousands 
of community journalists on The Huffington Post, and we get 
amazing stuff back.
    For many reasons, people want to participate in exposing 
what is happening. That's the case, for example, with the bank 
bailout. The tape that we put out on The Huffington Post of the 
Morgan Stanley executive who talked about bonuses being called 
``retention awards,'' came from a citizen journalist. The 
Mayhill Fowler story about President Obama's comments at a 
fundraiser came from a citizen journalist. So, the importance 
of the citizen journalist cannot be overestimated.
    Senator McCaskill. Is there--are there editors in that 
model?
    Ms. Huffington. Absolutely--
    Senator McCaskill. Is there--
    Ms. Huffington.--there are editors. And that--
    Senator McCaskill. And who's paying the editors?
    Ms. Huffington. We are paying the editors. The online 
providers, the newspapers, we're all paying editors. It's 
called the ``ProAm'' model, professionals and amateurs working 
together.
    Mr. Ibarguen. Yes, there are--if I may, Senator, there are 
a number of similar kinds of local and mission-driven 
organizations that are set up as nonprofits. The Voice of San 
Diego is one of them. MinnPost in Minneapolis is another. 
ChiTown Daily News in Chicago--Gotham Gazette, in New York, 
Village Soup, in Maine. Those are just a handful that our 
foundation happens to support.
    We also have offered, to community foundations, to match 
dollar for dollar--whatever contributions they make to this 
sort of organization.
    I really do agree with Marissa saying that this is early. 
You're right, Senator, it's late for a newspaper that's gone 
into bankruptcy, but it's early in the evolution of this 
technology and early in our figuring out how this is going to 
work at the local level, where most journalism in America 
actually happens, not at The New York Times or at The 
Washington Post, it seems to me.
    So, I think we need to look for ways to encourage 
innovation locally. If it's a nonprofit organization--if it's 
enhancing the capacity or the ability of a chain to unload one 
of its papers and turn it over to a community group as a 
nonprofit, if there are ways of encouraging that sort of thing, 
I think you ought to look at it.
    I think there are already lots of people who are innovating 
and surviving. The five that I just mentioned have been around, 
each of them, for a couple of years. Is that as long as my old 
paper, the Miami Herald, 110 years? No, of course not. But, I 
think they're serious, and I think they will get more serious, 
they will get better, they will develop their practices and, I 
think, eventually they will answer something.
    I just have a terrible feeling that what we mustn't do, it 
seems to me, is to try to figure out the opposite of what Yogi 
Berra said, ``If the fans don't want to come to the ballpark, 
nobody can stop them.'' And if people are going to give each 
other information, digitally, on mobile, I think our efforts 
ought to be on figuring out how you deliver that kind of 
information, how you facilitate that kind of information, and, 
as I said in my remarks, how you make sure that you don't leave 
out the 40 percent of Americans who are divided on the other 
side because they live in a rural area, because they're poor, 
or because they're elderly.
    Senator McCaskill. Thank you, Mr. Chairman.
    Senator Kerry. Thank you very much.
    Senator Cantwell?
    Senator Cantwell. Thank you, Mr. Chairman. Thank you for 
having this important hearing.
    And I have to say that, having listened to the many 
witnesses, I'm not sure that there is much, actually, I 
disagree with, in the sense of--I'd like to see some of the 
things that maybe I could have witnesses answer, where I can 
understand whether you are in disagreement. I guess that is to 
say, you know, it seems to me that there was probably, in the 
early days of radio, a proclamation that maybe the newspaper 
industry was going to go under, and I'm sure there was with 
television, that the newspaper industry was going to go under. 
And now, I'm sure, with the Internet. But, as much as the 
Chairman, I know, is--I think, in your comments, said that 
newspapers are an endangered species, I actually like going to 
The Huffington Post on my mobile BlackBerry and seeing that 
headline and seeing the Chairman there, and reading that story, 
and having the ability to have access to that.
    So, to me, this is about having the best of both worlds. 
And I can't wait till somebody offers me a subscription to a 
newspaper that gives me full access to their Internet site 
without jumping through a bunch of different hoops, and 
probably also gives me a discount on something else, either the 
coffee I drink or the next airline ticket I buy, or gives me 
something, you know, for being a good customer. I mean, I think 
that really this is about new business models and how long it's 
going to take for those new business models to develop. And 
what are we willing to do to help, in the meantime, the 
industry as those new business models develop?
    Now, I, for one, am willing to do something. I certainly 
support the carryback provisions for Net operating costs for a 
longer period of time. I'm not--I need to know a little more 
about the antitrust provisions to understand that, exactly 
what--but, I'm for supporting that.
    So, I guess I wanted to start with you, Ms. Huffington, 
about what do you think about the antitrust provisions, and 
would you--whether you would support those and would be 
favorable toward some of the tax breaks that have been talked 
about, as well.
    Ms. Huffington. I would not, Senator Cantwell. It seems to 
me that antitrust provisions would create more organizations 
that are too big to fail. And again, we've seen how that has 
not worked in other areas of our lives. So, let's not create 
any more behemoths that will be treated as too big to fail.
    I would suggest that if we allow this process of innovation 
to unfold and support the nonprofit investigative efforts, and 
also support the hybrids that we've been discussing here, we 
will get there, and we will get there in a way that will be 
better than what we've had, because I don't think we can 
underestimate these big stories that we have missed. If 
journalism was working out so well, how come so many financial 
journalists missed the economic meltdown? There is a way in 
which many journalists who are working the same beat begin to 
basically sell their journalistic credentials for access. And 
we see that happening every day, including now, in the way that 
the bailout and the banking crisis have been covered.
    Senator Cantwell. I agree, there could be much more 
attention to that, as somebody who suffered through the Enron 
crisis and now the credit default crisis, I guarantee you there 
would have been, with better coverage of those issues, more 
knowledge for the public, everybody, maybe, would have avoided 
some of that.
    But, what's wrong with Mr. Moroney or Mr. Simon getting the 
ability to become better aggregators? And if they need the 
ability to talk to other news organizations to become those 
aggregators, what's wrong with that?
    Ms. Huffington. Well, of course they can already talk to 
each other. What we are discussing is whether we give them 
antitrust protections so that they can actually implement 
policies that would make it impossible for others to aggregate 
content online.
    Senator Cantwell. Mr. Simon or Mr. Moroney, do you want to 
address that?
    Mr. Simon. Listen, this comes down to a very fundamental 
thing, which is, Does intellectual property have value, does 
content have value? Everything else that is dealing with the 
online digital world has had to fight this battle. You know, 
publishers--and I'm an author, so I know--have been contending 
with Google and other aggregators as to how much of their work 
can be online. I mean, I'm getting a settlement from some 
lawsuit that was over this very issue. The recording industry 
has had to struggle with Napster and other things. Ultimately, 
it's a leaky cup, and that's inevitable, but there has to be 
some kind of cup.
    If it has no value, then explain to me why the Little Rock 
paper and the Albuquerque paper, which are two of the few in 
this country that do not allow their websites to be public 
without subscription--why their circulation is actually up and 
the rest of the newspaper world is down.
    Senator Cantwell. Well, can I--could I--because I want to 
get to the specific here and make sure I understand, because I 
think what Ms. Huffington is arguing is that fair-use laws 
cover--that she's only using that content within the--
    Mr. Simon. Right--
    Senator Cantwell.--confines of fair use. And so--
    Mr. Simon. And right now--
    Senator Cantwell. So, how does--
    Mr. Simon. Right now, the newspapers have--and I believe 
they butchered this, going back 10 years--right now they have 
signed off on fair use, and they are hurling their stuff out 
onto the Internet for free. It's insane. And I think it's been 
proven insane, and it's heralded this incredible implosion of 
journalism.
    If I think--if I thought they had a chance to do it over 
again, I think they would look hard at that decision, and they 
would say, ``You know what? It's a lot better if we say, if you 
want to subscribe to The Baltimore Sun and get it at home and 
have us cut down a tree and bring it to you doorstep and do it 
the old anachronistic way, it's $17, $18 a month. If you want 
to get The Baltimore Sun online, we'll only charge you $8 a 
month, but we get the $8.''
    Senator Cantwell. No, I'm--
    Mr. Simon. ``We get the $8 for our''--
    Senator Cantwell.--I'm willing to pay $12, and I want the 
choice of getting--picking the newspaper up on any stand that I 
want, and I want to--
    Mr. Simon. That's a world--
    Senator Cantwell.--get it on--
    Mr. Simon. That's a world that--
    Senator Cantwell. And I want to get it on--
    Mr. Simon. Exactly. That's a world that--
    Senator Cantwell. And I want to get it online--
    Mr. Simon.--should happen.
    Senator Cantwell.--when I want it. Right. So, I'm saying 
there is a--
    Mr. Simon. Well, right now the horse is out of the barn 
door, and it's been out of the barn door for 10 years. And 
there are people who say, ``Oh, you can't get back what you 
made free. It's never going to happen.'' I don't believe that, 
because I work in television now, and no American, for the 
first 30 years of television, paid anything for their rabbit 
ears.
    Senator Cantwell. But--
    Mr. Simon. Now they pay $60, $70 a month for better 
content.
    Senator Cantwell. But, that's my point about the business 
model. I mean, technology shows, over and over again, that 
technology can be there one day, but sometimes it takes 25 to 
30 years before the business models develop. That's how long 
sometimes.
    Mr. Simon. In that--
    Senator Cantwell. Mr.--
    Mr. Simon. In that--let me just say--
    Senator Cantwell. That's--
    Mr. Simon.--and I'll end this. In that window, the talent 
pool and the institutional memory that was the journalism that 
we saw over the last 50 years, the modern American newspaper, 
is leaching out, it's gone.
    Senator Cantwell. Which is why I'm supportive of things to 
help it in the meantime.
    Mr. Moroney, on the--
    Mr. Moroney. I think Mr. Simon is--
    Senator Cantwell.--on the antitrust issue, specifically.
    Mr. Moroney. Mr. Simon is exactly right, this horse is out 
of the barn for 10 years. To try to bring it back one website 
at a time, one daily newspaper website at a time, will not 
work. If The Dallas Morning News today put up a paid wall over 
its content, people would go to the Fort Worth Star Telegram to 
get a lot of information about what goes on in Dallas/Fort 
Worth. And if they put up a paid wall, they'd go to the AP, and 
so forth and so on.
    If we could have a limited antitrust exemption to have 
conversations--and some of those conversations are not 
permitted even within the context of antitrust today--if we 
start talking about pricing and so forth, we are in violation 
of laws. You can't even have that discussion. We need to be 
able to have that discussion, with a limited exemption, and 
then be able to take action, and do it as quickly as possible, 
because, differently than many of my colleagues here, time is 
not on our side with this, from the newspaper standpoint. Yes, 
there's going to be a long evolution of how content gets 
consumed and how journalism gets done over time. But, for those 
newsrooms and those employees in those newsrooms of newspapers, 
time is not on our side. We need help in this way today.
    Senator Cantwell. I know my time is expired, Mr. Chairman, 
so--
    Senator Kerry. It's all right. Go ahead, take a little--do 
you want to--
    Senator Cantwell. Well, I just--so, you're saying, about 
the specific information. Like this example I just came up 
with, of saying--you know, offering to your readership that you 
could have both an online and print--
    Mr. Moroney. Sure, we can--
    Senator Cantwell.--membership--you're saying, right now the 
competition--
    Mr. Moroney. Because so much of our information is already 
out there for free, because we are part of the AP, for 
instance, because there's a competitor in the marketplace, 
because there are other papers in Texas covering the 
statehouse, there are a lot of places to go today for free. If 
the newspaper industry acted in concert, there might be an 
opportunity then for all of us to have, sort of, our own intra-
industry level playing field and then be able to go to--en 
masse, as an industry, to the Googles and so forth, and say, 
``We want to be paid for consent to take our information''--
again, not unlike what the broadcast television stations did 
with cable to have retransmission consent. If we do that as an 
industry, we have some clout, we have some leverage. If we do 
it a newspaper at a time, it just won't work.
    Senator Cantwell. Yes, I--yes, I'm not sure--I think brand 
accounts for a lot. I think it's something you have. I think 
it's something Ms. Huffington is building. And I think it's 
about, again, a limited amount of time. But, perhaps we can go 
to a second round.
    Senator Kerry. We'll come back to it. We're going to--I 
want to continue this conversation, because it's very 
important, and I--and one of the obvious questions is, How do 
you, if you did that, prevent an abuse of that conglomerated 
clout so that you don't squeeze out what massive numbers of 
people have come to believe is also their right, which is this 
ready access to what they want, where they want it, and how 
they get it? And there could be a very anachronistic 
consequence, which is, you sort of go backward and create a 
status quo that actually prevents our technologies and the open 
architecture and all the virtues of this from taking off. We 
need to talk about that.
    Let me recognize Senator Pryor first.

                 STATEMENT OF HON. MARK PRYOR, 
                   U.S. SENATOR FROM ARKANSAS

    Senator Pryor. Thank you, Mr. Chairman.
    Let me follow up, if I may, with Senator Cantwell and the 
Chairman's questions and comments with you, Mr. Moroney. And if 
we're talking about an antitrust exemption, I think you said it 
should be limited. Do you think it should be limited in scope 
and duration?
    Mr. Moroney. I think both.
    Senator Pryor. And tell me the limits on the scope. If you 
can articulate those today, that'd be great.
    Mr. Moroney. Well, I wish I could tell you that I have had 
enough time to think this through and have a perfect solution, 
but I don't. I just know that if we could get together as an 
industry and have this conversation, and if there were some 
limits around what that conversation or where it could go or 
what actual business model we could come up with, it would be 
better than what we have today, and something will definitely, 
in this case, be better than the nothing we have today.
    So, I don't have an answer for you, but I'm confident there 
is one, if we were given the opportunity to work together.
    Senator Pryor. Mr. Coll, do you have any comments on that, 
on an antitrust exemption?
    Mr. Coll. I don't, really, Senator, thank you for asking, 
though.
    Senator Pryor. Let me ask, if I can, with you, Mr. Moroney 
again, staying with the issue of antitrust and Department of 
Justice and, you know, that legal realm that you have to deal 
with--as I understand it, one of the questions that the 
journalists are asking about the industry is, Should we change 
the definition, have a more modern-day definition about the 
advertising market? In other words, maybe back in the old days, 
your newspaper basically just competed against other newspapers 
in advertising, but in today's world, you do have a lot of 
other entities out there, on the Internet and otherwise, that 
you are competing with, even maybe radio and TV. I mean, we 
could talk about that, as well. But, tell me about--if you 
think we should have a new definition for, you know, the 
advertising market.
    Mr. Moroney. I do believe there should be one today. 
Newspapers are competing with all kinds of other media in the 
local market for impression-based advertising. There's 
impression-based advertising with television, there's 
impression-based advertising with outdoor boards.
    Senator Pryor. What do you mean by ``impression''?
    Mr. Moroney. Meaning someone is paying me a certain amount 
of money in order to put somebody's eyeballs in front of an ad 
that appears on some kind of media. Cost per thousands, cost 
per points, it's all the same idea, that, for the number of 
people that are watching that commercial or that ad, there is a 
formula for paying them, and that's the basis today of most of 
the advertising revenue in traditional media. It's impression-
based. And that is the model that we initially took to the 
Internet to be paid on a CPM, cost per thousand, impressions 
basis. And then, when you take local media and you put them 
online, the technological distinctions that--or, the technology 
that at one time distinguished television from newspapers from 
a radio station, has disappeared. We're all playing with 
exactly the same technology. And so, now that marketplace is 
not only not just newspaper against newspaper, it's newspaper 
against all other local media.
    And then, 40 percent of the traffic to DallasNews.com comes 
from outside of the, you know, 26-county Dallas-Fort Worth DMA. 
So, we are having audiences come in from, you know, not only 
all over the United States, but all over the world. So, this 
idea that there is a defined market for newspapers that is 
really geographic and newspaper against newspaper, I just don't 
believe holds in the world we live in today.
    Senator Pryor. Let me ask this, if you know. In terms of 
changing that definition, does that require statute or--who 
does that? Department of Justice do that when they look at----
    Mr. Moroney. Well, I mean----
    Senator Pryor.--antitrust issues?
    Mr. Moroney.--today, I guess, the FCC has defined, at least 
in some ways--and Department--well, the Department of Justice, 
number one, and then there's, of course, FCC issues around 
cross-ownership, which I think fall--come out of that DOJ 
statute.
    Senator Pryor. OK.
    Mr. Chairman, that's really all I have. Thank you.
    Senator Kerry. Thank you very much, Senator.
    Senator Klobuchar?

               STATEMENT OF HON. AMY KLOBUCHAR, 
                  U.S. SENATOR FROM MINNESOTA

    Senator Klobuchar. Thank you very much.
    Senator Kerry. Who comes from newspaper stock.
    Senator Klobuchar. Thank you very much, Mr. Chairman. It's 
true, to the panelists, that my dad, while he first was a 
reporter and then he was a columnist, and now, at age 82, he's 
a blogger.
    [Laughter.]
    Senator Klobuchar. So, I've kind of seen the whole world, 
and the differences in the world. He doesn't get paid as a 
blogger.
    And I will say he came up in sort of the golden times of 
journalism. He actually was writing for the AP, and Minnesota 
was still out on the Kennedy Presidential race, and he wrote 
the story, because he knew that the Iron Range of Minnesota 
would go for Kennedy, and he called it for Kennedy, and Kennedy 
won. And he came up at a different time. And so, growing up, I 
knew that he had a lot of exciting things he did, from 
interviewing Ronald Reagan to Ginger Rogers to Mike Ditka. And 
I saw that he was a witness to history, and that he did a good 
job of it.
    And I also see that we still need that role in our society. 
And I'm still, despite--I do read your blog, Ms. Huffington. I 
read it, in fact, 2 days ago. But, I still don't see that we're 
going to get that--and maybe you say we're in transition, Ms. 
Mayer, but I don't think we're going to get that quite yet from 
some of the blogs. And that's why I'm very concerned about 
what's going on, in terms of society.
    I know that Senator McCaskill covered the issue that I was 
focused on, on local coverage and how important that is, the 
local courthouses, the local mayors, and making sure that we 
have watchdogs over the activities of local government. And I 
know we can set up these nonprofits and do these things, but I 
am afraid we're going to lose that watchdog and that check if 
we don't figure this out.
    And so, I wanted to ask some questions just to follow up on 
what's going on. We know we're having an advertising decline--
Is that correct, Mr. Moroney?
    Mr. Moroney. That's correct.
    Senator Klobuchar.--of great proportions. And do you see 
any hope for that with the economy improving for our 
newspapers?
    Mr. Moroney. There is cyclical dimension to it, but there 
is also a very secular dimension to it. So, as this economy 
improves, which it will, there will be some rebounding back, or 
that cyclical part of this downturn. But, the secular issues, 
particularly in the classified advertising space, aren't going 
to turn around. They are secular and permanent.
    Senator Klobuchar. And then, many of the newspapers are in 
bankruptcy. The Star Tribune in Minnesota is in bankruptcy, 
even though it's, I think, the tenth biggest newspaper for 
daily circulation; similar to what you've been talking about, 
that readers are there. And do you think there's anything that 
can be done with bankruptcy proceedings--anyone have any 
thoughts on that--to ease it? I'm trying to look at every 
angle, here.
    Mr. Moroney. Well, I would say that there are some 
newspapers that--whose parent companies are in bankruptcy, but 
those newspapers themselves are still, as operating companies, 
profitable. And it is the amount of debt that was taken on, the 
interest that has to be paid, that has forced these companies 
into bankruptcy. And so, if the creditors, which is not the 
purview of Congress--but, if the creditors of these companies 
would be willing to reduce the debt, take a haircut on the debt 
that they have, these companies could come out and continue to 
operate, at least for some period of time, profitably. But, 
again, if advertising revenues are down 25, 30 percent this 
year, even those companies that were operating profitably in 
2008 may find it very difficult to be operating profitably in 
2009.
    Senator Klobuchar. And then----
    Senator Kerry. I won't take this out of your time----
    Senator Klobuchar. OK.
    Senator Kerry.--but I just want to--what was the debt taken 
on for? Does that vary according to----
    Mr. Moroney. You--every different company had a different 
reason. Some were for consolidation purposes, some were for 
other reasons. It really would vary by company.
    Senator Kerry. Any sense of how much of it was taken on for 
the, sort of, bad judgments that Mr. Simon referred to earlier?
    [Laughter.]
    Senator Klobuchar. Oh, there's a good question.
    Mr. Moroney. No, I don't--Senator, I don't--I don't--I 
can't--I can't speak to that.
    Senator Kerry. But, you claim to be immune from that.
    Mr. Moroney. Well, we have very, very little debt at the 
company that I work for, and I'm grateful for that, because it 
makes it easier for us to weather this storm. But, as we 
reported, first-quarter earnings for our company, which has 
three newspapers not far from you--the Providence, Journal, and 
the Press Enterprise, in Riverside--we lost money as a company, 
including all expenses. The operations, the EBITDA, of the 
three newspapers was at a margin of 1 percent in the first 
quarter. So, just virtually break even.
    Senator Kerry. Thanks, Senator. Appreciate it.
    Senator Klobuchar. Good. Thank you.
    That almost was as good, Senator Kerry, as the question I 
decided not to ask Ms. Huffington, that someone had gave me, 
of, What percentage of your blog is opinion and what percentage 
is factual? I think those are tough questions, but maybe you'd 
want to get at that.
    Ms. Huffington. I would love to answer it, because, first 
of all, opinion needs to be fact-based. So, at The Huffington 
Post we put a tremendous premium on that. Our rules are that if 
there is any mistake that a blogger makes, they have 24 hours 
in which to withdraw it and correct it or their password is 
removed. We also have hired 30 comment moderators who are 
working around the clock to make sure that we maintain a civil 
atmosphere on the site so that we don't have ad hominem 
attacks, we don't have trolls. And last month alone we had a 
million comments. So, there is a lot we're doing to adopt what 
I said in my testimony are the best parts of traditional 
journalism--accuracy, fact-checking, fairness, and making sure 
that there is a civil environment in which the debate takes 
place.
    Senator Klobuchar. I just still, though, think--and I 
think, Mr. Ibarguen--did I say your name right?--maybe you can 
get at this with some of the work--I know you've helped with 
MinnPost, which is a fairly successful--I think we have 1,300 
subscribers, sort of Internet-based news in our State. But, I 
just still don't understand how that is, on a national level, 
going to get to the kind of investigative reporting. And when 
my dad went undercover as a prison inmate for a week or when we 
have these intricate issues in our police department that 
people want to report on--I just don't know how that model can 
be brought down, city by city.
    And if I could ask you that, please.
    Mr. Ibarguen. I suppose if I had to give you the exact 
answer to that, I'd be home, clipping coupons. So, I really 
don't. But, it seems to me that MinnPost is very small compared 
to the Star Tribune at this point. But, if you look at the 
trends, and if you look at media usage and look at the 
increasing use of media, the younger the person, the higher the 
likelihood is of using digital mobile media. I think you're 
kind of whistling past the graveyard to expect that that's not 
going to be the way of the future.
    I think the focus ought to be on ensuring universal access. 
I think the focus ought to be on experimenting with 
organizations like MinnPost so that, a year, 5 years, 10 years 
from now, those organizations will have developed the expertise 
to do the kind of reporting that you still want.
    Senator Klobuchar. Senator Kerry, I'm going to come back, 
if you could--the is what happens when you're the single 
Senator. I have a call with our Governor, but I will return. 
You're--you do, you're literally doing two things at--all the 
time. All right. Thank you.
    Senator Kerry. Amy Klobuchar never misses an opportunity to 
say, ``We need Al Franken here.''
    [Laughter.]
    Senator Kerry. Let me, if I can--first of all, you all have 
been terrific, but I want to get you to sort of dig in a little 
more, if you can. So--I enjoy doing these as roundtables, to be 
honest with you, and I've done that a lot on the Foreign 
Relations Committee lately--so, I'd love you to think--if you 
want to interact a little bit and ask each other a question and 
sort of rebut and come back, I think it would engage us a 
little bit in some of the real issues here that are on your 
mind, because I'm confident, when you get into a little private 
conversation outside of here, you're going to be a little more 
adamant about your side, what you need, what's missing. And I'd 
like to have a little of that take place here, if we can, so we 
can--you know, have it--to that end, let me just sort of ask 
something that I think is at the center of this.
    Google's relationship with the content providers, sort of, 
what I'm hearing, obviously, from you, Ms. Huffington, is that 
this is exciting and that this is the new frontier of 
journalism. And I agree with you. I think it is. This is an 
enormous transformation taking place. And actually, you are 
correct. I mean, I wanted to signal that--when you say it's 
early, obviously it's not, for those who are really feeling the 
pressure right now, but, in terms of the evolution of what 
we're going through now, I understand that. I don't think any 
of us can sit here today and absolutely predict what shape this 
is going to take, completely. But, part of that is going to 
depend, folks, on how this intellectual property right is 
either respected or not, and how we sort of do wind up fairly 
sharing the cost of providing this news content that people are 
getting.
    Let me give you an example. It's my understanding--I mean, 
that you, as an aggregator, you pull together--let's say, for 
today's hearing, somebody went in and they pulled in ``Senate 
newspaper hearing.'' I think some 134 different articles came 
up. If we chose to go to those articles, each hit that we go 
to, you're going to get something like 40 cents, as I 
understand it. You correct me if I'm wrong. Or you get 
something out of that. But, with a single hit to the article 
that I--that we go to, the provider of that article, the people 
who put together the intellectual content of that, wind up 
getting only for the one time it went to their particular 
article or not. So, you might get ten to their one for 
something that they have produced. Is that accurate? Is that 
fair?
    Ms. Mayer. That's not quite right.
    Senator Kerry. All right, so----
    Ms. Mayer. So----
    Senator Kerry. Help me.
    Ms. Mayer.--disentangling a few of the different products 
that are in play here, there's Google Web Search, which is our 
general search, where you might get blogs, Web pages, news 
stories, videos; there's Google News, where people go to search 
for and view news stories; and then there's the actual 
publisher's site, where Google AdSense can run, or there are 
other competitive alternatives there.
    And the purposes that users have when they go to those 
sites is different. So, for example, someone, say, typing 
``Portuguese water dog'' on Google's main search may want to 
see a video of it, they may want to buy one, or they might want 
to read the news. On Google News, we know they want to go and 
read the news. It's possible that, after reading several 
stories, if they keep coming back--click--result coming back, 
they may ultimately click on an ad for a Portuguese water dog. 
But, I think the argument can easily be made that that same 
advertisement on the publisher site, where you see the full 
story, you see the full picture, that----
    Senator Kerry. Well, help us----
    Ms. Mayer.--that the ads tend----
    Senator Kerry.--help us----
    Ms. Mayer.--to perform better there.
    Senator Kerry. Help us to understand who gets paid where, 
how.
    Ms. Mayer. Sure. So, on the publisher site, the publisher 
gets paid. And on our site, if we get a new click on, say, an 
ad on news or an ad on Google Web Search, we get paid. There 
are many--there are many searches that are done, though, where 
there is not a click on an advertisement, because the user 
intent is different.
    Senator Kerry. Is it only on the click-on of the ad that 
there's any kind of registration on payment?
    Ms. Mayer. That's right.
    Senator Kerry. Only on the click-on of the ads. So, if you 
simply go through you as the aggregator, they have simply been 
directed to the site of the host.
    Ms. Mayer. That's right.
    Senator Kerry. And, in fact, they're then using the host 
content. And what would happen to you if there was this limited 
antitrust exemption, limited in time, scope, duration, but 
which allowed them to at least get to the table to have some 
kind of negotiation to see if you could get the horse into a 
barn without becoming restrictive? Arianna, I'm particularly 
interested in your reaction to this. I mean, I don't want to 
see us do anything that hurts the openness and innovation and, 
sort of, creativity which has taken place. And I think, in many 
ways people have greater access because they can go anywhere 
and can choose, and there's a freedom in that, and so forth. We 
can make a lot of arguments about that.
    But, the folks putting together--Mr. Simon is correct, and 
Mr. Moroney's correct--the folks who have got this huge 
newsroom investment, which provides a lot of local 
accountability, which we don't want to lose, gets--is being 
driven out of it because they're not being--they're losing 
their revenue base from forces out of their control. Help us 
with that.
    Ms. Huffington. Well, but, first of all, Senator Kerry, 
they're not losing their revenue base because of the Internet, 
they are losing their revenue base because of Craigslist, 
because advertising is down due to the economic crisis, and 
because of the changes in consumer habits. They are not losing 
it because of other aggregators. In fact, we're getting 
hundreds of requests every week from newspapers to link to 
them. And I'm sure they love being linked to from Google, 
because it drives a lot of traffic.
    Senator Kerry. Isn't there a greater synergy that could be 
found between you and this? I mean, I agree with that. I don't 
think they are losing it because--they are losing it because 
of, you know, any number of things--eBay--well, Internet Yellow 
Pages; I mean, there are other ways in which people are losing 
them, but it's mostly because there are quicker, easier, 
simpler ways people are choosing to get information, and we 
don't want to do anything to tamp that down. That's healthy. 
But, with respect to their content--you're dependent, in 
effect, on some of their content. Won't you do better, in the 
long run, if you help keep that content capacity alive?
    Ms. Huffington. Oh, absolutely. We want to see the content 
capacity expanded in multiple ways. We don't want it just to 
survive, we want it to expand. It is my understanding that 
Rupert Murdoch is already taking the lead in having a lot of 
these conversations among different content providers about how 
to be able to make agreements of the kind that Mr. Moroney was 
talking about. Nobody, at the moment, is prohibiting content 
providers to have these conversations, which are ongoing.
    Senator Kerry. Would you find it onerous--Google and 
Huffington Post or anybody else--would you find it onerous to 
be in a position where you have to sit down with them as a--as 
an aggregate and negotiate something where they're more able to 
provide this content on a sustained basis, or would you find 
that that would be an interruption in the marketplace that sort 
of disrupts where this ought to go on its own?
    Ms. Mayer. We think that journalism is very important and 
that we need to find business models that can sustain it, 
because it is very important to our users. So, we would welcome 
something that makes the business model more robust.
    I think the real issue that I see is that, in the print 
newspapers, the advertisements weren't intrinsic to the 
product. The classified could be segmented off. And when you 
look at online, advertisements tend to be much more integrated, 
they're much more relevant, they're targeted, they're 
measurable. That ultimately holds a great potential to increase 
the value of those advertisements, because people can tell 
exactly what they're getting from it.
    I think the other piece that's been missing in this 
discussion is around fair use. All newspapers and all 
publishers right now can opt out of aggregation. There are 
standard industry practices, files that you can put in place to 
say, ``Please don't collect my content.''
    It is true, though, that most newspapers, in fact, prefer 
the distribution. The distribution is better for them, it's 
also better for users. I would argue that it's much more 
powerful to read the article from a paper in Texas, where--in 
the actual community where someone died of the swine flu than 
actually reading one of the duplicate articles down the line. 
And so, that amazing distribution that comes through the 
Internet and through inclusion in aggregators is very powerful. 
And I think we need to find a way to sustain that, as well.
    Senator Kerry. Yes, Mr. Simon?
    Mr. Simon. There's an equivocation here, in terms of what 
the existing revenue stream is for newspapers and why it's 
diminishing and what the potential revenue stream is. And 
that's the problem in some of these discussions.
    Yes, advertising is going down, and it may not come back, 
to the degree it ever did. Craigslist certainly seems to have a 
permanence that is dramatic and fundamental. But, what was the 
problem for newspapers perceiving the Internet at the key 
moment was that--you have to understand the culture of 
newspapers--circulation for the entire modern run of the 
American newspaper was a cost center. It cost money--it cost 
more than it--it cost more than they got from your circulation 
dollars to get the paper to your doorstep. So, with every new 
circulation, they were making no money. All the revenue stream 
was in advertising. And that might have stayed the same, and 
that might have made newspapers indifferent to the idea of 
content and pricing content and receiving remuneration for 
content, except we've entered this brave new world. And now the 
only chance, I would argue, that newspapers have is to retain 
their content.
    And I will give you what I imagine to be the only viable 
solution for the--for a regional news product in my town. And 
when I say ``newspaper,'' by the way, I mean online, I don't--
you know, I don't think we're going to be cutting down trees 
very much longer. But, if The Baltimore Sun were able to charge 
$10 a month, and you could only know what happens in the region 
in Baltimore by subscribing for $10 a month, that's $10 a month 
of pure profit. No trucks, no newsprint, no delivery cost. That 
is a new revenue stream that might be able to support a metro 
desk of 40 reporters, 50 reporters, give them benefits, let 
their families live in houses with mortgages.
    I mean, the wanton destruction of the source of all this 
news that the aggregators are enjoying is, in a way, self-
defeating, but I think we've had--for the last 20 years, we've 
seen that people--you know, if there's a short-term profit to 
be made, somebody'll figure out how to make it, at the expense 
of the actual industry.
    Senator Kerry. What do you say to that, Ms. Huffington?
    Ms. Huffington. Actually, Senator Kerry, I was not around 
when the printing press was invented, but if I were around, I 
would imagine that the scribes working with stone tablets would 
be making a similar argument, saying, ``You know, if you just 
left us alone and just forgot about that printing press, we 
could really go on making a living.'' The argument that The 
Baltimore Sun could charge for content that would only be 
available to those paying a subscription to The Baltimore Sun 
seems to me so antiquated and flying in the face of all 
consumer habits. And, as Eric Schmidt, the CEO of Google, said 
during a recent speech----
    Senator Kerry. Let me----
    Ms. Huffington.--you know----
    Senator Kerry. Let me just interrupt you there for 1 
minute. It's a product.
    Mr. Simon. Yes.
    Senator Kerry. It's created by somebody. It is--it's 
intellectual property, which we recognize as having a value, 
correct?
    Ms. Huffington. Absolutely.
    Senator Kerry. Why do they not have a right--why is it 
antiquated to believe they have a right to be paid for their 
product?
    Ms. Huffington. No, no, no. The fact that they wish that 
was the case is not antiquated. The fact that it cannot happen 
makes it antiquated, because that's not how people are 
consuming----
    Senator Kerry. Now, is it----
    Ms. Huffington.--news.
    Senator Kerry.--that it cannot happen because they have 
decided to provide it free, and you can't put the horse back 
into the barn, or is it because it can't happen anyway, no 
matter what our rules were? For instance, if you sat down--I 
mean, you said, a moment ago, Ms. Mayer, that you were 
prepared--you--I think you were saying that it's important to 
have these folks capable of doing this. They're not going to be 
capable of doing this if they can't have a revenue stream that 
comes to them directly for doing it. Do you--I mean, do you 
agree with that, or not?
    Ms. Mayer. No, because I think it's a false dichotomy.
    Senator Kerry. OK.
    Ms. Mayer. I think you could say, ``Well, with the product 
we have today, it's not working.'' But, you could try and 
preserve the business model as it exists today, or you could 
attempt to change the product in a way that maintains the core 
of what's wonderful about journalism but ultimately becomes 
more engaged and adapt online, generating more----
    Senator Kerry. We've got to give some----
    Ms. Mayer.--generating more in demand.
    Senator Kerry. How do you get----
    Ms. Mayer. So----
    Senator Kerry. Look, I'm an old prosecutor, too, as Claire 
McCaskill was, and I remember those reporters sniffing around 
the DA's office and the courthouse, and, man, they held people 
accountable, and they got stories, and they did everything 
else. Is that going to happen?
    Ms. Mayer. I think it can. But, it does mean that--and 
actually some of what's going wrong, I think, right now in the 
newspaper industry, isn't about the actual act of journalism, 
it's about--in the structure of the product and the way that 
it's delivered. Right? For example, when a new update comes 
into play, do you publish a whole new Web page with one new 
sentence and five paragraphs that someone read yesterday, where 
they're going to look at the article and say, ``Well, I've 
already read that''? When you get to the bottom of an article--
it's interesting, in the print version, when you finish an 
article, there are ten other articles in view, any one of which 
you could begin. When you get to the bottom of an article 
online, often just a static version of it was printed in the 
paper, and there's nowhere else to do things. That's not the 
way online works. Right? When you buy something on Amazon, 
there are products you can buy. When you watch a video on 
YouTube, there are other videos you can watch. When you finish 
reading an article online, what should you do next? A lot of 
the websites will just say, ``Well, you can leave a comment,'' 
and there's really no other link in view, there's no concept of 
what to do next if you want to be engaged and informed. And if 
we can come up with a product that can increase engagement, 
increase engagement the way social networks have, for example, 
ultimately there will be----
    Mr. Simon. Well, news is a product.
    Ms. Mayer.--a lot of demand for other products.
    Senator Kerry. I think everybody is all for doing that, but 
you still have the initial question--I mean, that's after 
you've read their product.
    Mr. Moroney. Wait.
    Senator Kerry. You've still got to get their product in 
order to get there.
    Mr. Moroney. Well, Senator, also----
    Senator Kerry. Sorry, go ahead.
    Mr. Moroney. Well, Senator, you know, the DallasNews.com 
doesn't put up PDF pages and attract 50 million page views a 
month and 6 million unique users who are Web-savvy. I think Ms. 
Mayer may have an antiquated view of what newspaper websites 
are doing. We're doing very many of the things that she's 
talking about.
    We want to link in. We want to link out. We want to provide 
more context and analysis from other sources. We're not against 
that whatsoever. The problem is that that model today, for 
about 60 percent of the inventory we generate, is monetized at 
40 cents a thousand. I can't make a living at 40 cents a 
thousand. That's a million dollars a year to The Dallas Morning 
News. That's one-thirtieth of the cost of my newsroom. So, 
we're----
    Senator Kerry. So, what would it take----
    What would you need to be able to do that?
    Mr. Moroney. Well, I mean, multiply the number up. I guess 
I have to have 30 times 50, so about a--I don't know, what is 
that? A billion-five--a billion 500 million page views a month, 
and that isn't going to happen for the--for DallasNews.com. We 
don't want to pull out of the digital ecosystem. We're not 
against what Ms. Huffington does, and we're certainly not 
against what Google does. We just simply want to have a fair 
compensation for the content that we publish that becomes 
available digitally for other people to use in what ways they 
want to use it. We're not getting paid fairly for that across 
our industry.
    And I think you're exactly right, by the way, Senator--I 
agree with you, and I don't think they're going to argue--they 
should want my $30 million worth of investment in news 
resources to continue to be at 30 million or more, because I 
provide the kind of content that helps drive traffic to 
Google--for Google AdSense to monetize or to Ms. Huffington's 
website, and so forth. So, in one way, I do believe we have a 
mutual interest in this. We may just have a different way of 
how we need to go about it.
    Senator Kerry. Ms. Huffington?
    Ms. Huffington. Absolutely we have a mutual interest. And 
what I had begun to say is that Eric Schmidt, the CEO of 
Google--and Marissa, you can talk to that more--has already 
begun to speak about an application that Google is developing 
which will actually help newspapers, because it will be able to 
identify subscribers' wants and tastes in a much more granular, 
directed way, which will be easier to monetize.
    And, Marissa, I don't know if you want to address that any 
further. I know that it's not available yet, but I understand 
it will be available pretty soon.
    And one more thing: there are really two different ways to 
approach that, Senator Kerry. One is the way Time selects, 
which did not work, involved putting specific content behind 
walls, and they had to acknowledge that it did not work, and 
they pulled the walls down. And the other approach is what The 
New York Times is considering doing now with the new Kindle 
that, as you mentioned----
    Senator Kerry. Right.
    Ms. Huffington.--was announced today. And they are 
considering getting new subscribers to buy, at a much reduced 
rate, a new Kindle on which they can read the newspaper and 
then also get a long-term subscription to the newspaper. So, 
there are many innovative ideas like this, that newspapers need 
to experiment with, instead of coming here and asking for 
antitrust legislation in order to protect their legacy 
business.
    Mr. Moroney. Senator, the Kindle, which I think is a 
marvelous device--the best deal that Amazon will give The 
Dallas Morning News--and we've negotiated this up to the last 2 
weeks--they want 70 percent of the subscription revenue. I get 
30 percent, they get 70 percent. On top of that, they have 
said, ``We get the right to republish your intellectual 
property, anything you do, to any portable device.'' Now, is 
that a business model that's going to work for newspapers? I 
get 30 percent of the subscription price and they get the right 
to license my content to any portable device? Not just ones 
made by Amazon. That, to me, is not a model. Now, maybe what 
Plastic Logic comes up with or what Hearst comes up with, with 
E Ink--might provide a good model. But, today, Kindles are less 
than 1 percent penetration in the U.S. market. They're not a 
platform that's going to save newspapers, in the near term.
    Mr. Simon. I'd also like to speak to the time-select 
experiment. I think that actually points up the need for the 
entire industry to have an open discussion about content and 
copyright, because what it showed was that the Times, acting 
alone, without The Washington Post, without other competitors, 
could not go it alone. And furthermore----
    Senator Kerry. Because people simply went elsewhere for 
the----
    Mr. Simon. Right. I mean, unless everybody looks upon this 
as--unless the news has value, unless it is a product, and 
unless it's treated as a product, and unless it's treated as an 
intellectual property, it's over, this thing is over, this is 
all over but the shouting.
    Senator Kerry. Senator Klobuchar, we interrupted your 
session there for a moment. And then----
    Senator Klobuchar. That's fine.
    Senator Kerry.--we'll go to Senator Nelson.
    Senator Klobuchar. OK. Thank you very much, Mr. Chairman. 
Thank you, again.
    When I was--before I left, we were talking about these 
steps that we can take. We have the ad issue, which maybe could 
improve some as the economy improves; the bankruptcy issue--
didn't seem like anyone thought there was much to do there. 
Senator Kerry has been exploring this idea of how the 
newspapers get paid for content. And I just wanted to go back 
to the antitrust one, just for 1 minute, because I know that 
Speaker Pelosi had written a letter urging the Attorney General 
to take a broader view of newspaper competition.
    And again, I know we went over this a little, but there is 
this issue of the competitors and viewing that differently, 
obviously. But, I want to get a sense of how this would help 
you, vis-a-vis as you talk about your negotiations, Mr. 
Moroney, for The Dallas News, as you're trying to negotiate 
something where you're getting paid for your work of your 
reporters. How would that change this, if there was some change 
to the antitrust exemption?
    Mr. Moroney. Well, again, there are two things. One, if the 
industry can come together, there's a whole different 
discussion that is had with aggregators as large as Google and 
even smaller. For instance, I'm quite confident that somehow we 
could go to Kindle and strike a deal--I could strike a deal 
better than 70 percent of the revenue going to Kindle--if we 
all acted together. But, as a single newspaper in a single town 
in the United States, I don't have any leverage with a company 
as large as Amazon.
    So, those are----
    Senator Klobuchar. Right now, you're prohibited from 
talking to newspapers in what way?
    Mr. Moroney. Well, I mean, we can't come together and talk 
about, you know, pricing, for instance. I couldn't get together 
with other newspapers and say, ``Let's go to Kindle and talk 
about what kind of price we want from them, what kind of share 
we would like to have, together.'' We're prohibited from doing 
that, understandably, you know, in the way the markets have 
been regulated over time. But, I think some limited exemption 
for the industry to come together for a period of time could 
allow us to really find out what Mr. Simon's been talking 
about, which is, What is the value of this content that we did 
let out of the barn? It's out there for free. Could we get back 
control of it as an industry and determine what the value of 
our intellectual property is?
    Senator Klobuchar. And, Ms. Huffington, you talked about 
how you don't want to go back in the way-back machine. And it 
sounds like Mr. Moroney is struggling to go forward. He wants 
to try to do something differently by working with the other 
newspapers to get some leverage. Do you have a problem with 
that?
    Ms. Huffington. No, but it is my understanding that 
newspapers are already having these conversations. I mean, 
that's what I've been told by Rupert Murdoch himself, that 
these conversations are ongoing.
    Mr. Moroney. But they're limited conversations.
    Ms. Huffington. No, and that----
    Senator Klobuchar. OK.
    Ms. Huffington. But, they are ongoing----
    Senator Klobuchar. You want to finish and then--Mr. Simon 
was nodding his head no, and I'm curious----
    Ms. Huffington. Well, there are definitely ongoing 
conversations. And----
    Senator Klobuchar. Mr.----
    Ms. Huffington.--nothing prevents, or should prevent, that.
    Mr. Moroney. Those conversations are so limited in scope, 
we really can't come to some sort of business model, describe 
it, and then go forward with trying to enact it. So----
    Mr. Simon. My understanding is, Mr. Murdoch is talking to 
his own people within his own institutions, and he has been 
floating a few balloons over to the other side, but there can 
be no conversation. That--the problem is----
    Senator Klobuchar. But it----
    Mr. Simon.--the industry has been unable to protect the 
sanctity of its copyright and its product by talking to each 
other and by deciding what to do about new media.
    Senator Klobuchar. So, the trial balloons get out there, 
but you can't actually----
    Mr. Simon. Yes, and as Mr.----
    Senator Klobuchar.--have the leverage of----
    Mr. Simon.--Moroney says, when you----
    Senator Klobuchar.--working together.
    Mr. Simon.--negotiate individually, as the Dallas paper, as 
the Des Moines paper, as the Minnesota paper----
    Senator Klobuchar. Well----
    Senator Kerry. How many aggregators would you have to 
negotiate with?
    Mr. Moroney. Well, I assume the--you'd start with Google 
and AOL and the Yahoo!, to begin with, and you would probably 
go to Amazon and some of the other e-reader developers, and--
I'd have to think more through it, but that would be a good 
start.
    Senator Klobuchar. Mr. Coll, do you want to comment? You've 
been kind of quiet over there.
    Mr. Coll. Well, I don't----
    Senator Klobuchar. On this idea of negotiation and the 
antitrust exemption as----
    Mr. Coll. I honestly don't have a view about the antitrust 
exemption, but I would offer a little bit of historical 
perspective about the newspaper industry's collective efforts 
to deal with the rise of the Internet.
    I was present at some of that when I was managing editor of 
The Washington Post between 1998 and 2005, and the industry did 
attempt to collaborate to defend classified advertising through 
classified ventures online. It did at--through the AP 
cooperative, wrestle with the challenge of the rise of online 
news, and it failed. It failed again and again to anticipate 
and to manage the challenge of the World Wide Web. And it was 
very frustrating, in those early years, to argue that the AP, 
for example, should be careful about selling proprietary 
content by its cooperative members for subscription to rising 
online publishers without considering what this might do to the 
business model.
    And so, I'm--I have no objection if the newspaper industry 
is finally able to corral the intellectual property that it 
managed so poorly, in my opinion, during those years. But, I'm 
not optimistic that this is going to provide the solution to 
the question that you've been asking, and Senator McCaskill and 
Senator Kerry earlier, which I think is critical, which is, 
Where is the public interest in this crisis? And the public 
interest is not located in the business competition between 
big, well-funded corporations. The public interest is located 
in the reporting on public matters, on government, on private 
power, on public institutions, on international affairs, 
particularly at the local level.
    And we're in a period of transition, and, while I don't 
share Ms. Huffington's optimism about citizen journalism and 
fact-based opinion, I applaud her innovation, and I hope that 
she proves me wrong. We're in a period of experimentation, a 
period of transition. The question is, How do you protect the 
public interest during this transition? And I think you've 
surfaced a lot of possibilities. I think there is a kind of 
civic-marketplace function, as well as an actual marketplace 
function, that will sort out some of the answers over the next 
5 to 10 years.
    But, I just wanted to add one element to the discussion 
about how you get those reporters into the police stations and 
how you get them into the zoning hearings and account--watching 
the mayors and the governments that are administering a public 
trust over the next 5 to 10, 15 years. We have an 
infrastructure in this country, in public broadcasting, that is 
embedded in every one of these communities. Now, none of--no 
single solution is the answer, but in the mix of solutions that 
includes small experiments funded by foundations like MinnPost 
and Voice of San Diego, which are terrific and important--I 
hope they flourish--and Huffington Post investments in 
investigative reporting--I applaud them, I hope they flourish--
but, we already have a nationally distributed public 
broadcasting infrastructure that could be revitalized and 
adapted to send reporters down to local and State government 
and sustain some of the civil-service-modeled professional 
reporting that is what we all think we're in danger of losing, 
and which is where public interest lies.
    So, I just--I wanted just to add that thought in. It 
complements, in my view, all of these other approaches, but its 
absence in the discourse worried me, because I do think it's a 
opportunity where the--this--the wiring is already there, you 
just have to go to work on reform and revitalization.
    Senator Klobuchar. OK. Last word for----
    Mr. Simon. I'd also----
    Senator Klobuchar.--Mr.----
    Mr. Simon.--like to second that. And this is where I'm 
going to have to part company with Mr. Moroney. I have no faith 
that if a new revenue stream were established and newspapers 
began to thrive again, that the chain journalism that was not 
locally based, that was not committed within the communities 
that it was covering, that was basically a creature of Wall 
Street and of the profit margin--I have no faith that that new 
revenue stream would not be cannibalized into CEO salaries and 
the price per share, and it would not be transformed into new 
reporters, new hires, better coverage.
    You know, the reason we all pay $50, $60 a month now for 
our television, which used to be free, is that the content 
expanded and became more complex and more sophisticated. And 
we're willing to lay out money for something which was free for 
30 years. Newspapers actually shrunk prior to the arrival of 
the Internet, and they did so because they were not nonprofit. 
They were--the public's interest and the public--the public 
interest, in their essence, was not the priority.
    So, I am absolutely with Mr. Coll on this--you know, to the 
extent that the nonprofit model can be brought to bear, that 
probably is the only future that's going to get you there.
    Senator Kerry. Senator Nelson?

                STATEMENT OF HON. BILL NELSON, 
                   U.S. SENATOR FROM FLORIDA

    Senator Bill Nelson. Thank you, Mr. Chairman. And thank you 
for having this hearing.
    And I apologize for being late. I've been in a highly 
classified hearing, which I had to chair, and I apologize to 
the panel and thank you for your contributions.
    I particularly think that what is in the public interest is 
to have unfettered freedom of the press and all that that 
brings to a democracy. And since I have here in front of us, 
not only one of my personal friends, but one of, I think, the 
most sage observers of America and its trends, I want to posit 
a situation where we will be in 10 years, and you tell me, Mr. 
Ibarguen, whether or not you think that the public interest 
will be served.
    We will have only a few newspapers that are actually 
printed in 10 years, perhaps one like The New York Times. It 
will also be online, and it will be charged online. That local 
newspapers, printed, will be a thing of the past, and they will 
be online versions. How they will be financed, I can't say at 
this point, but, in addition to the local newspaper, which may 
have gone out of business or may have a remnant of an online 
version, there will be other local venues that will come up 
online, offering news. That this diminished capacity will 
lessen the number of students in journalism school, and that, 
for--that the entertainment kind of news will continue to 
proliferate on the cable television stations. Is that where 
we're going to be in 10 years?
    Mr. Ibarguen. Well, first of all, I'm flattered by your 
recognition of our friendship. I don't accept the mantle of 
``wise man,'' however, I appreciate it.
    I don't know, Senator, where we are in 10 years, but, in 
the scenario that you describe, I don't think we're better off. 
I'm not sure that that's the scenario that we actually get to, 
though.
    The discussion that we've had today--and I think Steve and 
I have not participated in it because it's been a discussion 
about the preservation of a business. The thrust of our 
presentation here today was to suggest to the Committee that an 
appropriate Congressional activity ought to be looking forward. 
That's said with some pain, because, as a former publisher, I 
lived through many of the things that have been described here.
    But, I go back to what I said before, ``if the fans don't 
want to come to the ballpark, nobody can stop them.'' I think 
there is an inevitability about the use of digital media so 
that the kind of focus that we had on the existing business of 
newspapers honestly doesn't seem to me to be very productive.
    I do agree that there should be inquiry into whether you 
can preserve the intellectual property. I think whatever you 
can do to extend the life of these organizations--of these 
organizations, meaning the newsroom, I think is probably a good 
thing. But, I don't think that's where we're going. And I think 
in 10 years, this is going to feel like a reasonably 
anachronistic kind of conversation.
    I think we need to look at enabling all Americans to have 
access. I think we need to look at figuring out what the models 
are going to be on the new media that are going to be able to 
pay for the kind of journalism that we'll require.
    Maybe, as I listened to Mr. Moroney, maybe you need to 
allow newspapers to negotiate all together, or at least to 
negotiate--well, I guess the first thing you'd have to do is to 
get the AP not to sell the content, which they've been doing 
for quite a long time, in representation of their members, who 
are all newspapers. But, I don't know how you--even if you did 
something like that--how you then would answer Mr. Simon's 
concern about local, because, in the end, maybe not in Mr. 
Moroney's company, but certainly the other publicly held 
companies are accountable to institutional shareholders, 
they're not accountable--never mind to the original families 
that may have started them; the pressure is from institutional 
shareholders who not only don't care, but cannot care. They 
have a different kind of responsibility.
    In a very local operation, you have a different view of 
your responsibility to the community, and that's actually one 
of the reasons why I said in my statement that I thought the 
idea--I don't know that it's necessarily nonprofit, maybe it 
should be some sort of hybrid, but the idea of a local, 
mission-driven organization that is community-based, that is 
dedicated to that community first and to profit second, has, it 
seems to me, a great deal of appeal. But, I don't think that's 
necessarily going to happen, by some of the things that we've 
heard today.
    I wish I could tell you a quick answer to a 10-year 
scenario, but I don't think that a scenario based on watching 
cable reruns is a really good civic model.
    Senator Bill Nelson. And if you had that local model 
dedicated to the news, then presumably you would have the 
resources to do investigative journalism at the local level.
    Mr. Ibarguen. Well, and that's the big presumption. I don't 
know that--I don't know that you can make that presumption. I 
remember when I was publisher of the Miami Herald, asking the 
fellow who was the head of Comcast for South Florida, and I 
told him, ``I think what I need to figure out is how I become a 
utility, just like you have.'' If you could figure that out--I 
mean, I don't know if you have, but if you could figure that 
out, then that would provide a way of paying for these things.
    I mean, Macy's and classified advertisers didn't 
particularly care. And I shouldn't use any brand name, but 
department stores and classified advertisers were not 
especially interested in our foreign bureaus in Latin America. 
They paid, because they got value. When they stopped getting 
value or when they got better value or more efficient value 
someplace else, they moved someplace else. So, I don't think 
you can assume that they would necessarily continue with the 
paper.
    But, if you could combine that in some fashion so that 
there is the feeling of a utility, like a cable operation, then 
you'd have enough revenue, in general, to support it. The 
Washington Post is famously able to do a lot of what they do 
because of Kaplan Educational Services, a different kind of 
business that throws off a lot of money within the same 
company.
    Senator Bill Nelson. May I say, Mr. Chairman, just in 
conclusion--and thank you, again, for being visionary yourself 
in holding a hearing like this--I, as an observer, to see this 
thing fast changing in front of our eyes on a daily basis, I 
get so concerned, because I see local newspapers that are 
becoming thinner and thinner and thinner, and, as a result, to 
attract readers, get more sensationalistic in their reporting, 
as opposed to what we think of as gumshoe investigative 
reporting. Likewise, you and I most often each night don't get 
home until a quarter of 8, 8, and I want to turn on the TV----
    Senator Kerry. How do you get home so early?
    [Laughter.]
    Senator Bill Nelson.--and I want to get a quick summary of 
the news, because we've been doing this all day. And I turn it 
on, and it's a bunch of shouting at each other on the cables. 
And I literally have gotten to where I turn it off. And I don't 
think this is serving--if it's having a negative reaction in 
me, someone who absolutely lives on this stuff, then just think 
what it's doing to the casual observer.
    Thank you, Mr. Chairman.
    Senator Kerry. Well, thank you for that observation, 
Senator. I agree with you completely.
    I think--before we wrap up, here, let me just ask a couple 
of quick questions, and then we will wrap up. You've all been 
very, very patient. It's been a long hearing.
    Mr. Ibarguen and then Mr. Coll, I want to make sure you 
leave us with your sense of what the priorities are that you 
think the Committee rightfully might consider here that would 
make a difference. I mean, what has come out, to each of you, 
in terms of looking to the future and preserving the larger 
interests that you've expressed?
    Mr. Coll?
    Mr. Coll. Well, I think the totality of the questions and 
discussion has answered that important question by describing 
where the priorities lie. They lie in creating pathways to 
sustain independent public-minded reporting, particularly at 
the local and municipal level, but also at the State level, and 
with, also, cognizance of the potential loss of American-
originated reporting from abroad at a time that the United 
States is making large and risky investments around the world. 
So, that's the mission.
    And I think the other thing that's come out from the 
hearing in totality is that there's no one way there, it's 
going to have to be all in, including trying to facilitate the 
kind of innovation in entrepreneurship that's represented at 
the table, including reviewing every instrument that's 
available to preserve the newsrooms that are contracting at 
newspapers primarily, creating support for philanthropic 
innovation of the sort that the Knight Foundation represents, 
but also, I think, taking a hard look at the infrastructure 
that already exists with the public service mission, and not 
just accepting its role, but looking to reform and revitalize 
it purposefully, with this set of priorities in mind. And I 
think that may take some time to get it right, but there is an 
opportunity that could have a lasting impact on a whole 
generation of American public life there, I believe.
    Senator Kerry. I would agree with that.
    Mr. Ibarguen?
    Mr. Ibarguen. Well, I would second what Steve just said. 
I've--this is a time for experimentation, and, to the extent 
that government, through intermediaries--because you don't want 
to be in the position of being the direct funder, I think, for 
First Amendment kinds of reasons--but, government supporting 
innovation, government promoting the evolution of Public Media 
2.0, and absolutely pushing as hard as possible for universal 
digital access, affordable digital access for all Americans.
    All that said, I think the discussion today, which was 
primarily about the newspaper business, shows just how 
difficult it really is. But, I think it's worthy of your 
attention. I think if you could actually cause to happen--I 
don't know whether the lunch that you seem to be setting up 
between Google and newspapers is actually where it's going to 
happen, but I think if you could cause those two forces to come 
together in a way that allows for the preservation of the kind 
of journalism that we all respect, I think that would be a very 
good thing.
    Senator Kerry. Ms. Huffington?
    Ms. Huffington. Senator Kerry, first of all, since there 
was so much emphasis here today on local coverage, it's really 
urgently important to look at the fact that 27 states no longer 
have a reporter covering the congressional delegation here, so 
updating the credentialing process, I would say is really 
important. And we heard here about a lot of good work being 
done by sites like Voice of San Diego or MinnPost, that, under 
the current credentialing rules, would not be allowed to have 
someone here.
    And one last thing. I really appreciated Mr. Coll's 
distinction between newspapers surviving as a business and the 
public good, because these are two very different concerns. And 
I can completely empathize with newspapers wanting to survive 
as a business, but I don't think that's where the government 
needs to come in, especially since if you look at, for example, 
the latest earnings report by The New York Times, you see that 
while they've asked the guild to take a 5-percent cut, while 
they demanded that columnists, who don't belong in the guild, 
take a 5-percent cut, which they've already taken, they have 
given bonuses to senior management of the kind that is very 
offensive to those who claim that it's all about reporters 
producing content.
    And that is related, also, to the other problem with 
contemporary journalism, which is how much it has been driven 
by access. Which is why I would love to provide you with a list 
of sites that are covering the economic meltdown in a way that 
is very significant, which are not attached to newspapers, but 
which don't have to deal with the problems that come with 
access, which often mean that business magazines and newspapers 
that cover Wall Street have not been as good, either at 
predicting the meltdown or at covering, right now, what is 
happening.
    Senator Kerry. Well said. And I think it's a good segue 
into closing out the hearing in this way. I said, at the 
opening of the hearing, that we came here, you know, without a 
specific, sort of, legislative agenda, but with an agenda, with 
respect to our responsibilities to the country, in terms of our 
oversight of television, obviously, broadcasts, but also print 
media and the rules we have made with respect to cross-
ownership and other things. And all of those things happen for 
the simple reason that we have always guarded the--not just the 
First Amendment rights, which you alluded to earlier, but the 
criticality, the importance of the free flow of information, of 
people being able to hold us accountable, corporations, special 
interests, others in the process. It's accountable only to 
other degree that there's sunshine and sunlight on it.
    And I quoted Paul Starr and his Columbia Journal Review, at 
the beginning, about how newspapers have always been the eyes 
on the State and the check into our lives.
    Now, that, let me emphasize--and I think Ms. Huffington 
just said this--we certainly don't have a right to come here 
and have some vested interest in keeping a newspaper, per se, 
as a business, alive because that's the way it's always been. 
And we have to not think about this locked into a sort of 
pattern of thinking because that's the way it's always been. 
That's--life changes, and the marketplace changes, business 
models change. And we're seeing that with enormous upheaval in 
green energy, in alternative energy, in different demands on 
automobiles, Detroit, what's taking place, not to mention what 
we've gone through in the last 25 years with globalization and 
the transformation of the marketplace.
    I suspect this is probably no different, in a lot of ways, 
but I want to guarantee that it doesn't leave behind that 
precious difference that we have in our country from almost 
every other place on the planet, and that is that unbelievable 
ability of a couple of beat reporters on the police beat in 
Washington to hold a President of the United States accountable 
for a crime. That was local reporting that translated into 
something national.
    Now, that is not to say that you're not going to fill this 
void. And I think we have to be very, very careful here not to 
get involved in a way that--you know, we've always had this 
winners-and-losers debate around here--we have to be very 
careful that, whatever we decide to do, if anything, is 
strictly in keeping with this larger public interest. That's 
what brings us to the table.
    Americans are increasingly--have more information 
available, but it doesn't mean that they're processing it or 
that they actually access it all, or that it becomes part of 
our national dialogue. And I think this is an increasing 
challenge to all of us. It is harder and harder to build 
consensus around any issue in this country. And it is harder 
and harder to separate fact from opinionated something and so 
forth. And there are less entities to create accountability 
nowadays, for whatever reasons.
    Hopefully, this transformation is going to see that emerge, 
and it may be that there'll be a corps of citizen reporters and 
other kinds of ways and means by which that's going to happen. 
I don't see it yet, I will tell you. I see a sort of cacophony 
without standards and a conglomeration of different sources 
and--but, I see more and more people operating in public life 
with snippets, and I think that's dangerous. I don't have a 
complete answer to it, but I think it's dangerous, and we've 
got to think about, sort of, where and how this plays out.
    Some of what's appearing is very partisan, and some of the 
sites adopt--you know, attract people by virtue of their 
partisanship, not by virtue of their provision of neutral, sort 
of, fact-based news or people--I mean, I suppose any entity has 
its biases, and people draw their distinctions and they learn 
how to do that. But, some of them are, you know, very clearly 
in one place or another, and the only people who go to them are 
people who already have that affinity.
    So, we need to encourage--you know, we want to have a 
standard, we want the professionalism, we want experience, we 
want all those virtues to somehow rise to the surface in this 
process. It may well be that Ms. Huffington has created the new 
model and that, as it grows, it's going to provide more of this 
standard and more of these professionals, and more of a sort of 
structure, as we've known it. I don't know the answer to that.
    But, this is worth our, sort of, thinking through more. 
This is a first conversation, a first brush with it all. And I 
hope it elicits further commentary from people, and input.
    We're going to keep the record of the Committee open for a 
week, for the purpose of other colleagues being able to submit 
questions, if they want to.
    Senator Kerry. And I think we will absolutely continue the 
conversation with the Rules Committee with respect to the 
accreditation. I think that's a very important way to augment 
this accountability, certainly in terms of the national scene.
    We've still got to think about what's going to happen and 
how we're going to fund and how we're going to keep what 
happens in States and in localities, because I think it's going 
to take a while for this new model to fill that. And, you know, 
in 2, 3, 10 years, who knows what happens in that vacuum. I 
hope Mr. Simon isn't correct, you know, that it's an 
opportunity for, you know, nefarious efforts, but we'll see 
what happens.
    Did anybody want to ask anybody on the panel anything, or 
say anything that was unsaid, at this point? I think we've had 
a good discussion.
    Senator Nelson, anything else?
    We thank you very much for joining us today, and we stand 
adjourned.
    [Whereupon, at 6:03 p.m., the hearing was adjourned.]

                            A P P E N D I X

          Prepared Statement of Hon. John D. Rockefeller IV, 
                    U.S. Senator from West Virginia

    For centuries, journalism has been a pillar of our democracy and a 
watchdog the public relies on. Newspapers and broadcasters have been a 
check on the excesses of government, business and individuals. When 
investigatory journalists have uncovered truths and scandals, their 
work has often brought people together, motivated the public to be 
guided by our better angels, and push for change. But more than that, 
on a daily basis, dedicated reporters work around the clock to filter 
the news gems from the dross, and provide us with the knowledge we need 
to conduct our lives as well-informed citizens. Put simply, good 
journalism is vital to our democracy.
    But what happens when our watchdog grows mute and can no longer 
bark? When newspapers, slice their staff and slash their news 
operations? What happens is that we all suffer.
    The numbers alone tell a chilling story. During roughly the last 6 
months, daily newspaper circulation has declined 7 percent. During 
roughly the past year, media companies have cut a heartbreaking 41,000 
jobs. The inevitable result is less reporting, less news, and less 
coverage of our communities and interests at home and abroad.
    From these facts we can infer that the newsgathering model that 
served us so well in the past is now in trouble. The future of 
journalism is digital. We are fast migrating from a world where news is 
cranked out daily over a regional printing press to one where news is 
distributed digitally over the infinite networks of the Internet. There 
is much to celebrate and explore in this change--access to an endless 
array of ideas and opinion and minute-by-minute updates on newsworthy 
events--but there is also is cause for concern.
    In this new evolving world, trusted sources, adhering to the fact-
checking mores of traditional journalism, are often too few and far 
between. The important and time-consuming work of investigative 
reporting may lack the institutional support it needs to thrive. Uneven 
access in to the Internet in some communities is a trouble that needs 
to be addressed. And then there are the unquantifiable losses. The 
daily promise of unfolding a newspaper, rustling its pages, and letting 
your eye dance across the page and survey its offerings is a pleasure, 
I fear, our next generation will not know.
    In the near term, we must seek ways to make sure that our existing 
news entities find a firmer financial footing. In the long term, 
however, we face more fundamental concerns. From the very beginning our 
approach to media policy has been informed by a set of core values--
encouraging competition, ensuring a diversity of voices, and fostering 
localism. Despite the changes all around us, I believe we should strive 
to make sure that these values continue to inspire our media policy in 
the digital age.
    The dialogue only begins with today's hearing. We are undoubtedly 
in a transformational period for the newsgathering business. Though the 
challenges before us are many, sustaining quality journalism is a cause 
that is worth the fight. By working together we can bring focus to the 
difficulties news entities are facing and identify ways to make sure 
that the future of good journalism is as bright as its past.
                                 ______
                                 
 Prepared Statement of Carl Shapiro, Deputy Assistant Attorney General 
     for Economics, Antitrust Division, U.S. Department of Justice

    I appreciate the opportunity to submit a written statement to the 
Committee on behalf of the Department of Justice, to discuss the future 
of journalism, the challenges facing the newspapers, and the important 
role of antitrust in protecting and preserving competition during these 
troubled times.
    I was recently appointed as Deputy Assistant Attorney General for 
Economics in the Antitrust Division; I previously held this same 
position during 1995-1996. I have been a Professor of Business and 
Economics at the Haas School of Business at the University of 
California at Berkeley since 1990.
    I am an economist who has been studying competition, antitrust, and 
competitive strategy, for over thirty years. One strand of my research 
and applied work has focused on the antitrust treatment of mergers 
between competitors. Another strand has focused on the competitive 
strategies of firms in markets that have been transformed by 
information technology. As the title of this session indicates, with 
the advent of new technologies and the proliferation of online content, 
the newspaper business is entering a new age.
    During the course of our Nation's history, newspapers have been 
considered the keystone to the proper functioning of our democracy. An 
informed electorate helps to ensure a responsive government of the 
people, by the people, and for the people. However, over the years the 
newspaper industry has not been static; rather, it has faced various 
pressures from new technologies and changing tastes. Within my 
lifetime, it was common for many communities to have at least two daily 
newspapers: a morning paper and an afternoon paper. With changes in 
American lifestyles and the ways in which information is shared and 
transmitted, afternoon papers generally were eclipsed by morning 
papers. In response, seeking to preserve independent voices in the 
community, Congress passed the Newspaper Preservation Act in 1970, 
which I will discuss below.
    Today, newspapers are once again facing significant pressures, most 
notably from the current sharp recession on top of the challenge posed 
by the Internet. Newspapers are experiencing a painful and ongoing 
decline in circulation and advertising revenues. According to the 
Newspaper Association of America, weekday newspaper circulation 
declined from 55.2 million in 2002 to 50.7 million in 2007, an 8 
percent drop, and this was before the onset of the current recession. 
Similarly, total print advertising decreased from $44.9 billion in 2003 
to $34.7 billion in 2008, a 23 percent decline. Newspaper revenues from 
classified advertising has been declining much faster, dropping from 
$15.8 billion in 2003 to $10.0 billion in 2008, a 37 percent decline. 
For many newspapers, declining revenues have been accompanied by heavy 
debt incurred by owners of newspapers before the current economic 
challenges. As a result, the continued viability of many newspapers has 
been put in serious doubt.
    How does antitrust enter into this rather gloomy picture? While 
newspapers have served as a keystone to democracy, for over a century 
sound competition policy has been the cornerstone of our Nation's 
economic foundation. Vigorous antitrust enforcement promotes and 
protects a robust free-market economy, thus harnessing the power of 
competition to pressure businesses to lower their costs, improve their 
products, and generally find ways to better serve consumers in order to 
stay in business. Ensuring that anticompetitive agreements, 
exclusionary conduct, and mergers do not distort market outcomes has 
helped American consumers obtain more innovative and high-quality goods 
and services at lower prices. For this reason, antitrust enforcement 
has rightly enjoyed substantial bipartisan support through the years, 
and this support has in turn greatly enhanced the effectiveness of 
antitrust enforcement.
    Antitrust is critical to ensure that the public obtains the full 
benefits of competition. This is especially true in industries 
experiencing technological change, where competition spurs innovation, 
including innovative business strategies and business models. In the 
newspaper industry, major changes are taking place in terms of the 
creation and distribution of content and in terms of the business 
models adopted by those who incur the costs necessary to create 
content, especially content that is relatively costly to provide, such 
as investigative journalism. A wide-ranging and healthy debate is 
taking place about the future of the newspaper industry, with different 
participants adopting different strategies for survival and success. 
Among the many possibilities being considered are new revenue models 
for traditional newspapers, user-supplied online content including 
blogs, open-source approaches like wikis, crowd-sourcing, and non-
profit news organizations. This is the essence of the competitive 
process that the Division is dedicated to protecting.
    Congress passed the Newspaper Preservation Act in 1970. 15 U.S.C.  
1801. The opening sentence of the NPA articulates the ``public interest 
of maintaining a newspaper press editorially and reportorially 
independent and competitive in all parts of the United States.'' The 
NPA exempts from antitrust liability certain types of joint newspaper 
operations, so long as two or more newspapers (owned or controlled by 
two or more owners) remain in a given locale, and so long as these 
newspapers maintain separate staffs and independent editorial policies. 
15 U.S.C.  1802-1803. However, the NPA does not grant an unlimited 
antitrust exemption. It expressly states that antitrust immunity shall 
not apply to any joint operating arrangement (``JOA'') or party thereto 
``[e]xcept as provided in this chapter'' and it specifically enumerates 
those activities on which JOA newspapers are permitted to collaborate. 
15 U.S.C.  1803 (c). Thus, for example, there is nothing in the text 
or the legislative history of the NPA suggesting that Congress intended 
to immunize the acquisition by one JOA partner of the other partner's 
newspaper. Indeed, that would be directly contrary to Congress's goal 
of ensuring independent and competitive editorial and reportorial 
voices.
    In reviewing mergers, the Antitrust Division applies Section 7 of 
the Clayton Act, which prohibits the acquisition of stock or assets 
``where in any line of commerce or in any activity affecting commerce 
in any section of the country, the effect of such acquisition may be 
substantially to lessen competition, or to tend to create a monopoly.'' 
Section 7 reflects the Congressional judgment that merger enforcement 
should be able to arrest anticompetitive transactions in their 
incipiency, to forestall the harm that would otherwise ensue but be 
difficult to undo. Thus, merger enforcement standards are forward 
looking and, while we often consider historic performance in an 
industry, the primary focus is to determine the likely future 
competitive effects of a proposed merger.
    The Division, and the Federal Trade Commission, with which we share 
merger enforcement authority generally, have jointly developed Merger 
Guidelines that describe the inquiry the agencies will follow in 
analyzing mergers. ``The unifying theme of the Guidelines is that 
mergers should not be permitted to create or enhance market power or to 
facilitate its exercise.'' Merger Guidelines 0.1.
    There are a variety of issues the Division grapples with in 
analyzing the facts of any newspaper merger. For example, besides the 
two local daily newspapers seeking to merge, there may be a national 
daily newspaper and a local community weekly available in a particular 
community. The Division needs to collect and examine the facts to 
determine whether these offerings are sufficiently competitive with 
each other, both for advertisers and readers. If a significant number 
of readers highly value yesterday's sports scores, for example, a 
community weekly is not likely to be considered a viable competitive 
option for a daily for these readers. At the same time, if many readers 
highly value information regarding local issues, such as a local school 
board vote or policy, a national daily is not likely to be considered a 
viable competitive option for those readers. We ask similar questions 
with regard to advertisers.
    We also take into account the fact that newspapers generally 
receive revenues from both subscribers and advertisers. Since 
advertisers are willing to pay more to appear in a newspaper with more 
readers, newspapers, like other media, have an additional incentive to 
attract subscribers. If advertising revenues decline, newspapers may 
have an incentive to raise their subscription prices. Competition with 
another newspaper can prevent such increases of subscription prices, 
especially as regards traditional readers who are in the habit of 
reading a local daily newspaper, to the benefit of the reading public.
    Ultimately, following Section 7 and our Guidelines, our analysis of 
a proposed merger of two local daily newspapers will depend upon the 
extent to which subscribers and advertisers would shift to other media 
in response to a price increase. Measuring substitution patterns of 
this type requires a detailed, fact-intensive inquiry. As technology 
advances, and as demographics shift, that inquiry could lead to a 
different result in the future than it would have in the past, in a 
given locale. Newspapers are hardly unique in this respect. 
Technological change and shifting consumer preferences over a period of 
decades have altered the competitive landscape in other media as well; 
for example, in video programming, some consumers have shifted over 
time from broadcast television to basic and pay cable television as 
well as direct broadcast satellite.
    In past newspaper merger investigations, the Division has performed 
a factual analysis to determine whether other media outlets, such as 
radio, television, and new media, are in the same relevant market as 
local daily newspapers. In those past investigations, we have found 
sufficiently strong competition among local daily newspapers to define 
these products as a relevant market. These conclusions are perfectly 
consistent with the observation that newspapers have been losing 
subscription and advertising revenues to other media. A relevant market 
consists of products that could profitably be monopolized; some degree 
of competition across market boundaries is the norm. But changes in 
technology, and in consumer preferences for their sources for news and 
entertainment, may well make it possible that the facts surrounding a 
particular future merger or acquisition involving two local newspapers 
could lead us to conclude that consumers' preferences are such that 
other media outlets provide a sufficient competitive constraint to 
alleviate concerns raised by that merger.
    Even if we find that local daily newspapers form a relevant 
antitrust market, that conclusion certainly does not end the analysis. 
Before concluding that a merger between the two remaining local daily 
newspapers in a given community should be enjoined, we still need to 
investigate further to determine if the merger will significantly harm 
competition. The Division is in general receptive to the argument that 
a proposed merger generates sufficient synergies to benefit consumers, 
notwithstanding the resulting loss of competition. That receptivity 
certainly applies to newspaper mergers.
    Especially in today's economic environment, we may be faced with 
the contention that the newspaper being acquired is a failing firm and 
thus the merger should be allowed to proceed. In that case, we would 
analyze the extent to which the assets of the weaker local newspaper, 
including reporting staff, innovative features, or other valuable 
attributes of the paper, would exit the market if not acquired by the 
stronger local newspaper, or whether they could go to other 
competitors, or support a new competitor.
    The Division has considerable experience evaluating claims by 
merging parties that one of them qualifies for the failing firm 
defense. Strict requirements must be met for that defense to be 
invoked, and rightly so. For a free market economy to work to harness 
the power of competition, rivals must not be able to short-circuit the 
competitive process, to the detriment of consumers, unless the 
alternative is imminent exit, which would also involve a loss of 
competition. Unfortunately, this type of ``tough love'' may come into 
play with increasing frequency during the current economic challenges, 
simply because we are likely to see an uptick in the number of mergers 
in which the acquiring firm asserts that the acquired firm (or 
division) is failing.
    Newspapers play a vital role in our society. The Antitrust Division 
continues to work to protect competition in the newspaper industry. We 
believe that antitrust analysis is forward-looking and flexible enough 
to take into consideration the economic and technological pressures 
facing newspapers as we continue to make market-by-market and case-by-
case factual determinations pursuant to the antitrust laws. Vigorous 
antitrust enforcement will guarantee that this important industry will 
be as competitive as possible, and that American consumers will have 
available to them more, rather than fewer, options for getting news and 
information.
                                 ______
                                 
       Prepared Statement of George Tedeschi, President, Graphic 
   Communications Conference, International Brotherhood of Teamsters

    On behalf of the International Brotherhood of Teamsters (IBT), I am 
pleased to submit this statement for the record. The membership of the 
Teamsters remains one of the most diverse in the world--there are 1.4 
million members in a wide range of sectors, including the newspaper 
industry. There are nearly 1,900 Teamster affiliates throughout the 
U.S., Canada, and Puerto Rico. In the newspaper industry, the Teamsters 
represent nearly 30,000 workers through the Graphic Communications 
Conference and the Newspaper Drivers Conference.
    Our members include workers both in production and delivery, as 
well as reporters. It is an understatement to say that we support a 
viable newspaper industry and measures that would help this struggling 
sector. For example, we represent workers employed at well-known 
newspapers in major metropolitan areas that have either filed for or 
face bankruptcy, such as the Chicago Tribune and The New York Times. 
Both of these newspapers date back to the 1800s and the possibility of 
two major cities without a viable newspaper is troublesome, not only 
for our workers but for civic engagement and democracy. We also 
represent workers at institutions such as The Boston Globe, Minneapolis 
Star-Tribune, and the Cleveland Plain Dealer.
    We recognize that the country has shifted technologically with the 
Internet and Web-based search engines, blogs, and other form of media; 
however, we also recognize discrepancies in how advertising revenues 
are distributed in the print media, which creates an uneven playing 
field for newspapers and the workers they employ.
    In this digital age, we must figure out how to maintain the vast 
amount of news and information we receive coupled with how we pay those 
who create the content. Web companies, such as Google, are able to 
utilize search engines, aggregate information, and then charge 
advertising dollars, while newspapers from which the content is derived 
receive no revenues from this.
    This practice dates back to what we call the ``fair use'' doctrine, 
which allows the limited use of copyrighted material without permission 
from the owner. The unintended consequence in the digital age has been 
the shift of advertising revenue from newspapers to search engines with 
little going to the content providers. In 2008, Google's annual revenue 
totaled $21.7 billion, while the newspaper industry lost advertising 
revenue, going from $47 billion in 2005 to nearly $36 billion in 2009.
    While we applaud innovation and Google's business model has been a 
success, we recognize the shift in advertising revenue, and believe 
there must be some way to address this for the preservation of the 
newspaper industry short of a bailout. We also recognize that the 
newspaper industry must re-examine its business model. That model, 
based primarily on circulation and advertising revenue, no longer 
works.
    However, there can be another approach in how the revenue is shared 
and distributed. For instance, content aggregators such as LexisNexis, 
a popular service, pay royalties to use content. Congress can examine 
this approach. However, time is of the essence, and we hope that 
Congress can work with the newspaper industry on viable options for its 
future.
    Many newspapers have instituted staff cuts, wage freezes, and other 
cost reductions in order to remain viable. Our own members have also 
made sacrifices. We support the concept of legislation that would treat 
newspapers as tax-exempt organizations under the tax code.
    Legislation introduced by Senator Ben Cardin (D-MD), S. 673, the 
Newspaper Revitalization Act, would exempt the advertising income of a 
tax-exempt newspaper corporation or organization from taxation as 
unrelated business income and would also allow a charitable tax 
deduction for contributions to newspaper organizations. The measure is 
designed to protect newspapers serving local communities. We believe 
this offers an immediate solution to a long-term problem, while the 
issue of fair use is dealt with among many stakeholders. Congress may 
also want to re-examine anti-trust laws governing the industry, so that 
newspapers can collaborate on ways to preserve and protect their 
content.
    Thank you for the opportunity to submit this testimony.
                                 ______
                                 
Prepared Statement of the National Newspaper Association (NNA) by John 
 W. Stevenson, Publisher, The Randolph Leader, and NNA President, 2008-
  09 and Reed Anfinson, Publisher, Swift County Monitor-News, and NNA 
                  Government Relations Chair, 2008-09

    Mr. Chairman and Members of the Committee, National Newspaper 
Association appreciates the interest of the Subcommittee in the future 
of journalism. NNA attended the Committee's May 6 hearing and found the 
questions of the Members provocative and thoughtful. One major missing 
element in the hearing, however, was the role of the community 
newspaper in supporting American journalism. Therefore, on behalf of 
NNA's 2,500 community newspapers across America, we would like to 
provide supplemental views for the record.
    First, we want the Subcommittee to understand that newspapers in 
America are not dead.
    Attached to this testimony is a map of NNA's membership.. 
Represented on this map are hundreds of small daily, weekly, semi-
weekly and tri-weekly newspapers that cover America's small towns, 
suburbs, inner city and niche markets. (By some counts, there may be 
eight thousand or more weekly newspapers in the country, but 
definitions of ``newspaper'' differ, and some may be basically editions 
of one main title.)
    As publishers of two of these newspapers--which are 117 and 124 
years old respectively, we find ourselves borrowing from former 
newspaper reporter Mark Twain, ``reports of our death are 
exaggerated.'' We are concerned that perceptions of the death of 
newspapers are misleading Americans to believe our own quite successful 
newspapers are no longer viable.
    In fact, most of America's newspapers are closer to the sizes of 
our community papers than to the respected Boston Globe, Seattle Post-
Intelligencer (now only online), or the late Rocky Mountain News. We 
are all affected by the economic downtown in America--principally by 
the decline in real estate and automotive advertising--but some of us 
had our best years ever in 2008. We are now sustaining our businesses 
in the throes of the recession and preparing for better times ahead.
    Second, while the typical NNA member newspaper has a well-used 
website and business strategies for these sites, our newspapers are not 
being put out of business by the Internet. Readership surveys in 2008 
of community newspaper markets by Belden Associates found that:

   86 percent of adults over the age of 18 read a newspaper 
        every week.

   75 percent of those readers read most or all of their paper.

   On average, readers spend 45 minutes reading an issue of 
        their paper, compared to 42 minutes from the 2007 survey, and 
        38 minutes in the 2005 survey.

    Third, the family-owned franchises whose passing was lamented by 
former reporter David Simon at your hearing are also still alive. We 
are most often found in America's community newspaper franchises. In 
fact, of NNA's 23-member board of directors, 14 represent family-owned 
newspapers. Several others are or have been executive managers for 
family-owned newspapers. We are typically in smaller communities, and 
our news is very, very local, at a time when local news is holding 
together the fragile economies of many of America's small towns and 
communities. At NNA's March 19-20, 2009, Government Affairs Conference, 
NNA celebrated the emergence of the next generation of owners as we 
watched our sons, daughters, grandsons and granddaughters present to 
Members of Congress their intent to inherit and operate the family 
business.
    Finally, the local journalism that witness Alberto Ibarguen of the 
Knight Foundation believes may be rediscovered only in non-profit 
supported enterprises, and Arianna Huffington of the Huffington Post 
hopes to gather from volunteer reporters is going on, daily and weekly, 
from within the professional ranks of our newspapers. Our journalists 
regularly cover the school board, high school athletics, city council 
news, the chicken dinners at local nonprofits and, yes, even the zoning 
board.
    We speak out now for two reasons.

        1. As Congress laments the decline of metropolitan newspapers, 
        it could affect our own futures, if the nature and breadth of 
        the threats to journalism here are not understood. A perception 
        can become a reality if it is not combated with the truth. 
        There have been many forces that led to the demise of some 
        beloved metropolitan newspapers and with our industry, we mourn 
        their losses. But some of the factors that have nothing to do 
        with the Internet--including assumption of excessive debt in 
        the alluring era of low interest rates, loss of mass market 
        retailer advertising as the likes of Federated Department 
        Stores consolidated and shuttered stores, and the pure size and 
        weight of metro papers trying in vain to cover sprawling 
        suburbs--are factors that are now in our rear view mirrors. 
        Congress can do little about them now. We do not wish Congress 
        to undertake a ``rescue'' of newspaper journalism without a 
        thorough understanding of its nature and provenance. Congress 
        could do more harm than good unless it keeps in mind the 
        businesses that are very much alive and, if not well in this 
        economy, committed to slugging through this recession and 
        keeping our focus on sound journalism and its principles. While 
        NNA has taken no position on the prospect of relaxing antitrust 
        laws to permit the larger newspapers to negotiate in consortia 
        with Internet aggregators, we would be concerned if the 
        redefinitions of relevant markets, or the scope or length of 
        antitrust exemptions led to competitive disadvantages for 
        existing, healthy community newspapers.

        2. There are things Congress can do, and should do, if it wants 
        to keep community journalism alive, even as continuous 
        exploration for Internet business models goes on. These are 
        some of the issues NNA addresses daily through its 
        Congressional Action Team and its Washington office. Our 
        members are willing and able to meet with any member of your 
        subcommittee at your request to discuss the positive tools in 
        the hands of this Congress for supporting newspapers that 
        provide the journalism that, as Chairman Kerry said, enable our 
        democracy.

                a. Reliable 6-day mail delivery and affordable postal 
                rates are at the top of our list, as the U.S. Postal 
                Service contemplates serious financial strains. Most of 
                our newspapers are delivered through the mail, and more 
                small dailies are abandoning their own carrier forces 
                for the mail each year. NNA supports a proposal that we 
                believe to be forthcoming from the Senate Homeland 
                Security and Governmental Affairs Committee to 
                recalculate the aggressive pre-funding of postal 
                retirees' health benefits. And we vigorously oppose a 
                retreat to 5 day mail delivery. There is a newspaper 
                delivered in the mail from Monday to Saturday every 
                week in America. And cash payments delivered by USPS 
                Monday through Saturday can be vital to the survival of 
                a small business during tight times.

                b. Family owners should be encouraged to keep their 
                businesses in the family through an exemption in the 
                estate tax. Without commenting on the ongoing 
                discussion of the impact of this tax on small business 
                generally, NNA has seen many good family papers end up 
                in indifferent hands, mismanaged and bled of their 
                commitments to local news. If we have heirs interested 
                in this business, they should not be required to take 
                on substantial mortgages to pay a 45 percent tax on an 
                intangible asset.

                c. Finally, we would like to call to your attention the 
                important role of government as advertiser. Congress 
                has recently watched the Federal Government blithely 
                remove the public notices of asset forfeitures--usually 
                carried out by U.S. Attorneys or the Federal Marshals 
                Service--from local newspapers. These are being 
                published on a government website that cannot achieve 
                the transparency and awareness that newspapers bring. 
                According to the U.S. Census bureau's 2008 statistics, 
                an average of 13 percent of Americans with Internet 
                access visit a government website daily--and there are 
                no available data on whether any of those are visiting 
                the agency websites that seem to some in government to 
                be cheaper than newspaper notices. We do not believe a 
                newspaper public notice constitutes a government 
                bailout, as the newspaper remains the best and most 
                durable venue for this advertising. But if Congress 
                wishes to direct revenue to newspapers going through 
                tough transitions, this Federal spending would be one 
                highly promising venture to explore. In addition, the 
                government is a heavy advertiser for procurement, 
                military recruits, Social Security benefit information, 
                and other messages and services that could be directed 
                to newspaper pages. We might also add that the 
                senators' own campaign consultants might consider the 
                value of coherent and informative messages available in 
                newspaper ads.

    The Subcommittee's inquiry into the future of journalism is 
welcome, and timely. We agree with your witnesses, and with many on 
your Subcommittee whose probing questions led to thoughtful answers 
that the future of journalism lies at the root of our sustained 
democratic government. While Congress must respect its traditional 
hands-off role in direct oversight of print journalism, it must also be 
aware of its power to influence the marketplace that supports this 
journalism. We welcome the Subcommittee's interest and stand ready to 
provide additional information if the Members or staff would find our 
assistance useful.
                                 ______
                                 
                       National Association of Broadcasters
                                        Washington, DC, May 5, 2009
Hon. John F. Kerry,
Chairman,
Senate Committee on Commerce, Science, and Transportation,
Subcommittee on Communications, Technology and the Internet,
Washington, DC.

Hon. John Ensign,
Ranking Member,
Senate Committee on Commerce, Science, and Transportation,
Subcommittee on Communications, Technology and the Internet,
Washington, DC.

Re: Hearing on ``The Future of Journalism''

Dear Chairman Kerry and Ranking Member Ensign:

    On behalf of the Nation's local broadcasters, I want to thank you 
for holding a hearing this week on the timely and important issue of 
the future of journalism. In light of the serious economic and other 
challenges currently facing America's electronic (as well as print) 
news organizations, Congress must be careful not to take any actions 
that would inadvertently undermine the ability of broadcast stations to 
serve their communities. In particular, Congress should avoid changes 
to the law that would threaten the viability of local stations by 
allowing the importation of duplicative programming from out-of-market 
television stations, or by imposing unnecessary burdens on the only 
locally licensed and oriented members of the electronic media.
    Television and radio broadcasters provide a free, over-the-air 
service that reaches virtually every household in America, keeping 
local communities--your constituents--informed and connected. NAB's 
more than 8,300 member stations serve viewers and listeners throughout 
the country with entertainment and informational programming, including 
news and public affairs and vital emergency information. Television and 
radio stations are unique among electronic media, as they are the only 
outlets licensed to and focused on serving local listeners and viewers.
    The transition to digital television and radio broadcasting is 
enabling local stations to improve their service to communities large 
and small. Stations are now able to offer multicast streams with 
additional diverse programming, including local news, sports and 
weather. Radio and television broadcasters are providing their 
programming to consumers over the Internet and are exploring ways to 
offer their programming via a range of mobile devices.
    As representatives of the newspaper industry will also attest, 
competition in the 21st century digital media marketplace is 
relentless. Technological advancements and the explosion of media 
outlets have created an increasingly challenging economic environment 
for the production of quality news and information, especially local. 
The current economic crisis has only exacerbated the difficulties that 
broadcast stations face. Double-digit percentage declines in 
advertising revenue threaten to undermine the ability of television and 
radio stations to offer locally oriented services, including costly 
services such as local news.\1\
---------------------------------------------------------------------------
    \1\ NAB has shown, in detailed studies submitted to the Federal 
Communications Commission (FCC), that the costs of providing local news 
continue to rise, while the cash-flow and profits of a number of 
television stations decline, especially in medium and smaller markets. 
See, e.g., NAB Comments in MB Docket No. 06-121 (Oct. 23, 2006), at 89-
97 and Attachment J; NAB Reply Comments in MB Docket 06-121 (Jan. 16, 
2007), at 60-70 and Attachment; Smith Geiger, Newsroom Budgets in 
Midsize (51-100) and Small Markets (101-210) (Dec. 2002), attached to 
NAB Comments in MB Docket No. 02-277 (Jan. 2, 2003). The FCC has 
expressly recognized that ``the ability of local stations to compete 
successfully'' in the video marketplace has been ``meaningfully (and 
negatively) affected in mid-sized and smaller markets,'' in large part 
due to the more limited advertising revenues available in smaller 
markets. Report and Order and Notice of Proposed Rulemaking, MB Docket 
No. 02-277, 18 FCC Rcd 13620, 13698 (2003).
---------------------------------------------------------------------------
    Obviously, in today's very difficult economic environment, there 
should be no changes in law and regulation that would further undermine 
the financial viability of local broadcast outlets. In particular, 
Congress must take care not to approve changes in the law disrupting 
the current structure of the television marketplace by permitting the 
indiscriminate importation of duplicative programming from out-of-
market stations.
    Proposals have been made that would allow subscription television 
providers (such as satellite or cable) to bring into local markets 
programming from distant broadcast stations located in other television 
markets (called designated market areas or DMAs). The importation of 
duplicative national programming (including network and syndicated 
programming) from outof-market broadcast television stations would 
undermine the local, home-market stations' ability to attract viewers 
and advertisers. As a result, local stations would have fewer resources 
to serve their communities and provide local programming, such as news, 
weather alerts and other emergency information, and additional public 
affairs content.\2\ Such a radical restructuring of the local 
television marketplace is not only unnecessary, it would be devastating 
to the financial viability of local stations--and their capability to 
serve local viewers--particularly given current economic conditions.
---------------------------------------------------------------------------
    \2\ NAB notes that subscription television providers are already 
able, under existing law, to import the local programming (such as news 
and sports) of stations in distant DMAs. Thus, pay television 
providers, for example, may import the local news of a station located 
in a state capitol (such as Sacramento, Austin or Richmond) into other 
television markets in those states, even if hundreds of miles away.
---------------------------------------------------------------------------
    As your hearing this week will doubtless demonstrate, the continued 
production of high-quality local news and information is increasingly 
difficult due to serious and growing competitive and financial 
challenges. Particularly in light of current marketplace conditions, 
Congress should refrain from making changes to existing law and 
policies--including rules impacting the structure of local television 
markets--that would harm the ability of local broadcast outlets to 
serve their audiences. Undercutting the economic foundation of local 
stations by permitting pay television providers to import 
indiscriminately duplicative national television programming would in 
the end harm communities that depend on local broadcasting.
    If you have any further questions on these matters or any other 
issues affecting local radio and television stations, please let me 
know. NAB is ready to assist you and other members of the Subcommittee 
in its consideration of these important questions.
    Best wishes.
            Sincerely,
                                             David K. Rehr,
                                                 President and CEO.
cc: Chairman John D. Rockefeller
Ranking Member Kay Bailey Hutchison
                                 ______
                                 
 Prepared Statement of Bernard Lunzer, President, The Newspaper Guild, 
                   Communications Workers of America

    The Newspaper Guild of the Communications Workers of America is 
deeply concerned about the crisis in American journalism. The loss of 
newspapers represents the loss of significant news organizations, and a 
steep drop in the number of journalists. The net effect is a huge loss 
of information that normally feeds the news cycle across all platforms, 
including radio, television and the Internet. We have already seen a 
decline in investigative reporting, and an even steeper loss of local 
and government coverage.
    We are embroiled in five bankruptcies of major newspaper companies. 
Most of these severe problems are due to over-leveraging--too much debt 
taken on by those who viewed the industry as an infallible cash 
machine. But the failure of U.S. markets, with rising unemployment and 
less advertising, has resulted in a precipitous drop in profitability. 
Even iconic companies like The Washington Post and The New York Times, 
which had been stable, are now facing serious problems.
    With current market conditions, companies have been shedding staff 
at a dramatic rate. We have lost an estimated 10,000 journalists in 
just the past 2 years, and the erosion appears to be accelerating as 
publishers engage in a death spiral of job cuts, a shrinking product, 
loss of readers and ever thinner revenue streams.
    There is no question that the Internet has contributed 
significantly to the problems facing journalists and the newspapers for 
which they work. Although the amount of revenue earned via Internet 
advertising has grown, it remains at roughly 10 percent of print 
revenues. We are left with a quandary of how to pay for the type of 
journalism that protects our communities from political and corporate 
over-reaching, tackles systemic problems of the environment and the 
economy and chronicles the every-day lives of our neighbors. Start-up 
operations on the web typically are small in scope. Most rely on the 
newspapers within their region to provide the bulk of news coverage. 
Hence, as the newspaper industry contracts and responds by furloughing 
and laying off journalists, Americans will be left painfully uninformed 
about the issues facing their communities, the Nation and the world.
    The goal of those who care about quality journalism is not to 
protect newspapers. Although many of us believe that print will not 
truly disappear, there is no question that just as the advent of 
television changed radio forever, the Internet will change our 
industry, too. The irony is that much of the news accessed on the web 
today is gathered and edited by print journalists. The problem is that 
the collapsing newspaper industry is evidence that this model is not 
sustainable.
    There is a legitimate public interest in maintaining a level of 
quality journalism within the U.S. A democracy is not possible without 
a substantial sharing of information amongst its citizens. Much of what 
has arisen to replace newspapers is actually opinion-based information, 
including most of what's seen on cable news and published in blogs. 
While there is an important place for such communication, if it is not 
buttressed by objective journalism our culture will become increasingly 
polarized.
    Additionally, there currently is a substantial digital divide in 
the U.S. Internet ``haves'' and ``have-nots'' have been created by the 
steep cost of broadband and Internet access, as underscored by a recent 
poll finding that 50 percent of Americans who want good broadband 
access would not be able to afford it even if it were available. This 
means that even if the web provided quality information in the absence 
of newspapers, many communities would not be served. This digital 
divide is unacceptable, not least because it further exacerbates racial 
and class conflicts in the U.S. Just as Franklin Roosevelt set out to 
create universal access for phone service in the 1930s and 40s, we must 
set similar goals for Internet access.
    The Newspaper Guild and the Communications Workers of America are 
pursuing multiple strategies in light of the current crisis.
    Our first approach is to seek alternative ownership models. 
Although ownership changes won't fix current revenue problems, 
returning ownership to local communities--along with employee-based 
ownership--reduces the relentlessly high profit expectations generated 
by today's prevailing ownership structures. Such changes also would 
tether news organizations to the communities they serve, rather than to 
Wall Street.
    Consequently, we are seeking better access to employee-stock 
ownership, cooperative ownership, and improved corporate structures. We 
are pursuing legal changes that would allow for mixing non-profit 
foundation money with for-profit companies, as is contemplated by the 
L3C model. This new class of limited liability corporations would 
permit commingling of foundation money with low-profit entities that 
would be required to meet stated social purposes and provide annual 
reports on their progress. Foundation investors in an L3C corporation 
would receive only low levels of returns, and if such an enterprise 
should become strongly profitable it would be required to convert to a 
standard limited liability corporation.
    Other remedial approaches include allowing alliances across 
platforms so that broadcast, print and Internet companies can share 
information--but we believe substantial caution is needed in doing so. 
Our goal is not to create new monopolies that stifle innovation. TNG-
CWA currently opposes relaxation of anti-trust laws for existing media 
companies, because doing so would only result in additional job cuts 
and a continued decline in real information. To put it simply, this 
model has been tried and it has failed miserably, as evidenced by the 
current crisis in the newspaper industry. The banking and finance 
sectors have amply demonstrated that bigger is not always better. 
Still, as media platforms converge, there should be structural ways to 
share information without diminishing journalistic quality.
    In addition, tax credits should be considered for subscriptions to 
media, which would create a market-based benefit for both traditional 
and new media outlets. A parallel approach to supporting news media 
would be the creation of tax credits to offset the cost of employing 
journalists. While we recognize there is a reflexive antipathy by many 
people to the idea of tax subsidies of any kind for news-gathering, in 
fact the United States has a long history of providing such breaks, 
starting with subsidized mail delivery for newspapers and other 
periodicals. Such subsidies date back to the 1700s because of the 
Founding Fathers' appreciation of the central importance of journalism 
to the proper functioning of a democracy.
    We believe that Congress should be as concerned today about the 
substantial--and negative--effects the loss of vigorous quality 
journalism will have on our country. The Newspaper Guild of the 
Communications Workers of America is committed to working closely with 
anyone who is dedicated to strengthening the media industry. We ask 
Congress to take the lead by convening all stakeholders to ensure the 
continuation of sustainable, strong news organizations. Thank you for 
allowing me the opportunity to submit this written testimony. I look 
forward to your reply.
                                 ______
                                 
  Prepared Statement of Jennifer Towery, President, Peoria Newspaper 
                                 Guild

    Chairman John F. Kerry, Ranking Member Ensign and Committee 
Members, it's with great appreciation that I submit a summary of Peoria 
Newspaper Guild's work looking at alternative ownership models for 
newspapers and our hope for an emerging business model that has great 
promise for newspapers. Much has been made in the media about the 
importance of disassociating government from the newspapers that 
monitor and chronicle its proceedings. But the fact is, government has 
long protected the interests of the information industry, and vice 
versa. Journalism is the only industry protected in the U.S. 
Constitution. Through legislation, court rulings and tradition, 
journalists are free to fulfill the role of watchdog of the government 
and private industry, and the practice of releasing the activities of 
taxpayer-funded bodies to the public through the media is called 
``sunshine.'' What's more, our government cares about what is essential 
to our citizens, and that is free and abundant information. Through 
legislation and other means, government acts to protect industries 
vital to the country. In fact, every time the landscape has 
dramatically changed in this country, on the local level or nationally, 
government has had a hand. It's true of the smallest TIF district, the 
railroad industry of our past, the agriculture industry that feeds us, 
the telephone industry and the airlines. This hearing is 
acknowledgement of the importance of newspapers and the real threat of 
their demise. It's time to change the landscape for newspapers, and 
government must be a party to that change.
    Newspapers reflect their communities and provide a forum for the 
same. Their work is vital to a community's commerce and economy, to be 
sure. Newspapers fulfill a variety of functions, all of which are 
important and most of which have nothing to do with making money. When 
a community loses its newspaper, it loses its collective voice. 
Newspapers engage the community; analyze events; promote retail and 
services through advertising and news; and provide a record for 
posterity. A free and healthy media is one of the fundamental 
components of a thriving democracy.
    It is appropriate to discuss the problems with and future of 
``newspapers'' versus other media, but not because there is anything 
magical about information printed on newsprint or out of a sentimental 
appreciation for the historic tradition of the newspaper. Our work is 
neutral to the content delivery system, whether it's newsprint, the 
Internet or vehicles that have yet to be invented. Saving newspapers is 
about saving journalism. Newspapers are the only news outlets that 
remain rich in news gatherers. Radio and television news desks staff 
people to disseminate the news and even to produce it, and bloggers 
primarily discuss it, but the sum total of all of those folks in any 
given area will not equal the resources that community's newspaper 
devotes to collecting and disseminating the news. Newspapers also have 
had the competitive edge because of their depth. A lengthy news story 
is a miniscule fraction of the content of a day's edition. A lengthy 
broadcast piece on a local newscast--say, 2 minutes--is a significant 
chunk of time allotted to news that day, and will be aired at the 
expense of other stories. It's easy to mistakenly assume the Internet, 
with its limitless news hole, has given all media a level playing field 
in this regard. But that's not the case, because there has been no 
commensurate increase in journalists to take advantage of the 
Internet's vastness--quite the opposite, in fact. All media are 
shedding journalists at alarming rates.
    Two years ago, the University of Missouri released a 10-year study 
of newspapers similar in size to the Journal Star, our newspaper in 
Peoria, Illinois. They were looking at whether investing in the 
newsroom improves a newspaper's bottom line, and they found that 
absolutely to be the case. News quality affects profits more than 
spending on circulation, advertising and other parts of the business. 
The Journal of Marketing looked at the same thing recently. Here's what 
it found: ``Disinvesting in newspapers leads to circulation declines, 
which leads to more disinvestments, more circulation declines and 
finally, more revenue loss.'' Cutting the news gathering starts what 
the study's authors call a suicidal spiral. But investing in the news 
product, through training and the addition of skilled journalists, 
doesn't mesh with the business model. Revenue comes from advertising. 
When advertising falls off, publishers instinctively reduce the side of 
the business that doesn't bring in money, and that's the news side.
    In years past, as more advertising dollars have been lost to the 
Internet, newspapers have maintained enviable profit margins by 
reducing the news staff and the resources available to it. If debt 
payments became too much, or more money could be made through the sale 
of the newspaper, that newspaper was put on the market. It's a practice 
that has grown newspaper chains. Those chains have maintained 
considerable debt by making purchases that, while adding to the debt, 
also added to the revenue. It was an unsustainable business practice, 
and it allowed no margin for reduced revenue. When the economy tanked, 
business owners further reduced their advertising. The reaction of 
newspaper owners to this economic crisis has been to reduce content and 
employees, thus resulting in a double whammy to communities by reducing 
news coverage and failing in the newspaper's traditional role as 
community watchdogs. Newspapers are going bankrupt and even folding. 
And the industry has not hit bottom. More newspapers will fold, and 
soon. Merely putting some newspapers on the market to unload debt is 
now not an option. The chains that have long competed for newspapers 
that were being sold are mired in debt, and literally cannot take on 
more. Furthermore, there is no credit. And there is nothing to suggest 
that purchasing a newspaper and operating it with the same business 
model won't have the same result. We are an industry in crisis.
The Peoria Plan
    The union journalists at the Journal Star, the newspaper of record 
in Peoria, Illinois, have been studying this industry crisis for 
several years, even before the Journal Star was purchased by its 
current corporate chain owner. We believe it is the duty of 
stakeholders in communities--employees, unions, business leaders and 
community organizations--to find new ownership models that will allow a 
community to invest in these community assets to preserve independent 
voices in a democracy. This is not a crisis that can be solved within 
the industry. We must pool the knowledge of many people and many 
industries, and we must have the support of those in office. We also 
are striving to create a business model that can be replicated at other 
newspapers. In fact, the Journal Star is not on the market. 
Nonetheless, its corporate owner may need to sell profitable newspapers 
such as the Journal Star to help meet its debt obligations. That would 
be an opportunity for the community to reclaim its newspaper, and we 
want to be ready if that happens.
    Initially, we looked at a model that was a hybrid of employee 
ownership, community investment and a non-profit. The non-profit arm 
would be shares of the newspaper given to an educational institution, 
which would earn them by providing ongoing training and support to the 
employees of that newspaper as a way to ensure the quality of the 
product and thus increase readership. In that early model, the 
newspaper would be subsidized through an exemption on state and Federal 
taxes. It's a proposal similar to a measure recently introduced by the 
distinguished senator from Maryland, Benjamin Cardin.
    But tax exemption should always be the model of last resort, 
particularly in an industry charged with oversight of the government 
providing the tax relief. While it would serve to help reduce the need 
for high profit margins, it would create additional problems such as 
the appearance of conflicts of interest. We continued to search for a 
better model, and find great potential in a corporation called L3C.
    Low-profit, limited liability corporations, or L3Cs, are for-profit 
ventures that must have a socially beneficial or educational purposes 
as their primary missions. By definition, that relegates making money 
to a secondary role. That's not just a question of semantics. It means 
that an L3C enterprise must make business decisions based on how to 
better fulfill that socially beneficial purpose. L3Cs are allowed to 
make money, and profits returned to investors are taxed, but profits 
cannot be the reason for operating. The L3C can now be used in all 50 
states as a result of legislation signed into law in Vermont in April 
2008. Since then, Michigan, the Crow Indian Nation, Wyoming, Utah and 
North Dakota have all passed L3C measures. L3C legislation is pending 
in some form in Illinois, Missouri, Arkansas, Montana, Oregon, 
Washington State, North Carolina, Massachusetts, Tennessee, California, 
Colorado and Georgia.
    The concept of the L3C was intentionally written to dovetail with 
the Federal tax regulations relevant to Program Related Investments, or 
PRIs, by foundations. The L3C facilitates PRI investment and brands the 
organization as one that will put social benefit ahead of profit. It 
also facilitates tranched investing, with the PRI usually taking first 
risk position, thereby taking much of the risk out of the venture for 
other investors in lower tranches. The rest of the tranches become more 
attractive to commercial investment because the PRI has improved the 
credit rating of those tranches, thereby lowering the cost of capital. 
It is particularly favorable to equity investment. Because the 
foundations take the highest risk at little or no return, the model 
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. Foundations that invest in L3Cs are essentially 
loaning money to an organization that shares its mission. Even with 
more of the risk assumed, the foundation is in a better position that 
if that money were granted, because that money is no longer available 
to be used again.
    The newspaper industry is in need of a new business model and 
quality reform. An L3C newspaper would deliver both.
    Some examples of how an L3C newspaper could meet its socially 
beneficial mission are:

   Ensuring professionalism. A community is entitled to expect 
        quality work and accurate information from its newspaper. That 
        means having a quality staff. An L3C newspaper could build 
        ongoing training and education for staff into the operating 
        agreement, ensuring quality news coverage.

   Offering transparency. An L3C newspaper could offer 
        quarterly open meetings to readers and investors, much like 
        publicly traded companies have shareholder meetings. Finances 
        for the quarter could be presented by administrators. Editors 
        could recap staffing levels, long-term goals and journalistic 
        challenges and successes of the past quarter. Changes to 
        advertising rates could be discussed. Most importantly, the 
        newspaper staff could accept feedback from the community. That 
        accountability, far more than the specter of a one-sentence 
        correction, would steer journalists to act responsibly, as will 
        the reflective nature of continued training in news judgment 
        and other arenas.

   Creating and maintaining a scholarship fund to provide free 
        and subsidized subscriptions to low-income people in the 
        community. Newspapers are expensive to produce and purchase, 
        but the information they contain, not to mention the 
        educational value in the content, is most important to the 
        people who can least afford it. Under the L3C model, such a 
        scholarship fund could be operated through a community 
        foundation, allowing citizens to make donations to the 
        scholarship fund that would be tax-deductible to them.

   Ensuring a vibrant press to provide coverage of non-profit 
        agencies' events and the programs available to help those in 
        the community.

   Establishing a reduced advertising rate for the non-profit 
        sector, and making in-kind donations to select charities in the 
        form of ads.

    An L3C newspaper can be a profitable, self-sustaining venture by 
expanding its role and restoring many services that have been reduced 
or cut at most newspapers. We expect it will be profitable enough to 
maintain and purchase equipment as needed and to explore and develop 
ways to use and integrate new media with the newspaper model. But as an 
L3C, a newspaper will not be under pressure to generate unreasonable 
level of profits or diminish services in order to increase profits or 
service highly leveraged debt. The L3C structure will permit the paper 
to direct its effort to providing the kind of community service the 
subscribers, advertisers and other stakeholders have a right to expect. 
It will be a public service vehicle, as the founding fathers 
envisioned. As an L3C, it will, by law, be charged with placing 
community service ahead of profit.
Federal Legislation
    Peoria Newspaper Guild approached the creators of the L3C about the 
possibility of using the L3C as a newspaper model. It was their 
considered opinion that, based on the Internal Revenue Service's 
history of not allowing newspapers to operate as non-profit 
organizations, the Federal Government would first need to give its 
blessing. While an L3C is a hybrid of a non-profit and a for-profit, we 
still feel very strongly that newspapers need to be clearly included 
under the umbrella of the L3C before we attempt to proceed with an L3C 
newspaper.
    L3C Advisors, led by Robert Lang, along with the Washington, D.C., 
law firm of Caplin & Drysdale, have drafted a Federal bill that would 
provide that consent for a newspaper to operate as an L3C, among other 
things. The legislation's chief purpose is to create a registry of 
companies that are operating as L3Cs, and an approval process of same 
through the IRS that mirrors the one currently in effect for non-profit 
companies. When an L3C is formed, it would apply to the IRS to be 
included, laying out its social benefit and, more importantly, how it 
plans to fulfill its social benefit. The IRS would have 45 days to 
review the documentation and accept it as an L3C. A listing on the 
registry would signal to foundations that the L3C is a viable 
investment vehicle. The company would be required to release an annual 
report detailing how it is fulfilling its social benefit. The Newspaper 
Guild, other media organizations and L3C Advisors are currently 
lobbying Members of Congress to introduce and pass this measure.
    More information on the L3C, in general and as a potential business 
model for the ailing newspaper industry, is available through myself 
and Robert Lang, CEO of L3C Advisors L3C of New York, at (914) 248-8443 
and robert.lang@l3c
advisors.org. I can be reached at (309) 696-6592.
    I remain grateful for the opportunity to share this information and 
appreciate the Committee's interest in exploring ways to save the very 
vital newspaper industry.
                                 ______
                                 
                Prepared Statement of Bob Cohen, Ph.D., 
                President and CEO, Scarborough Research

    Thank you for the opportunity to submit a statement to the 
Committee. I am Bob Cohen, President and CEO of Scarborough Research. 
Our consumer research firm, a partnership between The Nielsen Company 
and Arbitron Inc., measures the media usage, lifestyle patterns, 
shopping behaviors and demographics of American adults in over 120 
localities (designated marketing areas or DMA's TM) as well 
as nationally. We survey more than 220,000 adults on an annual basis. 
Our core measurement services are accredited by the Media Rating 
Council (the third party certification organization that verifies that 
research services are valid, reliable and effective).
    As part of our standard service, Scarborough has been measuring 
newspaper audiences since 1974. We provide the ratings service for the 
newspaper industry. Our large and diverse multi-media clientele 
includes the overwhelming majority of the major daily newspapers 
operating locally as well as nationally in the top local U.S. markets 
that we measure.
    I believe that our measurements and our long-term relationships 
with newspapers provide us with a useful and a unique perspective on 
the current challenges that newspapers are facing. Additionally, from 
1989 to 1992, I served as Director of Marketing Strategy at the Los 
Angeles Times so my industry understanding, also comes from this first-
hand experience.
    An often cited metric for a newspaper's strength is 
``circulation,'' defined as the physical number of copies distributed 
on an average day. Somewhat less well known, but a metric which on a 
number of levels is actually more relevant is that of ``audience.'' 
Newspaper audience is defined as adults (typically in a paper's local 
market) who report having ``read or looked into'' a given newspaper 
within a specified period of time, typically on a ``read yesterday'' or 
``past seven day'' basis. The important difference is that ``audience'' 
takes into account that an average copy of a newspaper includes 
multiple (i.e., more than one) readers. It also provides a more 
meaningful comparison to the audience ratings of electronic media, 
measured by companies such as Nielsen and Arbitron.
    The notion of audience assumes even greater significance when 
considered in the current ``digital'' environment. This is because 
there is a fundamental need to measure and report several distinct 
groups of readers: citizens who are reading the more ``traditional'' 
print editions of newspapers, those who go online for newspaper 
content, and those who are engaging in both of these activities. This 
manner of measurement is changing the (often stereotypical) portrait of 
newspaper readership, and one which is often lost in circulation 
statistics alone, or in newspaper online-only readership statistics 
provided by online measurement companies. Understanding print 
readership in relation to the online audience provides a more complete 
perspective on the total newspaper readership phenomenon.
    Currently, Scarborough is measuring all three components of 
newspapers' audiences, which we have referred to as ``integrated 
newspaper audience'' (INA). The concept of INA has been embraced widely 
within the U.S. newspaper industry and is routinely used in their 
sales, marketing and related efforts.
    Forgive me for getting somewhat technical, but our expertise is 
measurement and the statistics that I cite are relevant to our 
testimony and germane to the issue at hand.
    In the United States in 2008, close to half or 45 percent of adults 
(18 years and older) have read a (printed version) newspaper on the 
``average weekday''; 50 percent on Sunday, and 71 percent within the 
past 7 days. Correspondingly, 19 percent of all adults read an online 
newspaper in the past week--with 19 percent of this group doing so 
exclusively and 81 percent reading a newspaper online in addition to 
their readership of the traditional printed edition.
    When we analyze adults who read the printed paper exclusively by 
demographics, we find that adults who read newspapers exclusively in 
print are much more likely to be older Americans (40 percent are age 
55+ and 23 percent are age 65+). We would at least ask: in the absence 
of the availability of a printed newspaper, would older Americans lose 
a key source of news and information? Based on the patterns that our 
research has identified, it is unclear whether these older Americans 
would ``migrate'' to the Internet, to the extent necessary to 
compensate for this potential lack of availability of a printed paper.
    On the other hand, adults who read the newspaper exclusively online 
tend to be younger Americans. Over one-third (39 percent) are between 
the ages 18-34 and 47 percent are age 35-54. Newspaper websites appear 
to be viable for younger adults who turn to this industry for news and 
information but do not necessarily rely on the printed vehicle.
    When viewed in total, almost three-quarters or 74 percent of 
American adults are newspaper readers. That statistic sounds 
astonishing given much of the negative publicity that newspapers have 
ironically endured over the past several years regarding their loss of 
readership. Also, it is important to recognize that newspaper 
readership, as with most consumer behavior and media usage patterns, 
varies on a local level.
    Let me offer a recent example, to illustrate this concept.
    In the Washington, DC area (DMA), 58 percent read The Washington 
Post weekly, 23 percent visited the Post's various websites weekly, 
resulting in a total readership, or INA weekly audience, of 63 percent 
of all Washington, D.C. area adults.
    In fact, the need to examine readership locally is underscored by 
our findings that the INA metric ranges from a low of 59 percent in 
Bakersfield, CA to a high of 87 percent in Syracuse, NY (national 
statistics often obscure these important local market differences). 
This local variability is due to a number of factors including the 
demographic composition of a local population, the competitive media 
situation (the mixture of more traditional/established media as well as 
digital/online media), the local business and economic base, 
geographical proximity to specific industries, colleges or 
universities, as well as the organizational wherewithal (including 
unique and interactive content, promotion and other executional 
features of their websites) of local newspapers.
    My intent here is simply to point out that there are success 
stories, at least selective ones. All is not lost. It is likely that 
some, perhaps many, newspapers will overcome the well known challenges 
with readership. We should be very careful not to paint the entire 
country, or newspaper industry, with one ``brush.''
    This broader and more comprehensive portrait is important, because 
it demonstrates that while the more traditional audience for print 
newspapers continues to decline, an audience for online newspapers 
exists and can be nurtured and grown. This online audience is gradually 
increasing for newspapers in some cities and the integrated audience is 
larger than is often realized, especially outside of the newspaper 
industry.
    At a minimum, this manner of viewing newspaper audiences also 
suggests a somewhat different perspective on American citizens' 
interest in and appetite for news and information. There is some 
``migration'' of readers from the print to the online version of 
newspapers. And online seems, perhaps disproportionately, to have the 
ability to capture the attention of younger people--many of whom have 
been elusive, not regular readers of printed newspapers, and a group 
that newspapers have historically been challenged to appeal to and 
reach. Consequently, the newspaper website audiences, to some degree, 
are offsetting and compensating for the decline in readership of the 
printed newspaper. So newspaper audience dynamics are shifting and not 
just in one direction.
    At the same time, these findings do not negate the business 
challenges that newspaper are confronting in ``monetizing'' their 
online audiences, that is, their efforts to attract advertising revenue 
and support for the online component of their newspaper audiences, 
especially to compensate for the significant decreases in advertising 
revenue of their printed editions. My point is that the inability to 
sufficiently monetize these audiences, while certainly a critical 
business issue that challenges or changes newspapers' business model 
(and even economic viability), should not be confused with, and should 
not obscure, the continuing and sustained interest that Americans have 
in the content of newspapers, regardless of the delivery mode--print or 
electronic. Somewhere here there is a greater sign of hope for an 
informed and motivated citizenry. Leaving aside people's willingness to 
pay for online content, newspapers have an important role in the 
democratic processes that leaves citizens hungry for the details and 
the journalistic style that newspaper offer. One of the key challenges 
becomes how they can maintain their brand differentiation and avoid 
becoming perceived as commodities? This challenge, of course, is not 
unique to newspapers, and has begun to impact most established 
information purveyors.
    Lastly, I would like to make a couple brief points about other 
media.
    As I noted at the outset, Scarborough measures and provides 
audience profiles for all major media. All established media, including 
broadcast TV, cable TV and radio are challenged in today's environment. 
People are exposed to many more information and entertainment choices, 
and consequently the audience dynamics for all of these sectors 
continue to shift. As is well known, more and more options are entering 
the marketplace, fueled by the digitization of information content and 
the increasing mobility of distribution channels. Not that this 
perspective necessarily offers any consolation, but one must recognize 
and appreciate that newspapers are part of a broader phenomenon. While 
there is a tendency to define people in a singular manner--as newspaper 
readers, or radio listeners, or TV viewers, or website visitors, most 
of us are ``multi-media'' consumers and need to be understood in this 
broader and more holistic context. The issue may be recast, not 
necessarily as a ``newspaper problem'' per se, but rather as a more 
collective challenge of the media industry, to inform, educate, and 
entertain citizens in today's increasingly fragmented and dynamic 
society.
    Thank you.

Data Source: Scarborough Research USA+ R2 2008 (Current 6 Months)
Scarborough Research Washington, D.C. R2 2008
                                 ______
                                 
                                                     30 April, 2009
Michael Langley,
Sacramento, CA.

Re: The Future of Journalism

Senator John Kerry,

    Good morning. I hope this letter finds you well and in good 
spirits. Though you do not directly represent me in the Senate you will 
represent me and all American journalists next week by your leadership 
on the Subcommittee on Communications, Technology and the Internet.
    I am a journalist who has worked for several media companies in 
several cities across the United States and I wish to add my voice to 
those you will hear on 6 May, 2009, during the hearing on ``The Future 
of Journalism.''
    I am relieved that you are convening to discuss the future of 
journalism and believe the issues you are dealing with are of critical 
interest to the American people, though they may not now recognize 
that. I hope you will include the following statement in the official 
record of these proceedings.
    For the record, my name is Michael Ellis Langley. I have been an 
online, broadcast, print and radio journalist for more than 15 years. I 
have served the people of the San Francisco Bay Area, the California 
capital of Sacramento and in our Nation's capital, Washington, D.C. I 
currently participate in and help moderate a weekly online forum for 
journalists and write a weekly online article for the Poynter Institute 
in Florida.
    I have, for some time, felt a growing dismay about the current 
state of journalism in America and the public attitudes toward the 
press. Moreover, the dismay I feel is not only shared by many of my 
peers, it is driving far too many of our most experienced members from 
journalism.
    My own personal dismay reached a critical level in January 2008. I 
learned that the newspaper that served my home town in California for 
more than 110 years was about to curtail circulation to 3 days a week 
and severely cut staffing. The editors announced they would now not 
cover every meeting of city officials because of those limitations. The 
reasons are obvious to anyone who is even remotely familiar with the 
state of journalism in America today: a steady decline in advertising 
revenue and falling subscription numbers. The latter reason concerns me 
the most. The Tracy Press, like so many small town newspapers, is the 
only way most people check on the actions taken in their name by their 
elected and appointed government officials. This is the basic promise 
and responsibility of journalism. The fact that a dwindling number of 
Americans get information from local journalists is troubling.
    If community newspaper reporters did not attend city council 
meetings, school board meetings, meetings of parks and recreation 
departments and other such events, few people would know either the 
details of city activities or the context in which they occur. I now 
work for a television station and tell you honestly we will not, and 
could not, cover every such meeting in every community we serve. If 
broadcast journalism is the broad brush of what is happening within a 
region, community newspapers are the pencils, etching every detail upon 
the canvas of history.
    To get such information, community members would have to, one by 
one, come to city hall to physically read the record and minutes of 
such meetings. Fewer still would have the time and ability to directly 
question their elected and appointed government agents about the 
decisions made in their name.
    The founders of our nation, in their wisdom, knew when they forbade 
Congress from making any law ``abridging the freedom of speech, or of 
the press'' what so few seem to grasp today: Someone must watch our 
government. People dedicated to the premise of informing all of us 
about what is going on within the context of our community. 
Journalists.
    I will admit that too many media companies, and even journalists, 
abuse the protection our Constitution affords members of the press. I 
offer no excuse for bad business decisions or poor journalistic 
integrity. I recognize that much of the public perception of my calling 
and of journalists stem from these decisions. A fact underscored by how 
few Americans rise to prevent the collapse of newspapers like the Rocky 
Mountain News in Denver and other publications now teetering on the 
brink of failure.
    I plead with this Committee and its members not to save media 
companies but to preserve and promote the role journalists fulfill in 
our Nation. Media companies will find a business model to make money in 
a variety of medium. The future of journalism lies not with any one 
medium or with the companies who profit from the work of journalists. 
The future is in the pens, pencils, recorders, cameras and keyboards of 
the journalists themselves.
    Many have argued that community bloggers or other such activists 
can easily fill the role of journalists within their towns and cities. 
I would say to you that journalism is more than reporting. Journalism 
is fundamentally about a sense of shared responsibility and objectivity 
about the events journalists cover. Journalists operate within a system 
of checks and ethics to prevent biased reporting. I respect independent 
reporters, bloggers and others and believe they are part of balanced 
community reporting. But I would not want just these individuals, each 
with their own bias and interests, to be my only source of information 
about my community.
    Imagine an America without professional journalists. Imagine our 
Nation with no organized group dedicated to finding and reporting upon 
graft, waste, fraud and social injustice. Our democracy is inherently 
good. It serves the will and want of every American. The American 
democracy provides a framework for success of the individual and of the 
Nation but only so long as everyone adheres to the purest intent of our 
founding. If one person abuses the system and is not exposed to the 
public, his or her actions will inspire others to act in their own 
interest and not the interest of the community they serve. The outside, 
objective scrutiny of journalists across this Nation is one of the few 
things that prevent such activities from becoming commonplace. I fear 
the tyranny that waits at the end of that path. There are already far 
too many examples of this within other nations in other parts of the 
world.
    I come from a family dedicated to public service. My grandfathers 
served honorably in the Second World War and then served their 
communities afterwards as a physician and public utility worker. My 
grandmother, a pediatric nurse, rescued infants from the orphanages of 
India. My aunts are nurses. My uncles law enforcement officers. My 
mother built an arts center in Tracy, California when our schools cut 
art programs because of shrinking budgets. My father and brother served 
as firefighters. My wife has built a career working for legislators on 
behalf of the American people. This ethic of public service is so 
ingrained in me that I chose the most honorable profession for which I 
was suited: journalism. Journalists are no less than public servants 
dedicated to uncovering, understanding and spreading information to the 
communities they serve and it is my hope that you will see them as 
such.
    I will conclude by reminding all of you that journalism is the only 
private profession specifically protected within the Constitution. That 
provision puts an enormous responsibility upon journalists that we 
daily serve the best public interest and earn that protection. I 
believe the first amendment of the Constitution is also a warning, 
passed down through history, about what could happen if journalists are 
not active in our society. The United States is the only modern nation 
founded on the requirement of a free press. I am proud to be an 
American and a journalist.
    You members of the Senate Subcommittee on Communications, 
Technology and the Internet, and your peers in both houses of Congress 
have the opportunity to reinforce the role of American journalism now 
and for future generations. I urge you with all the passion and 
patriotism in my soul to use these hearings, and your power and 
influence, to see that journalism survives economic upheavals and 
transitions to new medium, so that we and future journalists may 
continue to serve the American people.
                                 ______
                                 
  Response to Written Question Submitted by Hon. Daniel K. Inouye to 
                             Marissa Mayer

    Question. If you knew that Congress could take only one legislative 
action in the next 6 months, what would you recommend as the single 
action that would most assist the newspaper industry?
    Answer. Preserving robust and independent journalism at the 
national and local levels is an important goal for the United States. 
Google is doing its part by driving more than one billion clicks to 
newspaper websites each month, by helping online news publishers 
generate revenue through advertising, and by providing tools and 
platforms enabling them to reach millions of people. Though there are 
certainly many challenges to face in adapting the long tradition of 
journalism to the online world, at this point we believe that 
innovation and ensuring an environment in which journalists and news 
organizations can innovate will help preserve journalism and its vital 
function in our society.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                             Marissa Mayer

    Question 1. The industry structure for the metropolitan daily 
segment of the newspaper business has evolved over time from more 
local, independent ownership to almost exclusive corporate ownership. 
The fact that many newspapers enjoyed high-profit margins because of 
the quasi-monopoly they held in their local communities certainly made 
them attractive properties to investors. Do you believe that the 
publicly traded ownership model for newspapers has been good for 
journalism?
    Answer. The rise of the Internet as a major source of information 
has allowed news organizations to reach more consumers than at any time 
in history. That said, we do not have the expertise to judge the impact 
of the publicly traded ownership model on journalism. However, Google 
is willing to work with news publishers to help them find bigger 
audiences, regardless of their business approach.

    Question 2. Micro-billing is part of the wireless industry's 
business model. Consumers download games, songs, videos, ring tones, 
and other applications onto their wireless devices and appear to be 
willing to pay relatively small amounts. I know some newspapers have 
attempted micro-billing for content but with no success. One of the 
difficulties seems that when consumers are used to free content it is 
extremely difficult to put the genie back into the bottle. Do you 
believe that micro-billing has a future when it comes to the 
distribution of on-line content from newspapers?
    Answer. We believe that advertising is critical to the future of 
journalism, as it has been for centuries. Today, online news publishers 
are experimenting with new ways to generate additional revenue from 
advertising through new and innovative products like Google's interest-
based advertising, which helps deliver more highly tailored ads based 
on users' interests. In addition to advertising, subscriptions play a 
revenue role as well.
    An analogy would be monetization on television. Today, there is 
advertising-supported, over-the-air television that involves no payment 
by viewers, there is cable television, and there is pay television. 
Generally, the smaller, niche markets--for example live sports events 
or concerts--generate the most revenue from viewers. By contrast, 
network television shows generate little to no revenue from viewers 
themselves because they reach broad audiences that are attractive to 
advertisers.
    In the context of online news publishers, there is a category of 
information that can and should be distributed without cost to users 
with financial support from advertisers. By contrast, there are certain 
publications that can and will be sold on a subscription basis, either 
in whole or on the basis of particular articles or sections. Indeed, we 
see this today in the online world where publications like The Wall 
Street Journal charge subscription fees. We believe, however, that most 
readers will continue to prefer the advertising-supported model. It is 
therefore imperative for online news sites to develop strong and 
innovative advertising models to complement evolving direct payment and 
subscription models. Google is willing to work with news publishers to 
help them find bigger audiences, regardless of their business approach.
                                 ______
                                 
     Response to Written Question Submitted by Hon. Mark Warner to 
                             Marissa Mayer

    Question. I read a blog about a ``Redesigning Journalism'' effort 
at the Institute of Design at Stanford University. Students developed a 
variety of proposals, two involving iPhone applications and another was 
a computer application for newsrooms that would serve as a kind of 
dashboard to monitor a community's activity online, both on the media 
organization's website and beyond. What kinds of new technologies are 
newspapers and other media organizations developing to modernize 
journalism?
    Answer. The structure of the Web itself requires the presentation 
of news in a way that's fundamentally different from its offline 
predecessor. The Web has caused some parts of the news to be presented 
more easily and effectively. For example, Web pages can link to 
voluminous supporting materials without worrying about column inches. 
In addition, the always-on, always-updating nature of the Web means 
that real-time news updates can appear throughout the day without being 
tied to print production deadlines. However, other aspects are more 
challenging, particularly in regard to how users arrive at a news story 
and how authority on a particular topic is established. As I noted 
during the hearing, I have three observations that may be helpful: What 
I've called the ``atomic unit of consumption'' for online news, the 
prospect of creating living stories online, as well as a few simple 
steps online publishers can take to keep readers engaged.
    The atomic unit of consumption for existing media is almost always 
disrupted by emerging media. For example, digital music caused 
consumers to think about their purchases as individual songs rather 
than as full albums. Digital and on-demand video has caused people to 
view variable-length clips when it is convenient for them, rather than 
fixed-length programs on a fixed broadcast schedule. Similarly, the 
structure of the Web has caused the atomic unit of consumption for news 
to migrate from the full newspaper to the individual article. As with 
music and video, many people still consume physical newspapers in their 
original full-length format. But with online news, a reader is much 
more likely to arrive at a single article. While these individual 
articles could be accessed from a newspaper's homepage, readers often 
click directly to a particular article via a search engine or another 
website.
    Changing the basic unit of content consumption is a challenge, but 
also an opportunity. Treating the article as the atomic unit of 
consumption online has several powerful consequences. When producing an 
article for online news, the publisher must assume that a reader may be 
viewing this article on its own, independent of the rest of the 
publication. To make an article effective in a standalone setting 
requires providing sufficient context for first-time readers, while 
clearly calling out the latest information for those following a story 
over time. It also requires a different approach to monetization: each 
individual article should be self-sustaining. These types of changes 
will require innovation and experimentation in how news is delivered 
online, and how advertising can support it.
    The Web by definition changes and updates constantly throughout the 
day. Because of its ability to operate in real-time, it offers an 
opportunity for news publishers to publish on changing and evolving 
stories as they happen. Web addresses (known as URLs--uniform resource 
locators such as http://www.google.com) were designed to refer to 
unique pieces of content, and those URLs were intended to persist over 
time. Today, in online news, publishers frequently publish several 
articles on the same topic, sometimes with identical or closely related 
content, each at their own URL. The result is parallel Web pages that 
compete against each other in terms of authority, and in terms of 
placement in links and search results.
    Consider instead how the authoritativeness of news articles might 
grow if an evolving story were published under a permanent, single URL 
as a living, changing, updating entity. We see this practice today in 
Wikipedia's entries and in the topic pages at NYTimes.com. The result 
is a single authoritative page with a consistent reference point that 
gains clout and a following of users over time.
    A much smaller but still important factor for online newspapers to 
consider in today's digital age is the fundamental design and 
presentation of their content. Publishers should not discount the 
simple and effective navigational elements the Web can offer. When a 
reader finishes an article online, it is the publication's 
responsibility to answer the reader who asks, ``What should I do 
next?'' Click on a related article or advertisement? Post a comment? 
Read earlier stories on the topic? Much like Amazon.com suggests 
related products and YouTube makes it easy to play another video, 
publications should provide obvious and engaging next steps for users. 
Today, there are still many publications that don't fully take 
advantage of the numerous tools that keep their readers engaged and on 
their site.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. Tom Udall to 
                             Marissa Mayer

    Question 1. Ms. Mayer, a few years ago the music industry was in 
turmoil due to fears that their traditional business models could not 
adapt to the Internet. Yet now millions of Americans purchase songs 
online for their iPods and other digital music players. Do you foresee 
the development of any new technologies, such as those for reading e-
books, that would save newspapers or the delivery of investigative 
journalism for readers in an Internet era?
    Answer. Your question highlights the fact that the atomic unit of 
consumption for existing media is almost always disrupted by emerging 
media. For example, digital music caused consumers to think about their 
purchases as individual songs rather than as full albums. Digital and 
on-demand video has caused people to view variable-length clips when it 
is convenient for them, rather than fixed-length programs on a fixed 
broadcast schedule. Similarly, the structure of the Web has caused the 
atomic unit of consumption for news to migrate from the full newspaper 
to the individual article. As with music and video, many people still 
consume physical newspapers in their original full-length format. But 
with online news, a reader is much more likely to arrive at a single 
article. While these individual articles could be accessed from a 
newspaper's homepage, readers often dick directly to a particular 
article via a search engine or another website.
    Changing the basic unit of content consumption is a challenge, but 
also an opportunity. Treating the article as the atomic unit of 
consumption online has several powerful consequences. When producing an 
article for online news, the publisher must assume that a reader may be 
viewing this article on its own, independent of the rest of the 
publication. To make an article effective in a standalone setting 
requires providing sufficient context for first-time readers, while 
clearly calling out the latest information for those following a story 
over time. It also requires a different approach to monetization: each 
individual article should be self-sustaining. These types of changes 
will require innovation and experimentation in how news is delivered 
online, and how advertising can support it.
    We see many technologies that can further enable the distribution 
of journalistic content, and we believe that more devices and greater 
access to and openness of the Internet will help provide the 
distribution infrastructure that will be critical to the success of 
online publishers and the journalistic content that they provide.

    Question 2. Recent concerns about pandemic flu highlight the need 
to be able to communicate accurate information to the public about 
important events or problems. Yet the Internet can also spread 
inaccurate stories or unfounded rumors far faster than the any flu 
virus. In an era of online journalism, will a system of checks and 
balances that governed newsrooms and editorial boards eventually 
develop for new online media sources?
    Answer. The lines between professional journalism and citizen 
journalism may continue to blur. The landscape is changing, and has 
already changed in ways that can't be reversed. For example, we're 
already seeing the impact of microblogging on journalism. Janis Drums 
from Sarasota, Florida, broke the story of the crash-landing of U.S. 
Airways flight 1549 into the Hudson. His now-famous iPhone photo posted 
on Twitter spoke 1,000 words. His Tweet read, ``There's a plane in the 
Hudson. I'm on the ferry going to pick up the people. Crazy.'' His 
images were viewed by millions of people on the Web, on the front pages 
of newspapers and on TV news programs. In addition, citizen journalists 
have been critical to telling the story of the protests in Iran since 
the Presidential election on June 12 through videos available on 
YouTube and other online media.
    As this type of real-time reporting continues, professional news 
organizations can serve an important role by using their trusted brands 
to verify information and help users separate fact from rumor. So too 
will the trend of journalism as a conversation as opposed to the one-
way dictation of yore. As this engaging dialog becomes more pronounced, 
new opportunities for capitalizing on it will emerge too. The best 
local newspapers have long served as reflections of the communities 
they serve, and the web allows them to facilitate conversations about 
the news and trends they report.
                                 ______
                                 
  Response to Written Question Submitted by Hon. Daniel K. Inouye to 
                               Steve Coll

    Question. If you knew that Congress could take only one legislative 
action in the next 6 months, what would you recommend as the single 
action that would most assist the newspaper industry?
    Answer. Enactment of a version of Senator Ben Cardin's 
Revitalization of Newspapers Act would clear up confusion that may 
inhibit the conversion of at least some for-profit newspapers to a more 
sustainable nonprofit model. Efforts to refine that legislation should 
also examine tax and other incentives that might temporarily encourage 
such conversions.
    More broadly, Congress should create a commission to review and 
make recommendations about the reform and revitalization of America's 
public media with the express aim of replacing some of the independent 
reporting on public institutions and public affairs at the local, 
municipal and state levels, as well as on international affairs.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                               Steve Coll

    Question 1. The industry structure for the metropolitan daily 
segment of the newspaper business has evolved over time from more 
local, independent ownership to almost exclusive corporate ownership. 
The fact that many newspapers enjoyed high-profit margins because of 
the quasi-monopoly they held in their local communities certainly made 
them attractive properties to investors. Do you believe that the 
publicly traded ownership model for newspapers has been good for 
journalism?
    Answer. It's a mixed history. Some owners at some times used the 
high profit margins they enjoyed to reinvest in deep, independent 
journalism about their communities and the world. Too often, however, 
investors made ever-increasing margins their priority. Not only did 
they reduce funding for journalism in order to chase higher margins, 
but even more tragically, they failed to use their temporarily high 
profits to think and invest strategically so that they could continue 
to produce important journalism in the digital future--whose contours 
have been clear for almost two decades now. On balance, the publicly 
traded ownership model, driven by Wall Street's relentless focus on 
quarterly results and high margins, has not been good for newspapers.

    Question 2. Micro-billing is part of the wireless industry's 
business model. Consumers download games, songs, videos, ring tones, 
and other applications onto their wireless devices and appear to be 
willing to pay relatively small amounts. I know some newspapers have 
attempted micro-billing for content but with no success. One of the 
difficulties seems to be when consumers are used to free content it is 
extremely difficult to put the genie back into the bottle. Do you 
believe that micro-billing has a future when it comes to the 
distribution of on-line content from newspapers?
    Answer. The model has not been fully tested, but I'm doubtful that 
it will succeed. Even more unique intellectual property than news and 
journalism, such as popular music, has not yet found a sustainable 
business model through micro-payments. For news and journalism, the 
genie problem is a real one. Some financial news content--such as that 
which may have a direct effect on market prices for equities, bonds, 
currencies, and commodities--may attract enough buyers, micro or 
otherwise, to cover the costs of its production for many years to come. 
But there is no evidence as yet that Internet users regard general 
news, and particularly journalism about local government, state 
government, and general foreign reporting, as valuable or unique enough 
to thrive in this or similar models. The paradox for policymakers is 
that readers still see this reporting as valuable--as a public or civic 
good--and continue to consume it in large numbers, but the business 
model that has made its production possible for so long no longer 
works.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Frank R. Lautenberg to 
                               Steve Coll

    Question 1. In a recent article, you note that in the early 90s--
when the Internet was just beginning to take off--reporters focused on 
readers' neighborhoods to sell papers. Has this trend of newspapers 
focusing on local issues continued as Internet competition has grown? 
Is this local emphasis an effective way for traditional media to 
distinguish themselves from their Internet competitors?
    Answer. As Internet use spread, readership surveys showed that 
subscribers valued local news coverage from their newspapers above all. 
Indeed, when newspaper readers were asked, in effect, ``What can you 
get from your newspaper that you can't get anywhere else?'' they most 
often cited local news coverage of school systems, local government, 
local personalities, elections, and so on. The difficulty now is that 
the newspaper advertising model is under such pressure that the costs 
of producing this local reporting exceed the revenue that is available 
to pay for it. Readers still want the coverage--but the business model 
from which they received this coverage is now under severe pressure.

    Question 2. With newspapers consolidating operations--as is the 
case in my state of New Jersey--what is the risk to independent 
editorial viewpoints?
    Answer. The Internet has collapsed barriers to entry in publishing. 
Today everyone, in effect, can become a publisher by setting up a low-
cost website. In that sense, there will be more independent editorial 
viewpoints than ever--a cacophony of voices. What is likely to be lost 
as newspapers consolidate, lose circulation, and cease publishing is 
the community-building common discourse and fact-based reporting that 
has been so much a part of American public life in recent decades.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. Tom Udall to 
                               Steve Coll

    Question 1. One of the ideas presented at the hearing was to 
transform newspaper businesses into nonprofit entities or charitable 
organizations supported by endowments. Would this work only for large 
national newspapers? Would having large endowments to support newsrooms 
be a viable option for smaller newspapers like those in New Mexico?
    Answer. The nonprofit model may be easier to develop for smaller 
newspapers than for larger ones. It may not be prohibitively expensive 
to fund, through endowments and other nonprofit fundraising endeavors, 
the kind of local newsroom that can produce valuable reporting on 
community and local government. Community foundations, community 
leaders, businesses and other constituents, if they banded together, 
might find it easier to build such a model than would comparable groups 
in a very large city, where the community leadership is more dispersed 
and where the money required to support legacy newsrooms would be 
considerably greater.

    Question 2. Mr. Coll, people across the globe read more news today 
than ever before thanks to the Internet. It seems to me that the news 
has value. I am puzzled why newspapers today have so much trouble 
selling their news, either online or in print form? Why has no viable 
for-profit business model emerged for journalism in the Internet age?
    Answer. Fundamentally, the problem is not of readership, as you 
correctly point out, but of changes in the advertising marketplace, and 
how those changes relate to the cost structures of newspapers. In the 
heyday of the newspaper era, only about twenty percent of the cost 
structure of a typical newspaper was paid for by circulation revenue. 
The rest came from advertising. In the Internet age, advertisers have 
many, many more options for reaching their target customers than they 
enjoyed in the newspaper age. As a result, the cost of advertising per 
capita generally has been driven down. Even where newspapers are able 
to capture large numbers of readers online, they cannot command the 
kinds of advertising prices per reader that they enjoyed in the 
newspaper era. There are some successful for-profit business models 
emerging for journalism in the Internet age--but they tend to be 
concentrated in financial journalism, which is relevant to market 
prices, and some national cable networks that have built strong brands 
within the scarce spectrum of basic cable packages. But the independent 
reporting on local and public affairs that these profitable sources are 
producing is scant, and nowhere near sufficient to replace the 
reporting that is being lost at newspapers.

    Question 3. Mr. Coll, good journalists try to protect their 
independence in order to do their work. How can Congress help a dying 
newspaper industry without eroding independent journalism?
    Answer. My view is that rather than concentrating its efforts 
solely on the dying newspaper industry, Congress should concentrate on 
identifying and addressing where the public interest lies in the 
deepening loss of independent reporting on local, municipal, and state 
government, as well as international affairs--and then take steps to 
fill the gap.
    A portfolio of policies framed by the pursuit of the public 
interest, rather than a single silver bullet, will be required. On the 
newspaper side, clearing up barriers to conversions to nonprofit status 
is one opportunity. More broadly, to support journalism per se, I 
highlighted a number of policy options in my written testimony, but I 
would particularly emphasize here the need to reexamine, reform and 
revitalize the country's public media infrastructure, while ensuring 
its independence, so that it can replace some of the independent 
reporting that is being lost as newspapers shrink. Every other of the 
world's industrialized democracies invests orders of magnitude more in 
its public media than does the United States and many of these 
democracies have developed systems to ensure that the journalism 
produced in these systems is free from political interference.

    Question 4. As Mr. Simon mentioned, the Albuquerque Journal charges 
readers a fee for online as well as print subscriptions. Why is this 
business model not more frequently utilized across the country? What is 
essential for the success of this business model for newspapers?
    Answer. Since the beginning of the Internet era, newspaper 
publishers have that feared placing their content behind a pay wall 
would chase readers away, and thus reduce advertising revenue without 
generating sufficient circulation revenue to make up the difference. So 
far, many experiments of this type have indeed had that outcome. The 
problem, as stated above, is that the journalism produced in newspaper 
newsrooms, while attractive to readers, was never paid for by 
circulation revenue--it was paid for mainly by advertising. In effect, 
the news was always given away free, or mainly free, in order to 
attract eyeballs to advertisements. Even if newspapers are able to now 
charge some fees for their content (a big if, as Internet users have 
become used to free information on the Web) they are unlikely to be 
able to replace the levels of advertising revenue available at the 
height of the newspaper age.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to 
                              David Simon

    Question 1. If you knew that Congress could take only one 
legislative action in the next 6 months, what would you recommend as 
the single action that would most assist the newspaper industry?
    Answer. I would urge Congress to pass a limited exemption to the 
anti-trust statutes that effectively prohibit the industry as a whole 
from sitting down to discuss the wholesale destruction of its revenue 
stream, which was previously based on ad revenues, with circulation 
being a loss leader for newsprint. Online publishing has flipped that 
dynamic and as a whole the industry must move to create a revenue 
stream that is based not on advertising, but on the value of its 
content, whatever that value is.
    This is not, as some would claim, an avenue toward monopoly in the 
news industry. Quite the opposite: If, as a whole, the industry can 
agree to take all of its intellectual property away from free 
distribution, then it will, as a whole, create a revenue stream through 
which additional locally based online ventures will be able to hire 
reporters and editors. They will then be more easily able to compete 
with large dailies for the fundamental reason that circulation costs--
print, presses, trucks, gas, delivery personnel--are no longer the 
fundamental expense in high-end journalism.
    The issue is not monopolistic price-fixing--the issue for which 
anti-trust legislation is designed as a counter. The price of an online 
subscription to The New York Times, The Washington Post or The 
Baltimore Sun will be what the market will bear, just as it will be set 
by any new publications that choose to hire and pay professional 
journalists and offer pay subscriptions. The issue is survival of the 
very model of professional journalism within the new construct of the 
Internet and whether journalism as an industry can be given a modest 
window to discuss whether as an industry, united, they might move to 
establish a new distribution model.
    Because most major daily newspapers are inextricably linked by the 
wire-service collective, and because neither The New York Times or The 
Washington Post--our two national papers with comprehensive national 
and international coverage--cannot successfully go to a pay 
subscription model without knowing that the other, too, is willing to 
take the risk, a fundamental discussion about journalism's future needs 
to occur. That conversation is now, effectively, prohibited. The 
industry may get there without the help of Congress, true. We are 
hearing about discussions at both the Times and the Post about changing 
to an online pay subscription model. But that transition will happen 
more readily if there are direct discussions rather than simply trial 
balloons and feints. And the faster it happens, more of our regional 
newspapers and their newsrooms might be around to make the transition 
as well, leaving intact the institutional memory and professional 
integrity of what were once healthy news organizations.

    Question 2. Mr. Simon, given that several recent studies have shown 
that a loss of news coverage in a community has an adverse affect on 
public participation in the political process, in your opinion, what is 
the worst case scenario?
    Answer. I do not believe that our largest national newspapers, The 
New York Times and The Washington Post, will disappear. I believe they 
will survive the transition to online publication, moving their 
subscriber base from wood-pulp to digitization in a generation or two. 
But regional newspapers are dying and most, if not all, will succumb 
unless a revenue stream based on content is created.
    I believe there will be plenty of national coverage and to the 
extent America has direct involvement in an international situation, 
there will be coverage of that as well through the Times and Post. But 
I believe we may well end up with only a couple national newspapers, 
with the Times and the Post competing online in major cities from 
Baltimore to St. Louis to Phoenix. Each paper will hire a small handful 
of journalists to report a few major stories daily from various regions 
and will publish, online, a zoned Baltimore or St. Louis version of The 
Washington Post or New York Times that suggests local coverage but does 
not go deeply into issues. It will be local journalism by implication, 
but not in substance, much in the manner that USA Today attempted to 
suggest its local relevance as a newspaper without much real 
justification.
    Over time, pay subscription sites providing more detailed local 
news will arise to offer those few readers unsatisfied with the 
national paper's marginal local presence, but the impact of these 
sites--serving perhaps 30,000 readers where a major regional paper once 
served ten times that number--will be limited. Government at the state 
and local level will become less responsive and alienation of the 
citizenry, already somewhat pronounced in our culture, will increase. 
The worst case scenario is that we move from democracy to oligarchy at 
a rate faster than we have become accustomed.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                              David Simon

    Question 1. The industry structure for the metropolitan daily 
segment of the newspaper business has evolved over time from more 
local, independent ownership to almost exclusive corporate ownership. 
The fact that many newspapers enjoyed high-profit margins because of 
the quasi-monopoly they held in their local communities certainly made 
them attractive properties to investors. Do you believe that the 
publicly traded ownership model for newspapers has been good for 
journalism?
    Answer. As my testimony indicates, I believe the original sin of 
American journalism was in turning to Wall Street for investment in the 
first place. When newspapers were locally owned and in no way tied to 
the profit expectations of Wall Street analysts, they proved capable of 
providing legitimate, yet idiosyncratic coverage of different cities 
and communities and accepting profit margins proportional to their 
long-term health and public mission. Raw, unencumbered capitalism 
eviscerated newspapering for short-term profits, without returning any 
of that money to improve the product, to prepare for the transition to 
digitization and online subscriptions, and ultimately, to maintain a 
level of essential quality for which readers might be expected to pay 
online to read about their nation, their state and their community. 
This outcome is no different than what Wall Street has wrought with 
American manufacturing, auto-making, banking or any of the other myriad 
examples in which unregulated capitalism has been used to poor civic 
purpose. Make no mistake: I accept that capitalism is a powerful 
economic engine, perhaps the best ever loosed upon societies to create 
mass wealth. But how the United States spent the last thirty to forty 
years mistaking it as a singular framework by which to build a just and 
healthy society is a source of endless fascination to me. The purpose 
of every civic structure is not to make the most money. Profit might be 
a necessity to sustain that structure, but maximized profit is simply 
greed given form and substance. And for the last twenty years, 
newspapers have been run into the ground by men who had, if not 
indifference, then a basic contempt for the actual purpose of the 
newspapers they were operating.
    Allow me to close with an anecdote. Shortly before I decided to 
leave journalism in 1995, I went to an employee meeting at The 
Baltimore Sun to hear the new CEO of the Times-Mirror chain address us 
on our future. This gentleman had, until a few months prior when he was 
named to head the newspaper chain, made his reputation improving the 
stock price and market share of a major cereal company. He spoke for 
about 40 minutes and never mentioned the mission, purpose or ethos of 
The Baltimore Sun. He talked of profit and cost centers, of market 
synergies and such. He did not mention news, or community service, or 
the role of a newspaper in society. He closed by saying that reporters 
should cooperate more with the advertising department in order to help 
boost income. I left that meeting and got on an elevator with three 
other reporters who I had come to respect for their honesty, integrity 
and commitment to craft.
    ``It's over,'' one of them said. ``We're done.''
    Prescient, he was.

    Question 2. Micro-billing is part of the wireless industry's 
business model. Consumers download games, songs, videos, ring tones, 
and other applications onto their wireless devices and appear to be 
willing to pay relatively small amounts. I know some newspapers have 
attempted micro -billing for content but with no success. One of the 
difficulties seems that when consumers are used to free content it is 
extremely difficult to put the genie back into the bottle. Do you 
believe that micro-billing has a future when it comes to the 
distribution of online content from newspapers?
    Answer. I claim no expertise with any of the billing models 
ultimately being used or considered for online distribution of 
intellectual property. I only know that I still believe that news has 
value for a certain limited, yet essential, portion of the public and 
that if this is news that they can't get anywhere else, then that 
public will pay for access to that news. Further, I do not believe that 
news that has real value--beat coverage, investigative work, consistent 
coverage of complex issues--will be achieved with any consistency or 
quality-control by people pursuing journalism as a hobby. Whether 
online or off, whether through traditional newsrooms or smaller 
Internet consortiums, a way must be found to pay good reporters to 
dedicate their lives and careers to the craft. Unless that happens, we 
are all going to be a lot more ignorant and disengaged, regardless of 
the unsupported claims that new media continues to make for its 
fledgling efforts. Understand that I accept that it may not be The 
Baltimore Sun that survives to pay reporters to cover Baltimore and 
sell that coverage online in some fashion, using some fresh billing 
structure to create revenue. The Baltimore Sun has shown itself over 
the last twenty years to be an enterprise that never misses an 
opportunity to miss an opportunity. But some entity will do this 
eventually, albeit it may take years, possibly a generation or two 
before enough institutional memory, talent and professional competence 
can be supported by a smaller revenue stream than what newspapers once 
enjoyed.
                                 ______
                                 
 Response to Written Question Submitted by Hon. Frank R. Lautenberg to 
                              David Simon

    Question. With newspapers consolidating operations--as is the case 
in my state of New Jersey--what is the risk to independent editorial 
viewpoints?
    Answer. I don't mean to be flippant, but this is a question for 
1982. The risk to an independent editorial viewpoint was there when 
newspaper chains, those hideous amalgamations of Wall Street ambition, 
began buying up the profitable, monopolistic survivors of the newspaper 
wars of the 1970s. When maximized profits and appeasement of the Wall 
Street analyst was the measure by which newspaper CEOs and board 
chairmen were judged--rather than by service to all the idiosyncratic 
and unique regions covered by their newspapers--the writing was on the 
wall.
    In my city, when I started as a reporter in 1982 there were three 
newspapers, the Hearst afternoon daily and both morning and evening 
editions published by The Sun. There were also a string of 
independently owned weeklies covering various counties and communities 
in Central Maryland. To make itself attractive to a chain buyer, the 
family-owned A.S. Abell company brought in a publisher to firmly 
establish a monopoly, not for editorial reasons but for pure profit. 
After running the Hearst paper into the ground, The Sun folded its own 
evening edition and then bought all of the community papers, creating a 
monolith that reached an apex of 37 percent profits. Then they began 
cutting reporting positions and reducing coverage because, of course, 
one makes more money publishing a bad newspaper than a good one.
    This is the story of regional journalism in America over the last 
twenty years. Greed, greed, and short-sightedness, followed, of course, 
by more greed. The risk to varied independent editorial viewpoints was 
there a generation ago, and it went unheeded. Now, the risk is of no 
systematic, professional coverage whatsoever in major American cities.
    Less important than the editorial page--and whatever careful, 
centrist opinions flow from a single, monopoly paper that is trying to 
offend no one and maximize profits--is the fact that the news pages, 
the functional essence of journalism, are disappearing.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to 
                          James M. Moroney III

    Question 1. If you knew that Congress could take only one 
legislative action in the next 6 months, what would you recommend as 
the single action that would most assist the newspaper industry?
    Answer. Congress should pass legislation that provides the 
newspaper industry with limited antitrust protection to experiment with 
and implement ventures and new business models that support local 
journalism. Change is happening so fast that the industry cannot wait 
for Department of Justice approval of joint ventures which only comes 
after lengthy and costly antitrust investigations. Legislation could 
provide newspapers with the ability to propose innovative cost saving 
arrangements or new methods for content distribution under an expedited 
review process at the Department of Justice.
    My colleagues and I in the newspaper industry know too well that 
newspapers compete with a host of other media for advertising and 
readership. To illustrate, the newspaper industry's share of the total 
advertising market is less than 15 percent--so competitors have the 
lion's share of the local market. Despite changes in the competitive 
landscape, antitrust enforcement is still mired in the outdated 
perception that the relevant market is limited to daily newspapers. The 
DOJ confirmed its current view of the relevant market in its recent 
testimony in the House of Representatives and indicated that, at best, 
it might be willing to change its views in a specific case after an 
investigation--that would undoubtedly be extensive, costly and time-
consuming. The newspaper industry has neither the time nor the 
resources for such a burdensome process. It will be too late for some 
newspapers that might be close to shutting down or are faced with the 
difficult decision of further cutting back on newsroom operations.

    Question 2. Mr. Moroney, in her testimony, Ms. Mayer suggests that 
micropayments for online content might be one way for newspapers to 
earn additional income. What is your opinion on the use of 
micropayments to charge for content?
    Answer. Newspapers on their own are generally exploring ideas for 
charging for some portion of newspaper content that is provided online. 
There are a number of ``pay for content'' strategies that have been 
discussed within the industry from an annual or monthly subscription 
for non-subscribers to day passes to access the content from multiple 
publishers to micropayments for single articles. The micropayments 
concept may be more suited for national newspapers which undoubtedly 
will have the potential volume to cover administrative costs associated 
with a micropayments approach. Local newspapers might be able to use 
micropayments for the distribution of innovative news coverage and 
other information that is targeted to the specific interests of the 
consumer. Regardless, newspapers will need to experiment with these 
different models.
    Importantly, it is my belief, that the newspaper industry will need 
limited antitrust protection to make a ``pay for content'' approach 
work across the industry so that newspapers can support local 
journalism over the long term.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                          James M. Moroney III

    Question 1. The industry structure for the metropolitan daily 
segment of the newspaper business has evolved over time from more 
local, independent ownership to almost exclusive corporate ownership. 
The fact that many newspapers enjoyed high-profit margins because of 
the quasi-monopoly they held in their local communities certainly made 
them attractive properties to investors. Do you believe that the 
publicly traded ownership model for newspapers has been good for 
journalism?
    Answer. A. H. Belo is a publicly-traded company, and I'm very proud 
of the journalism we do at our three newspapers, including The Dallas 
Morning News where we have won 8 Pulitzer Prizes since 1986. There are 
also privately-held newspapers with a long history of excellence in 
journalism. In my view, the ownership structure does not have a 
significant impact on the quality of the journalism.
    The laws of economics are the same for the locally owned newspaper 
and the newspaper that may be part of a publicly held company. In fact, 
there are some economies of scale to newspaper groups that allows them 
to operate more efficiently and contribute more resources to their 
newsgathering efforts.

    Question 2. Micro-billing is part of the wireless industry's 
business model. Consumers download games, songs, videos, ring tones, 
and other applications onto their wireless devices and appear to be 
willing to pay relatively small amounts. I know some newspapers have 
attempted micro-billing for content but with no success. One of the 
difficulties seems that when consumers are used to free content it is 
extremely difficult to put the genie back into the bottle. Do you 
believe that micro-billing has a future when it comes to the 
distribution of online content from newspapers?
    Answer. There is a lot of discussion about different models for 
charging for some content online. It may well be difficult to convince 
consumers to pay for content that--to date--has been provided for free 
online. However, in order to support local journalism at the scale that 
has been historically accomplished by daily newspapers, the industry 
will need to experiment with new business models--and will likely need 
antitrust relief to do so.
    Micropayments might work if you are providing news and other 
information that is specifically directed at the consumer's interest. 
Because so much information is already out there for free, an 
individual newspaper will have a difficult time implementing a 
micropayment system or online subscription service on its own. That is 
why the industry is seeking antitrust legislation that would provide 
expedited Department of Justice review of joint ventures that will 
allow newspapers to implement innovative content distribution models 
without the threat of antitrust investigations which are too costly, 
too time consuming and may come too late for many newspapers.

    Question 3. Mr. Moroney, does the Newspaper Association of America 
believe that mergers between a daily newspaper and a broadcast outlet 
in the same market would address the newspaper industry's long-term 
structural challenges? If so, can you explain why?
    Answer. The Federal Communications Commission's modest relaxation 
of the cross-ownership rule is now under review in the courts. No one 
has suggested that eliminating the 34-year-old prohibition on 
newspaper/broadcast cross-ownership would solve all of the long-term, 
secular challenges facing the newspaper industry. However, in certain 
circumstances, elimination of the rule could facilitate the survival of 
at least one voice in a community when there is a danger of a newspaper 
closing down or a local broadcast station eliminating local news or 
shutting down altogether.
                                 ______
                                 
 Response to Written Question Submitted by Hon. Frank R. Lautenberg to 
                          James M. Moroney III

    Question. With newspapers consolidating operations--as is the case 
in my state of New Jersey--what is the risk to independent editorial 
viewpoints?
    Answer. The newspaper industry is the least consolidated of all 
major media. Of the nearly 1,500 daily newspapers in the country, the 
largest newspaper company, Gannett, owns less than 10 percent of the 
titles. In addition, over the last few years a number of newspaper 
companies have put newspaper properties up for sale and many of these 
newspapers are still on the market--because the market for newspapers 
has shrunk.
    In today's media landscape consumers have access to a wide spectrum 
of news and information and editorial viewpoints, particularly with the 
advent of self-publishing on the Internet--not to mention the editorial 
viewpoints available on local TV and radio.
    Newspapers have made the largest investments in quality journalism 
to ensure there is a trusted source of accurate and balanced 
information for local markets across the country. Newspaper companies 
are deeply committed to the editorial autonomy of their newspapers. All 
of the research I've seen to date says that newspaper readers demand a 
local point-of-view for local, regional and state issues. To take away 
a local newspaper's prerogative to reflect its independent voice would 
undercut the very value proposition that has sustained local newspapers 
for decades.
                                 ______
                                 
     Response to Written Question Submitted by Hon. Mark Warner to 
                          James M. Moroney III

    Question. You recommend that we establish a right to protect a news 
organization's breaking news--akin to the ``hot news'' doctrine. Can 
you explain how that would work in the Internet age--how long is a 
scoop ``hot'' news?
    Answer. There are many aggregators that take the guts of newspaper 
content and put it on a website to drive consumer traffic and sell 
advertising around the content. We question whether this is ``fair 
use'' under the Copyright Act, but ``fair use'' is often a difficult 
concept to define. What you describe looks to us like a 
misappropriation of commercially valuable property by individuals who 
hope to gain financially from the investment in journalism done by 
newspapers and other news services.
    The ``hot news'' doctrine, which is only recognized in a few 
states, protects against the types of poaching of business property 
that the Copyright Act may not cover. It arises out of a Supreme 
Court's decision in the early 1900s, which found that breaking news is 
the ``quasi property'' of a news-gathering organization and subject to 
protection against a competitor's free riding on the newsgathering 
investment of another company. In that case, ``hot news'' was 
interpreted as information that is ``time sensitive.'' Case law over 
time or even a statutory definition could determine the definition of 
time sensitive information.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to 
                           Arianna Huffington

    Question 1. If you knew that Congress could take only one 
legislative action in the next 6 months, what would you recommend as 
the single action that would most assist the newspaper industry?
    Answer. I'm not in favor of Congress taking such legislative 
action.

    Question 2. Ms. Huffington, as you continue to build 
huffingtonpost.com, do you have ideas on how you can make local content 
available to your audience? Is it reasonable to think that online-only 
content providers can step in and provide competition and diversity in 
communities that are now served by only one local paper?
    Answer. As we roll out local versions of The Huffington Post, we're 
impressed with the desire for local news online. It's important to note 
that there are a number of local news sites--Voice of San Diego and 
MinnPost, for example--that are already doing strong local reporting. 
So while newspapers are undergoing a painful transition, it's essential 
to focus on how we can save journalism, not how we can save the 
newspaper business.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                           Arianna Huffington

    Question 1. The industry structure for the metropolitan daily 
segment of the newspaper business has evolved over time from more 
local, independent ownership to almost exclusive corporate ownership. 
The fact that many newspapers enjoyed high-profit margins because of 
the quasi-monopoly they held in their local communities certainly made 
them attractive properties to investors. Do you believe that the 
publicly traded ownership model for newspapers has been good for 
journalism?
    Answer. I do not. I believe that newspaper-owning corporations have 
been too focused on short-term profits rather than long-term investment 
in the future of journalism. Instead of focusing their resources on 
experimenting and developing their news gathering businesses, they have 
far too often focused on satisfying Wall Street.

    Question 2. Micro-billing is part of the wireless industry's 
business model. Consumers download games, songs, videos, ring tones, 
and other applications onto their wireless devices and appear to be 
willing to pay relatively small amounts. I know some newspapers have 
attempted micro-billing for content but with no success. One of the 
difficulties seems that when consumers are used to free content it is 
extremely difficult to put the genie back into the bottle. Do you 
believe that micro-billing has a future when it comes to the 
distribution of online content from newspapers?
    Answer. I believe that, as the industry moves forward and we figure 
out the new rules of the road, there will be a great deal of 
experimentation with new revenue models. But I don't see micro-billing 
as the answer when it comes to providing news and opinion.
                                 ______
                                 
 Response to Written Question Submitted by Hon. Frank R. Lautenberg to 
                           Arianna Huffington

    Question. Sites like yours benefit from reporting by major 
newspapers, which are struggling to create a sustainable business model 
as more people turn to the Internet for their news. If newspapers 
continue to cut back on their reporting and close down, how will your 
site obtain high-quality news?
    Answer. First, it's important to note that we send a great deal of 
traffic to other sites--over 20 million pageviews a month. Second, 
while we do aggregate--and link to--material from newspapers, we also 
publish a great deal of original material, both blog posts and stories 
by our staff reporters. Our answer to the problem of producing high-
quality reporting is to launch the Huffington Post Investigative Fund, 
a nonprofit/for profit hybrid. Backed by nonprofit foundations, the 
Fund provides both staff reporters and freelance journalists who have 
lost their jobs the opportunity to pursue important stories.
                                 ______
                                 
     Response to Written Question Submitted by Hon. Mark Warner to 
                           Arianna Huffington

    Question. Your website is one of the most successful blogs on the 
Internet. Can you tell us about your business structure? Could any or 
all of your business structure be adopted by the newspaper industry?
    Answer. The Huffington Post has been able to leverage the reach of 
the Internet to build a media brand quickly. But we've also grown the 
business by being innovative, efficient, experimental and by moving 
quickly, things that all news gathering companies can do.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. Tom Udall to 
                           Arianna Huffington

    Question 1. Ms. Huffington, a few years ago the music industry was 
in turmoil due to fears that their traditional business models could 
not adapt to the Internet. Yet now millions of Americans purchase songs 
online for their iPods and other digital music players. Do you foresee 
the development of any new technologies, such as those for reading e-
books, that would save newspapers or the delivery of investigative 
journalism for readers in an Internet era?
    Answer. I am certain that new technologies will emerge that will 
radically alter the way users receive their news. That's why it's 
important to keep in mind that while hardware applications may change, 
the fundamental needs of news gathering and reporting stay the same. 
Which is why I stress that the thing to focus on is saving--and, 
indeed, improving--journalism, not saving newspapers.

    Question 2. Recent concerns about pandemic flu highlight the need 
to be able to communicate accurate information to the public about 
important events or problems. Yet the Internet can also spread 
inaccurate stories or unfounded rumors far faster than any flu virus. 
In an era of online journalism, will a system of checks and balances 
that governed newsrooms and editorial boards eventually develop for new 
online media sources?
    Answer. I believe those checks and balances are already developing. 
Yes, the Internet allows false information to spread more quickly than 
in the past, but it also enables course corrections to happen more 
quickly. The Internet has shown itself to be an incredibly valuable 
asset when it comes to keeping our political and business leaders more 
honest. Thanks to YouTube--and Twitter and blogging and instant fact-
checking and viral e-mails--it is getting harder and harder to get away 
with repeating untruths without paying a price.
    The best journalists working online embrace the ways of new media, 
including transparency and immediacy, while never letting go of the 
best practices of traditional media, including fairness and accuracy). 
And, we mustn't forget: the checks and balances of traditional 
newsrooms and editorial boards didn't keep all the misinformation that 
came out in the run-up to the war in Iraq from being printed and 
spread.

                                  
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