Journalism, its economics and its freedom

In the spring of this year Mediapart was the subject of a case study by one of the departments at the University of Chicago Booth School of Business. This is the background to an unexpected tribute which comes at a time when the model of 'free' news publishing is more than ever shown to be a dead end for the independence of journalism.

The French website Slate.fr, which was founded in 2009 by former journalists from French daily Le Monde, has just been bought by shareholders who specialise in tax avoidance (the people who run the private Swiss bank Groupe Edmond de Rothschild) via a company based in Luxembourg, a tax haven in the heart of Europe. Whatever the qualities of the journalists involved, this news highlights the ethical decline which is today corrupting journalism's ideals more than ever.

The question of the media's economic independence seems to have become such a secondary issue that the profession is increasingly accepting shareholders who are far removed from the aims of journalism, which calls on us to provide information with freedom, unbeholden to any private or state interests. The democratic promises of the digital revolution were an opportunity to defend and reconstruct this independence, but instead they have come up against both prosaic economic realities (the best guarantee of independence is profitability) and counter attacks from dominant financial interests. From Patrick Drahi, founder of the multinational telecommunications company Altice, to Xavier Niel, whose companies include French broadband and mobile phone operator Free, the billionaires of the digital world have grabbed control of a significant section of the old press, joining the established oligarchy of French businessmen and industrialists such as Bernard Arnault, Serge Dassault, Arnaud Lagardère and François Pinault.

When in 2009 we and others created the organisation representing independent online media, the Syndicat de la Presse Indépendante d’Information en Ligne (SPIIL), which still brings together a variety of digital news providers, the media landscape was not yet so fixed and settled. But since then two of the seven co-founders have disappeared completely (Terra Eco and Bakchich) and two have lost their economic independence, even their identity (Rue89 and Slate fr). The three survivors - @rrêt sur images, Indigo Publications and Mediapart – are very different in their methods while still claiming allegiance to the same professional traditions. But they all have one point in common. From the start they backed the online paying model, supporting in the digital world that which underpinned the success of the printed press in the past: the loyalty of the public.

For the failure of Slate.fr, like that earlier of Rue89 (founded 2007), which was first of all bought by Claude Pedriel, owner of the weekly news magazine L'Obs, before being sold with that publication to Le Monde's shareholders (Pierre Bergé, Xavier Niel and Mathieu Pigasse), highlights the utter dead end of the 'free' model – in fact, it relies on advertising – for any journalistic project of a serious standard. It's not only that there is no sign of economic profitability in this ‘free’ model, it is that its quest for ratings directly impacts on its content. It often imposes briefness, immediacy and superficiality. Or it gives priority to opinion and comment over news and investigation.

To put it another way, the economic model has consequences on the value of the journalism. This is not just on the value of the company that produces it, but in the value of the news itself. Using the classic distinction between 'value in use' (a product's utility) and 'value in exchange' (how much it buys), then if the value in exchange of the news is zero, its value in use (in other words, its democratic usefulness for the reader) will also end up heading towards zero. The final result is the corruption of news by entertainment (which can include the constant blathering of commentators) where the economic model relies on a large audience and free access with adverts.

It is this not simply economic but political issue of the value of journalism which has attracted the curiosity of economists at the University of Chicago about the case of Mediapart, its model and its success. First of all there was an article in October 2015 in the Financial Times by Professor Luigi Zingales under a headline that left no room for ambiguity: “A strong press is best defence against crony capitalism” (read the article here). In this article this professor from the University of Chicago Booth School of Business defended the democratic need for investigative journalism to highlight the abuse of dominant positions, monopolies of power and concentrations of wealth, and referred to Mediapart, which had passed the milestone of 100,000 subscribers, as a demonstration that this aggressive practice of the profession can find both an audience and profitability.

Luigi Zingales, who sees economic liberalism as inseparable from radical political liberalism, where society's actions are indispensable in regulating capitalism which is otherwise inevitably uncontrolled, is the director of the Stigler Center at the business school, a centre of research and studies dedicated to the study of the economy and the state. An Italian-American who is just as au fait with the economic debates in Europe as in the United States, the professor stands out for his sometimes iconoclastic positions, as someone who is at the same time a strong defender of the free market, an advocate of the greater control of banks and a relentless opponent of “crony capitalism”.

The title of one of the professor's books, Saving Capitalism from the Capitalists, published in 2003, sums up the original and solitary path that he is trying to open up. It helps explain why Mediapart intrigued him: professional journalists who devised an online medium which became profitable by just exercising journalism, with no other formula apart from its readers' subscriptions and the loyalty of its public. That is how, against a backdrop of a general questioning of the historic crisis of the printed press, we became the Stigler Center's first case study, a profoundly disruptive example given how much it is at odds with the dominant economic ideologies.

After a first visit to Paris by professor Zingales last year, Guy Rolnick then came along to see us with Dov Alfon. A co-director of the Stigler Center, Guy Rolnik is the founder of the Israeli business daily The Marker, published with the support of the Israeli news daily of reference Haaretz, whose investigations have shaken the establishment in Israel, revealing the disastrous effects, including corruption, of the concentration of power and wealth among a small group of billionaires. As for Dov Alfon, whose name will be familiar to those attentive readers of Mediapart who followed his investigations with our own Fabrice Arfi into the involvement of organised crime in a vast carbon trading scam (see more here, here, here, and here), he is today the Paris correspondent for Haaretz which he previously served as editor.

Their study involved several trips and correspondence exchanges, when we produced all our financial accounts (they are published every year, in French and English) and replied to all their questions. We decided to publish a brochure in English in which our finances are detailed and in which also Mediapart co-founder and editorial director François Bonnet explains the history of Mediapart. It can be downloaded here.

Published in March, their study is entitled Mediapart: a viable model? Available in English here, and in French here. Under that guarded title are two questions which represent for us challenges: will Mediapart’s success continue after the departure of its founders and can it be reproduced elsewhere? But on a strictly economic level, their starting point remains the surprise at the profitability of Mediapart, all the more so given that our company does not distribute dividends and this profitability serves only to further develop our contents and our independence.

The introduction to the April 13th special Stigler Center event (see here), when the study was presented to the Chicago students, had no hesitation in underlining the gap between the profitability of Mediapart and that of The New York Times in 2016 (respectively, 18% compared to 6.5% regarding operating income, and 16.6% compared to 1.9% regarding net earnings). “Mediapart’s profitability stands out, even when compared to much older, much bigger, much more established counterparts,” reads the presentation. On the eve of the public event, Luigi Zingales posted an article on the Stigler Center blog in which he stressed the democratic stakes that lie in this economic success (see here). “The case focuses on a very important challenge: how investigative journalism can be profitable in a digital world,” he wrote. “It is not just an interesting business question, but a very important public policy one. Investigative journalism plays a crucial role in the functioning of not only democracy, but also of capitalism itself. The story of Mediapart represents a ray of hope not just for France, but for the entire world.”

In face of these no doubt somewhat excessive compliments, we tried, with Mediapart co-founder and general manager Marie-Hélène Smiéjan, to give a modest explanation of Mediapart’s formula for success during the public presentation of Guy Rolnik’s case study. What we said was really of no surprise: “Journalism, always journalism, nothing but journalism!” Earlier, Stanford University professor of communication, James T. Hamilton, commented on the case study in the light of his latest book, Democracy’s Detectives (Harvard University Press, 2016), a vast and exhaustive study of the economics of investigative journalism.

Below is a video recording of the Stigler Center event:

Le 13 avril 2017, Mediapart à l'Université de Chicago

News starts here (L’info part de là): download the Mediapart presentation brochure in English.

[English version by Graham Tearse and Michael Streeter. Original French version here. Spanish version here.]

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