A Few Words in Celebration of the Failure of Newer Newsrooms

Philanthropy needs to act a bit more like real venture capital

Welcome to Second Rough Draft, a newsletter about journalism in our time, how it (often its business) is evolving, and the challenges it faces.

This week I want to celebrate failure.

It’s not that the failure of news organizations is fun, or pretty much ever a happy event. But for newer digital entrants, I think it’s happening too rarely, and that we’re much too afraid of it.

I want to start with a statistic I saw presented recently at a conference: that the failure rate for digital news nonprofits, over a long stretch of time, was on the order of 6%. That’s actually up from 3% just a few years ago, the presenter later told me. The number was offered as a sort of proof of resilience, but I’m afraid it’s a sign of funder timidity, founder stubbornness and industry stagnation.

Venture philanthropy vs. venture capital

Institutional philanthropy, including the foundations supporting the news business, likes to compare itself to venture capital. But in real venture capital, while precise statistics are hard to come by, failure rates are often said to be 30-40%, but may be as high as 65%, or even 75%.

Why the gap? Real VC’s have only one measure of success: whether they will get back the money they have invested, and enough more, soon enough to satisfy their greedy investors. That’s much too narrow and impatient an approach for a field motivated by public good, so we should expect a much lower and slower failure rate from philanthropy.

But one-in-16 or even one-in-30? I don’t think so, and the scores of struggling newsrooms, that clearly will never deliver on their initial promise, also suggest otherwise.  

What’s going on then? Any organization suffers its own difficulties for its own reasons, ranging from plain bad luck to founder burnout to management mistakes. But in far too many cases, I think the fault for the low failure rate traces back to funders who don’t really believe their own rhetoric about taking risks, who are afraid that the failures of what were initially acknowledged as experiments will reflect poorly on them, and who thus throw good money after bad.

In my view, this is an unwise PR judgment; it’s surely poor giving practice. It’s unwise PR because aligning rhetoric (“we are risk capital”) with practice would actually eventually garner credit, including for transparency. And throwing good money after bad is poor philanthropy because there then remains less both for new possibilities and for proven successes.

Why we need more failures

The most important reason we need more failures in the news business is because the road ahead remains uncertain. We don’t yet have a clear blueprint for how to build a successful digital news nonprofit. I have offered some suggestions, both in this column and elsewhere, and so have many others. But difficulties abound about how to apply this early learning in varying situations.

In particular, there are hard questions about audience to be faced, and budgeting remains more art than science— and an area in which I know many newsrooms are having a tough time. We can learn many things from the numerous successes so far, but there could be a great deal to be absorbed from the failures, if only we could acknowledge, surface and confront them.

In saying this, I do not mean in any way to make light of the human cost of newsrooms ceasing to publish. And I hope some of the failures can be incorporated into other more successful ventures, by either merger or acquisition-- although such deals, if they are to be successful for more than a year or two, must be made from a position of strength on the part of at least one of the entities involved. I also don’t mean to suggest that every modest retrenchment is a sign of incipient failure. Growing pains are a real thing in the development of many ultimately successful businesses.

What remains

Moreover, just because a news organization fails to thrive as a business should mark no judgment on the valuable editorial work it may have done in the meantime. That good remains—as it does with many of our legacy publications now in decline—and should be a source of enduring pride for reporters, editors and others.

So I hope we will be more willing to accept failure in our still-young field, more open to acknowledging it so we can learn, more rigorous in demanding that renewed funding be allocated only where there is still promise, and not to stem or obscure decline. I firmly believe that the future for nonprofit journalism overall remains bright. But an absence of individual failures needs to be seen for the weakness it is, and the weaknesses it seeks to hide, not as some industry fluke or badge of honor.