talking about news organizations. we're not just talking about newspapers that have to be across platforms, especially since almost all newspaper -- news organizations these days are online, so the differences between platforms is getting blurred, to some extent. in any case, there is some evidence that this movement of advertising online can up and the business model for news organizations, especially newspapers and broadcast news. there's a great deal of innovation going on in the small online newsgathering organizations, but no sustainable new business model has risen. there are reasons to believe that the free market for news, especially public affairs news, is potentially subject to market failure. and that means there is a

possibility that a new business model will not emerge. and, finally, it would not be novel for the government to provide indirect support for news organizations, and i emphasize indirect. so what did we do? we had a workshop in march for two days to talk about, together experts and talk about what might some of these policy options be, that should be considered? and that's where i believe it and i'm happy to elaborate if we have time or anybody is interested in spirit and we will definitely come back later and hear what comes next. steve, same question to you. where does your study stand and what do you think the next steps would be? >> the fcc's study as a couple months behind the ftc's study. we're looking at some of the same issues, but we also have a

special emphasis. in addition to understanding what's happened with the news business as a whole, the federal communications commission has direct regulatory authority over, really, every part of the media industry, other than newspapers. so local broadcast, cable, radio, wireless, et cetera. so we need to make recommendations, the plan is to make recommendations in general. for congress, for society as a whole. but also to make sure the fcc is approaching these issues in a way. some of the roles on the fcc's books were conceived before there was an internet. some of them were conceived before there was a tv. so to assume that the people who constructed these got it right back then is probably wishful

thinking. so obviously, i agree with susan's general assessment that there's a pretty serious potential problem going on in the news business. there is a drop of 44% and revenue from newspapers since 2000. newsmagazine staffs have been cut in half since their peak. local news has cut back across the board. you have some very serious contraction. now, a few points i want to make about what does that mean in terms of government intervention. first, the term bailout i think the term bailout got kind of put into the discussion about news because of a coin student of timing. the contraction of journalism happened to happen at the same time were bailing out the auto industry, and the banking industry. i don't actually know of anyone who is advocating bailout of

newspapers, or any part of the media for that matter, in the same way that we have talked about with other institutions. so in that sense there is a simple answer to the question for this. it's no. there isn't going to be a bailout of the newspaper industry or something like that. now that's not to say, first of all, it's not to say that the crisis isn't just as severe as what's happening with autos or banks, he does though the banking system might not collapse as a result of newspapers declining, what's been lost is potentially just as serious, the ability to hold public institutions, public leaders accountable. the ability for consumers to be protected. the ability for our basic democratic institutions to function well. that's a big deal. it's a big deal, and that's why the fcc launched this project in the first place. is not so much we have a particular interest in economic of anyone of these industries. it's what does the this mean for

democracy? there's a lot of different points that i think we can talk about. i think the two that have been on the most, one is the concept of unbundling and bundling, which you have probably talked about a lot in other context. but it basically is reversed in some sense to the ways that newspapers, and other media institutions, were able to cross subsidize different functions within the same operation. and people have their favorite example, whether it is the horror scopes were essentially subsidizing the city hall reporter, or the sports scores were subsidizing the baghdad bureau. there is to the the ideal that one of the reasons that journalism that wasn't cost effective in a strict sense was subsidized is that newspapers were able to create this overall bundle that worked in is to

county, but if you break it apart and suddenly start applying straight supply and demand economics to each component, everything changes. and now you can get your box scores for free and then some online. and it really basically calls the question, for the first time in perhaps 100 years, of what are you willing to pay for news. and the answer may be, not much. and then you have some interesting dilemmas of what happens in the world where there is, you know, people are not willing to pay for something that we nonetheless think is an important social value. the other thing that has been kind of coming back, coming out of over and over again is a confusion that has developed between, you might call a bundling of media and a abundance of journalism.

i've often heard people say how can you say that there is a crisis or shortage? there is tons of new outlets, tons of new websites. you can get information more ways than ever before. you can get it on your phone. you can get it the traditional ways. and so it has the feeling that we're in an age of abundance, and in many ways we are. and yet if you trace back the information that you get with all these different, and many different outlets coming you find that it is actually a small and shrinking number of journalists that are providing the information that go out to an ever enlarging number of outlets. so you have both, this air of abundance on one part of the media spectrum, and an era of shortage and scarcity on another part. it's very important to kind of disentangle those two forces if you want to thank wisely i think about public policy.

>> thank you. that is a great start. barber, i'm going to turn to you next as someone who represents a very important media company. how do you see the situation as described by the two previous speakers? and how did we get here? >> well, i have to say, susan really hit the nail on the head, and i think the workshops that you have been conducting have been quite informative. and the points that you made, steve, as well our very profound. but in terms of the economics, and for those of you who don't know, gannett is a company that publishes 82 daily newspapers, including u.s.a. today, and went 26 television stations around the country as well. and in terms of how we got here, it's hard to know where to begin. but if you are just, you know,

top three, what susan put out is exactly correct. decline in classified advertising has had a huge impact. because, as you said, 80% of newspapers, traditionally, have been supported by advertising. of that 80%, 40 to 60% has come from classified advertising. and so the decline in classified advertising has had a profound impact on the dollars available for newsgathering. and secondly the news streams of revenue come online, simply don't pay as well. as the old streams did. and there have been a lot of formulations of this, but i think probably the most precise is the one that mark mentioned at one of your workshops, which is that in print come a pair of eyeballs per year is probably about $500. of course, there are various sides of the market.

but online those eyeballs are only worth about $75. so it's hard to see the lines crossing win, you know, with the emergence of the online products. emerging and growing, and we are growing audiences on line. at a very good clip. out the dollars that we derived from those audiences are smaller than those that we derive from, from the tradition print product. and also of the fixed cost nature of the business can't be discounted. you know, print is capital intensive. distribution is very expensive. and we have to maintain that cost structure, whereas a new and it's coming and they don't have any of those expenses. so i think it's the conflict really of those three major developments that have found us where we are today. >> okay.

andy, you have some thoughts about whether in all of this there is an appropriate role the government can play. >> sure. first of all, i find myself in the odd situation of agreeing with everybody here on what's been said so far. so let me hypothesize somebody who is not here, or someone like clay or carry on huffington, people who talk about citizen journalism and people and their proverbial pajamas blogging away and somehow providing a function that replaces traditional journalism. and i would disagree with that person. because there is this it reducible role for these people quote journalist and his people called editors. who create these products that tell us things we didn't know we wanted to know intel we saw the headline on we saw the story

there and found it to be very important and produced with professionalism. i think this is a public good. i think there is a very serious danger of a market failure. and there is a tradition which susan alluded to, going back to the very start of the country, it is inherent in the goals of the framers of the constitution and the first amendment to create a well-informed electorate to making sure that voters are informed about issues of the day, and able to make decisions in the democratic process. i'm going to actually read a couple of sentences from professor michael john, talking about the role of government in this context. congress is not be barred from all action of upon freedom of

speech, legislation which bridges that freedom is forbidden but not legislation to enlarge and enrich it. the freedom of mind which the six members of a self governed society is not a given fixed active human nature. it can be increased and established by learning by teaching by the unhindered flow of accurate information by giving men, i will edit, and women health and safety by bringing communication and mutual understanding, although the federal legislature is not forbidden to engage in that positive enterprise of cultivating the general intelligence upon which the successes of self-government, so obvious it depends on the contrary in that positive field, the congress of the united states has a heavy and basic responsibility to promote the freedom of speech. now, i do subscribe to this very robust view of governments role in using the first amendment as a tool to promote civic discourse.

we have done it since the beginning. people like paul start and robert can just he has written a wonderfully about postal subsidies and and credit important role that they played in creating a robe of us and the effective journalism, and how really, for the last 100 years, it's been an accident of technology that we have a profitable, a cross subsidized journalism created by large advertising revenues in the newspaper and the broadcasting industry, and how we are now facing a real dilemma. and i think is entirely appropriate for government in the tradition of these, of neutral subsidies, advertisements for public notices, postal subsidies. any noncommercial space, public radio, which barber can speak

to, there are ways to do this that do not impede and greatly promote first amendment guide is. i will do to barbara, but i don't think in her years at npr the fact that some of npr's funding came from the government impede the vigor or the effectiveness of npr's journalism. i think we need to look to ways to do that. there are some terrific models and we can talk about them. people have proposed. we certainly want to incubate. i'd like to have something like a national endowment for journalism like the nea and neh to make new models and try them out to assist people trying to develop new and different ways to do it. it may well be that we will not come of in this new environment for a journalism that is truly self-sustaining without some governmental role. and i think this needs to be a very important part of the discussion, seeing how government can do this.

in a proactive way. >> thank you. and in the next part of our discussion we will get to some of the specific proposals. so i won't pressure on that. now i want to give gene a chance. gene has first amendment in the title of his job. >> i'm going to run with that idea and tried to take the sort of longer perspective which is very easy when you work with a paragraph that was ratified in 1791. you are sort of drawn to that kind of activity. and so let me react a little bit to what's been said here. i think steve, you answered no. i might be tentative answer on the bailout no and never. but with some, i will admit, some caution. the concept of public funding for laboratories and experiment. for new development. to assist an industry that frankly has never been all that good at innovation, quite honestly. you know, we change the width of the columns, we congratulate ourselves when we adopted color

50 years after technology made it possible. it's never been an innovative industry. i think when we talk in this context, there are a few things to think about. we in some ways we're talking about a crisis of mechanics, of the corporate suite, that is in terms of acquisitions and expansion versus the core product of news. we are not talking necessarily about a crisis of journalism. what's interesting to me in terms of a market model is that we have this incredible, i think formula for success in terms of a free press, and that is that we have a tremendous and maybe even growing need for information to do with an incredibly complex world. we have new mechanisms which to deliver it, and we have an incredible thirst by all accounts because of the explosion of users and websites and all the rest for the information on the consumer and. so from that sort of basic model, if you are setting up a mom and pop store somewhere in picking a product, you couldn't

pick a better product than journalism, and an environ and which he free press can function. i think again in the longer view if you think about free speech, freedom of press, we have gone through an evolution. may be a circle. i call it from the village green to the village green. we have really circumvented it in some ways. these entities that grow up, starting about the late 1800s and robustly into the 21st century, that were interposition between the consumer, the news gather or the news itself come and and a consumer. so we have this marvelous innovative period. having said that, too many of my colleagues are out of work, former colleagues are out of work, too many industries are doing things like a week furlough without pay. to make local stations have cut back staff. too many journalists have been redirected to other critters for me not to say in fact it is a crisis. but again i think when we talk

about the subject, and i am struck because we have done other panels on the subject as well, we are in a transition. we are in from a model that worked for 100 years, 80 years, 60 years, to something new. and with all respect to the studies going on, we are dipping cups into the waterfall right now. we are trying to find industry mentors flowing environment. and i worry that if we come up with a solution today, that will be an appropriate solution tomorrow in terms of what happens with, forgive me, and entanglement of government. however, we build protection, however weak structure, director and -- and direct. we need to be very cautious about this. not trying to do with the fact that every day fewer journalists are may be employed him and we're also losing a high-end spectrum of journalism. the senior people with the most experience are leaving in numbers that we wouldn't have anticipated ever, and so it would not have occurred in a natural cycle. we are losing that talent pool

at the top. that has been 30 years, and not just at a national level. you know, i grew up with a starting in smaller newspapers before i went to the world's largest neighborhood data, and what i learned there was often from summit with that 20 years of expensive who knew more about the county budget or been visible workings than anybody holding office because they have been there through all of those administrations, all those transitions. i think when we talk about the grand solutions we look at these mega- solutions, we need to think about preserving somehow that kind of thing and a viable industry most newspapers, stand-alone operations, i think television station still are viable entities. community newspapers where they don't face the craigslist deprivation of classified, and are also seen as important new conduit does you can't punch in your zip code and get the weather forecast. those are the places that are

still robust journalism going on so also what we look at solutions, and we look at these, i hope that we will consider that in. and what do we need to enlarge their role to assist the role? the community newspaper at that level is still i think very robust. and i think we need to worry again through all of this, and i understand and i have read the report, i read our friends who published lynn downey, who published the report, but the founders were very specific. the 45 words are out there, and it does say, well, there is no barrier to, congress should make no law. and i think implicit there was a desire to keep government out of not only restricting, but directing. and with all due respect, i never thought i would be quoting jerry falwell this often, but with the shackles comes the shackles that and i think the letter, the first aggregators

with a clone of newspapers who could mail each other for free. they were aggregators in 1791. but we need to be very cautious about stepping forward on this, because remember, we also do with the big unknown, the skeptical public. who will see any assist, as they have with other industries, as the head of government somehow tilting the objectivity or pushing the objectivity, or lack thereof, that already exist. so i think we need to be very, very cautious. i really don't have one foot in the target that i would like to see innovation. i think subsidizing universities and other places for innovation is a good idea, but i worry about that intrusion into the news product. >> did you want to add something? >> yes, and i just wanted to interject their briefly that we've been, unit, burying the newspaper industry. but really it is a brit -- bit premature. in fact, this quarter i think around the country you see the

numbers improving. we still think we have a very viable and vital business. it was exciting last fall, gannett invited most of these editors to our headquarters and its the first time we've been able to get financially in a while. and there were three days of meetings, and the message was really watchdog journalism is our future. local watchdog journalism is our future, and we think we have a future. you know, we recognize i think the bailout notion is a little far-fetched. but even government subsidies of journalism, i think, are pretty radical when there are much smaller steps that could be taken to improve the financial health of newspaper by the government. i'll just mention a couple. one is that, you know, that growing wisdom seems to be the

postal subsidy has benefited newspapers. but, in fact, something of the reverse is true because the periodical but it applies to weeklies, primarily as the beneficiaries our magazines and the weekly newspapers. but for the daily newspapers, there's actually been a postal trend that has hurt us quite significantly. and that is that the postal rate commission has given much, much lower rates to saturation mailer. why does that matter? saturation mailers are likely as that's in advertisements out to an entire community. by contrast, what we do at the newspaper is we take the same ads, we call them insert, and we put them in the newspaper. for those of people in the community who don't describe, we mail. so that is called high-density mailing. and high density mailing that we do, which is selected by

address, it is much, much more expensive than saturation mailing. and continually when the increases come through we see very low increases for saturation, and much higher for high density. so that is a very small thing, but it could benefit newspapers and particularly the advertising revenues stream that is essential to their survival. quite significantly. so there are a lot of, you know, with andy on the panel i'm not going to talk about cross ownership right now. you know let's face it, we are treated like the dominant voice and the d.o.j. applies a market definition that basically considers us monopolist. so again, if we are looking to ways to maybe have consortiums or joint ventures, et cetera and be able to have them approved through the department of justice, there are very small steps which involves looking slightly differing. and we think realistically at

the market, that could help us again a long the way so that there wouldn't be a need for a handout from the government. >> icehouse is making a note when you are talking about the postal rate. and i want to return to you and ask, what kinds of policies, policy changes and policy adoptions are you thinking that the ftc might be considering? >> well, it's not necessarily what the commission will end up considering, but we did have actually the chairman of the postal rate commission, and speak at our workshop in march. and unfortunately, the postal rate commission and the postal service, as you may have noticed, is not doing well financially. so they are really that enthused about any ideas that would include lowering rates for anybody actually. spin mag well, making them even might be a start.

>> yes, yes. and, you know, more power to you. [laughter] >> just a thought. >> no, no. it is a valid thought. i think the general notion is that postal rates subsidies did a lot more for newspapers at the beginning of the country, when the founding fathers really had a notion that they needed to subsidize newspaper delivery to help bring the country together, and who also informed citizens and help get democracy functioning. they are not helping newspapers or news organizations in particular these days. another idea that probably the idea that is most readily of interest is this whole notion of, not just had to increase revenues to news organizations, but how do you reduced the costs of newsgathering? and so we held the presentations

on some of the work that is being done to make government data more readily available and more easily manipulable. and that is a trend that is going on in a lot of areas, including at the security and exchange commission your we had somebody come in and explain to us how they have developed new types of financial reports that companies are now required to submit that out loud youth much more easily to compare across companies what the various, you know, factors ebitda, or whatever, you know, those financial terms are. and there is more and more that can be done that certainly facilitates some of the watchdog reporting that you are talking about as the future of news. we did also discuss, there have

been discussions about new types of organizations that would be either a hybrid of nonprofit and for-profit, or for profit but with social purpose. and the thought is that news organizations might fit into that kind of an organization, which would allow newspapers to thrive may be a five or 6% return on investment, but would allow the board -- >> there's a number of corporate executives clutching her chest. >> but that's not the kind of person who would be running this organization. these are organizations that would be run for the purpose of getting some return on events investment, but also for having a social purpose, and it would be, they would be specific bylaws that would allow members of the board of