Special Episode: Covering California, Panel 2 – The Business of Journalism

CAPITOL WEEKLY PODCAST: This Special Episode of the Capitol Weekly Podcast was recorded live at Capitol Weekly’s conference COVERING CALIFORNIA: The Future of Journalism in the Golden State, which was held in Sacramento on Thursday, May 30, 2024

 This is PANEL 2 – THE BUSINESS OF JOURNALISM – REDEFINING THE MODEL

Panelists: Senator Nancy Skinner; Chris Argentieri, Los Angeles Times; Neil Chase, CalMatters; Steve Stuck, Urban Edge Consulting

Moderated by Edie Lambert, KCRA 3

This transcript has been edited for clarity.

RICH EHISEN, CAPITOL WEEKLY: If you missed the intro, I’m Rich Ehisen. I’m editor-in-chief for Capitol Weekly. Thanks for joining us for our conference on the future of journalism. And this is our second panel, which is dealing with something that was touched on a little bit in the first panel, which is the evolving, changing, maddening era of the new business model around journalism.

We think we have a really great panel of folks to talk about this. I’m gonna let our moderator introduce them, but I’m going to introduce her now because she’s a long time… If you’ve been in Sacramento for a minute, you know Edie Lambert, the primetime news anchor for KCRA, along with others. All the awards, all these things, if you know anything about Sacramento, you know Edie’s one out of the best. So, I don’t… It’s almost one of those she needs no introduction things, but I guess I just gave her one. So anyway, Edie Lambert, KCRA, thank you for moderating the panel. I’m gonna go sit down and let you introduce them, and we’ll get this going. Senator Skinner is gonna come in here like a tornado in just a minute, so, that’s why we have her down there at the end.

EDIE LAMBERT: Perfect.

RE: Proceed.

EL: Any introduction that just says, “She won a lot of awards,” so, I’m happy. Yeah, it’s all good. All has been said.

I would like to start with Neil Chase, next to me, the CEO of CalMatters. With a distinguished career in journalism and media spanning over three decades, he’s been at the forefront of transforming how news is delivered and consumed. Under his leadership, CalMatters has become a premier source for non-partisan, in-depth reporting on California’s politics and policies. Neil’s approach to journalistic integrity and his innovative approach to storytelling have significantly enhanced the public’s understanding of crucial state issues.

Next to him is Chris Argentieri, the President and Chief Operating Officer of The Los Angeles Times. He has a distinguished career spanning more than two decades in media. He’s been instrumental in driving the transformation and innovation of one of America’s most storied news organizations. Under his leadership, The LA Times has expanded its digital presence, enhanced its investigative journalism, and deepened its commitment to serving the diverse communities of Southern California.

We all know he’s also dealt with some major, very painful cuts to his newsroom. He’s been at the center during that, of the work to extend The Times brand and its journalism, extending it to additional platforms, collaborating with other businesses and organizations, and basically refining the overall portfolio and market offerings, really just getting through, it’s been a tough time.

“I think the challenges we face are ones of basic economics that are about as bad as they get” – Chris Argentieri

And finally, we have Steve, a prominent executive of Univision is probably how most of us know him. He left that job in January. He’s been a key leader in one of the nation’s largest Spanish language media companies. He played a crucial role in driving on Univision’s growth and innovation. His career has spanned more than two decades in media and broadcasting. He’s been instrumental in expanding Univision’s reach and influence, ensuring that it remains a vital source of news, entertainment, and cultural connection for millions of viewers.

He is also now starting at getting off the ground and creating Urban Edge Consulting, which helps companies of all sizes respond to industry transitions in order to stay competitive. I should also mention, a long-time a member of the California Broadcasters Association and led that group as well until January, or very recently.

STEVE STUCK: Correct.

EL: Yeah. Okay, so I wanna start because you have all been just in the thick of it. I think, Chris, let’s start with you. And as we’re talking about having to redefine the model, you have been knee-deep in doing that work, neck-deep in doing that work. So, let’s start with you and just kind of where you see things right now.

CHRIS ARGENTIERI: Yeah. I think the challenges we face are ones of basic economics that are about as bad as they get from a standpoint of the cost to acquire an audience. The cost to create our primary product, which is content… continue to increase for a lot of reasons, but also, we don’t get to decide anymore where a reader engages with our content. So, we believe you need to be – whether it’s actually true or not – but you need to be on all platforms and different formats. And that takes time and cost money.

Covering California, Panel 2: The Business of Journalism – Redefining the Model. Edie Lambert, KCRA 3; Neil Chase, Calmatters; Chris Argentieri, Los Angeles Times; Steve Stuck, Urban Edge Consulting; Senator Nancy Skinner. Photo by Joha Harrison, Capitol Weekly.

And keeping pace with all of the technology platforms has a lot of hidden costs. So, cost going up and then we had the benefit, well, I didn’t have the benefit in my career, but some did, of having just an exceptionally profitable, strong business in part from two revenue sources, primary revenue sources, which was advertising revenue and subscriber or consumer revenue.

So, I think where we are heading from here is, this has to be a primarily consumer revenue business, where it used to be for many years, primarily advertising revenue business. There’s just too much control of the advertising marketplace by a few large companies.

We have no leverage whatsoever in that business. We don’t have much control over our fate or destiny. And in consumer revenue business, you do have more control, so that’s subscriptions, but that’s also other lines of revenue driven from consumers.

And these are areas we’ve had some success in over the last few years. We’ve grown digital subscriptions substantially. We earn a fair amount of revenue from other licensing of our content, other lines of business. So, we have to work every day to continue to build a product people are interested in paying for, that aligns well with the mission of what we’re here to do, much better than advertising does. We’ll remain in the advertising business, but there’s some real secular challenges with that.

EL: And I do wanna introduce Senator Skinner in just a moment, but I wanna follow up quickly with what we just heard from The Washington Post within maybe the last week or two. In the face of a loss of $77 million last year alone, they’re now changing their subscription model to have sort of a tiered level of offerings. The coverage of it, that was their own coverage of it kind of compared it to Politico Pro, which I think all of us know pretty well. Can you talk about whether you see that as the future of how things will go for, especially the major newspapers?

CA: Well, I think we have to get smarter, for sure, in how we go about the subscription business. What the Post is doing, I mean, I do agree with the kind of blob of covering everything for everybody all the time is not where the internet is, or certainly going. So I think we have to be smarter about personalization and individual experiences, and then how we deploy the paywall or when we engage somebody to try to get them to subscribe needs to be much more dynamic based on what their user habits are.

“Until 25 years ago, journalism was a relatively profitable business for a lot of folks. And then when Google and Facebook came along with the different ad model and the revenue disappeared kind of overnight” – Neil Chase

So yeah, I think what the Post has recently put out does make sense. I think we’re following a similar path, won’t be exactly the same, and in some ways, I don’t envy The Washington Post because they don’t have Los Angeles and California, which is my single greatest sign of optimism that we have at The LA Times, is this state is a better and continuing, developing story.

EL: Thank you. And I would love to welcome Senator Nancy Skinner. Thank you so much for joining us, and what a fun time for you to walk in, just as we’re hearing about the ad revenue part of this deteriorating, and that’s part of what we do have some work at the state capitol to maybe shore that up and bring some of those resources back to journalism, which is one reason we’re so happy you’re here.

Nancy Skinner represents the Ninth Senate District, which encompasses the East Bay. Senator Skinner has been a dedicated advocate for environmental justice, criminal justice reform, and affordable housing. Her career in public service spans more than two decades. She has championed groundbreaking legislation aimed at reducing greenhouse gas emissions, improving public safety, and expanding access to education and healthcare.

She’s been the floor manager in the Senate for the California Journalism Preservation Act, authored by Assemblymember Wicks. She’s also taking on social media companies in another bill, SB 976, to force media companies to change their algorithms to protect kids and teens from harmful content. So thank you so much for joining us and being part of this conversation.

We’re starting with some of the people who’ve been at the center of trying to navigate the changing landscape and running these companies, so we first heard from Chris from The LA Times, and Neil, why don’t we go to you, CEO of CalMatters? And it’s a very different business model as a non-profit.

NEIL CHASE: It’s very different, indeed. I sort of did a double-take when Colleen earlier talked about the fact that people don’t understand the disconnect between journalism being so important to democracy and being a business that needs help right now.

And so the idea behind CalMatters is nine years old. It was started to fill a gap. There were once 150 journalists crawling all over the state capitol. And by the time CalMatters was started almost a decade ago, that number was much smaller. You’ve had some folks from the [Sacramento] Bee, from our friends at Cap Radio, The LA Times, and it kinda dwindled off pretty quickly after that.

Covering California, Panel 2: The Business of Journalism – Redefining the Model. Chris Argentieri, Los Angeles Times. Photo by Joha Harrison, Capitol Weekly.

And what we’ve been able to do at CalMatters is restore that coverage in a way that brings those issues to light for Californians. We’re now a team of almost 100 people covering a lot of different issues. And the challenge for us has been that same thing that Colleen mentioned earlier: The chance to sit with somebody and explain that until 25 years ago, journalism was a relatively profitable business for a lot of folks. And then when Google and Facebook came along with the different ad model and the revenue disappeared kind of overnight and a lot of companies took a long time to adapt to that.

The need in democracy for journalism is greater than ever. The funding model has dramatically changed. And so, like we heard this morning and like we heard from Chris, reader revenue is a huge part of it. People who receive the journalism, being able to support it, is huge.

It’s not a new idea. Public media has been doing this for a long time. But we start with the premise that journalism is important, that these issues need to be covered, that people need to understand, they have a need for this information about how what happens at the state level affects them. And to support that journalism, we have a mix that is foundations, individuals, large donors, members, corporate support, and ideally, legislative support, support from the state, as Senator Skinner and others work on that. So that we have a lot of different revenue streams flowing in, and we have the ability to run these businesses. And what you saw in the earlier panel and you’ll see here today, too, all the business models are necessary.

We need the for-profit, we need the philanthropic support, we need the membership, we need the government support, we need corporations to step up because this is so important to our democracy. And just like a lot of other things in society that we’ve all been used to funding for decades or centuries, we need to think about journalism that way now too.

EL: All right, thank you. And Steve, let’s go to you, and again you have worked in a model that deals with regionalism, reaching out and kind of economy of scale, as you covered such a large area. Chris talked about what a great state California is, and it’s a great, big state with a lot of regions.

SS: Yeah, exactly. And Univision had the opportunity to have their top stations be owned and operated stations, so, the fact that we could really pull our resources together in Northern California, specifically, that’s where I worked, and take our newsrooms out of the Bay Area, for instance, Sacramento and Bakersfield… and kind of get rid of duplication and try to really expand and put resources towards where we needed it. And depending on each other in order to do that.

“What does [AB 886] really do? It requires the social media platforms to pay newspapers for the content that they stole” -Senator Nancy Skinner

There was a lot of collaboration in the newsrooms as far as even stories, too, that may be crossed over between cities. A lot of times in local news, we get so obsessed with our own local team… hyper-local, which is important, and it’s really where we have to go, but there’s opportunities and sometimes cross over between news stories with other regions. And we have that ability to do that because of our connection to them and because of our partnerships across that.

So, that model is also working in Univision because our network is part of our entire group, and so we are even taking resources back and forth between the network and the local stations in order to try to maximize how we can do it. Because if you think about it, and I’ll just give an example… newsrooms in Sacramento: if you look at English language, they probably range anywhere from maybe 50 to 80 people, maybe 100. Univision’s newsroom in Sacramento is 20 people.

And so, you have to rely on other resources and other avenues in order to expand your reach to be doing things. And we do take advantage of organizations in the capitol and things. Yeah, we can’t always be there, we do try to cover key things, but if the news is being sent to us, then we’ll utilize that and be able to still cover that event, but not necessarily having a reporter over there. So, you have to be smart about how you’re deploying your teams, and then you have to use your resources across the region in order to maximize revenue or cost.

EL: Got it. Senator Skinner, I would love to bring you into the conversation. So she has served as the floor manager for the California Journalism Preservation Act when it moved over to the Senate. It would require tech companies basically to pay for news content that shows up on their platform. Google was not happy about it and threatened to basically remove all California news links from its search platform for some of their users. So, if you can talk about the bill and then what it’s been like trying to manage that.

SENATOR SKINNER: Certainly. So that’s my good colleague, her district is nested in mine, Assemblymember Buffy Wicks, so that’s AB 886. So I’m sure most of you are familiar with… and it’s patterned, it’s very comparable to legislation that was passed in both Australia and Canada.

And interestingly enough, I think it was… Yeah, Meta. So Facebook retaliated in both of countries and cut off news feeds.

So we’ll see how all of that proceeds as we go forward, and of course, Google and others are threatening if that bill gets passed in California. And interestingly, I would, probably not when I stood on the floor, but sitting here, I’ll say, that what does the bill really do? It requires the social media platforms to pay newspapers for the content that they stole. That’s basically it.

And it requires also the money that the social media outlets would have to pay, is then based on news outlets that have journalists, that actually employ and hire journalists. Which I think is very important because clearly, look, we know, all of you better than me, what has happened to our journalist business. It’s incredibly shrunk, and it isn’t only social media that factored that.

Since 2005, the US lost 2500 newspapers, and in California alone, 100 newspapers closed down in the last decade. Now, that last decade has all been, probably not all, but greatly affected by social media. But if we look at the numbers since 2005, there were many other things that were contributing to the loss of journalism as we know it and news outlets as we know it.

“We’re in a house of mirrors and that what social media has done is created that house of mirrors. And it has exacerbated the polarization that we’re all experiencing because you only see things that reinforce that” – Senator Nancy Skinner

But clearly, social media platforms taking content and refusing to acknowledge that they took that content. So I really think of it as a similar battle that we’re having with AI now. That AI is stealing people’s content, too, and not crediting or acknowledging or paying for that content.

So, we’re gonna have… we think that, I don’t wanna be a predictor of bad news, but I think we’re now really grappling and trying to hold the social media companies accountable. But when we’re hit full-on with the AI, what are we gonna then do? And maybe these bills should incorporate both the social media platforms and AI, because it’s not uncommon for the legislature to be behind the curve. So we’re trying to regulate things well past when the problem has really manifested itself.

But I wanted to make a comment about – our… I think it was our good LA Times representative who spoke — the fact that so many of us get our news from social media. And we get it not because we searched, not because we asked, “Okay, I wanna find out what’s going on with Trump’s trials right now.”

No, because the algorithms send us stuff that is determinant on what we’ve looked at before to get us to stay on the platform, so it’s very sensational. Now, I remember, growing up, the criticism towards all news media was, “You’re just sensational. All you were doing was going for headlines that were sensational.” Yeah, there’s a truth to that.

But, social media, I’m sorry, pales in comparison. It just, it’s all sensationalism.

And what I fear when I hear, but I don’t know what we do about it, when I hear that we have to kind of change our model, business model, so that we’re not providing news in that kind of larger picture way, but more catering to the user, which would be much more like what the algorithms are doing. Then I fear for democracy also.

And I don’t know how to correct for it because it is where we’re in. And it’s the… What my problem with all of this is, is that we’re in a house of mirrors and that what social media has done is created that house of mirrors. And it has exacerbated the polarization that we’re all experiencing because you only see things that reinforce that.

Now, certainly, when you just pick up the newspaper, and now I’ll sound so archaic, I still like feeling paper. I still read books instead of on my… using them online, but whatever. You could scan it and you didn’t have to read everything, but at least you saw a whole array of content. And I would hope that we could achieve that.

“That elusive 18 to 34 user… they’re so used to digital media, they’re so used to video on demand, really. And so we have to figure out a model that does that” – Steve Stuck

And maybe… I’m carrying a bill now, as was mentioned, SB 976, to hold social media companies accountable for the harm on our kids and to basically have them not – the default – not be the algorithms that they use now, but the default for minors be algorithms that don’t send those addictive feeds and where the content that kids got was more based on what they liked and what they searched versus what the algorithm would feed.

And I’m wondering now, I think maybe I should be really having that bill be for all people and not just kids. When I think about the harm that this kind of house of mirrors has had on our civic life in general, but I’ll stop there.

EL: Just really quickly, where does the bill stand now? And if you can just talk us through what it’s like navigating against a behemoth opposition.

NS: So the bill got through the Assembly and is in our Senate… our house now. And I would say, and this is not news to anyone, I think it helps that its main author is the Approps chair because most members, if you vote against an Approps chair, that’s not necessarily a good survival skill, so that gives it an advantage.

When you’re… I always tell advocates that come to me that are looking for an author, I just say, pick your authors carefully, pick your authors, you have to have… there’s a lot of factors in choosing an author and some insurance is always helpful. And so having an author like an Approps chair is kind of an insurance. It never guarantees that the bill will succeed, but it does help. So I think that’s gonna help.

“In what you might call the old days, you would write your story and you were done… But now writing the story is, I don’t know, 30 or 40% of the battle. You’ve got to get it out there in front of people” – Neil Chase

And I think the other thing that will help is that one of my colleagues, Senator Glazer, who was carrying a bill who didn’t like the construction of Assemblymember Wicks’ bill, AB 886, then introduced his own bill, which he kind of viewed as a counter, but I think he now sees them as very complimentary, which is a good thing.

Covering California, Panel 2: The Business of Journalism – Redefining the Model. Edie Lambert, KCRA 3; Neil Chase, Calmatters; Chris Argentieri, Los Angeles Times; Steve Stuck, Urban Edge Consulting; Senator Nancy Skinner. Photo by Joha Harrison, Capitol Weekly.

His bill required two thirds, and it did not get the votes yet on our floor. But because it’s a two thirds vote bill, he can take it up again. It’s not dead. However, I think that he has become now more part of what he confronted with his bill was the same opposition that Assemblymember Wicks confronted, and I think that kind of made him mad. So I think he’s now much more supportive of Assemblymember Wicks’ bill, which will also help. So I think the number…

EL: SB 1327.

NS: Yes, 1327, right. And what 1327, of course, does is more…. so Assemblymember Wick’s bill, how it helps our news media get revenue is because it requires the social media companies to compensate the journalistic entities for which they take content from.

The way that Glazer’s bill is structured is that it would levy an effective tax on all of the largest on Google, Amazon, Facebook, that then the state would distribute to journalistic efforts based on their number of employees. So they both would help with funding. They just have different mechanisms. And before Senator Glazer and some of his supporters were anti Ms. Wicks’ bill, and now I think they’re all coming together.

EL: And we’ll be hearing from Senator Glazer soon.

NS: Okay, great.

EL: An interesting idea came up when I was talking to Steve, and that is, two things that I think kind of blend together. One is that our audiences tend to be 50 and older, the kind of the core group, which is not long-term a growth model. And that a lot of us, while we are branching out, and you talked about the difficulty of this, Chris, we’re still stuck in a certain model.

And I know that we were joking, when people tell me, people in their early 20s, “oh, I watch you all the time because my mom has the news on” or “because my grandma likes to watch the news.” It’s never that they tuned in at 6:00 to watch KCRA 3. So Steve, let’s start with you and kind of putting those things together. Just, we’ve got to grow the next generation here.

SS: Right. So I think Tim referred in one of the things I read, eroding ratings, and nobody’s gonna challenge that. But I’ll first say that, I’m not necessarily a fan of our ratings providers and their methodologies and all of that. So I think there’s not an apples-to-apples comparison of what we used to have. But in reality, however you think about our ratings provider, I won’t say their name, when you look at it, yeah, the newscasts are pulling in, the majority of our audience.

Our targeted demo would be 18 to 49 or 25 to 54. And if you look at it, sadly, the majority of who’s watching is 50 plus. And so I think what you’re doing is that elusive 18 to 34 user is how are you going to get them? And they’re so used to digital media, they’re so used to video on demand, really. And so we have to figure out a model that does that.

We have a model in broadcast that we’d start off our newscast, we have set times with our newscast first off, then you start off your newscast with about 10 minutes of kind of a, I’ll call it a rapid fire of detail, which is good because people want things in very short bites. And then we go to these long breaks. And I think a lot of times what happens is we lose everybody after a certain period.

And if those rapid fire information is not what they wanna hear, then they’re less likely to tune in the future. Whereas I think viewers that are used to it are willing to sit through what they don’t care about because they’re waiting for the things that they do care about.

EL: The weather.

NC: The weather.

SS: The weather, or other things. Yeah. And so the weather is, it’s funny you say that because weather has taken such a predominant… top of the newscast now everybody.. And who thought that weather it would be the driver of our newscast, but in reality, that is a big driver for us.

“We’re never gonna build a business model that says ‘all the readers who consume journalism will just pay for it and we’ll be fine’” – Neil Chase

And so I think we have to re-approach and not only figure out a way of targeting the younger viewer, but are our formats that we’re traditionally using every… for years the half hour formats, are those the right things for the future? And that’s the things that we’re grappling with always in our, you know, discussions.

EL: Right. Neil, it seems to me like part of your work is… the excellent work that you produce, but then the platforms, who is getting it out there into the world and that would really play a role here.

NC: Exactly. In the newspaper business, in what you might call the old days, you would write your story and you were done, you give your story to your editor and you’d go downstairs to the bar that was always next door to the newspaper and you’re kind of done. If you could write the story, the machine took it from there and got it out. The pages are made, the printing presses run, the trucks run. There’s a system that gets it out to people. And of course, we all knew that if we wrote a story on the front page, everybody in town read it the next morning, obviously. And then we got Web metrics and found out that wasn’t true.

But now writing the story is, I don’t know, 30 or 40% of the battle. You’ve got to get it out there in front of people. I won’t speak for Chris, but the newspaper companies I’ve worked at, and I know this is true in some of the television as well: The problem is the business model is upside down. The people you’re talking about, the younger readers, there are so many people out there who are younger who care passionately. You go to a campus, you talk to journalism students, you watch the protests that are going on. You see the queries that we get in public events. There’s a lot of passion about the issues that we all cover.

But in the newspaper companies that print newspaper that is smaller in many cases and thinner in many cases and in some communities, down to a couple of days a week, or so thin, you can’t, it blows off your doorstep. That still generates most of the revenue because the print model is gonna last for as long as older people keep getting that newspaper and it gets more and more expensive.

And so most of the revenue is coming in from the part of the business that is not attracting these new readers. Most of the revenue that we get from younger readers is gonna be much smaller. It’s people on social media. It’s people coming in different ways. There’s not a path to them providing the revenue. And so we have… you have to work desperately to get every story in front of people. You have to do all the things you can do to build impact to put the story in front of the people who are actually gonna care about it. And then in a lot of these businesses, we have to figure out how to fix this disconnect between that reader not being the one who’s providing the revenue.

And so it’s tough. We’re combining with an organization called The Markup, a tech news site, because for a lot of reasons, they’re gonna improve our tech coverage.

Everybody’s watching California on tech issues right now. But also because they are better than most other journalists we’ve seen, including a lot of our own, at really thinking about the impact of stories.

Covering California, Panel 2: The Business of Journalism – Redefining the Model. Neil Chase, Calmatters; Chris Argentieri, Los Angeles Times. Photo by Joha Harrison, Capitol Weekly.

For every story you write, going through a process of thinking, who’s this for? Who’s gonna read it? Who’s gonna care about it? Who’s gonna do something about it? And how do we make sure those people are seeing it?  And doing that for every story you have is just a very different way of thinking. It’s a marketing plan for every story, which is the exact opposite of what we used to do. Which is build a marketing plan for the company and run that for years, and then do a bunch of stories inside that.

So the changing business model is not just about the lack of revenue for newspapers. It’s the how you can encourage a connection between the readers we hope to attract and the revenue we need to bring in.

EL: Chris, how are you guys doing that work?

CA: Yeah, I don’t think it’s the…. I think Neil’s right. It’s not the inability to reach new consumers that I think we’ve done…

NC: It’s to reach their wallets.

CA: Yes. And well also to engage them for long enough to get to the wallets as well. But we have seen we’re not in the same situation in terms of the average age of our audience. If we’re using that as a proxy of new customers is consistently gone down. We’re reaching new readers, but at a very passive level. Not when you look at our paid customers.. that I imagine, I’m not sure that we can say without a shadow of a doubt, but that we’re not… We don’t have enough paid customers amongst new audiences.

And the same thing, engaging them and being.. thinking through at really at the story level, as Neil said. And what I said at the beginning, that creates additional costs. So then you have to do things, like you have to de-leverage the business from the print.

When I got to the LA Times years ago, I don’t know, we talked a lot about the revenue from print. But if you really brought the business down, probably two thirds of the cost also were tied up in the paper. So that requires as difficult – all these organizational changes are difficult – but when we have to close a printing plant in Los Angeles, where dozens of people had worked for… multiple people, three generations, a couple of four generations, a number of people at 50 years, plenty of people at 40 years. It’s a horribly difficult decision to make. They have to be done because you need that capital to invest in some of these audience engagement efforts and other things.

But I do wanna say clearly, I would applaud Senator Skinner and everybody working on legislation.

It’s not a “nice to have,” It is imperative for these businesses to survive to have government intervention. There is no audience with the large tech platforms for our companies. I don’t care who you are, a large paper, some of you may have heard of in New York, it doesn’t matter.  You’re not getting an audience to have any commercial discussion: the companies are too large.

And I would also say there’s all kinds of things about trust in the rigor we put into reporting that I could talk about for weeks. But it’s been reported at social media companies, sitting, having evidence that their platform is harming youth around the world. Understanding that and not acting on it… that couldn’t happen in a news organization.

“One study found that Google and Meta should owe at least $13 billion a year to US publishers for the content that they are directly profiting from” – Edie Lambert

We are… It’s probably taken years off my life, but we are heavily scrutinized by our own staff the same way they scrutinize other companies and the government. And I’ve made a ton of mistakes since I’ve been at the LA Times.

There is no chance we could sit in a room and talk about harming youth and say, “well, we’re just gonna stick that in a drawer somewhere.” It’s not… the public benefits from that scrutiny of these organizations that you don’t have in the tech sector because of their sheer size dominance. And frankly, I would say their sometimes reckless conduct.

NC: And that’s why, right we need, as we talked about the need for journalism in society, we desperately need what Senator Glazer, Senator Skinner, Assemblymember Wicks are doing, trying to find these new revenue streams. We’re never gonna build a business model that says “all the readers who consume journalism will just pay for it and we’ll be fine.”

We need the foundation support that we get. The LA Times is doing some philanthropy work as well. Everybody’s reaching out to these multiple streams. And if we don’t have all of them, we’re not gonna make it.

NS: Well, I wanna add that because, so let’s say, I don’t know how the miracle where the each of your entities were able to ..whatever… have enough revenue to survive. One of our purposes, of course, one of our… if we look at the necessity of journalism, for the benefit of civic life, and for the benefit of democracy, then we want a lot of eyes on it.

And so when you… Why is it that these internet platforms, non – meaning the social media and other internet platforms – have so much revenue and stolen all the ad revenue? Because of the number of eyes on it.

So they don’t have to charge like you would for the subscription, because there’s so many eyes that the advertiser will pay just on the basis of the number of eyes. And you’re not gonna get that. I love it, but you’re not gonna get it. However, it’s still a very essential service.

So I don’t know how, and I would love to hear all your reactions, and you’ve sort of said it, but, how, unless we can get the entities that are taking your content to pay for that content, pay you for that content. I don’t know how we fix the business model. I think that’s essential.

And of course, those as much as the internet platforms don’t necessarily, I don’t want, I hate to say this, but they don’t have to have the content. They’re still even for their respectability, they need some level of real content and not just bullshit, whatever, QAnon stuff. They do have to have… They have to be able to point to, well, we don’t only have this made up crap. We actually have… You can find on Platform X or Y, real news.

So I just think that we have to break that somehow. And because it’s always gonna be the eyes, the number of eyes that generate the revenue. And independently you won’t be able to get those number of eyes. So whether it’s, whatever, whether it’s the success of Assemblymember Wicks’ bill, or Senator Glazer’s bill, or some other mechanism, we can’t give up. We’re going to have to get that content paid for.

EL: And so one study found that Google and Meta should owe at least $13 billion a year to US publishers for the content that they are directly profiting from.

I did wanna ask you, Senator, about the nexus, some people do question whether we should be having the state in charge of keeping journalism sustainable, whether that is a legitimate role. And clearly, we know the answer from everyone on this panel. That’s crystal clear. But what I do wanna talk to you about is on one hand, your two bills look different, the Assemblymember…

NS: Wicks’ versus Glazer’s, yeah.

EL: Wicks’ bill and Glazer’s. But they both force the social media companies to do the right thing.

NS: Right. Right.

EL: And if you can talk about just kind of at the 30,000 foot level…

NS: Right.

EL: Why that’s appropriate, where the state, whatever level of government needs to step in.

NS: Sure. I’m going to approach it a little differently because I think there’s… You could have a lot of debate as to… you want journalism independent of government. However, we do… If we look at the protection of consumers, if you have a business model that steals content from others, not just protection of consumers, but just protection of… Many times we enact things because we feel like some set of business or some business model is predatory on another, right?

So we can look at it that we’re doing protections because we see this predatory model. So I don’t know if I want to engage right now in what the role of government should be in, say, in journalism. Because that could be a very long discussion and have… But I would say that when we look at the social media companies, they have hugely benefited. They are what they are today because we never regulated them and then technically we don’t tax them.

And yet they… Both the Federal government and California have had this hands off, which has allowed them to become the behemoths that they are and to have the type of impacts they’ve had.

And I think we… This was where, when I made the comment earlier, and there’s many, many examples of this… where we’re behind the curve. We wait till something becomes… and I don’t mean we wait purposefully, but it almost has to become a very glaring, horrible problem before we act. But then it’s also much more difficult to act because that glaring, horrible problem is so ubiquitous.

So we could just take the whole thing of PFAS, that the forever chemical, it’s in everything now. Everything. So what has the US EPA done? Told our public water agencies, get it out of the water. And yet the private sector can still put it in everything. Anyway, that’s a funny diversion, but yes.

NC: But you’re right. And the idea that Google and Facebook have stolen content from us, they would come back and they would say something different, right? Which is, I don’t know what it is at the LA Times, at CalMatters, about 60% of our traffic comes from people who do a search, find in Google what they’re looking for, and that refers them to the CalMatters story about that.

And so we heard on the last panel, right, this test that Google has done with blocking access to content in California, sort of a shot across the bow, a nasty threat, and one, frankly, that lost them the support of a lot of publishers who were trying to work with them.

We’ve seen it in Canada. Facebook just said, “Facebook, we don’t really need news anymore.” And I’d like to think you’re right. They need something to show they don’t have all this crap. I’m not sure if Facebook is thinking that way anymore. And even though Google may still be, there are multiple sides to this. And we have to figure out how to make this work in this ecosystem where, like you said, they have been able to become so big and so dominant that they control too many of the levers.

EL: Right.

NS: Well, Facebook is a bit of a different animal than Google, but…

NC: Yeah.

NS: Yeah. But I get your point.

NC: Yeah.

EL: We just have a few minutes left before we’re going to start taking questions. I do think we should address AI in the role of kind of redefining the model of journalism and looking at the business of journalism.

I wanted to start with some examples from my own newsroom, where we’re using AI and trying to find the balance between humans and technology and getting our jobs done. But one thing that Hearst as a company, which I know you worked for a while back, has done is so interesting, navigating scanner traffic. So police scanner, firefighter, just kind of listening to all that and sending out push alerts to hyperlocal communities that would need that information in real time but might not make the news. And that’s just all done with AI.

Personally, I’m very excited to start using this one where you can turn your TV scripts into web copy. So it’s still your work. But I mean, it’s like the intros. It kind of puts it all together tidily, and then you would just scan it, correct it, and hit “go.”

Aggregating events so that people could click on maps and it would be like happening near you and as something that we can offer on our website. So all of that is going on right now in Hearst newsrooms, and I’m curious to hear. Let’s just start with you and how you may be using AI to do things smarter, cheaper…

NC: Yeah.

EL: Maybe better.

NC: Kudos to Hearst. Hearst has always been a company that’s experimented with technology back to when I was working there. The way we’re using AI specifically everything you described, is something that in the newsroom of old, when we had secretaries and clerks and staff and lots of people doing all sorts of data work. You might have had somebody’s job was to go find all those events, aggregate them, and put them on the events page. And you’d have these other kinds of things.

The value of AI to us is doing what those 150 reporters who are all over the State Capitol used to do. That is looking for trends, looking for ideas, looking through all the data. We now have a tool called Digital Democracy that finds… that collects all the data about every state legislator. And then AI is looking at that to find story ideas, not to write stories, but to say, “hey, this is a new kind of voting pattern, this is a new kind of funding pattern.” Generate a story tip. Give that to a reporter who can then look at it and decide if there’s a story there, not just a CalMatters’ reporter, but we’re going to share them with all of our partners across the state, including The Times, if they want them. Here’s the stories we’re seeing out of our data. If this is useful to you, go take it.

I really think there’s a tremendous use for AI in doing the things that we don’t have the people to do either anymore or that we never did because they’re people intensive. And all the fears about replacing reporters, I love Larry’s line, right. “AI is not going to replace you, but a reporter who makes better use of AI than you might replace you.”

We are using these tools to do the things that need to be done by… That can’t be done by a large number of people who don’t work here anymore, so that the journalists who work here can do better work, more meaningful work, work that people will find useful and will pay for.

EL: Chris?

CA: Yeah, I think very similar applications, I would say we’re in the… We’ve looked at primarily as the main…. we have a very old 140 plus year archive of content that is in various forms, largely digitized, but not available to the public. And it is remarkable to see what this technology is able to do from a… I think…

EL: Do you still have microfiche?

CA: We have that, but we have a little better than that in terms of converting it,. But it’s not… most of it is not published online. And then there’s a variety of ways, applications. But I think a lot of it right now, for us at least, will come down to content discovery and the ability to be able to get your hands on things faster than go to the editorial library, to ask the librarian questions, to go pour through something.

And challenge-wise, my own personal views of the horror of it, aside, or the potential horror, is it is one of these… you have to resist the urge to boil the ocean. ‘Cause definitionally, I think you could do about anything with it. So we’re struggling a bit to narrow down to the four or five things we could move forward with as opposed to the 500 things we won’t move forward with.

NC: And one of the last newsrooms on Earth to still have an editorial librarian. That’s pretty cool.

EL: I know. Jealous.

CA: Despite all the reporting of all of our trials and tribulations, we have a lot of things that others aren’t fortunate enough to have.

EL: Steve, where do you see AI being maybe transformative as we’re talking about redefining the model of journalism?

SS: So I first will say, I’m sure some younger audience members didn’t know what microfiche was when you said that. Sadly, I definitely know what that is.

EL: I wish I didn’t. That was just no fun.

SS: I don’t want to be too repetitive. So I’ll try to add what I’m thinking on the AI side. I think, AI, you have to lean into it. You have to use it where you… and I think, too, it’s maximizing resources.

So, for instance, if you have a massive research poll that would take hours for somebody to go through and really pull the detail out of, AI can do it in minutes, and it’s going to help you write your story. So, if you don’t go in and engage in those kind of ways where you’re doing data analysis or you’re doing trends or you’re doing all those kind of things. That’s huge because it’s just giving you a kind of a framework which you’re going to write your story underneath.

You still need the journalists to be able to do the storytelling, to have the decision making on what you should be putting, either ethically or other things. So there’s still that human nature that has to feed into it. But if you’re not using it to kind of the behind the scenes and take the advantage… I mean, I’m a sports lover and I would hate to see that change but at the same time, like sports scores, it’s easy. You could pop those out. You really don’t need somebody telling us what the scores are of a game.

“I think we’re also trying to outrun a remarkably historically insular industry… There just wasn’t a need to have partners. They just didn’t work across” – Chris Argentieri

Unfortunately, it’s… You can go everywhere and find that. You can be watching it minute by minute. So I think there’s massive ways within the newsroom and within the newsgathering that you can use it. Again, you have to decide what… how far you go in and how deep you go. But to not use it and not make you more efficient to where then your reporters can be really focused on the key things that are still making you stand out, like investigative and the other things, that’s really where you have to tap into it.

Covering California, Panel 2: The Business of Journalism – Redefining the Model. Question from the audience. Photo by Joha Harrison, Capitol Weekly.

NS: And of course, that’s what makes the whole, the regulating of AI so tricky, because as all of you pointed out, there’s incredible benefits to it. It’s an amazing tool. But like when the Writers Guild and the whole… and the strike and their issues, how do you… You all want to preserve that ability for the creative, for your generation of content. For your, I mean, when we go back to why do we really value journalism? From my point of view, it’s partly because of the ability to dig in and do that investigation and expose things that we otherwise wouldn’t.

And while AI would be a great tool for analyzing some of the things that we pull up, they can’t do the investigative journalism in and of itself. And yet, so however it is regulated to protect sort of your fundamental roles or your fundamental benefits, it’s still, you want to be able to use it. So, yeah, it’s tricky.

EL: All right, we have just enough time for 10 minutes of questions. I wanted to make sure we’re able to include anything you’re interested in hearing here.

RE: Yes. And just catch my attention or Tim’s. I’m gonna start right over here. Please.

ANTONIO HARVEY: Chris, maybe you can answer this question, and Steve, maybe you could follow by, since you just mentioned sports. I do have The Athletic sports subscription based online. They started off with $150 million, and then a few years later, New York Times buys them specifically to extract their subscription. I just want to know where that stands as far as the business model. And will The LA Times will be interested in doing something like that on the West Coast. Just want to get your idea of that particular business model and the direction that has been going because it’s successful?

CA: Yeah, I think it’s hard to say, actually, how that works over the long term. It was obviously successful for the founders. In the short term, I think it’s a good business. And it is actually… I mean, I believe one of the founders was quoted as saying that that business would be built on the demise of newspapers and…

NC: And then apologized for it, but he shouldn’t have said it in the first place.

CA: Well, I missed the apology.

NC: Yeah.

CA: But all’s fair. It is a business at the end of the day. And unfortunately, some of that is true. A lot of their early talent were newspaper sports writers. Not really. Maybe one, I think, from the LA Times.

NC: Five stolen from the Mercury News while I was the editor there. Not that I’m bitter.

CA: Credit to them for building a business. I think it makes sense for the New York Times because of their explosive growth over the last few years, and they have to keep it going. Sports is a fascinating challenge for us in LA because the LA teams are all a national story all the time. Whether good, not so good, struggling. So it’s a very competitive space for us. And I think we do a very good job, but we do need to look at options. So if there was something to work with other entities, I’m sure we would be open to discuss it. The industry was slow and on that topic, and I think The Athletic took advantage, for better or worse.

[INAUDIBLE]

CA: Sports. Yeah.

EL: Right. Right.

NC: Yeah. He’s making the point the New York Times basically replaced their sports staff with The Athletic.

RE: We have a question back here.

AUDIENCE MEMBER: So, when you think about subscription models, I don’t know if any of the rest of the people in the room are skiers. But the ski industry has really been transformed recently by instead of having individual season passes, there are these giant season passes that are good to dozens of resorts.

In our household, we subscribe to six different newspapers. If we could get a season pass to a bunch of newspapers, that would be fantastic. And I teach Political Science, and my students don’t think of subscribing to papers. They’re annoyed at paywalls, but it just doesn’t even occur to them. But if there was some sort of easy multipass that you could get to legitimate journalism.

EL: Just a bundle. Yeah.

NC: Yeah. I mean, it’s been tried in different ways over the years. I think one of the differences in the ski industry is the consolidation. So many of those resorts are owned by a couple of companies now. I don’t know if that facilitates that or not.

We’ve looked at all these models, everything from paying a fraction of a cent for every story you read to shared subscriptions. McClatchy, now, if you get a subscription to the McClatchy… to The Sacramento Bee, you have access to all the 30 plus McClatchy papers across the country.

It’s a great idea, but by the time you bundle it all together and parcel out the money among the publishers, there’s not… I’m guessing there’s not enough left to make it attractive to somebody like the LA Times.

CA: Yeah, look, I think the bundling is very much a new trend. If you look at the streaming platforms as well, you can subscribe to this versus that. So something we talk a lot about.

I think it needs to be targeted, because despite, again, all of our challenges, we do offer a lot of the same things. There’s overlap and what is covered in the time it would take to sort through that. So I think without the several hundred million dollar acquisition of something like The Athletic, CalMatters does serve… did fill a hole here, I think. Can we work together with something that is offering, that is additive to what we do, primarily additive to what we do, and then gives the consumers something they wouldn’t have as opposed to them having to sort through so much of similar stuff? Maybe not the same stuff.

NC: So coming soon, the CalMatters, LA Times bundle?

CA: Maybe.

NC: Let’s do it.

[laughter]

RE: Could that be done as a lead-in? I mean. On a daily basis, I can see your point about trying to figure out… we’re all covering the budget and how could it be different? Because could you do some of the long form things or other things that are not time sensitive as a lead-in that you would bundle to get folks interested in your daily publication aspect?

NC: Yeah. Yeah. And there’s a tremendous amount of collaboration going on now that didn’t used to happen. You heard about in the last panel a little bit.

There’s now a news meeting every week among all of the major public radio stations in the state and CalMatters. We partner… They treat us like another one of the stations and we do a whole lot of stuff together, including with our friends at CapRadio who are great partners for us.

There’s a lot of that kind of sharing to reduce the cost, to reduce the duplication because we all used to cover the budget when it came out, and now the number of people writing a budget story when it comes out is very small, right. And the LA Times is gonna do it, The Bee is gonna do it, CalMatters is gonna do it. There’s a couple others who are gonna do it. But it’s not one of those things that has 100 people writing different stories and that we have to at least collaborate on the work. And collaborating on the revenue is a great way to think about it.

CA: Yeah.

SS: Yeah. I think collaboration is important, but it’s also the distribution of the revenue is how you’re gonna have to… Is there going to be a partnership or not? Because if nobody’s pleased with how it’s being distributed, then you’re not gonna put the time into the collaboration. So the challenge is just finding that.

CA: Yeah, I think we’re also trying to outrun a remarkably historically insular industry. These businesses were very insulated. There just wasn’t a need to have partners. They just didn’t work across.

And then some newer businesses have come along realizing that that’s necessary. I think that’s helped inform everybody. And we’ve tried for years. I think we’ve gotten better at it. But it’s 130 years of not doing it and maybe a decade of trying, and maybe we’re on the verge of the next frontier.

EL: Yeah. Not only not forming the partnerships, but considering all of that competition. I mean, kind of actively working against a lot of these other publications.

CA: Yeah. Almost overnight, you lost the competition, but you didn’t also realize fast enough that you could work with these other entities. So…

EL: Yeah.

NC: We’re trying to still sabotage each other’s payphones.

[laughter]

RE: We have a question over here.

HANNAH ROSS: Thank you. Okay, so we’ve talked a lot about the sustainability of the journalism business. But I have a question sort of more towards the sustainability of the journalist. I think that’s sort of like a piece that hasn’t really been talked about yet.

We’ve talked about layoffs. We’ve talked about freelancing. But like, as a young journalist, I only have 12 hours a week, and I freelance. I live at home because my parents subscribe to three newspapers. That’s the only way I can get that access. You know what I mean?

Covering California, Panel 2: The Business of Journalism – Redefining the Model. Edie Lambert, KCRA 3; Neil Chase, Calmatters; Chris Argentieri, Los Angeles Times; Steve Stuck, Urban Edge Consulting; Senator Nancy Skinner. Photo by Joha Harrison, Capitol Weekly.

What are you guys thinking about in terms of sort of how do you make this a field that people want to and can continue to thrive and do the work in? Because I don’t see a path forward, really, for myself beyond just like piecing together things. I don’t see newsrooms anymore as a place where I can, like, build a career. Yeah. Can you talk a little bit about that element of the business piece? Thank you.

EL: Oh, ouch.

CA: Well, I think they’re all intertwined in what we have talked about. I mean, they’re… Just speaking for the LA Times, I mean, I look at everybody that works there as important as anybody else, whether you’re a reporter or you work in the printing plant or you’re on the product team, whatever you may do. But the fact of the matter is the primary product is the content we produce.

So we’re a company that has just, over the last five years, shrank dramatically. And if you went back 15 years, it has, about every year, has come down in the size of staff as the revenue has come down. The overwhelming majority of that has been done on the business side of the company, endeavoring to protect as many of the feet on the street, if you will, as we can.

We remain, I think, the largest newsroom west of Washington, DC. We’ve had substantial layoffs recently, but we’re really no smaller than we were newsroom size five, six, seven years ago.

We tried to invest, to expand, and we did. We grew subscriptions. We did other things. But you’re being dealt body blows as you go. In terms of the job, the work itself, I think younger people, based on research, conversation, those we work with and otherwise, are more focused on the purpose of the organization that they work for. And I think you could hold what journalists do up against anybody. It has real societal benefit and impact. And so we have that going for us.

“The unions, I’ve seen them do a great job of protecting individual journalists when there’s a situation where they’re not being treated right by the company. But the unions themselves can’t fix the financial model that is causing all the stress” – Neil Chase

We have to get the business sustainable. We have seen the cost of people, journalists and everybody that works at the company, also escalate dramatically over the last five years, almost 30%. So, it’s not that we’re not trying, that we’re not investing. And nor do I think it’s hopeless because we have to have some optimism in the citizenry that somewhere along the way we’re going to value the importance of what is done. Because you can mathematically prove that these are worse cities and a worst state and a worse country to live in without a news organization. Not because of us. It’s just…

NC: No. It’s…

CA: Let’s put that aside. But that’s just a fact. So it is a challenge of ours. I think we have the purpose, part of it going for us to attract, continue to attract talent. But it’s a choppy few years before we collectively figure out how to stabilize.

NC: And just real quick. I know we’re tight on time, but there are a number of opportunities out there. So we run a program, 20 college students around the state are working for us 15 hours a week, getting paid for it, to be campus correspondents. Part of our higher education beat.

The program that Christa [Scharfenberg]’s running at Berkeley is putting 120 new journalists on the street for two years, which is a start. There are a lot of people retiring, moving out of the industry. And the conversations that we’re having about… Larry’s grown The Observer 3X in the last few years. It’s not as much, but the growth is there, the passion is there. And I still meet a lot of people every day who want these jobs and who are finding jobs. So the… We have a responsibility to connect you with those jobs. But they’re out there.

RE: Chris, can we add one thing to that just really quickly? What role are the unions playing in this? We’ve seen more unionization, including at CalMatters. What role are they playing in all of this?

NC: I mean, for us, a lot of news organizations have unionized around California, around the country. The energy that we see behind unionization comes from the fact that a lot of the bigger organizations are shrinking. And so a lot of people think even if an organization is doing well, if we have a union, we’ll be in better, not necessarily better position to not shrink the newsroom, but better position to treat people well and fairly and have a process written down and a way to shrink if we have to lay people off.

But it’s not… The unions, I’ve seen them do a great job of protecting individual journalists when there’s a situation where they’re not being treated right by the company. But the unions themselves can’t fix the financial model that is causing all the stress. They can just help kind of mitigate the impact or make the impact a little more predictable and fair.

SS: I think the other potential challenge with the unions is that… and I was gonna say this to her question too… is at least with my old stations, is you’re moving towards MMJs, which are multimedia journalists. So you’re not only writing your stories, but you’re having to shoot them, you’re having to report, you’re having to do multiple tasks.

And I think when it… And the unions are adapting to that, but I think unions in the past at least, used to be tended to be very defined by position and defined by things. And we’re needing people to be so flexible across so many different abilities that I think that’s where it may be coming to clash. But, I mean, the unions have to adapt to that. They have to be able to build those positions into their new structure. So it’s just a matter of adapting. Or even offering training.

NS: Not speaking to the union issue, but just the generic… your point. So for many of us in the legislature, and I put myself definitely in this, our interest in, we look at this title, The Future of Journalism, our interest in… is helping to ensure that there are journalists because that is what’s going to… That to us is what is, when we think about the role of “journalism” in, say, the kinds of qualities that we feel are so important to civic life, to minimizing corruption, to holding government, not just government, but holding private sector, holding anybody accountable.

That’s journalists who do that. So we have to have journalists. So you’re… You know, you’re going to hear from Senator Glazer later, but I think that’s part of why he structured his bill, so that the revenue that was generated would go to entities that have journalists.

EL: All right, thank you so much. First of all, what is your name? Hannah. Well, I think I speak on behalf of all of us here, up here, when we say we wish you luck. If I were you, I’d hit up Neil or Chris for a job.

NC: Yeah.

EL: As you’ve got them right here, right now. I would do that. We are all here because we do believe, all of us in this room, in the importance of journalism, especially in a democracy. We know there will always, always be a need for good, trusted, accurate information. There will always be a need for the watchdog role. And that need does have value.

We’re just figuring out what the future looks like. And I thank all of you not only for being here on the panel, but also the work that you’re all doing to help navigate that future. You’re also actively involved in it. So with that Senator Nancy Skinner, Neil Chase, Steve Stuck, Chris Argentieri, thank you so much for being here. Also, thank you to Capitol Weekly, Rich Ehisen, Tim Foster for putting this together and have a great lunch.

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