Central Texas and the NYT Food Stamp Map

November 30, 2009

The NYT continues to do as much as anyone with data-driven stories.  Today on A1 was a feature about the rise and concomitant de-stigmatization of food stamp usage across the country.   But the interactive map on the NYT web site tells the stories behind the story.

In Texas, the Rio Grande Valley is predictable  tale of woe; Hidalgo County has the largest percentage of food stamp recipients of any county in the U.S. with over 500k residents (29% vs. a national average of 11.5%).

Closer to home, the story is more surprising.  Travis County, which most of us tend to regard as a relatively insulated economic island, didn’t fare so well.  Between 2007 and 2009, food stamp usage went up 50% in Travis, a rate of change that landed it in the 82nd percentile across all counties in the nation (average was 34%).  Adjacent Williamson County–home of Dell–is far worse, still:  up 100%, ranking it 48th out of 3,136 counties nationwide (98th percentile), and the third largest of the bottom 50 counties.

So, poverty-wise:  what’s the matter with Central Texas?  Kudos to the NYT for providing the starting point to investigate the question.


Wanamaker’s Revenge

November 27, 2009

My friend Alan Mutter has an annoying habit of actually analyzing data rather than waving his hands at it.  Recently, he did his trick on the latest numbers out of NAA, which remain dismal (16 straight quarters of decline).  The most breathtaking piece is the precipitous disappearance of classified advertising from newspapers:

Among the classified categories, automotive and real estate advertising, two long-time pillars of the newspaper advertising model, each was down by 43% in the third quarter, compounding drastic declines in recent years.

Auto sales, which nearly hit $1 billion in the third quarter two years ago, were $321 million in the same period in 2009. Realty advertising, which topped $1 billion per quarter as recently as two years ago, declined to $358.6 million in the third quarter. It will take a long time for either vertical to return to its former strength, assuming they ever will.

Recruitment advertising, which surpassed $2 billion per quarter at the peak of the Internet bubble in 2000, all but dried up in the third quarter of this year, falling nearly 64.7% to a mere $175 million. Employment advertising is not simply at its lowest point in history, it is all but gone.

For those few of us who obsess on this stuff, the fusillade of ugly stats has taken on the feel of waves of body bags returning from Southeast Asia in the 1970s.  It’s both sickening and desensitizing.   But stepping back, here’s a way of thinking about these numbers in a broad-rushstroke sort of way.

At its peak, the newspaper industry probably had $15-18 billion in operating profits (30% of $55-60 billion in revenue).  The NAA numbers show the likely permanent disappearance  (due to the advent of cheaper substitutes, not merely “the uber-culpable “broader economic conditions” which the NAA is so fond of scapegoating) of about $10 billion in what were essentially pure profit dollars–60% + of peak industry profitability, before one even considers the slides in display and circulation revenues.

It’s oversimplifying the case a little, but it’s close enough:  $10 billion in newspaper classified ads has been replaced by less than $100 million in Craigslist revenue.  Last time I checked, 97 of the top 100 online classified sites belonged to the Craigslist newtwork.

So start with a very capital-intensive industry which is capped at mid teens operating profits percentage, and then consider two macro trends:  (1) for every buck in display advertising that disappears in print, something less than a dime comes back online; and (2) sightings of faithful newspaper readers born after the inauguration of a certain Georgia peanut farmer are about as rare as credible video footage of Sasquatch hitting golf balls in the Big Thicket.

But, I digress.  The classified franchise was  exceedingly valuable to newspapers because classified readers were the portion of the newspaper audience closest to actually transacting.  And especially in an absence of alternatives, the effectiveness of a newspaper want ad was was ultra-measurable:  whether you were advertising a used Toro or the Deputy Assistant Vice Presidency of the Southwest Iowa Region, you knew precisely how many people had responded to your ad.  Unlike legendary retailer John Wanamaker near the turn of the twentieth century, you knew damn good and well whether your advertising dollar was well spent:  it was close to the transaction, and its return was imminently measurable.

Today, we call those lead generation businesses.  And newspapers are simply not well positioned to be in the lead gen business.  If you want to see what well positioned looks like, check out the S-1 on file for Quin Street,  run by my business school classmate Doug Valenti and a competitor to AV-owned All-Star Directories (as always, I must remind that I speak only for myself, and not for AV,ASD, The Texas Tribune, or anybody else).

If mucking around SEC filings isn’t your thing, I’ll let you in on a secret:  Doug is laser-focused on matching big communities of buyers with sophisticated and price-sensitive populations of sellers.  The future of journalism?  Meh.  Not so much.  Ditto the teams at Sawbuck Realty and Responselogix.  Even though both are the beneficiaries of investments from A.H. Belo–and even thought the latter is run by an ex-Knight Ridder exec–neither company could spell journalism if you spotted them the consonants.  It’s simply not their raison d’etre.   They are all about creating liquid markets of buyers and sellers, period.

For a while, I was walking around saying that Wanamaker was right:  half of his ad spend was wasted.  Now, I’ve begun saying that he was wrong:  he was wasting a lot more than that.  And most of it he was spending with newspapers.  So this is what I mean when I say that public service journalism is is a public good.  And as such, it’s too important to be left exclusively to market forces.  Nothing I’ve seen in the data suggests that investment capital will strike a love match with the newspaper industry when investment capital does what it does naturally, which is to seek the highest risk-adjusted returns.     If you believe, as I do, in the importance of public service journalism, you simply have to examine non-market alternatives for producing it.  Call it Wanamaker’s Revenge.

The Chicago News Cooperative

November 23, 2009

Richard Perez Pena writes in the NYT about the new news venture, begun by ex Tribune journalists.    The barely suppressed animus between the Tribune and the CNC staffers is understandable, especially given the long relationships involved, the intractable financial state of the the Tribune Company, and the bare-knuckled history of journalistic (or practically any other kind of) competition in Chicago.

At one level, it’s totally legit that these two teams view the world differently.  One thinks that serious journalism is more likely–over the long term–to find support from market forces than from any other model.    The other believes that market forces are insufficiently reliable to produce enough of the stuff.  But let’s face it:  the Tribune team comes off sounding awfully disingenuous when it claims–or at least implies–that its public service mission hasn’t been compromised by its resource challenges.  Such a position strains credulity in a way and to an extent that no journalist would accept from the subject of one of his or her stories.  It also belies bitch sessions which are taking place nightly (sometimes creeping forward into late afternoons) among long-time newsfolk at saloons nationwide.

If the two teams really wish each other well–and if they both believe, as the leaders of newsrooms often proclaim–that their first obligation is to the public, then they will publish or at least link to one another’s material liberally.  I predict they will find that the sun will continue to rise and the earth will go on spinning.   And who knows:  maybe their public will keep them both in business.

The War We Can’t Win

November 15, 2009

In Commonweal, Andrew Bacevich asks, essentially, “why not Mexico instead of Afghanistan?”    A thought-provoking companion piece to David Loyn’s In Afghanistan:  200 Years of British, Russian, and American Occupation.

Carr on T2

November 9, 2009

NYT media axe David Carr happened to be in the offices of The Texas Tribune when the terrible news broke in Ft. Hood.   His piece is up on the NYT site.

The Texas Tribune–(Short) Week #1

November 7, 2009

In my not-so-humble and entirely un-objective opinion, The Texas Tribune opened with one helluva week.  These are stories you simply will not see anywhere else.  Consider, in no particular order:

Emily Ramshaw on the (over)use of passive restraints in Texas classrooms,  and the head scratch-inducing conundrum of paying state psychiatrists a lot of money to work insanity-inducing hours to help make their patients more sane

Abby Rapaport on the reality tv show which doubles as the Texas State Board of Education, as well as the curious puzzle of the Texas dropout problem (together with Brian Thevenot, whom I’ll get to momentarily)

Morgan Smith on a brief history of fratricide in Texas politics (not that plenty of matri-types haven’t been in the mix)

Reeve Hamilton on the existential question of the difference between a pundit and several other words that begin with a p.  Reeve is also our guide to what’s happening around the state before breakfast and just after lunch.

Ross Ramsey, Jim Henson, and Daron Shaw on Rick’s lead over Kay, what Texans are concerned about, and why all polls will leave the majority of interested parties with something to bitch about (largely because the majority of interested parties won’t be in the lead).  Ross also broke the story about the party switch by Jim Hopson that had Democrats crying in their beer–before noon.

Elise Hu on the daily tug and pull of Texas politics, as well as a video about our fledgling enterprise which we will play over…and over…and over…in service of funding said fledgling enterprise, if nothing else.

Matt Stiles on the Houston mayor’s race and, more importantly, why he is the Overlord of All Texas Data

And yesterday, there was my personal favorite so far, Brian Thevenot’s article about the specter of electronic reading devices in Texas classrooms.

Brian comes to Texas from the Times-Picayune in New Orleans, where he was the member of two Pulitzer-winning teams and a finalist for the third.  He will be The Trib’s  axe on public education, and taught me a lot in this piece  To wit:

That scenario represents the ideal — to some, at least — and may yet be years away. The changes thus far have come slowly, navigating a thicket of big-money politics and curriculum wars surrounding the nation’s second biggest textbook market. At the core of the new order, resulting from new legislation, lie three fundamental transfers of power and money:

  • from the State Board of Education to the Commissioner of the Texas Education Agency;
  • from three major textbook conglomerates to a broad array of computer hardware and digital content providers;
  • and from the state to school districts….

The new rules mark a stark departure from the state’s unique and comparatively one-size-fits-all textbook adoption process, one stretching back to 1918 when voters approved a constitutional amendment mandating the state provide free textbooks to all…

Most states allow local school districts to buy their own instructional materials, in print or otherwise. Twenty-two states have similar statewide adoption processes, Givens explained in an interview, but none has held the reigns of curriculum and money so tightly as Texas. Here, school districts never see the bill for textbooks, which some argue has limited downward free-market pressure on prices. The state traditionally provides only a limited menu of books to districts, then writes checks based on local choices…

“Texas is the only state that pays directly,” Givens said. “So this is the first time, after they go through the process, that we’ll actually be sending money to districts out of the textbook fund. That’s the fundamental shift.”

The opening of the textbook fund for technology purchases takes on more significance in the context of the state’s historically paltry financing of technology infrastructure. Districts have been lobbying for years to increase a state technology allotment of $30 per child, a pittance compared to state financing of books.

I have a feeling I’m going to learn a lot from this team.  Congrats on a great launch.

The Texas Tribune-Because Journalism Is a Public Good

November 4, 2009

In case you’ve had the good fortune to spend the Great Recession on a desert island, here’s a snippet from the Columbia Journalism Review that summarizes the media landscape to which you have returned:

American journalism is at a transformational moment, in which the era of dominant newspapers and influential network news divisions is rapidly giving way to one in which the gathering and distribution of news is more widely dispersed. As almost everyone knows, the economic foundation of the nation’s newspapers, long supported by advertising, is collapsing, and newspapers themselves, which have been the country’s chief source of independent reporting, are shrinking—literally. Fewer journalists are reporting less news in fewer pages, and the hegemony that near-monopoly metropolitan newspapers enjoyed during the last third of the twentieth century, even as their primary audience eroded, is ending.

I find this interesting primarily because of the source. The passage comes from a long report with an immodest title: “The Reconstruction of American Journalism.” The authors—Leonard Downie, Jr. and Michael Schudson—are not exactly tattooed and pierced denizens of Netroots Nation but, rather, the former editor of the Washington Post and a Columbia J-School professor, respectively.

I do not agree with all of Downie’s and Schudson’s prescriptions for lifting America from our media malaise. But I heartily endorse what strikes me as their central premise:

The days of a kind of news media paternalism or patronage that produced journalism in the public interest, whether or not it contributed to the bottom line, are largely gone.  American society must take some collective responsibility for supporting independent news reporting in this new environment—as society has, at much greater expense, for public needs like education, health care, scientific advancement, and cultural preservation…

Which brings me to our own fledgling enterprise: The Texas Tribune.

In my day job, I’m a venture capitalist, so like much else in my life, this endeavor was born out of a quest for financial gain. In 2007, it struck my partners and me that the steady decline of the once-nearly-$60-billion American newspaper industry should present some financial opportunities for firms like ours. That turned out to be true—sort of—and our analysis of the newspaper business continues to inform our media investing strategy. But I couldn’t shake a personal conclusion that didn’t have anything to do with enriching myself:  that the abundance of public service journalism that prevailed in the period between the Kennedy and Bush 43 inaugurations was a historical accident, unlikely to ever repeat. Like the guy who realizes late in life that he’s been speaking prose all along, I was in my forties before I realized that I had grown up in a now-ended Golden Age.

I also concluded that capital-j Journalism—roughly the equivalent of Alex Jones’s “iron core” in his book, Losing the News—is a public good. The corollary to this conclusion is that the commercial press is too fragile for our democracy to rely on for all the news and information that we require to function as responsible citizens. It’s the ultimate case of bad things happening to good people. Most of the thousands of journalists who entered the business in the past few decades think of (or thought of) themselves as public servants. But the three revenue sources on which they relied to support their good work—subscriptions, classifieds, and display advertising—have all gone spectacularly awry due not just to a terrible economy,  but also to the arrival of cheaper alternatives.

Students of introductory microeconomics are taught that public goods have a number of characteristics, two of which are most relevant to Journalism. First, public goods are non-rivalrous: I can consume all I want without leaving any less for you. Second, market forces alone will not produce public goods in sufficient quantity (imagine a world in which indigent health care, national defense, and clean air were left entirely to the discipline of the market).

The provider of most public goods is government. But even though the U.S. ranks somewhere between Burkina Faso and Uranus in our per-capita federal spending on public media, Congress will not come rushing to the aid of Journalism anytime soon. There are simply too many competing priorities, and the deficit hawk in me recoils at proposing another one. Besides, obvious fox-in-the-henhouse issues arise—to mix animal metaphors—from government watchdogs funded out of government coffers.

So with both commercial and governmental fixes in serious question, maybe that leaves you and me. Well, me, anyway—I’m in for the proverbial penny and pound. You, I trust, will be won over in time by the good work of privately funded public media efforts like ours.

Thanks for your interest in The Texas Tribune. Seeing this day arrive is one of the true highlights of my life. I think we will succeed. And if I’m wrong, it won’t be for lack of effort.