Most journalism firms produce news and information to attract an audience that advertisers want to reach. Advertisers then pay the firm for access to the audience. Sometimes these firms also sell subscriptions to generate additional revenue. So the production of news that audiences consider credible or entertaining is essential to the economic survival of such firms.
Bloomberg offers an example of what can happen when there is a conflict between a non-journalistic business that generates most of a firm’s revenue and a secondary business that produces news.
So Bloomberg fits the model of a company where the majority of revenue comes from a non-journalistic businesses. Even if the news service is not directly subsidized, the news service could not exist independently from Bloomberg’s other lines of business.
However, Bloomberg’s reliance on revenue from its terminals creates a potential for conflict if news stories threaten that revenue source.
A conflict over news coverage of China
The publication of those stories prompted the Chinese government to deny visa requests from Bloomberg journalists, keeping them out of the country. Sales of subscriptions to Bloomberg terminals in China slowed after the stories were published. These consequences probably influenced Bloomberg’s decision to withhold subsequent stories that were critical of China’s elite.
He did not specify which articles should be reconsidered, but he did say the articles could jeopardize the sale of subscriptions to Bloomberg terminals in China. The company was also concerned it might lose access to financial data from China, data that Bloomberg subscribers need to make money.
Withholding investigative news stories can damage a news organization’s credibility.
Bloomberg’s economic self-interest
Why would publication of the stories have such counter-intuitive effects at Bloomberg?
So the business people who subscribe to Bloomberg’s terminals might regard withholding the stories as a sensible decision that helps business.
Publication could also put at risk the profits Chinese officials gain from their relationship with a wealthy businessman. The stories could also put at risk future profits and jobs at foreign firms for Chinese officials’ children.
So Bloomberg, the company’s customers, and Chinese officials all have self-interested reasons to oppose publication of the stories. Bloomberg journalists favored publication, but their contribution to the company’s revenue was too small to win the argument.
Bloomberg’s executives probably withheld publication because they had learned from publishing the earlier stories that critical reporting in China can damage Bloomberg’s economic interests. And responsible executives should put their company’s economic interests first, that is the very essence of their job.
The advantage of a traditional model for funding news
Why does the Times publish these stories when Bloomberg did not?
Publishing critical stories about China does not harm an important revenue source at the Times. Instead, these stories might have the opposite effect.
The stories add to the newspaper’s reputation as a trustworthy source of news. That reputation is critical for attracting the audience that advertisers pay to reach. The Times is also generating increasing amounts of revenue from selling subscriptions, and some readers might consider investigative stories valuable enough to pay for.
Does this mean the Times would never allow its economic interests to conflict with its journalism? Of course not.
But the reliance on credible journalism at the Times means the paper must focus on stories that its readers and advertisers prefer. This creates incentives to publish stories, not to withhold them. However, the Times will still shy away from stories that violate the preferences of its readers and advertisers.
Bloomberg is a large company with enormous resources and a history of supporting journalism. But Bloomberg had no choice when confronted with the possibility that some news stories could substantially harm its core business. The company had to withhold the harmful stories.
Those who argue that non-journalistic businesses should be used to finance journalism should rethink their argument. There will always be a potential for economic conflicts in these cases, conflicts that can damage the journalistic enterprise.