Two other guys from Yale, chief investment officer David Swensen and financial analyst Michael Schmidt, are putting forth the idea of newspapers becoming endowed institutions like universities. That goes along with the idea from professors Ackerman and Ayres for an national endowment from a Guardian article a few weeks ago.
In the New York Times they opine that newspapers could have endowments to make up for revenue sources they have lost.
Although the problems that the newspaper industry faces are well known, no one has offered a satisfactory solution. But there is an option that might not only save newspapers but also make them stronger: Turn them into nonprofit, endowed institutions — like colleges and universities. Endowments would enhance newspapers’ autonomy while shielding them from the economic forces that are now tearing them down.
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How large an endowment would a newspaper need? The news-gathering operations at The New York Times cost a little more than $200 million a year. Assuming some additional outlay for overhead, it would require an endowment of approximately $5 billion (assuming a 5 percent annual payout rate). Newspapers with smaller newsrooms would require smaller endowments.Note that just as endowed educational institutions charge tuition, endowed newspapers would generate incremental revenues from hard-copy sales and online subscriptions. If revenues were to exceed the costs of distribution, the endowment requirement would decline.
– News You Can Endow NY Times 27 Jan 2009
Essentially this proposal suggests converting to a non-profit tax-free structure, of which examples already exist, but to also tack on a truckload of money to it in the form of an endowment. After asking where the money is going to come from the next question should be: Do we really want to throw money at continuing to deliver dead trees to doors steps? With the idea of a national endowment, at least they were focused on the news and not the newspaper.
What needs to be endowed, supported, bought or otherwise funded is that actual generation of news. The distribution part has already been solved.