I had a couple conversations today which turned on the role of private equity in today’s economy and the importance of business models that align with a company’s purpose. Both of them were relevant to our soon to be completed drive for the TPM Journalism Fund. In the new episode of the TPM Social Club podcast Joe Ragazzo and TPM head of product Derick Dirmaier talk about the impact of private equity on sports. This involves caricatures of course but I think of Venture Capital and Private Equity as sort of twin players, often with perverse and deleterious effects on the lives of companies, the first on the ascent of the rocket, the second on the descent. Both have had deeply negative impacts on the news and journalism industry. In both cases that’s because scale and market dominance don’t play the same role in the news business as they do for social media or the production of widgets and many other kinds of business. Most require being rooted in the lives of particular communities, often geographical communities, or having a more than transactional relationship with an audience.
I was highly involved in TPM’s original business model (I created it and ran it along with a growing list of colleagues) which was based on advertising. It was great while it lasted. And a lot of what TPM remains today was built on the revenue we generated in those years. But in a job interview I conducted today I explained that when we moved to a subscription model (beginning at the end of 2012 but really kicking into gear in the mid-teens) the whole operation became more coherent. Our financial success, and thus the continued existence of the company and community, was directly dependent on those who valued us most: our readers.
That is the case in a way in the world of advertising. But the connection is indirect and contingent. You need readers or an audience to sell advertising. But the decisions and the financial logic is in the hands of advertisers who by definition don’t care whether or not your enterprise exists. That’s good. You don’t want them to. You don’t want to be deeply in bed with your advertisers. You want the relationship to be transactional and arms length. But that means that your business model can collapse for reasons that have nothing to do with the quality of the work you’re doing or the product you’re creating. Indeed, that is what happened to many news publications over the last decade. The nature of the advertising industry changed, especially the once central role of publications (as opposed to social media platforms) in that industry. If you’re dependent financially on the people who really want you to exist that’s a very different proposition.
When we started making this change – again, during the early and middle years of the teens – I had a number of conversations with staff in which I explained the upside of this unavoidable shift. In our dependence on advertisers the bottom might fall out for reasons that have nothing to do with the quality of our work. But now our success or failure will be based on creating as good a version of TPM as possible. We should be in a really good position to accomplish that, given as we are TPM and know as much about what it is and should be as anyone. There are no guarantees. But the quality of our work should have a very direct connection to our success as an enterprise and the security of our jobs. If we fail in that task the responsibility for that is on us. And that’s way better than being a tiny boat awash in the maelstrom of tech and social media platform consolidation, the business of equivalent of those lab rats scientist place in unpredictable and uncontrollable environments and watch sicken and die.
This has all proven to be the case. And the TPM Journalism Fund is part of that. So as we get to the end of this year’s drive I want to thank everyone who has contributed so far – getting us to $486,000 toward our goal of $500,000 – and invite you to contribute and get us the rest of the way there if you haven’t yet contributed. If that’s you and you’re so inclined, just click right here.
Thank you from all of us.
