Capitalisn’t: Yes, Journalism Does Have a Future

Ben Smith: And the information ecosystem rested, in a way—at least parts of it—on local. Is there a crime crisis in the United States? Well, I don’t know. You’ve got to ask somebody who’s covering crime in Indianapolis, and there are fewer people on that than there were, and you’re left with Washington politicians yelling about it.

Bethany: I’m Bethany McLean.

Phil Donahue: Did you ever have a moment of doubt about capitalism and whether greed’s a good idea?

Luigi: And I’m Luigi Zingales.

Bernie Sanders: We have socialism for the very rich, rugged individualism for the poor.

Bethany: And this is Capitalisn’t, a podcast about what is working in capitalism.

Milton Friedman: First of all, tell me, is there some society you know that doesn’t run on greed?

Luigi: And, most importantly, what isn’t.

Warren Buffett: We ought to do better by the people that get left behind. I don’t think we should kill the capitalist system in the process.

Bethany: As a journalist, of course, I want to talk about the future of journalism. I’m biased, but I think journalism matters. There’s at least an argument that the threat of an exposé forces everyone to be more honest.

Luigi: The transmission of information and the formation of reputation are two essential elements for a market economy to work well. Information is collected and travels through media, and reputation is dramatically influenced by media. Media in general, and not newspapers alone, are very important to the functioning of a market economy.

Bethany: If that’s the case, then there is certainly an argument that we are all in big trouble. The New York Times just published a story entitled, “How the Media Industry Keeps Losing the Future,” which asked, can the idea of news survive in a digital world? A New Yorker headline was even more apocalyptic: “Is the Media Prepared for an ‘Extinction-Level Event?’”

Oof, ouch.

It seems to me that the end of traditional media, which arguably began 25 years ago with the advent of the internet, has suddenly become clear. The New York Times and The Washington Post have eliminated hundreds of journalists between them. Here’s the most stunning statistic to me from that New York Times piece: one out of four newspapers that existed in 2005 no longer does.

Luigi: This clearly describes the death of journalists, but not necessarily the end or the extinction of the media overall. In every business, technology changes the way we do things. The question is not whether we need to protect the category of journalists, but whether the function of collecting and distributing information is still well-performed in the economy or even maybe better performed in the economy than it was before. And, if not, how to fix that, not necessarily to find employment for all the journalists, with all due respect.

Bethany: That is a very fair point, that there is a distinction between journalism and journalists. Journalism could be thriving even while journalists are no longer employed. But I think it’s pretty inarguable that the business model for journalism is unworkable, for the most part.

In simple terms, old-school journalism wasn’t funded by reader subscriptions. That was just a small piece of it. The bulk of the money came from advertisers. Once the classifieds moved to Craigslist and the advertising moved to internet companies, the funding model was broken.

The New Yorker, in their piece calling this an “extinction-level event”—ouch, again—wrote: “Then came Facebook, Twitter, Instagram, Pinterest—the social-media charge. These platforms allowed users to get into the distribution game themselves. Suddenly, all it took to reach an audience was pasting a link into a box. A story that went viral on social media often reached more people than a publication’s distribution networks could.

“In the short term, that offered gains. But in the long run, it created devastating advertising losses. Why stick your billboard at the end of Newsweek Lane when it could stand beside the exit on Facebook Highway that leads there and to so many other places?”

If the funding model is broken, I don’t know what that means for high-quality journalism, let alone journalist jobs. Am I too focused on business models?

Luigi: I think you are focused on business models, but I feel the pain. I don’t want to sound flippant. I feel the pain of journalists, and I’m not so sure how many listeners really understand that who really killed the newspapers was not Google. Google contributed, but who really killed newspapers was Craigslist.

By destroying the classified-ad market, which was a little monopoly niche in every town, it destroyed a big source of money for local media. I think that that’s the major casualty, because I see alternative business models for international news, and our guest has founded a new sort of publication, so there are still a lot of entrants in that sector. When it comes to local news, it’s pretty much a desert.

Bethany: I agree, but I also disagree, or I would amplify that. I think it’s not just local news. The magazine business, the print magazine business, is also profoundly troubled, and you can argue that maybe print magazines don’t have a place, or magazines overall don’t have a place, in the new world going forward.

Maybe that’s consumer demand. I don’t know. It seemed to me that there was a place for something that was separate from the onslaught of daily news and that was just a thoughtful look at big issues, and that magazines have contributed a lot over time. But I suppose that’s a debatable argument.

The other part about local news that I think is not debatable is that a lot of the inspiration for big national stories came from local news. You’d sometimes read a New York Times story, and maybe on the third or fourth paragraph they’d kind of reluctantly acknowledge, “as first published in The Des Moines Register.” But a lot of national reporters were getting their cues from great on-the-ground, local reporting. If local news goes away, so does a chunk of what matters for national news, I think.

Luigi: People have argued that, for example, the reason why the financial crisis in 2008 took so many people by surprise is because some of the distortions that led to the financial crisis were not covered by the local news. Generally, this stuff is covered by local news and then, finally, aggregates to a higher level. The same can be said for the opioid crisis. Even if there was some very good local reporting, I don’t think it received enough attention.

I think that there is definitely a big issue with local news. I’m not so sure how this can be fixed except through some models of financing by institutions, or by fundraising, or some nonprofit funding.

Bethany: Yeah. There’s an argument, for sure, that the state of affairs for many smaller media companies is about to get worse. As Google rolls out AI search, then instead of sending people to outside websites, it’s going to answer queries within the Google interface, and then traffic for many places might dry up.

But I do think it’s complicated because I want to blame everything on the broken business model, on, yes, Craigslist and classified ads, but also, of course, on the big platform companies like Google and Meta. But it’s complicated because if consumers were still clamoring for and hankering after old-school media, then the future would be brighter than it is. It wouldn’t be perfect, but it would be brighter than it is, I think. Media has a consumer issue, too.

Luigi: Of course, because it’s overstated that the medium is the message, but the change in medium does also change the way you present the message. The younger generations are used to absorbing news in a completely different way than you and I have learned to absorb news, and I think that’s only normal.

Again, the question is, are we starved for news or not? When you introduced the spinning jenny, there was a reduction in the number of weavers, but the amount of textiles that was produced went through the roof because productivity increased.

So, the question is, are the new technologies helping the collection and certification of information in a way that is much more efficient, so we need less journalists—which is, of course, terrible for the journalists that are in transition but is not necessarily a problem for democracy? Or are they really undermining the monitoring function that the press used to play, and then we do have a problem for democracy?

Bethany: I am, of course, going to resist your widget analogy. I don’t like the idea of journalists being thought of as widgets, but I actually think I’m right in this respect, because all yarn might be the same once it’s produced, but all journalism isn’t the same.

Journalism, in the end, was always an editorial act. To some extent, everybody would write the same story, but there were a lot of stories that one publication would cover that another publication wouldn’t cover, whether it was just because a reporter happened to notice something important, or because of ideological differences. And so, I don’t think you can argue that journalism can be efficiently mass- produced by one entity, and then people are still getting their news, because it doesn’t work that way.

Luigi: As an Italian, I refuse the idea that all yarn is the same. There are very good-quality ones, and there are bad-quality ones.

Bethany: Fine!

Luigi: So, I don’t think it’s that different from journalism.

Bethany: Anyway, we will stop arguing among ourselves. We thought we would have Ben Smith here to answer some questions about the future of journalism. Ben reported for Politico, was a founding editor-in-chief at BuzzFeed News, and then did a stint as a columnist for The New York Times. Then he cofounded a company called Semafor. He’s seen plenty in the media industry over the last few decades and thought about a lot of issues. So, who better to have on our podcast? Welcome, Ben.

Ben, I wanted to start with a big, broad question, which is, how much of this was our fault? What was inevitable, and what did we just screw up? This guy Brian Morrissey wrote in his newsletter, The Rebooting, recently that “what’s happening in the media industry is a delayed reaction to the commercial internet itself. I don’t know if anything could have been done differently.”

At the same time, you’ve spoken about some of the mistakes that you think that BuzzFeed made. Maybe start there: what were mistakes, and what was inevitable?

Ben Smith: Thanks for having me on and for that broad question. I think that there were things that were neither mistakes nor inevitable. There was a generation of media investors and executives who had made fortunes in cable. The core dynamic of cable from the ’80s, the ’90s, was that tech companies and infrastructure companies had laid wires in the ground and connected homes to literal cables. Those guys realized that to have people switch on and subscribe to the service that came through those cables, they’d need great content, and they paid tons of money to it. They paid most of their revenue to it.

Cable is not the highest-margin business in the world because they were shoveling money out the door to CNN, to MTV, to ESPN. Comcast did fine, but Comcast wasn’t Google. And, in fact, Viacom also did fine. There was sort of a parity between the distribution company and the content company.

When this new digital distribution came around, and when these new networks—whether it was the search network of Google or the social networks of Facebook and Twitter and places like that came along—the same people, literally the same people . . . Tom Freston, the founder of MTV, was the chairman of Vice. Ken Lerer, who’d also been central to MTV’s early running, was the chairman of BuzzFeed. They said, OK, this is a similar situation. You have new distribution, and there are going to be companies that get good at making content for these pipes, as had been true of cable.

I actually think it was not inevitable that the platforms found an incredibly high-margin business in which they never paid for anything and relied solely on user-generated content. That was a business choice by them, and in some ways, a regulatory choice.

Also, I think that in retrospect, it maybe was a bad business choice. The blue Facebook app was an incredibly profitable thing for 15 years, but I think it will be gone in another five or 10. I don’t think X is a great business, and I’m not sure that you’ll look back and say the choice to rely on user-generated garbage positioned them well against Netflix, though it was great for their margins.

Bethany: Over the years, both Google and Facebook/Meta have made noises about the importance of supporting journalism. Do you think they believed it for a time? Kara Swisher had asked you if right now was the end of a marriage between social media and news. I guess it seems to me that if it was a marriage, it was a really bad one, but maybe I’m wrong.

Ben Smith: Yeah, were we their trophy wife or something?

Bethany: Right. Something like that.

Ben Smith: I think that they were always supportive to the extent that it was essentially free or very cheap to buy off the media industry by providing partnerships here and there and throwing a little money their way. That was a way to not have to think about a universe in which 80 percent of your revenue goes to content, which was the old universe. But I think these half-hearted initiatives have run their course.

On the distribution side, certainly news and journalism relied very heavily on social media for a decade, and I do think that was a real marriage and is now a real divorce.

Bethany: Follow up on that a little bit. Why now? Is it just because of Elon Musk’s purchase of Twitter? Does that just underscore what happened, or is that a precipitating cause?

Ben Smith: No, I think by the time Musk arrives, that era was basically over, and in some ways, he gets blamed for stuff that was already happening.

I think it’s basically driven by consumers, who, for a time, thought it was cool to have all of their friends talking about all sorts of interesting things in the same place. And then, as politics became utterly, incredibly divisive in 2016, and that really became kind of a horror show, and consumers didn’t like it anymore, the platforms frantically tried to get all this divisive content that was driving people away off their platforms.

But it was mostly too late, and people are just moving to other forms of communication, whether it’s passively watching short videos or group messaging and WhatsApp with smaller groups. I think the notion that you want to get your news and connect with people every morning by walking out into an open-air insane asylum with every other person in the world has lost its appeal and novelty.

Bethany: You seem to me to have a somewhat dark view of human nature. You’ve said that you’ve always thought that one of the misreadings of social media was that its problems were fundamentally technical rather than fundamentally about human nature.

I read that to say that journalists chasing traffic and social-media companies using algorithms to amplify what we wanted to hear maybe speaks to who we are as people. It’s not the fault of the journalists or of social media’s algorithms. Is that fair? And is there any reason to believe that people care about the truth, about information, about struggling through something that isn’t entertaining because they just think they should be informed?

Ben Smith: I think some people do. But I think there was a real utopianism about it—one I certainly shared—about social-media, access to information, getting rid of filters, and middle-end gatekeepers that has obviously not borne out.

Although I would add as a codicil to that, it’s not like it was so great before. The moment that preceded this birth of social media was the Iraq war. If you do the counterfactual where Twitter exists during the Iraq war, and regular Iraqis are photographing and streaming what’s happening around them, and we’re not reliant on what turned out to be lies from the Pentagon about what’s happening in the first few days in the aftermath of the war—that’s a very powerful idea.

I think the big American mainstream organizations, led by The New York Times, had discredited themselves. That wasn’t imaginary or technical. And so, I think the notion that people were interested in and open to something different had that social-political component, too.

Luigi: Do you think that if newspapers started a paywall in 2000, the world would have been different? Could they have done it?

Ben Smith: Well, they would have had to be patient, because the news business isn’t that big or important. Netflix and Spotify represent much, much larger industries and things people care about more. And it took Netflix and Spotify to train people to pay for content online. Then, the news industry came in behind it.

I think what you saw with The New York Times was that they actually did wait long enough. They burned all their furniture and held on until the ecosystem was ready. But this is where, again—I think you might know more about this than I do, but it’s something I’m really interested in—Scandinavian media basically did that. German media, to some degree, did that. And I do think, if you look now, a lot of the European media that never gave it away for free are in a stronger position than the American media.

Bethany: If we come down to a world where the survivors are The New York Times and a few other small things around the edges, is that a good world or a bad world?

Ben Smith: Oh, I think it’s a terrible world, most of all for The New York Times, in a way. I wrote a story today on The New York Times’ handling of these allegations of sexual violence in Israel, which they didn’t do a perfect job on. It’s this strange situation where The New York Times’ verdict on this thing that many other people are writing about has this wildly outsized import, and it’s incumbent on them to handle it with exceptional care because of their outsized role in shaping American opinion. That seems terrible and imbalanced and terrible for reporters of The New York Times, because you have this crazy level of scrutiny, although it’s probably good for the business of The New York Times.

Luigi: I don’t know if you know Andrey Mir, who wrote this book called Postjournalism and the Death of Newspapers. He claims that the subscription model is, in fact, a “don-scription” model, a combination between donation and subscription. At the end of the day, The New York Times and so many other newspapers are victims of their own customers, because they’re not bought to inform, they’re bought to provide a justification to ideology. And so, they want more of the same ideology. Even the journalists who like to tell what they perceive as the truth, sometimes they find a lot of opposition, because they have ideologues who want support for their faith.

Ben Smith: I think that’s obviously a challenge with subscription businesses or any media business. Cable news is the subscription business in which you see that most purely. I think the Times is a more complicated story because it’s a family-owned business, and even though that is obviously the logic of the subscription business in the short term, the family hates it. And so, there’s this deep internal tension around the direction.

Luigi: Now, there is the business of news, and then, there is what I call the economics of news. What is the difference between the two? The business is how you make money in news, and the economics is what role the news business plays in the overall economy.

Maybe I’m an outsider, but I think the role that media play in society is to collect, select, and certify information. Are we better off along this dimension, or are we worse off, and why?

Ben Smith: It depends on who you are. In almost any field other than learning about a local area, you are better off. If you want information about markets, if you want information about the sanitation industry, if you want information about gossip in the economics profession, if you want investigations on subjects of national political importance, there is better, higher-quality information than there’s ever been.

Lots of people don’t believe it, which is another problem. But I would say the general, national American news landscape and, broadly, the business and trade reporting landscape are just richer and better than they’ve ever been.

Unfortunately, most jobs in the American news industry have always been in local news, and local news, in the United States . . . Actually, it is not this bad in Europe. I think it’s an interesting question that I’m curious about the answer to as to why. But local news in the United States was an incredible business in the 20th century, just a huge cash machine of a business. And that has collapsed in a way that is attributable to this classified and local-advertising business, and it is very hard to see how you fix it.

It’s just massive, massive downward pressure on journalists and journalism. And the information ecosystem rested, in a way—at least parts of it—on local. Is there a crime crisis in the United States? Well, I don’t know. You’ve got to ask somebody who’s covering crime in Indianapolis, and there are fewer people doing that than there were. And you’re left with Washington politicians yelling about it.

Luigi: I actually buy your answer, as far as we go, to the collection and selection of information. I’m a little bit less certain about the certification. I’m not necessarily saying that they were great, but in the old days, there were some publications with enough rents that they didn’t want to lose, that they were spending time, actually, making sure that when a fact was published, it was correct. Today, even the most prestigious newspapers, The New York Times included, write a lot of stuff that is of dubious quality. And even when they make mistakes, they don’t admit they make mistakes.

Ben Smith: You are imagining an era that just never existed. It was considered totally routine for one of the great newspaper columnists of the 20th century, Jimmy Breslin, to work with composite characters. Probably the most famous journalist of the 20th century, and he had a mobster he was always quoting to the point that there were investigations opened up into this mobster. Then, it turned out he was a fictional character. The internet wasn’t around to check the facts, but no, newspapers were always full of lies and nonsense and propaganda. It’s just that we now romanticize it.

Luigi: In economics, we talk about news as mostly a public good because it’s not exclusionary. I can read the same news that you get, and so, it’s easy to misappropriate the news and distribute it. And so, in general, the production of news tends to be subsidized. In the old days, it was subsidized by classified ads and, in part, by advertising. What subsidizes the production of news today?

Ben Smith: I think it’s become very niche. There are people making really good money not cross-subsidizing, directly selling news about the technology industry, about the sanitation industry. There’s a company that just sold for $500 million called Industry Dive that will report in great detail about narrow, deep industries. That’s not cross-subsidized.

For general news, this subscription business is very limited in various ways. It’s hard to build a huge business that way, and advertising remains really central. But mass advertising has lost a lot of its value. The businesses that are successful—which, I’d say, Semafor, where I am now, is one of them, Puck is another, The Information is another, this new wave of publishers—they’re selling advertising successfully because they’re reaching a very influential, high-end audience, which, again, of course, poses its own big-picture problems about who provides mass information.

Bethany: There’s something that has bothered me about the rise of these very expensive, subscription-only businesses and the rise of Substack, which is that news is becoming something that you have to pay for, and the more you pay for it, the more information you’re able to get. Is that dangerous, in a big-picture way, for a society in that it’s becoming an elite good?

Ben Smith: I would say that some of these, like Semafor, are free, but the advertising model requires reaching this high-end audience.

Bethany: Yes.

Ben Smith: For sure, yes. Obviously, there was a power to this kind of mass, high-quality news that operated by consensus, whether it was big newspapers or big broadcast television outlets, that’s been going away as long as you and I have been in the business. But it’s hard to know, is it cause or is it effect of this new populism that rejects all sorts of things related to journalism and to institutions? It’s certainly intertwined with that.

Bethany: How do you think about the purpose of and the funding of investigative journalism as a separate issue from the funding of day-to-day journalism or opinion journalism? The latter seems easier to me. Entities like Axios have built big businesses off, basically, other people’s reporting, even though they’re doing a lot of their own now.

But investigative journalism is different. It doesn’t pan out. There’s no way to hack it. You can spend six months on something, and it turns out to be a disaster. Do you think differently about how to fund that or how to think about that going forward?

Ben Smith: I think it’s a great question. When I was at BuzzFeed, we wildly overinvested in investigative journalism, in retrospect, because we loved it. I remember once some hedge-fund guys came by BuzzFeed and Jonah, the CEO, was talking to them, and they said: “Isn’t investigative journalism expensive? Why do you do it?”

And he’s like: “Well, I don’t know. How much does a good fund manager cost you—a really good one, one of the best, not just an OK fund manager?”

They’re like, “I don’t know, in a good year, that person could take home $30 million, $40 million.”

And Jonah’s like, “Well, guess what a really good investigative journalist costs.” They were kind of guessing high. And he was like: “No, no, it’s like $150,000, $200,000. And that person can bring down one of those companies that your manager is betting on. This is, in fact, incredibly cheap and the highest-leverage investment you can make.”

It doesn’t quite pan out that way. I do think that these successful, big investigative teams and these long, as you say, projects that could pan out, or not, can really only exist in the context of a business with big margins that support them. That’s sort of where they grew up, in these metro American newspapers that were incredible businesses. Unless you’re doing it in a nonprofit context, which is a whole other setup.

Luigi: A former editor of Promarket who went back to Italy had this idea of actually having the readers partly finance investigative journalists’ inquiries. They would put up three or four themes, then run a fundraising campaign with the double benefits of raising some money and making it clear that he wasn’t picking.

It was not targeted investigative journalism because, unfortunately, some investigative journalism is just an attempt to kill somebody. But this was outsourcing the decision, so outsourcing the responsibility. What do you think about this potential model?

Ben Smith: I’ve never really seen it work, because I do think that part of the challenge, as we were talking about with the subscriptions, is they may not like what they find. If you asked Americans right now to finance an investigative journalism project, undoubtedly, they would want more investigations into what Jeffrey Epstein was really doing.

The reality is, all of the great investigative journalists in the US have spent years on that one. Maybe there is more, but it sure is hard to get, and your charity subscription may not unearth meaningfully new stuff. The great investigative stories are usually things you haven’t thought of and no one is looking into, like Enron.

In a different way, ProPublica, which is the great, model investigative nonprofit . . . I know a guy who raised money for them would go around to rich people and would warn them, this is an unguided missile, and it could land on you if you give money. That is really important. I do think you see outlets of that model having huge impact. ProPublica has had some really large-scale stories, love them or hate them, about the US Supreme Court lately. I don’t know. I think that model obviously has worked in some places.

Bethany: You’re right, it is interesting. One of the things that has always bothered me, and it’s bothered me for a long time, is this idea that if you have financed investigative journalism, you’re going to be able to make movies, and you’re going to get these big hits, and you’re going to get a piece that everybody reads, because it’s not true. But, somehow, I feel like the commitment to investigative journalism needs to be separated from the results, because it’s dangerous when it’s not.

Ben Smith: Yeah, or you’re just selling people a bill of goods. One of the great fantasies is that you’re going to find a way to make money from journalism via making movies out of it. It’s this fallacy. Some people have done that, and occasionally it works, but you can’t reverse-engineer it.

Luigi: Can you tell us why you wanted to found Semafor? What are the premises, and what are the opportunities that you saw in creating this new publication?

Ben Smith: We thought that there’s an opportunity to, in the immediate term, just try to build around the way media is structured right now, to say, we’re going to go out and put on our hazmat gear and read everything on the internet so you don’t have to and filter it for you. And then, we’re also going to build around individual journalists whose names you know, who are transparent with their opinions and their views and their analysis, but also are open to disagreement.

That’s structurally how we’re doing it. And then, the other piece is just that news has always been global, but I think the American media has maybe never been as parochial as it is now and inward-focused. At the same time, the big stories are fundamentally global. You can’t understand the rise of Donald Trump in a totally American context and think of him as a totally unique global figure. He is obviously part of this huge wave, and so, we think that there’s, long term, an opportunity to build a more global news organization.

Bethany: I loved your analysis at the start about people coming out of cable and expecting the world to be the way it was in that universe. But even after that point, there has been no shortage of people who have been willing to make these big bets that they’re going to figure out journalism, whether it’s Marc Andreessen’s firm giving BuzzFeed $50 million in cash, or you guys finding investors for Semafor, or even the story of The Messenger, in some ways, was an idealistic bet on the future of journalism.

Why do people keep believing? Do they think they figured out a better mousetrap, or do you think there’s something else at work?

Ben Smith: I think there are different categories. I think with BuzzFeed, it was a classic Andreessen Horowitz bet, which is like, wow, if this thing can continue to scale the way it’s scaling now, if its revenues continue to grow like that, it’ll be a huge business and exit at a great multiple. And maybe also, secondarily, tweak our enemies at The New York Times. But it was honestly before those guys were so poisoned against the mainstream press.

I think for places like us, I do think these are investors who really are capitalists and believe that these things, to succeed, need to be sustainable, great businesses, but don’t necessarily see it as the absolute highest-ROI-possible investment and also are believers in the mission. There’s some combination of those things.

Luigi: To start Semafor, you, of course, had a bunch of people financing your enterprise. How do you keep them at bay?

Ben Smith: It hasn’t, honestly, come up, although you make very, very clear from the start that you have editorial independence. We wrote it into the terms of the investments, and we also raised money from a pretty large and diverse pool of people. There’s no one close to being a majority investor.

I think it’s a reasonable question to ask. We disclosed our investors, which I think is important because at least you can be held accountable publicly. But also, I don’t think there’s some neat solution to that. Actually, I would say the neatest solution is to build a profitable business. The most corruption you see is when people are desperate for money.

Luigi: Semafor has been accused of being too close to the Chinese government in reporting about China. How do you see that relationship, and why I shouldn’t be worried about it?

Ben Smith: That’s a very broad claim. We have no relationship with the Chinese government. I think we were accused of secretly taking Chinese money. I don’t think anybody ever questioned our reporting, actually.

We did not secretly take Chinese money. We talked about, we considered, and we still consider doing a conference in China. We do a lot of events, and you can’t do events in China without working with the communists, basically. Then, there were a lot of attacks on us that we might be working with communists. But we don’t have any relationship with the Chinese government.

I should add, I thought you were going to say, Tucker Carlson last week also accused us of us being in cahoots with the CIA to spy on him because we had broken some story about him, and the only possible source for it was the CIA. So, buyer beware.

Bethany: Do you think of AI as a savior for journalism or as the final nail in the coffin? And I’ve been told that I’m way—

Ben Smith: That’s so dramatic! Oh, my God. Does it have to be one of those two?

Bethany: Yes. Yes, it does. I’ve been told that I’m way too idealistic because, well, I like The New York Times’ suit against OpenAI, but I’ve also thought that, well, any journalistic entity that is breaking news that an AI has to have to provide answers will have a degree of value in this new universe. Maybe that provides a new funding model for journalism.

And people have said, no, no, no, not enough people care. Where do you come out on this?

Ben Smith: I think AI is a very cool tool, and we have been using it for some very specific stuff around research. If you want to do really fast, high-volume research across 17 languages on what’s being written about a news subject, it’s super useful.

I think that the kind of journalism that it’s going to replace is this kind of churny garbage that is gaming search engines that has very low value, and already there is more of it being produced. In a way, it is, at least right now, raising the value of what was already the higher-value stuff, which is trusted news from a brand and a human being you can trust. And then, also, providing really basic tools. A fancy type of AI spell check like Grammarly is not going to destroy journalism, although it does mean that people hire fewer copy editors.

Luigi: Speaking of AI, The New York Times has sued OpenAI for copyright infringement. How do you see that battle unfolding?

Ben Smith: My impulse is that the law feels like it’s on the side of the AI companies, but who knows what a court rules or whether there’s a big settlement? Right now, the AI companies have conceded in principle that they ought to pay something for training data, but there’s a huge gap between what they think they should pay—a few million bucks—and the big publishers think they should pay—a few billion dollars.

It sort of comes down to this question. I think tech companies really believe that they’re entitled to 80 percent margins and that that’s just the nature of the universe, that platforms have enormous margins and don’t pay for content because that’s how it’s been for the last generation of media.

That’s not a natural law. You could imagine a legal regime where the people who supplied the information get 80 percent of the content and these guys scrape by on narrow margins. That would be great. We would all have lobster for lunch again.

Bethany: Exactly. How’s this for idealism: maybe big tech will figure out that you’re right and that they’ve contributed to some of their own destruction or irrelevance by the path that they chose, and maybe they’ll choose a different path going forward. What do you think?

Ben Smith: I don’t think so. That doesn’t seem super likely to me. I don’t know. I don’t think people like to pay for things that they’re used to getting for free.

Bethany: A last question from me—and you can tell I’m desperately hunting for reasons to be optimistic, amid the death and destruction and terrible headlines like the New Yorker one. In addition to Semafor, what other green shoots do you see in the media industry? What else gives you cause to be optimistic that there will be a future for news?

Ben Smith: After social media, there’s this enormous fragmentation. I think if you look at podcasts like this one, there’s this strange fact that if you ask people their favorite podcast, the number one is Joe Rogan, this center-right talk-show guy. But he only has 4 percent of the market, and everything else is smaller.

It’s this huge middle tail of podcasts with 30,000, 40,000, 100,000 users. On one hand, for people who are used to this wide-open, transparent social media, it’s a little scary. You have no idea what anybody else is talking about or listening to on the subway. It could be totally different. I think people have retreated into maybe quite partisan spaces, but also into spaces that are sometimes more open, thoughtful, less divisive and safer after this social-media meltdown.

I find it’s hard to cover, actually, as a media reporter. Fragmentation is really hard to cover. When there’s just lots of medium-sized things of equal influence, you’re not sure what to write about. I don’t know. It does feel less toxic than the previous iteration. So, I guess I’m optimistic about podcasts like this one. There’s a good, flattering exit.

Luigi: That’s a good one. Thank you very much. And thank you for enduring some tough questions, but you did it with great style.

Bethany: Thank you.

Ben Smith: Bethany, I’m a huge fan. And, Luigi, yeah, thanks for having me. My son is a junior at Chicago. He’s in economics, so he was very impressed that I was talking to you.

Luigi: Bethany, you are the journalist. What surprised you about what Ben said?

Bethany: I think that he was as optimistic as he was. His point about the quality of news that’s out there today and the ability to find information . . . A lot of us in the news business would say it’s all horrible because journalists’ jobs are going away. The last six months, the last year, have been particularly brutal.

And so, I was surprised. I expected him to be more cynical and to be less . . . not really idealistic, but less optimistic about the future of the news business than he actually is. Maybe he has to be. He’s part of a startup, after all. But he does seem to see some real green shoots in how we’re emerging from this past couple of decades of social-media predominance.

Of course, I can’t help, with some degree of schadenfreude, liking his idea that maybe the era of social media is coming to an end, and maybe Facebook has written its own ending. I thought that was a fascinating comment.

Luigi: It was indeed. And I think you’re right. He must be an optimist, because otherwise, he wouldn’t have abandoned The New York Times to start his own enterprise with a lot of risk involved in it.

Bethany: Although I was hoping that he would have a better answer—or a happier answer—about the future of investigative journalism. I do think about the various business models that have been built in journalism—or the various content models, not even really business models.

One content model has been around what BuzzFeed did, which was lists and entertainment and fun. But another content model that has really worked has been derivative. It’s been people writing about other people’s reporting and adding opinion and a dash of humor to it. But really, in the end, it’s parasitical. It’s relying on somebody else’s underlying reporting, often that of The New York Times or another still-funded publication. In the end, even if it’s been successful, and even if it gets readers, it doesn’t answer the existential question about the business because it’s parasitical. And all of it leaves this question of how you fund investigative journalism aside.

I remember being really cynical in the teens when people would say, “Oh, well, it all becomes a movie, and we just want content so that it can become a podcast or a movie.”

I thought to myself, as Ben and I talked about, half the time, people don’t care what results from an investigative journalism project. It may be really important, but a movie it does not make. And so, it made me think about how we began this conversation with the problems in local news. But I’d add that there’s a problem with investigative journalism, too, that nobody has figured that one out.

Luigi: There is a problem, but there is also a new form of investigative journalism, which is based on massive data leaks. If you think about the Panama Papers, for example, as being an enormous sort of investigative journalism, it was not generated by a lot of shoe-leather effort, but by a massive dump of data. And newspapers have been good at creating international consortia to try to absorb this and process this and distribute it. It is much more efficient than it was.

Now, I agree with you that it is more difficult to identify pedophile priests in Boston by using this kind of data, but I think that it is an advantage over what was before.

Bethany: Yeah, I agree. Maybe there’s some good that comes out of the new era as well as some bad.

The question I didn’t think Ben answered was my first question, and it was a really big, broad question. What could we in the news media have done differently? Could we have done anything, or was this just inevitable?

He pointed out that everyone expected that the profit-sharing would be somewhat equitable, and it just wasn’t, whether because of regulation or because of the platform companies’ avarice, perhaps a lack of ability to see the long term. I don’t know. But you asked, too, if we had set up paywalls in 2000. And he answered that well, which is that the technology wasn’t ready.

But if the technology had been ready, would people have been willing to pay? And did we, in the news media, over the last 20 years . . . Was it just that our sins, our mistakes, and our biases, and how ideological we can be, were laid bare, and thus it always was? Or did we, in our desperation, our growing desperation to get revenues, chase clicks, and therefore, lose the trust of even people who would have continued to believe in us?

Had people set up paywalls earlier, would there be more of a business left? Was there a way to push back on the platform companies before they became as powerful as they became? I don’t know the answer. Maybe it’s crazy to even spend any time thinking about it, because here we are, and it doesn’t matter at this point. It is what it is.

Luigi: I think he did answer, in part. He said the situation could have been different. As he said, in other countries, it is different. I don’t think that the technology was not necessarily there before. For example, in France, Mediapart started very early with a paywall—doing, by the way, investigative journalism in a country that does not have a lot of investigative journalism—and has been quite successful.

There was, in a sense, a silly insistence on the existing business model, not realizing earlier that if you want to produce something of quality, people have to pay for it. I think it would have been helpful, and probably we would have had fewer of the casualties along the way.

But it is true that in order to support a business model based on subscriptions, there are a lot of economies of scale. And so, we’re back to square one. The local news are the ones really affected because in the old days, there was a market for advertising in Buffalo that was different than the one in Chicago or in New York. So, you could have a Buffalo Gazette supporting itself through that. Today, there is no reason to have a Buffalo Gazette separate from The New York Times.

Bethany: There is a larger question, too, even for our democracy, for society, than the business model working, and this came out of my conversation with Ben. I don’t know if it was his observation or mine, but I liked it, which is that there once was, when journalistic institutions made money and business made money and politicians had money, a balance of power.

When journalistic entities are struggling for survival, and money is fraught, and they have to do what they can to try to get money in the door and to try not to make enemies and to try not to have a lawsuit, it just changes the balance of power in ways that are really dangerous.

I did come away from this conversation thinking that not-for-profits cannot be the answer, because a not-for-profit will always be having to raise money among the wealthy and among the very people it’s covering. You need a workable business model for the balance of power to be what it should be.

Luigi: You’re absolutely right. In fact, there was a very interesting paper in the early 2000s that was showing that if you look at the relationship between advertising and content in newspapers and magazines . . . They were looking at mutual-fund advertising and what they were saying about mutual funds. The newspapers with the most diversified advertising base, like The New York Times, The Wall Street Journal, were completely unaffected by the advertising.

If you went to the more specialized Money magazine, all the advertising was basically by mutual funds. They couldn’t really piss off a mutual fund by writing something negative. And so, the content was much more affected. It’s the combination of the profitability and diversity of sources.

I liked his answer when I asked him, after all, you got financed by a bunch of people, probably to influence some of the reporting. And he said, oh, but the way I protect myself is by having a lot of them and keeping them relatively small, which I think is as good an answer as he could have given.

Bethany: Yeah, and there’s nothing different there, really, than . . . I mean, the old Fortune was part of Time Inc., which was a publicly traded company. We were funded by advertisers, but there were enough of them that nobody cared.

There was a period where IBM wouldn’t talk to reporters at Fortune and wouldn’t advertise in Fortune magazine because we’d reported that Lou Gerstner cheated at golf, and as a result, he excommunicated Fortune. But no one thought twice about that. That was just the price you paid.

We liked less that IBM wouldn’t talk to us than that they’d pulled their advertising money because we had so many of them. We had other places to go. It wasn’t a fatal blow the way it might be today or the way it might be for a more niche publication.

Anyway, did you come out of this episode more or less optimistic about the future of journalism? Did it change your mind in any way on how much journalism matters?

Luigi: Actually, before I answer that question, I want to ask, did he really cheat at golf?

Bethany: The magazine reported it, and I guess that’s what did in the . . . It wasn’t my story. But the old Fortune magazine was meticulously fact-checked, so I have to believe it was true.

It’s so funny, for so many years, I didn’t get this at all, until I asked a friend just recently, who’s an avid golfer, and he said that being accused of cheating at golf is like, I don’t know, tantamount to something awful. I totally didn’t get why anybody would care that much. But I guess they do.

Luigi: At some point, I wanted to study whether you could predict the cheating behavior of executives by the way they were playing golf. If you look at, for example, how Trump records his golf scores, they are too good to be true. And when you cheated once, you cheat every time. So, I think that—

Bethany: As is golf. Golf is life. Life is golf. There you go.

Luigi: Anyway, on your more important question, I came out more optimistic. First of all, he destroyed the myth of the good old days. I oscillate whether I believe that the days in the past are good or not, depending on the day of the week and depending on what I read. So, having an extra opinion saying that the old days were not so good is interesting, and he’s clearly optimistic about the future of media and even about journalists. So, since he’s in the trenches, I am more optimistic myself.

Bethany: I’m a little more optimistic, I think. Still, I’m very worried about the future of local news and what that means, not just for local communities, but for national news. I’m still very worried about the future of investigative journalism, but I am really going to try to think about there being a difference between journalists and journalism, and how much people still have access to high-quality information. And then that separate but linked societal issue about people wanting high-quality information and wanting truth and wanting something other than entertainment. That worries me, too, for the future of our society.

But, God, maybe thus it ever was, and maybe I’m too idealistic in thinking there was a different time where families sat around the table together with their newspapers instead of being on their phones looking at TikTok. Maybe that never happened. Maybe that never happened.