BrainstormNW: Can print media survive?

Survival and the Future of Print Publications:
Comments on the industry’s precarious future

Jim Pasero,
Publisher, BrainstormNW
Remarks before the Portland Rotary Club November 27, 2007

Last month, October 2007, BrainstormNW magazine celebrated its 10th anniversary with a dinner at the Tualatin Country Club, keynoted by Congressman Greg Walden “” who, by the way, sounded like he might make a good governor one of these days.

Not that we might need one.

We know that the print industry is in decline. Last month I addressed that topic in our 10th anniversary issue: I wrote partly about the number of newspapers who suffered major cutbacks this year, the Los Angeles Times, San Francisco Chronicle, The Philadelphia Inquirer, The Dallas Morning News, Star Tribune “” the list goes on and on.

The question we face today, those of us in the print business, is will the print industry disappear? Will it be replaced by the Internet? I think this is doubtful. More and more studies are showing that Internet content, without a legitimate established news source behind it, doesn’t have great appeal. Yes, there are exceptions: the Drudge Report, The Huffington Post “” but, again, without a news source as an anchor, not much appeal.

What is happening today in print is that more and more readers are expecting their news for free. More and more publications are falling into the trap of giving their product away, hoping to gain favor with advertisers.

These days 18 million people a day read The New York Times online for free. One million pay for the paper. The Portland Tribune gives its twice weekly paper away for free. Our publication, BrainstormNW magazine is not a newspaper. It is a monthly news and current events magazine, political magazine, a leadership magazine”¦

As far as a decaying print industry, the good news for BrainstormNW is that we are not a newspaper; the bad news is that the news magazine business is probably in worse shape from an economics model than the newspaper business. Nationally, there’s Time magazine, Newsweek, U.S. News and World Report, all news magazines “” and all shells of their former selves.

So how have we survived 10 years as a regional magazine when one of two magazines don’t make it to their second issue? Good question.

As I wrote in last month’s magazine, BrainstormNW resembles more a national thought magazine, such as The Weekly Standard, The Nation magazine, The New Republic, or The American Spectator, than it does a regional Time or Newsweek. All thought magazines are influential beyond their distribution numbers. The Nation’s distribution is 190,000. The New Republic’s distribution is 60,000. BrainstormNW’s distribution is 25,000. So you can see as a regional magazine, located in small state, our distribution numbers as compared to these national magazines are proportionally not bad.

Again, thought magazines are influential far beyond their readership.

For instance, Rupert Murdoch’s The Weekly Standard gets credit as the world’s leading neo-con voice in pushing America into war with Iraq. R. Emmert Tyrell of The American Spectator used his Arkansas Project to spend years looking up dirt on Bill and Hillary Clinton. Tyrell was successful enough that The American Spectator was harassed by Clinton’s Justice Department over the nonprofit status and their related work. Now while we have not started a war, or harassed a President, BrainstormNW has challenged a few sitting Oregon politicians, including a governor or two.

So how has BrainstormNW survived 10 years as a regional magazine in a market that is not large?

BrainstormNW has survived because we sit in a niche that, for now, is unoccupied by any other publication or news outlet “” that is to be an undiluted and unafraid voice for the private sector.

Our mission statement reads:

“BrainstormNW provides a roadmap to a richer life for productive, engaged Oregonians. We challenge the status quo with intelligence, style and humor. And we cultivate Oregon’s prosperity and vitality. Our monthly magazine offers a broad range of topics, such as business, politics, public policy, economics, and lifestyle.”

BrainstormNW is owned and operated as an LLC. Its ownership structure is unique. BrainstormNW has 17 owners; 15 of them own manufacturing companies in Oregon. This kind of ownership structure, where 15 manufactures have come to together to own a “leadership/ thought” magazine, doesn’t exist anywhere else in the country “” not in any of the other 49 states.

The good news is that we, Bridget Barton and I, have had the opportunity to put that unique ownership structure together. The bad news is that the reason BrainstormNW exists in Oregon, and no other magazine quite like it exists anywhere else in the country, is because Oregon has the weakest business and entrepreneurial culture in the country. But, of course, there are those who would argue that what I have just said is the minority position.

So there are two prevailing contradictory views of Oregon: the best of times or the worst of times.

The Oregon Leadership Summit is going to hold its sixth annual presentation of the Oregon Business Plan on Monday Dec. 3. The conference is a mixture of government and business leaders, and their message is often combines the two. The lead sponsors of the conference are Oregon utilities and health care companies.

This year’s mission statement for the conference reads:

“The Oregon Business Plan’s first five years have helped chart a course out of recession and into a period of growing prosperity. At last year’s Summit, Oregonians committed to advancing our state as a global leader in sustainable development, with the promise of great benefits for the economy, community and our quality of life.”

Last year, the Oregon Economic Development Department published statistics that showed Oregon ranked 7th in the nation in 2006 in GDP growth. That number was compiled by the U.S. Department of Commerce’s Bureau of Economic Analysis.

By the second quarter of 2007, according again to the Bureau of Economic Analysis, Oregon’s growth, at least in personal income, had retreated.

The Bureau ranked Oregon 26th in Personal Income Growth for the first two quarters of 2007, Washington ranked second, Nevada fifth, California 16th, Colorado 14th, Utah first, Wyoming 15th, Montana 20th “” but Idaho 43rd. In 2007, every Western state out performed Oregon in personal income growth, except Idaho.

But still there is one predominant view of Oregon’s economy, and it is the view that is also prevalent in our media here: Oregon is a place where government leaders and business leaders come together to lead the state forward in sustainable development and that new industry will pay big economic returns. Again, it is only one view of our economy, but it is the dominant view.

BrainstormNW exists because we aren’t afraid to take a different view, more of a critical view. We aren’t afraid to question prevailing fads, to be unpopular.

And there is fear out there if you challenge the status quo, the majority view. Recently, the Portland Tribune ran two prominent editorials pushing/suggesting that Oregon do something about its poor transportation system and its lack of investment in that system, especially compared to neighboring states such as Washington.

Now, the two editorials that the Tribune ran “” one authored by Bruce Starr and Rick Metsger, and the other authored by the editors of the paper “” both had an urgent tone to them. Those who read them knew they were talking about that unpopular five-letter word: roads. Building roads. Still Starr and Metsger didn’t get around to mentioning the ugly word, “roads,” until the ninth paragraph. And the Tribune’s own editorial never mentioned the word. That’s not our style at BrainstormNW. It’s not the way we do things.

In the last few years, BrainstormNW has covered some major businesses stories in our region, and done so accurately enough to get a reputation for credibility on these issues.

A few examples include:

“¢ BrainstormNW was where then Willamette Industries Chairman of The Board Bill Swindells, after weeks of silence, opened negotiations with Weyerhaeuser by naming a price. Press conferences were held in Chicago, New York and Florida to confirm Swindell’s quotes and his opening bid in BrainstormNW. The article was our May 2001 cover story: “Forest Fortunes “” Willamette, Weyerhaueser and Wall Street.”

“¢ BrainstormNW pages were also the place where Tim and Gertrude Boyle and Mayor Vera Katz discussed their dispute over the relocation of Columbia Sportswear to Washington County. It was in our March 2002 issue entitled “The City That Shrinks”

“¢ BrainstormNW was also where venture capitalist Ralph Shaw; economist Joel Cortright, working on contract with The Brookings Institution; and Schnitzer Investment CEO Ken Novack; and to some extent, Mark Hatfield, discussed their worries and concerns about OHSU’s expansion to South Waterfront and into the industry of biotech. It was our February 2003 cover story: “Banking on BioTech, OHSU President Peter Kohler’s Prescription for Oregon: Opportunity or Gamble.” Four and a half years later the critics concerns proved accurate, prophetic.

Those articles, and many others, have given BrainstormNW the credentials to weigh in on this argument about our region’s economic direction. And that’s good, because what is most wrong with our area is our inability to hold vigorous public debates, to juggle two opposing ideas at once, and our willingness to succumb to the economic concept of the “now” “” the “fad” “” even if the argument contradicts prevailing thinking.

Again, on Monday, the Oregon Business Plan will discuss sustainable development and how profitable it will be to our region’s future and what a trendsetter we are.

Now there is nothing wrong with sustainable development, but I predict that nowhere at that conference will a cover story be mentioned from an issue last month in Business Week entitled: “Little Green Lies: The sweet notion that making a company environmentally friendly can be not just cost-effective but profitable is going up in smoke. Meet the man wielding the torch.”

The man is Auden Schendler who, according to the article, raised Aspen Skiing Company’s green credibility. Says Schendler, “I’ve succeeded in doing a lot of sexy projects yet utterly failed. How do you really green your company? It’s almost “¦ impossible.”

One suggestion to green your region is to build nuclear power plants. But that’s for another speech.

Again, the majority opinion, as espoused at next week’s conference in Portland, will be to portray the state and city as world leaders is sustainable development. They will argue that we need to concentrate on these initiatives and build on them.

The minority position, which we hold, is that Oregon suffers from poor fundamentals that are of greater concern as far as competing in the global economy. Oregon suffers from a poor higher-ed system, poor transportation, poor roads, an antiquated tax system, a bloated public employee pension system, and a land use system unfriendly to development.

The result of poor fundamentals is that Oregon has been falling behind in per capita income versus its neighbors. Oregon now ranks 28th in per capita income. Washington states ranks 14th.

Two years ago, due to the falling per capita income numbers in Oregon, BrainstormNW embarked on a project with the Oregon Community Foundation to discuss Oregon’s future position in the global economy.

After a year of work on the project, in September 2006 we published a declaration addressing the concerns and suggesting remedies to make Oregon more competitive. The BrainstormNW/OCF declaration was signed by 37 of Oregon’s leading CEOs, including JELD-WEN’s Rod Wendt, Columbia Sportswear’s Tim Boyle, A-dec’s Joan Austin, Schnitzer’s John Carter, and David Evans of David Evans & Associates, to name a few. Ten of the CEOs who signed the declaration were from individuals who run publicly traded companies in Oregon.

In part, the preamble to the declaration read as follows:

The world economy is relentless, and the competitive climate is fierce. Yet Oregon’s infrastructure is weak “¦As we view Oregon’s competitive position, we share deep concerns for the well-being and security of the many thousands of employees with whom we work on a daily basis. We believe that without significantly upgrading the state’s economic infrastructure, job expansion in Oregon will concentrate and stagnate in low-paying service sector jobs and not in higher paying professional, manufacturing, engineering, and other creative fields. Opportunities for advancement and future employment will dwindle.

Upgrading Oregon’s infrastructure will require significant leadership”¦as Oregon business owners and CEOs, we are prepared to step up to that commitment.

Signatories to this document lead companies that make a significant portion of their income from businesses conducted outside of Oregon “¦ some do less than 2 percent of their business in the state. Therefore, let us be clear that it is not out of a selfish or profit motive that we make these policy recommendations to the government leaders but because we share a deep concern that Oregon is quickly falling behind other states and countries (as measured by per capita income) in the creation of family wage jobs.

We are very proud of the work that we did with the OCF and the 37 CEOs who signed the document. You can call our office and get a copy of the declaration. Still, competing in the world economy represents the minority position in Oregon.

Today in The Wall Street Journal, Joel Kotkin, who is the national skunk at the party as far as what “the creative class” offers cities, wrote an article entitled, “The Rise of Family-Friendly Cities.” Kotkin’s premise is cities that produce jobs and incomes will thrive, and they happen to not be the trendy cities often written about. Think Charlotte, Raleigh-Durham and Houston, not Seattle.

Writes Kotkin about what he sees as the “creative class” myth: “There is a basic truth about the geography of the young, educated people. They may first migrate to cities like New York, Los Angeles, Boston, or San Francisco. But they tend to flee when they enter their child-rearing years. Family-friendly metropolitan regions have seen the biggest net gains of professionals, largely only because they not only attract workers but they also retain them through them through their 30s and 40s.

“Advocates of the brew-latte-and-they-will-come approach often point to greater Portland, Ore., which has experienced consistent net gains of educated workers, including families. Yet most of that migration “” as well as at least three quarters of the region’s population and job growth “” has been not to the increasingly childless city, but to the suburban periphery. This pattern holds true in virtually every major urban region.”

Ralph Shaw, the former chairman of the Governor’s Council of Economic Advisors, a leading venture capitalist in our area, a former employer of Alan Greenspan, who was written up in Time in the 1970s as America’s best money manager, is the proponent of the minority position that Oregon’s fundamentals are weak and that they will eventually hurt us.

In 2002, in an address he gave to The Economic Roundtable at the University Club in Portland entitled, “Sleepwalking in Oregon,” he said:

“The Oregon economic miracle of the 1990s will be sorely tested in this decade by places with substantially better educational facilities and considerable lower operating costs “” but I hear virtually nothing from our elected leaders. Our universal response seems to be, let’s pretend we are making wise decisions and commitments to technology by putting modest amounts into science and engineering schools and substantial sums into biotechnology bricks and mortars that are unlikely to pay dividends for 15 years, if ever.”

Last year, as an attempt to build on our work with the Oregon Community Foundation and to broaden and deepen the economic debate in Oregon, BrainstormNW began mid-year and year-end economic reviews.

In December, we held our year end review for 2006. In June, we held our 2007 mid-year economic review. For the review we invited the Governor’s Council of Economic Advisors. Eight of the 12 attended. Ralph was the chairman of the Governor’s Council at the time. The invitation to the members of the council was, in part, an idea that Shaw and Phil Romero, former chief economist for the state of California, proposed. They believed then, and now, that members of the council ought to discuss broader policy implications in their meetings and to not just affirm the numbers in the revenue forecasts presented to them by the state’s economist.

During the two and half hour sessions, no surprise, the more classical conservative economists, Ralph Shaw, Phil Romero, Bill Conerly (founder of Cascade Policy Institute) and Randall Pozdena (of EcoNorthwest), dominated the session. They took the minority position and were quite critical of Oregon “” critical that Oregon lacked venture capital, a poor transportation system, and possessed no entrepreneurial culture.

The majority position, put forth by Tom Potiowksy and other economists attending (most of them on the state payroll), was to respond largely in silence in facing an avalanche of heretical views offered by Shaw, Pozdena, Romero, and Conerly. Again, the positions taken by Shaw and the other three were the more classic, orthodox economic positions. But in Oregon, still, the minority position prevails.

When the transcripts were published in our June issue, the governor had a conniption fit. Apparently, he is not used to criticism.

In response this month, Allen Alley, the governor’s deputy chief of staff, called a meeting of the Governor’s Council of Economic Advisors. This is a group, he informed them, he had never heard of before the governor brought their remarks in the June issue of BrainstormNW to his attention. It’s suprising that Alley had never heard of the council, especially since that very week council member Bill Conerly was written up in the Wall Street Journal editorial page for his work in defeating Measure 50, and the Governor’s Council was mentioned specifically by name in the Journal’s editorial.

Now Allen Alley’s most recent background is as CEO of Pixelworks. During his tenure, the company lost a couple of hundred million dollars and its stock is recently quoted on the NASDAQ exchange as under a dollar. That didn’t stop Alley in his new role as the Governor’s deputy chief of staff from telling the council on at least three different occasions that BrainstormNW has a history of misrepresenting issues. He also warned the group to be careful when talking to the press because the governor is not happy. He also said they shouldn’t participate with BrainstormNW in the future. If they did collaborate with BrainstormNW, Allen told them, there would be repercussions from the governor’s office.

Remember the issues we are talking about here “” we are talking about land use laws and lack of venture capital in Oregon. This is not exactly sexy stuff. But this is typical of the level of intimidation that occurs in Oregon when you are trying to have a dialogue that represents the minority position.

During the November meeting between the council and Alley, Ralph Shaw and several others questioned Alley about the exact misrepresentations in the June article. Alley said nothing specifically but reiterated that the governor did not like what he read and warned once again that the members of the Council should behave themselves in the future.

At that point, Shaw resigned as chairman of the Governor’s Council of Economic Advisors and from the council as well.

This brings me back to where I started. So how do you stay in business for 10 years as a regional magazine? Well, you do important things “” things that matter. You do important things, such as getting Ralph Shaw fired as the chairman of the Governor’s Council of Economic Advisors.

Thank you very much.