Jim Friedlich is executive director and CEO of the Lenfest Institute in Philadelphia. Previously, the Wesleyan University graduate consulted with newspapers on their digital transformations. He worked on the business side of Dow Jones, including the Wall Street Journal, and co-founded a firm that invested in publishing and information services. Friedlich spoke with the Bush Institute’s Bill McKenzie about the Lenfest Institute’s mission, news ecosystems, nonprofit journalism, and the impact of artificial intelligence on journalism.
The full version of their interview, which only has been slightly edited for clarity, is below, along with an excerpt in the accompanying video.
Let’s start with a simple question. What is the Lenfest Institute? How did it come to be?
The [Lenfest] Institute is a nonprofit organization dedicated to one thing, which is saving and growing the important resource of local news in America.
Gerry Lenfest was a cable pioneer who sold his business to Comcast and dedicated himself to philanthropy. And when he was 85 years old, his beloved Philadelphia Inquirer came on hard times, including politically, and he bought it and decided that it should be operated as a public trust, that it should be donated to a nonprofit organization.
So, he started the Lenfest Institute and asked me to run it. And the notion was that the Philadelphia Inquirer would serve as a kind of test kitchen or live laboratory for the transformation of local news, particularly from print to digital, and that we would share those lessons around the country. So, we’re Philadelphia-based, but we are national in scope.
Explain for a second how you all try to make a difference in your investments in local news organizations. For example, I see that you train people in raising funds for news organizations.
We’re trying to build capacity and capability across the nation at the local level. And that means several things. First, that we train and assist, and frankly learn from, organizations around the country about how to raise money for journalism. We have something called the Lenfest News Philanthropy Network. The News Philanthropy Network is a distance learning and training organization that has an annual summit.
And the theme is kind of “teach them to fish.” We think if news organizations, for-profit and nonprofit, can learn to tap their communities and raise money from individuals, from corporations, and from foundations as philanthropies, that they can invest in their future. So, building philanthropic capacity is one big pillar. We also do a lot around technology.
We were founded at a time when the internet had laid waste to a lot of American newspapers and taken advertising revenues and subscribers and readers, and we feared that news organizations around the country would never recover. Just as we’ve begun to rebuild those capabilities and get users to pay for their digital subscriptions to major American newspapers or to support their NPR stations, along comes AI.
We’ve taken the view that AI is as disruptive, or more so, than the original advent of the consumer internet in the late 1990s. But this time we think we won’t be fooled again.
We believe if we lean into AI, embrace it as an agent of change and an agent of improvement and empowerment for local journalism, that this time we can use the technology rather than suffer from it.
So, technology enablement is a second major pillar. And the third is, of course, direct investment in public service journalism. We think at the core of this is the need and benefit and American desire, on both sides of the aisle, to have a common source of truth. And journalism, when done well and independently and well-resourced, we think gets to the truth and helps our democracy continue to thrive.
I heard you talk in a podcast about an ecosystem approach to local news. What does that mean?
It’s a good question. I came from commercial media — at The Wall Street Journal, I was on the board of CNBC — and I had literally never heard the term “ecosystem” used for anything other than nature.
The ecosystem approach looks at news markets as kind of living organisms, if you will, in a market like Philadelphia or Austin, Texas.
There is not just one flagship newspaper, but hopefully multiple news organizations. Typically, there is a flagship NPR station, a major newspaper in one shape or another, digital startups (often nonprofit), commercial radio, and local television from which most Americans still get, and often trust, their local news.
We thought that Philadelphia should be supported at the ecosystem level. What that means is we put in place programs that help not just one news organization — even the one that we own, the Philadelphia Inquirer — but the market as a whole.
And that’s translated into supporting election coverage — nonpartisan election coverage — and accountability journalism across two dozen news organizations in the city of Philadelphia. We’ve seen this in cities like Charlotte, North Carolina. We’ve seen it in Miami, we’ve seen it in Detroit, we’ve seen it in Austin, Texas, which has the Texas Tribune, the Austin American-Statesman, and a leading NPR station. As you know, the ecosystem approach is a fancy term for supporting and trying to raise all boats, right.
Let’s talk for a second about the Inquirer and nonprofit news as well. So Lenfest is, if I have this right, the nonprofit owner of the Philadelphia Inquirer — is that correct? And the nonprofit Baltimore Banner recently acquired the for-profit Pittsburgh Post-Gazette. Do you see nonprofit ownership of once-for-profit papers becoming more of a trend?
I do. Let me explain some of the nuances in what you just said.
The Lenfest Institute is a nonprofit public charity. We received, as a donation, a gift of the Philadelphia Inquirer, together with a small endowment. We continue to raise money to support the Inquirer and all of our other work around the country in local news. The Inquirer remains a for-profit public benefit corporation.
It’s permitted to break even. It doesn’t have to maximize shareholder return. It has a double bottom line — financial and public service. But Gerry chose to keep the Inquirer as a for-profit. So, its team would get up in the morning wanting to sell advertising, sell subscriptions, work for a living, as he said, and not think that it had a sugar daddy.
We’ve made critical investments in their digital transformation and their public service journalism and their infrastructure, without which I’m not sure they would be where they are today, which is profitable and growing as a digital property. At the same time, they’re operated independently. We are the nonprofit, non-controlling owner of the Inquirer, so they can endorse candidates, which a for-profit can do and a nonprofit cannot do.
We read their endorsement in the last presidential election at the same time anyone else would. They don’t ask our permission. They operate independently. There’s an arm’s-length relationship that we’re quite happy with. The Pittsburgh Post-Gazette and the Baltimore Banner are each owned by an organization called the Venetoulis Institute for Local Journalism, which was modeled on the Lenfest Institute for Journalism.
We advised on that, and we’re very close with Stewart Bainum, who is the Gerry Lenfest of that equation.
The Pittsburgh Post-Gazette remains a for-profit organization. As I understand it, the difference between for-profit and nonprofit, from an operator’s perspective, is really three things. The first is that the organization can operate at breakeven and does not have minority shareholders or debt holders or a parent company that needs to be paid a dividend each quarter that comes out of the newsroom’s capacity, or out of the ability to reinvest in the transformation of the news organization. So,$ it can operate at breakeven.
Second, it can appeal to the public legitimately and genuinely as a nonprofit organization — like the art museum, or Children’s Hospital, or the University of Pennsylvania, or the University of Texas. This has allowed the Philadelphia Inquirer to attract over 5,000 individual donors, and $5 or $6 million a year, to support its activities. People believe, legitimately, that they are donating to a public trust, a public charity, rather than a commercial news organization.
And the last is a kind of attitude shift, I would say. It’s different, having worked in both environments: waking up working for a publicly traded company that is optimizing shareholder value and trying to make a profit for good reason, versus trying to serve the public interest first and foremost.
Nonprofit is, on the one hand, a tax status, but on the other hand, it makes a real difference in what the mission is and the types of people who are attracted to that mission.
Do you see this kind of trend — somewhat complicated, but this nonprofit/for-profit arrangement — do you see this as a trend, or maybe not?
I see the trend as a decided move to nonprofit, and the nuance of a nonprofit owning a for-profit, I think, is maybe a distinction without a difference.
Since we started ten years ago, the Salt Lake Tribune converted from for-profit to nonprofit — straight up, no nonprofit/for-profit hybrid. The newspaper in Lancaster, Pennsylvania, has made such a transition.
The newspaper in Santa Barbara was acquired by a nonprofit parent company called Newswell, which is operated out of Arizona State University. Newspapers in northern New Jersey have made this transition. The transformation of the Pittsburgh Post-Gazette, which I think is the largest of these, and we think the next one — which they’ve disclosed — is the Minnesota Star Tribune, which is owned by a beneficent owner named Glen Taylor in Minneapolis. He has said that it will likely transform into a nonprofit.
So nonprofit news for newspapers is certainly a trend. Nonprofit news for startups and smaller news organizations — like Spotlight PA, which is our statewide news organization in Pennsylvania, or the Texas Tribune down your way in Texas, or CalMatters — is a trend now over the past decade. The largest of those, of course, is ProPublica, which is the powerhouse investigative news organization — we think a $50 million-plus annual budget and the largest investigative newsroom in the country, not just of nonprofits, but of any kind.
Going back to AI for a second — I see your institute has invested in placing AI engineers in news outlets. What is their purpose? What are the results?
We thought that 20 to 25 years ago, the advent of the commercial internet caught the news business very flat-footed — by surprise, and either defensive or with its head in the sand. And by that, I mean many news organizations ignored it or treated it as a new way to distribute their content but not a new way of thinking about how they publish, when they publish, and how they operate.
And there was pretty egregious underinvestment. And most of the challenges to local news and news in general have their origins — at least their most recent origins — at that time. Our view has been, let’s get it right this time. Let’s invest meaningfully in training our news organizations how to use AI, like almost every other major American business. And we turned to, we thought, the logical partners in doing that — Microsoft, OpenAI, and a number of wealthy individuals whose wealth was tied to technology.
And in total, we raised about $10 million, including cash and software credits, to fund a sort of Fulbright scholarship for AI in news. The newsrooms all said, “We want to learn this technology — please give us one full-time AI engineer.” In every case, it was the first and only AI engineer in the news organization. And these are big newsrooms — the Boston Globe, Philadelphia Inquirer, Seattle Times, ProPublica, Baltimore Banner — 11 in total.
The results have been pretty spectacular after an initial, understandable period of skepticism — who is this person, what are they here doing, can I trust them? The fellows each sort of took root and expanded. There’s been a total of 50-plus AI tools developed that are shared throughout that network, and more broadly across local and national news.
There have been new tools to allow for archive search at the Philadelphia Inquirer, for new forms of advertising sales targeting and revenue creation at the Seattle Times, for new uses of public data and coverage of school board meetings, council meetings, and planning meetings that couldn’t possibly be covered by a single reporter — but AI allows this work. The philosophy has always been “human in the lead,” not just a “human in the loop,” and the newsrooms are extremely excited about the empowerment that AI has given them.
Let me wrap this up here. I heard you, also on the Local News Initiative podcast say that the new technology of AI is “telling us we should be looking differently at how we do business.” What do you mean by that?
What I mean by that is that you can think about AI in two ways. There’s a kind of Tier One approach, which is the obvious first step, and that’s AI for simple, repetitive tasks — like translating Chicago Public Media content from English into Spanish in near real time to reach a larger audience. Fantastic. Looking at hundreds of advertising leads at the Seattle Times and saying, “These are the five that most resemble your current clients — go get them.”
Searching the transcripts of 200 school board and council meetings each week in 71 communities around Philadelphia and looking for specific stories or specific words that reporters are interested in tracking — like who’s talking about data centers, who’s talking about flock surveillance, these kinds of things. Those are sort of Mode One approaches to AI: important, efficient, and enabling for journalism.
What we’re trying to encourage going forward is a more fundamental approach, which is: there are now a billion people per week using OpenAI around the world. And what that means is that there’s something about the AI experience — something about typing an English-language question into a box and asking it to explain something for you, or give you an answer, not a search result, not an ad, not a link, but an actual answer — that consumers not only like, but truly love.
So, we’re asking our news partners to think differently — as Steve Jobs once famously said, “think different” — about the product itself. The last time technology seriously disrupted the news industry, the spoils — the profits, the audience, and the attention — went to organizations like Facebook, Instagram, Snapchat, and Google, who really thought differently about the user experience.
We think there’s an important role, a vital role, for big brands like the New York Times, Philadelphia Inquirer, Washington Post, etc., in an AI world. We think people will trust information that comes from those brands more than they ever did, because there’s so much else out there on the internet. At the same time, they can and should show up in a different way, offering those kinds of AI-first capabilities and AI-first design that will attract users.
The user has told us — they’ve voted with their feet, or their eyeballs — the kind of experience they want. And I think they’d like to have that experience from trusted news brands, as well as from chatbots.
Thank you very much for giving us your insights into what is obviously a very rapidly changing world.
Thank you.
