The journalism company that has made the greatest impact online has been AOL, which was tenuously married to Time Warner for a decade until it went independent again in 2009. AOL purchased Patch around then, to be a “hyperlocal” digital news service, with branches in some 860 communities, supported by advertising. In other words, it would be like a digital newspaper but without the massive production expenses. A detailed and largely sympathetic Columbia Journalism Review account of a Patch editor in upstate New York described how the service logically focused on more affluent communities. After months of keeping the editorial and commercial sides distinct, that strategy was thrown overboard as the enterprise foundered; editors worked with the ad staff, among other things “drumming up ad sales leads.” The editors were then directed to favor content that would get people to the site and also to cultivate “user-generated free content.” Patch lost $100 million in 2011, and is estimated to have lost another $150 million in 2012. As David Carr puts it, Patch “is no closer to cracking the code.” While it may eventually get into the black, it will do so at the expense of sacrificing much of the journalistic vision it had at its launch.

Patch is evolving toward the Huffington Post business model: rely on volunteer labor, aggregate content from other media, emphasize sex and celebrities to juice the traffic, and generate some of your own content if you can afford to do so. As fate had it, AOL purchased the Huffington Post in 2011. An internal memo on journalism from AOL CEO Tim Armstrong at the time captured the commercial logic: he ordered the company’s editors to evaluate all future stories on the basis of “traffic potential, revenue potential, edit quality and turnaround time.” All stories, he stressed, are to be evaluated according to their “profitability consideration.” As one 2011 media industry assessment of the future of journalism put it, this is “good news for public relations professionals who are trying to pitch stories,” because “these sites will be looking for more content to fill their pages.”

Armstrong’s memo raises the question: What happens when a story— like that of a distant war or the privatization of a local water utility—fails to achieve proper “traffic potential, revenue potential”? What if no PR spinmeister wants to push it and provide free content? Does it disappear off the radar—and with it the ability of citizens to know what is being done in their name but without their informed consent? That might be a smooth ride for the CEOs, but it’s a clunker for a democratic society.

Two aspects of capitalism and the Internet loom large in digital journalism. First, if anyone can make money doing online journalism, it will almost certainly be as a very large, centralized operation, probably a monopoly or close to it. The Internet has proven to be more effective at centralizing corporate control than it has been at enhancing decentralization, at least in news media. “We are probably far more centralized than we were in the past,” one executive said.

To some extent it is because human beings are capable of meaningfully visiting only a small number of websites on a regular basis. The Google search mechanism encourages concentration because sites that do not end up on the first or second page of a search effectively do not exist. As Michael Wolff puts it in Wired, “The top 10 Web sites accounted for 31 percent of US pageviews in 2001, 40 percent in 2006, and about 75 percent in 2010.” By 2012, according to the Web traffic measurer Experian hitwise, 35 percent of all Web visits now go to Google, Microsoft, Yahoo!, and Facebook. (The same firms get two thirds of online ad revenue.)

The grand irony of the Internet is that what was once regarded as an agent of diversity, choice, and competition has become an engine of monopoly. As to journalism, it is unclear if anyone can make a go of it commercially, beyond material aimed at the wealthy and the business community.

The second aspect of the capitalism-Internet nexus at the heart of the online journalism business model is an understanding that the wages paid to journalists can be slashed dramatically, while workloads can be increased to levels never before seen. Armstrong’s memo states that all of AOL’s journalistic employees will be required to produce “five to 10 stories per day.” Tim Rutten of the Los Angeles Times captured the essence of this requirement in his assessment of AOL’s 2011 purchase of the Huffington Post: “To grasp the Huffington Post’s business model, picture a galley rowed by slaves and commanded by pirates.” In the “new-media landscape,” he wrote, “it’s already clear that the merger will push more journalists more deeply into the tragically expanding low-wage sector of our increasingly brutal economy.”

With massive unemployment and dismal prospects, the extreme downward pressure on wages and working conditions for journalists is the two-ton elephant that just climbed into democracy’s bed. “In the new media,” Rutten concludes, we find “many of the worst abuses of the old economy’s industrial capitalism—the sweatshop, the speedup, and piecework; huge profits for the owners; desperation, drudgery, and exploitation for the workers. No child labor, yet, but if there were more page views in it …” David Watts Barton left the Sacramento Bee in 2007 to work at the Sacramento Press, a hyperlocal digital news operation. In the Columbia Journalism Review, he described the extreme difficulty of producing credible journalism based on volunteer labor. “Editing costs money. Citizen journalists are cheap and they can even be good. but even great journalists need some editing; citizen journalists need a lot of it. … Without journalism jobs, we don’t have journalism.”

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