Journalism, as you learn in your first J-school class, is all about the inverted pyramid. It is the shape that haunts you as a writer and guides you as an editor. And now, as evidenced by Pew’s new report on the state of the news, it is a shape that increasingly defines the media industry’s business model. It also explains why we're suddenly seeing a raft of new Citizen Kanes’ investing in media and journalism.

Most of the coverage of the report focused on the rise of online and/or digital-native news operations. In all, Pew reports, such outlets have to date created 5,000 jobs.

This may seem like a sign that all is finally becoming well in the news business after the Great Internet Disruption that famously laid waste to print publications’ century-long dominance of the media. Yet, in a cautionary note, Pew points out that “the vast majority of bodies producing original reporting still comes from the newspaper industry,” which is still shrinking.

Making matters worse, many of the top digital media employers listed in Pew’s report are not necessarily outlets that primarily produce what you could accurately call original journalism. Yes, places like the Huffington Post certainly do some original reporting (for which they even won a Pulitzer), but a huge chunk of their work is in aggregation, curation, listicles, and other kinds of non-original (or at least derivative) content.

Taken together, online media outlets could be proliferating, but original journalism may still be contracting, or at least not growing in any measurable way.

Hence, the inverted pyramid. At the top of the new inverted pyramid of journalism are the many aggregators and curators who do not produce any original work at all (think Drudge and similar sites); in the middle, narrower levels are the outlets that mix aggregation and curation with some original journalism (HuffPost); and at the bottom, are the ever-smaller number of places that mostly do the expensive time-sucking work of original reporting.

In this system, the outlets in the wider layers at the top of the inverted pyramid largely rely on the content coming from the narrower bottom layers of the pyramid. They rely on that content for aggregation and curation. They also rely on it for all the riffing and remixing that masquerades as original content - from block-quote-based blog posts, to columnizing to video sampling to the so-called “explanatory journalism” projects being built by those who have not primarily done original journalism, but instead have mostly synthesized others' work.

How many media outlets can dance on the head of a pin?

Teetering on ever-fewer journalism outlets to feed ever-more curation/aggregation outlets, this model is inherently unstable in the same way a financialized economy is.

In that kind of economy, the bottom is where assets are actually made, and as you go up the system there are profit-skimming ventures based on selling derivatives and securities based on the core asset. When too many resources go into the derivative/speculative industries at the top and not enough go into building the underlying asset at the bottom, you get an inverted pyramid, and the whole system can fall over.

For example, when the value of the actual houses at the bottom of the economy's inverted pyramid dropped, that rippled up through the derivative industries that sold mortgages, mortgage backed securities, and insurance on mortgage backed securities, and it also wreaked havoc on institutional investors who had put their cash in such investments. Ultimately, we got the financial crisis of 2008. Similarly, if we, say, run out of oil at the bottom of the financialized economy’s inverted pyramid, the many oil speculation industries and instruments at the top of the inverted pyramid will be worth nothing, and there would likely be another financial panic.

It is potentially the same dynamic for journalism. If there's too little original quality journalism being produced - if, metaphorically speaking, the bottom of the pyramid becomes as narrow as a head of a pin - then profit-taking aggregators/curators like Upworthy at the top of the inverted pyramid can have the greatest algorithms ever created and get glowing magazine profiles, but they will have less and less "worthy" content to put up. And because they can’t very well curate curation or aggregate aggregation, it will likely mean relying on non-journalism content (sideboob, anybody?), begging for lower quality non-professional content, or facing total collapse.

The huge opportunity for new Citizen Kanes

In my Harper’s magazine investigation of this inverted pyramid in 2012, I noted that trends in newspapers, radio and television combined with trends in online news had together created the image of more news outlets, even though there may be less original news than ever. This is perhaps most easy to see on your TV screen - there are more and more cheap-to-produce chat shows featuring pundits and hosts pontificating about news, yet fewer and fewer TV journalists actually doing the unglamorous work of reporting original news. Using newspapers as a euphemism for all original journalism outlets, I reported in Harpers:

Even as millions of readers abandon newspapers for blogs and websites such as the Huffington Post and the Drudge Report, these online enterprises still rely on aggregation for much of their content. And since such aggregation is largely made up of borrowing or stealing from those very newspapers, the Internet has expanded newspapers’ ability to frame events and shape the terms of our political conversation, while simultaneously killing off such money-spinning franchises as the classified ad.

For you, the news consumer, this means that the Ron Burgundy on your local evening news program, or the radio announcer you listen to each morning during your commute, is relying more than ever on the old “rip and read” trick - tearing out stories from the monopoly newspaper and reading them as original news. As an investment, then, monopoly broadsheets and tabloids remain a jackpot for a particular kind of buyer: the industrialist or politico who wants to control the core commodity on which most other news products rely. In other words, as unstable and unsustainable as the news business's inverted pyramid is, and as bad as a decrease in original jorunalism is for democracy, it does present a huge opportunity to aspiring Citizen Kanes who value profit and political power, and who understand how the two are symbiotic.

These new Medicis, as Reuters Jack Shafer calls them, know that in the media business, there are two places to make money and gain power: distribution and content production. They know that the business of pure distribution - ie. curation, aggregation etc. - is prone to saturation because the Internet makes distribution a relatively inexpensive endeavor (in fact, it is downright cheap compared to earlier epochs when distribution required capital investments in printing presses, TV studios, radio facilities, etc.). They also know that that distribution isn’t necessarily where the most power is any more than oil futures rather than oil hold the energy economy’s true value.

In short, they know that for all the aggregation, curation and other euphemisms used to describe the act of monetizing others' online content for oneself, the most politically valuable input in the media economy is original journalism at the bottom of the inverted pyramid. Own that, and you control the core message that's being promoted via others' distribution conduits higher up on the inverted pyramid.

Thus, understanding that their comparative advantage over competitors is their money, the oligarchs are investing in the place on the inverted pyramid that can’t be occupied on the cheap - they are investing in original journalism at the bottom. As the pyramid becomes ever more narrow down there and wider at the top, that may destabilize the whole media economy and be terrible for society, but it makes the few oligarchs who own the tiny bottom of the pyramid that much more able to control the content that fuels the whole system.

Appreciating this raw power dynamic suddenly makes billionaires’ recent investments in original journalism seem brilliantly shrewd, rather than altruistic, whimsical, or hobby-ish. Sure, there may be some earnest principle at work, but these are indeed opportunistic moves - the kind that are taking advantage of the fact that publicly traded companies are getting out of the business.

Public companies have to answer to shareholders and Wall Street, meaning they have to prioritize short-term quarterly profits over everything else. Since short-term profits (as distinct from long term ones) are increasingly difficult to generate in journalism, those companies have been selling off their journalism properties at cut-rate prices.

Not surprisingly, into the vacuum has rushed a rogues gallery of politically active billionaires who don’t have to answer to short-term-focused shareholders and whose version of overall "value" differs from that of institutional investors.

For instance, a Washington Post that, say, loses Jeff Bezos a bit of his money may still be a huge net value gain for him if he can use that property to boost his other holdings (Amazon), protect his government contracts (CIA cloud computing contracts) or generally frame the national news debate to serve his empire's political aspirations. And the San Diego Union-Tribune may unto itself not make Douglas Manchester lots of money, but if it helps him promote his larger business interests, that’s a net gain for him.

Similarly, a PBS series doing original reporting on pensions may not make Enron mogul John Arnold money, but if Arnold's money skews the coverage to demonize pensions in the same way his concurrent political campaign does, then that's a return on investment for him. A major newspaper chain may not represent a huge part of the Koch Brothers portfolio, but it could be a value proposition for them if the content of its reporting shills for Koch Industries' priorities. Meanwhile, the Richmond Standard may not generate lots of money for its owner, Chevron, but that oil company clearly benefits from its wholly owned newspaper defending its environmental record in the city that hosts one of its key refinery.

As the San Francisco Chronicle says in its report on the latter example, it all "harkens back to an era of journalism when business magnates often owned newspapers to promote their personal financial or political agendas." That kind of trend is not a harbinger of a "revolution" in journalism, as many of today's new media triumphalists insist. If anything, it seems more like a sign of reversion, only with different names atop the mastheads.

* * * *

This isn't to argue that all is lost. Quite the contrary, in fact. After all, if sustainability looks more like an inverted trapezoid or a square than an inverted pyramid, there are certainly models which suggest a shape-shift is possible.

For example, outlets like Buzzfeed, Vice, and, yes, Pando have developed solid businesses mixing serious original journalism with differing amounts of aggregation, curation, synthesis and live events, and they/we have done so without relying on single billionaire Citizen Kane-esque owners.

Investors still may try to exert influence on such models, but these outlets' portfolio model of ownership/investment means it is much more difficult for one investor to exert too much control, especially when walls are put in place to keep them away from the newsroom (this, by the way, is why for all their problems, publicly traded media companies' newspapers were more likely to produce reasonably objective coverage in comparison to newspapers owned by the original Citizen Kanes).

That said, the fundamental problem still persists: original journalism is expensive and time consuming, meaning for it to be a sustainable business, it needs to recapture as much revenue as possible when its reporting is published. When instead the pure curators and pure aggregators monetize that original journalism for themselves, those skimmed profits are not plowed back into original journalism. Over time, that's a net loss for journalism, making the inverted pyramid that much more narrow at the bottom.

That dynamic might serve those aggregators and curators in the short term (at least before there's no original objective journalism left for them to monetize) -- but it most definitely benefits the new Citizen Kanes in the long term. Soon they will be the only ones left to fund any original journalism at all -- exactly as they hope.

[Illustration by Phil McAndrew for Pando]