America has a local news crisis: The small- and mid-sized papers that told their readers what was happening in their communities — and held powerful people and institutions in those communities to account — are shrinking or disappearing entirely.

Today, for instance, McClatchy — the newspaper chain whose 30 properties include the Miami Herald, the paper that broke open the Jeffrey Epstein case, filed for Chapter 11 bankruptcy protection (the company promises that it will continue to “pursue our strategy of digital transformation”).

The good news is that various people are trying to solve the local news problem, using a variety of techniques: asking readers to pay, or pay more, for news; creating new digital publications that focus on low-cost, high-demand subjects, like real estate listings; hoping that a very rich, benevolent person will come and save the local paper; or maybe hoping that Google or Facebook will do the same.

The bad news, says venture capitalist John Thornton: None of that is going to work.

Thornton is based in Austin, Texas, and co-founded the widely lauded Texas Tribune 10 years ago. The nonprofit newspaper, which focuses on Texas government and politics, sustains itself via a combination of reader donations, advertising, and philanthropy.

He is also the CEO of the American Journalism Project, which is trying to export the Tribune model to local news publications around America, along with a lot of money: The “venture philanthropy” thinks it can solve America’s local news problem by rounding up $1 billion — half of which it wants to raise itself, and the rest it hopes to get from other people — and distributing the funds to local, digital, not-for-profit publications like Vermont’s VT Digger. So far it has raised some $50 million and has allocated $8.5 million of that.

Thornton’s argument is both common sense and contrary to lots of perceived wisdom. If you’ve spent any time thinking about how media companies survive in 2020, you’ll be familiar with the idea that they need multiple revenue sources, as Thornton is preaching.

But his insistence that local news organizations simply can’t survive as for-profit businesses because there’s no market-based solution for the kind of news that citizens need will be bracing for lots of people. But it has a sad ring of truth to it: While national papers like the New York Times and Wall Street Journal seem to be very healthy, it is difficult to find local papers that have adapted to a world where both print and digital ad sales are declining while subscriptions aren’t close the gap.

Here’s an excerpt of our conversation in this week’s Recode Media, where he lays out his thesis, using McClatchy’s declining fortunes as a data point.

John Thornton

If you look at the earnings reports of the public newspaper companies that are reasonably transparent on this — and none of them are terribly transparent because the story’s just not very good — they talk about how their digital subscriptions are growing in the 30 and 40 percent range, but it’s on just a tiny base. And so if you force your way through the math, you come to a very consistent conclusion, which is that for every buck they’re losing on a year-over-year basis in advertising revenue, they’re recovering less than a dime [from subscriptions].

McClatchy reported last quarter that the company has shrunk for 26 consecutive quarters. There is just no hope that civic news is going to win in an environment where the idea is you pay as you go and you pay for what you read, rather than solving for what society needs as a whole.

Peter Kafka

And there aren’t enough people in any given community who are going to pay enough money to make a viable newspaper?

John Thornton

If you add up all the digital subscriptions in local news — not the Wall Street Journal, not the Washington Post, not the New York Times — the nonprofit news industry is actually almost as big as that. And so that just gives you a sense for how minuscule a contribution that actually makes.

Peter Kafka

[Another idea you say won’t work] is “basically hope a billionaire buys us,” “Hope Laurene Powell Jobs invests in us as a philanthropy,” or maybe, “Warren Buffet buys us as a for-profit business.” But [you say] that “hope a rich guy or girl buys us” is not a good plan?

John Thornton

We’re incredibly pro-billionaire. Very, very, very pro-billionaire. We think for the most part, though — with the exception of the Washington Post, where [executive editor] Marty Baron was nice enough to give me an hour recently, and he told me how the first thing that Jeff Bezos did was say, “This is going to be a national paper.” That’s the way the economics work — there’s really nobody who recently, at least, has tried this on a for-profit basis who hasn’t either thrown up their hands or, in the case of Paul Huntsman in Salt Lake City, converted it to a nonprofit.

So, it’s not out of the question, but I know that when my local paper came on the market 18 months ago or so, and I had wealthy, really civically big-hearted friends who said, “Well, what do you think?” And my response was, “Well, what are they going to pay you to take it?”

Because do you really want to buy something that my 13- and 15-year-old step-kids had never really heard of and won’t have any reason to? What happened instead was it traded four and a half or five times cash flow to Gatehouse who immediately offered buyouts to not just the whole newsroom but the entire company while putting on the back page at the same time this sort of heartstring-plucking plea to support journalism by subscribing to the Austin American Statesman. Which I just find to be complete and utter bullshit.

Like I said: bracing. I don’t know that Thornton’s solution will work any better than what we’ve seen so far, but it’s certainly worth trying. Listen for yourself and see if you agree: You can hear the whole thing above or at Apple Podcasts, Spotify, or any other podcast platform you’d like.