OpenAI is funding 13 Axios local newsletters in a three-year deal

OpenAI is paying the startup costs of 13 new Axios Local newsletters, covering both staff and technology. Axios employees also get free credits for OpenAI’s enterprise tools. In return, Axios lets OpenAI train its models on its free published coverage. The term is three years.

Issie Lapowsky set the arrangement out for the Columbia Journalism Review last week. It is the fullest account of the partnership so far, and it is the source for most of what follows.

What Axios is testing is whether a local newsroom can survive when everything except the reporting is automated. Jim VandeHei, the chief executive, put it to Lapowsky as a question.

“Could we use AI to basically automate everything you need in a local market other than the journalist and the journalism itself?” VandeHei said.

Three years, six weeks

On 9 August, VandeHei published a column in his own outlet about what he calls post-processable velocity. He means change moving faster than any person, company, market, or government can absorb it.

Preparing for an Axios board meeting, he wrote, a discussion of six-month horizons struck him as pure fantasy. Then came the line worth holding onto.

“For the first time ever, my confident line of sight is six weeks tops,” he wrote.

He went on to advise readers to loosen their reliance on plans that require being right about things far in the future. The Axios OpenAI local news deal runs for three years. It funds 13 newsrooms, and it asks reporters to build careers inside them.

What nobody will say

Allison Murphy, Axios’s chief operating officer, told CJR that OpenAI invested enough to cover the startup of the new markets. Beyond that, neither company would disclose the sum.

Nor would either say whether the deal stops Axios from taking legal action against OpenAI. An OpenAI spokesperson said the terms are confidential under the agreement.

That second silence matters more than the first. Local newspapers are suing OpenAI over training on their work. Whether Axios has signed away the option to do the same is not a routine commercial detail. It is the difference between a licensing deal and the settlement of a case nobody filed.

Axios does not mention the partnership in its local job listings. It does not appear in most of its OpenAI coverage either, unless the story is specifically about media deals. An Axios staffer told CJR anonymously that the lack of transparency has caused unease among reporters.

The money did not go to news deserts

OpenAI funded four starter cities first: Pittsburgh, Kansas City, Boulder, and Huntsville. Axios chose all four. Huntsville has no daily newspaper. Apart from that one, none is what researchers would classify as a news desert.

VandeHei told CJR that covering communities with no news at all would be “the Holy Grail.” Axios has to prove the economics first, he said. Axios Local now has more than two million subscribers and does not make money. An Axios spokesperson said that was expected. VandeHei said each city turning a profit within five years would count as a great success.

Matt Pearce is policy director at Rebuild Local News, a coalition representing more than 3,000 newsrooms. He named the structural problem with one-off deals.

“If you strike a direct partnership with an AI company, that benefits you but no one else. There’s a systemic problem, and you’re not really doing anything to address the systemic problem,” Pearce told CJR.

No union, no choice

Axios cut 10% of its staff months before the OpenAI deal, and another 11 jobs this year. It is not unionised. Politico’s union won an arbitration that shut down two AI tools, at the outlet VandeHei co-founded.

Speaking on an OpenAI panel in March, VandeHei described how Axios handled internal resistance.

“We were early to basically telling our staff that you don’t have a choice if you’re scared, if you don’t like it, we don’t care,” VandeHei said. He told staff they had to embrace it.

Holly Moore, executive editor of Axios Local, told CJR that staff worries eased once it was clear nobody had to use AI in reporting. On the same panel, the Boston Globe’s Shira Center drew a line between her employer and Axios. The Globe has no intention of replacing reporters with bots, she said.

The case on the other side

The strongest argument for the deal is a working journalist. Robert Sanchez writes two Axios newsletters covering Douglas and Arapahoe counties in Colorado, an area larger than Rhode Island. Every local byline is his. Rivals have several reporters on the same ground.

Reporting on AI in policing, he used ChatGPT to draft a public records request under Colorado law. It also found him the right recipient. He ran the request through a filter Axios built to reduce the odds of rejection. When the documents came back, he checked them against what he had asked for. Three files were missing. He had a follow-up letter drafted, and the files arrived by the end of the day.

That is not a machine writing journalism. It is a sole reporter covering two counties getting a week of administrative work done in an afternoon.

VandeHei’s underlying argument is also sound. Local news died of fixed costs rather than of disinterest: buildings, presses, and distribution, none of which produced reporting. OpenAI says Americans send it a million prompts a week looking for local news. That only works if somebody is still out there gathering it.

Axios has also kept covering OpenAI critically, including the allegations about ChatGPT and teen suicides. Reporters in the cities OpenAI funded have written about data centre fights in their own communities.

The question the deal does not answer

VandeHei says he hopes a proper compensation mechanism arrives, from Congress or the courts. He also says Axios is not the outlet to fight that battle, being young and mostly free to read. Others took different routes. Some are blocking AI crawlers outright. Apple has offered to pay publishers per use instead.

A third route is the one BuzzFeed took. A fourth belongs to the publisher that renamed itself Paradium.AI. Neither is obviously working. VandeHei is at least explicit about what he signed.

“If someone’s going to pay you for content, you say: Well, how much are you going to pay me?” he told CJR.

The test arrives in 2028, when the three years end. If the 13 newsrooms are still there and paying for themselves, the model works. If OpenAI stops writing cheques and they close, then what was funded was not local news. It was training data, with newsletters attached.