When the first Pulitzer was awarded in 1917 I could imagine reading a similar argument against them. I'm not a NYC historian but there were many prizes awarding public service from community foundations and religious organizations in 1917. All of them had their own spin but it's easy to see how someone at the time could roll their eyes at the prospect of *yet another* award.
Pulitzer and Columbia did not have that attitude, they instead, saw an opening. The newspaper industry in that era was booming but it was also a mess. Rising literacy had expanded the market and a host of papers (including Pulitzer's) were hustling and taking, what we would now consider, extraordinarily unethical steps to take their share. Their papers had advertisements masquerading as articles for miracle cures and front page news that was straight fiction. Pulitzer, and a few others, were successful; they made a fortune at the expensive of their own communities.
The point here is that every now and then the environment changes and a new community of practice emerges. The pioneers of this new community of practice could care less about getting public notoriety because the market usually does a decent job of awarding them. The purpose of an award for an emerging industry is that it helps structure and then codify a conversation about its values. It helps people and organizations in the space look beyond page views and ad dollars for recognition of their work.
I agree that The Pulitzer provides 'a long narrative arc' to the journalism industry but I can also see how this narrative can just be baggage that prevents them from innovating. When I go to http://www.pulitzer.org/ I see a staid institution resting on its own laurels in the twilight of its power. Nothing from them in the past few years suggests they have the institutional capability to adapt. By the time they realize that they've lost their pull, another organization will have stepped into its place.
