As a populist political pendulum swings against Silicon Valley, it has become common to blame technology companies for the ills of democracy in the U.S. and abroadin particular, the diminution and even the demise of the fourth estate, the American news media required for the functioning of free societies.
When the Youngstown, Ohio daily newspaper The Vindicator announced the closure of its print edition in the summer of 2019, the CEO of Digital Content Next, a trade body representing 60 internet publishers, tweeted a public letter to the local Congressman, writing, You can send any thank you notes to Google, @RepTim Ryan.It was Facebook that started the demise of journalism, a former San Francisco Chronicle President, wrote on LinkedIn last October. The New York Times was even more full-frontal, publishing an Op-Ed piece last fall entitled, Tech Companies Are Destroying Democracy and the Free Press.
Now the U.S. Senate Commerce Committee has weighed in. The local news industry is being decimated in the digital age, the committees Democratic minority asserts in a report released last week. It blames the destruction of local journalism on the internets disrupting journalisms historic business model, and a marketplace for online advertising now dominated by programmatic ads.
The syllogism is almost entirely false. I know, because I was there for a big chunk of the history, and covered it, as an editor, media reporter, and advertising columnist at The New York Times, and more recently as a nonprofit advocate of the advertising and media industries. And as virtually every long-time news executive will acknowledge, decades of industry data show that newspapers have not been synonymous with the news for at least a half-century, and have been undergoing structural deterioration for more than three decadeslong before Facebook, Google, or Craigslist were even a technological glimmer in any engineers eye.
Indeed, earlier Congressional and regulatory agency research, as well as scholarly studies have been almost unanimous in concluding that the disappearance of print newspapers derived from misguided Government policies that advanced local market news monopolies, reducing incentives for newspaper proprietors to innovate as their readers and advertisers left for other, more innovative, and better-priced media. And because the death of news argument and the nostalgic narratives underpinning it are so flawed, they offer little guidance to politicians, regulators, civic leaders, and marketing and media professionals who would seek to create a better-informed electorate and reinvigorate the public commonsvital objectives on the eve of an election that is testing the strength of American democracy.
By almost any measure, the American newspaper industry has been undergoing secular decline for at least 60 years, and probably far longer. In 1910, more than one-half of all newspaper cities enjoyed daily competition among as many as five or six newspapers. In the 1920s, more than 500 American localitiesincluding 42.6% of U.S. citieshad two or more newspapers competing with each other; about 100 of them had three or more papers. By 2000 (the year Google began selling advertising, and four years before Facebooks founding) only 1.4 percent of U.S. cities had competing newspapers, according to the Federal Communications Commission, mostly because afternoon newspapers had largely disappeared. Newspaper monopolies, according to the late media critic and scholar Ben Bagdikian, had eliminated competition in 98% percent of multi-newspaper cities. By 2002, only some six American communities had at least two newspapers.
The decline of newspapers was so pronounced (and the call for protection among the largest proprietors so loud) that Congress passed (and President Nixon signed) the Newspaper Preservation Act in 197050 years ago!to provide newspaper owners antitrust exemptions, arguing that such protection was required to advance the overriding principle that as many editorial voices should be preserved in a community as possible, according to 59 members of the House of Representatives, in an open letter supporting the legislation.
The effect was the opposite. A wide body of scholarship has traced the mass disappearance of American newspapers to the industrial combinations that took place after these antitrust exemptions were put in place. The newspaper sector consolidated as family-owned papers were bought by growing chains, reported the Congressional Research Service. Between 1960 and 1980, 57 newspaper owners sold their properties to Gannett Co. By 1977, 170 newspaper groups owned two-thirds of the countrys 1,700 daily papers. In 1920, 92 percent of newspapers were independent. In 2000, 23.4 percent were. Rather than preserving the existence of diverse and antagonistic voices, the Newspaper Preservation Act has merely preserved the status quo, concluded a University of Pennsylvania law review analysis. The NPA has constrained, rather than furthered, First Amendment interests.
I lived through these consolidations, having grown up in a two-newspaper New Jersey household (The New York Times in the morning, the Bergen Record in the evening), served as a paperboy (for The Record), and earned my first serious money calling in my high school football teams scoring plays to a collection of seven local papers that paid me $3.00 each per game. Between 1973, when I got that stringer gig, and 1986, when I started working as an editor and reporter at The Times, all but one of those local papers had merged or disappeared altogether.
Newspapers were consolidating because readers were indeed leaving for a new mediumtelevision. Television surpassed newspapers as consumers major information source in the 1960s. At the dawn of the commercial internet, in 2002, 84 percent of Americans said television was their primary news source, nearly twice as many as relied on newspapers. Daily news consumption trends painted an even starker picture: In 2002, only about 15 percent of Americans said theyd read a newspaper the previous day, half the number who had watched television news the day before, according to the FCC. Newspapers paid circulation, unsurprisingly, followed readers wandering attention. Newspaper daily circulation peaked (at around 63 million) in 1984, and then began a steady decline; by 2008, circulation was about 48 milliona quarter of their readers lost in 28 years. Yet during this entire period, another Government policya 1975 ban on newspaper-television station cross-ownershipprevented newspapers from following their readers and the news into this new electronic medium.
During their three decades of intense consolidation, even as they were losing readers to television, newspaper proprietors exploited their increasing local-market dominance to raise advertising rates, effectively pricing themselves out of business as new, better-priced, and better-targeted competitors emerged in cable television and alternative print vehicles. Between 1965 and 1975, according to the FCC, newspaper advertising rates rose 67 percent, which was below the cumulative rate of inflation. But between 1975 and 1990, rates skyrocketed 253 percent, almost twice the rate of the Consumer Price Index. Media critic Jack Shafer, writing in Politico, put actual, local dollar figures on these aggregate statistics: In its last year of competition with its daily crosstown rival the Washington Star, the Washington Postwas charging $2.85 per line for a one-time display ad. By January 1982, shortly after the Stars closure, that display line cost $3.15. Two years later, it was $3.65. In 1996, at the dawn of the dial-up internet, a Post ad line cost $7.93.
Similar pricing abuse occurred in classified advertising. Where they gained monopoly power, which was most U.S. cities, daily newspapers gouged their classified customers pitilessly, Shafer concluded. They lobbied Congress heavily to block the early migration of classifieds to electronic forms. And the big newspaper chains helped destroy their own business by investing in national online classified advertising verticals, which they ultimately sold.
This extraordinary exploitation of monopoly pricing power was the reason U.S. newspaper advertising revenues peaked in 2005, at almost $50 billion, despite the mass readership defections. The full collapse of daily newspaper advertising may have been accelerated subsequently by the internet, but it was certainly not caused by it. Rather, the fall-off was driven by abusive practices, combined with newspapers unwillingness or inability to invest to remain competitive in the face of a changing advertising environment.
The conditions and trends included the loss of local retail advertising, as local stores consolidated into national chains, moved larger chunks of their budgets into national media, and negotiated rates through national advertising agencies. In the grocery industry, for example, the no. 1 chain in the United States in 1992 was Kroger, with $22 billion in annual sales and 7.7% share of the market. By 2009, the largest grocer in America was Walmart, with $154 billion in grocery sales and a 30% market share. Through this period, Walmart was gradually ending its newspaper advertising in favor of television, and had mostly exited newspapers by 2015.
Department stores, another bedrock newspaper advertiser, underwent similar consolidation, with severe effects on the industry. Already by 1990, publishing executives were describing a domino effect, in which retail empires like the Campeau Corporation, which owns Bloomingdales, Jordan Marsh and other department store chains, are saddled with debt, curtail their ad expenditures and frighten their suppliers into zipping their own purses, I reported in a New York Times advertising column that April. Between 2005 and 2008, Federated Department Stores, owner of the largest department store brand, Macys, and fresh from its acquisition of Mays and its iconic store brands Filenes, Foleys, Hechts, Kaufmanns, May, and Marshall Field, cut its newspaper advertising spending in half, while increasing television advertising spend by nearly 60 percent.
Not once does the new Senate Commerce Committee report mention department stores, supermarkets, auto dealerships, or any of the other advertising categories that, for a century, were the financial backbone of the newspaper industry but which, with consolidation, began a long, slow exit from daily print as other pre-internet media became more competitive.
Indeed, even as the consolidating national retail chains moved more of their spend into national and spot television, the newspaper industry was simply unwilling to compete for national advertising. It wasnt until 1994, with the founding of the Newspaper National Network, a consortium among 25 large newspapers and the Newspaper Advertising Association, that newspapers developed the technology and collaborative will to provide the largest advertisers seamless entre to a national audience. While the NNN attracted $3 billion in national advertising during its 22-year existence, it proved too littlemore than $65 billion is spent annually on national advertising in the U.S. and too late in the face of more attractive television and digital options.
The slow introduction of color presses was another factor, driving auto and real estate advertisers out of high-priced newspaper display and classified advertising and into the more innovative free shoppersmany of them owned by newspaper conglomeratesdistributed in supermarkets and street boxes. In 1979, for example, fully 15 years after the introduction of national color television advertising by Pepsi-Cola, only 12% of U.S. newspapers were printing in colorthis despite the fact that color ads drove 43% more sales for advertisers than black-and-white ads.
Perhaps the final nail in the pre-internet newspaper coffin was the rise of free, alternative, print newsweeklies, which lured away from dailies new generations of independent retailers and classified advertisers with their younger demographics and advantaged circulation model. With their free distribution, the alt weeklies also prepared younger users for the free internet news model. As U.S. daily newspaper circulation began declining after its 1984 peak, alternative weeklies became the only segment of the newspaper industry to grow their readership growth that continued until the early 2000s. The Poynter Institute found that nearly a third of the 1,800 newspapers that were thought to have disappeared between 2004 and 2018 became advertising supplements, free distribution shoppers or lifestyle specialty publications.
Since, contrary to the Senate Commerce Committee, the internet is not responsible for the collapse of local journalism, it stands to reason that it is not responsible for the decline in the number of journalists. From 2008 to 2018, the number of newspaper reporters dropped 47 percent, according to the Pew Research Center but total newsroom employment across the five industries Pew researched (newspaper,radio,broadcast television,cable and other information services, Pews best match for digital) grew by about 5,000 positions when newspapers were subtracted from the equation.
Moreover, the Pew data also show that newspaper newsroom employment actually spiked even as newspaper readership declined in the period after Federal Government protections were enacted beginning in 1970, peaking at around 57,000 employees in 1990. One unavoidable conclusion is that newspapers artificially built up their newsrooms during a period of debt-fueled consolidation and monopoly profit-taking, and then brought their newsrooms back in line with their historic employment levels as the industry continued its long-term decline, first in competition with television, thereafter with the internet.
A second unavoidable conclusion is that newspapers are not the news industry and their decline does not equate to the decline of American journalism.
Recent coverage of newspapers falling fortunes has focused on the growth of news deserts a phrase popularized by the University of North Carolinas Hussman School of Journalism and Media to refer to American communities no longer served directly by a newspaper. While UNCs headline numberthe United States has lost almost 1,800 papers since 2004gets most of the attention, the fact is that only 60 of these failed papers were dailies; by UNCs own accounting, 1,250 of the closed newspapers were small weeklies with readerships under 10,000 people, in metro areas still apparently served by other newspapers. While the new U.S. Senate report correctly asserts that Americas local newsrooms are the watchdogs exposing crime, corruption, and keeping elected officials accountable to their constituents, it is fair to assume that most of these closed newspapers were doing little of the sort. Instead, they were tiny, freebie shoppers. (Their aggregate circulation of under 12.5 million compares with 48 million average monthly users reported by the online service Patch for its 1,200 hyperlocal news sites.)
In fact, it is quite likely that the number of newsgatherers has grown during the internets ascendency. Pew remains the benchmark for newsroom employment and other data, but its methodology almost certainly is incomplete. It does not appear to account for technology shifts that have improved productivity at the expense of newsroom headcount in ancillary technical jobs unrelated to newsgathering. For example, digital video cameras take fewer field operators than older videotape and film cameras; spellcheck software has replaced copyeditors in many newsrooms.
It also appears that Pew (and the U.S. Labor Department statistics on which it partly relies) may not be making apples-to-apples comparisons between analog-media newsroom employment (which includes not just police beat reporters and international news editors, but recipe writers and TV listing editors, too) and employment at sole proprietor and small websites engaged in similar, segmented functions such as recipe blogs and TV-criticism podcasts. All told, employment in such digitally native content operations has skyrocketed; consumer services employment growth in the internet, including content-site employment, rose 300% from 2008 to 2016, to 1.6 million jobs, according to The Economic Value of the Advertising-Supported Internet Ecosystem, a study for the IAB by John Deighton, Baker Foundation Professor of Business Administration at the Harvard Business School.
Some unknown portion of that offsets, and probably more than offsets, the 28,000 net newsroom jobs lost at newspapers during the same period. The former New York Daily News and New York Post gossip columnist William Norwich has captured that evolution and growth perfectly. In those days, he writes of fashion and style coverage in the 1980s, there was Suzy, Liz Smith, Womens Wear Daily, Bill Cunningham, and I to deliver the messages that thousands of influencers are delivering now.
The Senate Commerce Committees Democrats argue that local news needs new laws and regulations to make sure it can compete fairly and provide its true value to local communities and American democracy. But the Committees report is so rife with contradictions that it is hard to track from its analysis to serious policy solutions. It argues repeatedly for regulation to support local journalismbut in the next breath notes that two-thirds of local newspapers have been gobbled up by 25 conglomerates and hedge-fund billionaires, who by definition will receive the lions share of any Congressional windfall. It argues repeatedly (and accurately) that competition in news benefits the publicbut then decries the competition from digital upstarts that has made the advertising and the content more affordable for vast numbers of brands and consumers.
There may be reasons to break up big tech and decentralize information markets, but these wont resurrect newspaper jobs, wont shift consumers back to the mediums that dominated in the 1960s and 1970s, wont redirect advertising revenues, and wont create any more news-gathering jobs than are currently being created in the open internet.
Outside of totalitarian states that forcibly control both the content and supply of news, you cannot legislate attention. Previous attempts to deploy U.S. Government regulation to do so have alwaysadvertently or notfavored large gatekeepers. But those Government-supported communications oligopolies failed because innovation in attention markets is hard to suppress in a free state, and innovators will always find better ways to serve consumers diverse wants and needs. And that is what Medium writers, YouTube influencers, Instagram and Snap storytellers, Substack newsletterists, Gimlet podcasters, Yelp reviewers, Roku video publishers, and the millions of other digital creators are: innovators. How dare the U.S. Senate, or anyone else for that matter, denigrate, if only by implication, their contributions to the common weal?
The most forward-thinking newspaper proprietorsThe New York Times, Dow Jones, Gannett, Advance, Hearsthave long since recognized the trends and are deploying podcasts, digital video, social influence, data visualization, augmented reality, and other advanced technologies to reinforce their consumers trust and renew their attention. So are the innovators behind the new news operationsAxios and Politico and Talking Points Memoin Washington, Scotusblog at the Supreme Court, Recode and The Information in Silicon Valley, Business Insider on Wall Street, Vice in Brooklyn, Bleacher Report in the sports stadiums, Patch in thousands of U.S. communities, Buzzfeed and Huffington Post and The Marshall Project around the worldthat have used digital technologies to revolutionize the way news is gathered and communicated.
These innovators do not reflexively equate news with paper, nor mourn business models that were eroding long before Craig had a list. They are embracing alternative forms of delivery. They are building new business relationships among the thousands of digital-native brands that have risen as conventional brick-and-mortar retail undergoes its own post-industrial reinvention. They are finding new revenue streams in direct-to-consumer content sales, live events, and more.
Their journalism is certainly benefiting consumers and advertisers. The audience research service ComScore reports that Americans digital news consumption remains 30% above pre-pandemic levels. IAB research released just last week shows that 84% of all consumers feel that advertising within the news maintains or increases their trust in the advertised brands.
Improving on these trends will require media literacy education, so consumers can distinguish among well-reported news, advocacy, and fakery. It will require far more investment by digital aggregators and distributors in supply chain management to weed out dangerous material, and in content curation to elevate the valid above the suspect. It will require advertisers deliberately to select the media channels in which their ads run, and not rely solely on automated media plans provided by programmatic intermediaries.
Most of all,supporting real news in an era of digital-first consumptionwill take serious policy analysis, not nostalgic narrativesfor a pastthat already waspastby the time the Internet was born.
Randall Rothenberg is the Executive Chair of the IAB. He served asCEO of the association from 2007 untilSeptember 2020, after spending30 years as a magazine writer and editor, newspaper reporter and columnist, author,Chief Marketing Officer, and management consulting firm executive.
Read the rest here:
Big Tech Didn't Kill the News. (And the "News" Isn't Dead.) - IAB