|Newspapers’ Stand Against Tech Giants Won’t Save Them|
But it could help them resolve their existential crisis.
By Will Oremus
The current news economy holds much more opportunity for national and special-interest publications than it does for the local, general-interest papers.Zefart/Thinkstock
Newspapers’ business models have been taking on water for years thanks to the rise of Google and online advertising, and they’re continuing to gradually sink as their readers find more of their news on Facebook. The social network and the omnipresent search engine steer some online traffic to publishers’ story pages, but they siphon much of the ad money along the way. Meanwhile, their free, ultraconvenient aggregation of stories from all over the internet discourages users from even visiting a newspaper’s home page, let alone paying for a subscription. So newsrooms across the country continue to jettison jobs, clinging ever tighter to Facebook even as it undermines their ability to stay afloat.
Understandably, newspapers are resorting to some desperate measures. The latest is a bid from the leading newspaper industry trade group, the News Media Alliance, to get special permission from Congress for its roughly 2,000 member companies to negotiate with Facebook and Google over ad-revenue deals and other issues collectively rather than individually. (Specifically, the newspapers are seeking a new law granting them limited safe harbor from antitrust laws that prohibit collusion between firms to raise prices.) The case was made first in a Wall Street Journal op-ed by the alliance’s CEO, David Chavern, this past weekend, and New York Times media columnist Jim Rutenberg reported on it shortly afterward. Chavern wrote:
The only way publishers can address this inexorable threat is by banding together. If they open a unified front to negotiate with Google and Facebook—pushing for stronger intellectual-property protections, better support for subscription models and a fair share of revenue and data—they could build a more sustainable future for the news business.
The bid is a long shot, for several reasons. Even if an anti-media Congress were to grant the papers an exemption from antitrust laws, Facebook and Google would still hold the leverage in negotiations. And any concessions they win seem unlikely to do much to secure newspapers’ long-term future.
Yet, contra the compelling arguments of critics such as Mathew Ingram and Ben Thompson—who see the effort as not just counterproductive but “delusional”—I think it’s worth a try, for three reasons. First, what do they have to lose? Second, it calls Congress’s attention to the enormous power that Facebook and Google have accrued over the flow of news, information, and advertising. Third, and perhaps most importantly in the long run: It’s a sign that newspapers are beginning to recognize at last that they can’t go on this way forever. Something has to give—they just haven’t figured out yet exactly what that is.
For newspaper companies, asking Congress for help with their businesses would have been anathema even a decade ago. It runs against their fierce sense of independence from government interference and bespeaks weakness bordering on desperation. Yet weakness bordering on desperation is exactly the position in which many of them now find themselves, and even some modest short-term gains would buy them much-needed runway to keep trying to figure things out. The possible exceptions include national papers such as the New York Times, Washington Post, and Wall Street Journal, which have more to lose and are not in any imminent existential danger. (It helps that they’ve learned how to turn far-flung online readers into paying digital subscribers.) The current news economy holds much more opportunity for national and special-interest publications than it does for the local, general-interest papers that have long formed the backbone of American print journalism. When you’re shedding jobs, circulation, and revenues every year, as most metro dailies are, a Hail Mary pass isn’t the worst play call.
More broadly, the bid is worthwhile because it shines light on the increasingly monopolistic power of Facebook and Google and the ways in which their idiosyncratic profit motives are shaping society and democracy—not always for the better. That “digital duopoly,” as Rupert Murdoch’s News Corporation put it in a statement endorsing the News Media Alliance’s effort, controls 70 percent of U.S. digital advertising and close to 80 percent of online referral traffic, by some estimates. The irony, not lost on the News Media Alliance, is that it’s the 2,000 struggling newspapers fighting over the scraps that are likely to get slapped with a Sherman Antitrust Act violation if they try to negotiate collectively with those two giants. No doubt part of the goal here is to impress upon Congress, along with the public and the other two branches of government, that it’s time to look a little harder at the tech behemoths’ market dominance.
Yet the alliance’s antitrust exemption request also lays bare a contradiction at the very heart of its own industry, one that it urgently needs to reckon with if it hopes to survive in a robust form. Exposing that contradiction surely isn’t the alliance’s goal, and it may work against its interests in the short term. But to the extent members are forced to confront it in the course of their uphill battle for an antitrust exemption, that will constitute a third salutary effect of the endeavor.
The contradiction is this: Original news reporting, especially investigative and accountability journalism, is largely a public good. Yet the companies that provide it are, with rare exceptions, private and for-profit. Newspapers have historically been loath to acknowledge the contradiction, because for much of their history, they’ve been fortunate enough to have it both ways. Yet their request to Congress, and their corresponding pleas to the public, represent a reluctant step toward the necessary admission that they simply can’t have it both ways anymore.
As Thompson and others have articulated, newspapers’ historical near-monopoly over local print advertising gave them a coursing river of revenue, some small part of which they put toward the costly and unremunerative task of reporting on issues of public interest. Those near-monopolies and revenue streams were analogous to the ones that Google and Facebook now enjoy on a much grander, global scale.
Like Google and Facebook, newspaper companies often justified themselves both outwardly and inwardly by appeal to a noble social mission. But, also like Google and Facebook, their decisions at the corporate level were often driven by the pursuit of ever-greater profits. (Newspaper margins peaked in the late 1990s at well over 20 percent.) They could afford investigative teams, city hall bureaus, and in many cases even overseas bureaus, not because those teams’ work made them money, but because they served as loss leaders for their wildly profitable core products, including classified advertising. (Hello, Craigslist. Goodbye, classifieds.) In an era in which readers generally click on the headlines that interest them, which they are directed to by an algorithm that understands their preferences, the newspaper-bundle model that once paid for cops-and-courts reporters makes less and less financial sense.
Now newspapers find that their best journalism is benefiting the likes of Facebook instead, because often people can simply read it in their feeds. (Even if readers click through, the ads they view on the newspaper’s site are far less lucrative than those they see on the social network.) Of course these organizations are miffed. What’s worse, they’re powerless to stop it, because if they don’t provide it for free on the web and maybe social media, someone else will summarize their work and put it there anyway.
Negotiating with Facebook as a bloc wouldn’t stop the race to the bottom—there’s a lot more to online media these days than 2,000 newspapers, and plenty of venture capitalists willing to throw money at startups that publish directly on social media or focus on volume over depth of coverage—but it might at least slow it down a bit. At the very least, it would get them a seat at a table with Facebook executives, something most individual papers lack the clout to obtain on their own.
But in making the case for an antitrust exemption, newspapers have to overcome the glaring hypocrisy of their own position. In essence, they’re calling for special treatment from the government on the grounds that they provide an important public good. Yet it’s their status as private, for-profit companies that allows them to rake in cash when times are flush, rather than having to reinvest that money in newsgathering. In truth, public-interest reporting has always been a small element of what most newspapers do. If they really want to be treated primarily as providers of a public good, they’re going to come under a lot of pressure to justify that treatment by focusing more of their resources on actually providing that good—and less on, say, sports and lifestyle coverage, or chasing clicks via superficial coverage of the viral topic du jour.
That pressure, at this point, could only be a good thing. It’s astounding how slow most newspapers have been to realize that they need to fundamentally reinvent themselves for the internet age. The Times and Washington Post have realized it, but they’ve only just started to actually do it. And they’re naturally in the vanguard, since they have both more resources than smaller papers and are in a much better position to capitalize on the internet’s economies of scale. (Particularly the Post, which has been able to find a rare and profitable balance of viral-friendly coverage and dogged investigative work thanks to, for several years, a practically blank check from its new owner, Jeff Bezos.)
The transition is inevitably going to be more painful for local and metro papers, which simply aren’t sustainable in anything resembling their traditional size or form. Nonetheless, they’re eventually going to have to resolve the tension at the core of what they do, one way or another.
One path is to embrace the profit motive, ditch huge swaths of their operations, and reorient themselves around the portions of their businesses that could realistically make money online. That might mean shamelessly covering and promoting the most crowd-pleasing stories. It might mean pumping up their online video operations and winding down their print operations, as long as that’s where the money is. It might mean building platforms for user-generated content and helping local businesses develop native ads. What it probably won’t mean is robust, daily coverage of such institutions as city hall, the statehouse, and the local schools. But there could still be room for sharp commentary on local hot-button topics and perhaps even the occasional hard-hitting investigation. In short, they might have to become little, local BuzzFeeds.
The other path—the one that is suggested, intentionally or not, by their appeal to Congress—would also involve ditching wide swaths of their operation. But in this case, they’d be reorienting themselves around their stated mission of original reporting in the public interest. It’s possible they could achieve this while remaining for-profit companies, but that would require wealthy ownership groups who are prepared to shoulder losses, perhaps indefinitely. More plausibly, local newspapers could start to explore moving toward nonprofit status. A local newspaper, explicitly focused on accountability journalism, would become a point of civic pride, vying with the symphony and the opera for donations from local philanthropists.
The silver lining to the decline of the local newspaper is that there should now be room for both. A decent-sized city could have both its own mini BuzzFeed and its own mini ProPublica, with room for all sorts of other experiments alongside them.
Obviously this is not exactly what the members of the News Media Alliance have in mind. But it’s a reality they’re going to have to face sooner or later, and their cry to Congress for help might speed the dawning of that realization.