In the past decade and a half, newspapers have been shedding pages, journalists, and readers as print advertising revenue disappeared and news delivery digitized. Unfortunately for newspaper readers and journalists alike, newspapers’ historical business model no longer seems viable to support quality journalism.
In 2000, global print ad revenues were $152.2 billion (U.S. dollars, throughout). Online ad revenues were just starting to be reported ($10.4 billion that year), and the peak year for print ad revenue was still six years in the future, topping out at $155.3 billion. In 2011, print ads generated just $116.0 billion, after a disastrous 20 per cent annual decline from 2008 to 2009.
Advertising revenue continues to increase online, where search engines and social networks now collect billions every year. The 2011 global online ad revenue estimate was $70.9 billion, a seven-fold increase in just over a decade. 2010 was the first year that online advertising spending surpassed print advertising in Canada.
However, the rise of online advertising is not the whole story behind newspapers’ decline.
The quality of journalism was declining years before the advent of web-based publishing and the loss of its print revenue base. In The Future of Journalism: Addressing Pervasive Market Failure With Public Policy, Mark Cooper writes, “As the quality of the product declined, so too did the value of the business. Thus the root cause is the concentrated, commercial mass media business model, not the rise of the Internet or the advent of television.”
There is still quality journalism to be found, and online newspaper readership is climbing (1.9 billion readers worldwide in 2010), which indicates that the appetite for news is still widespread. Yet the bulk of online ad revenue does not go to funding journalism, it goes to sites with the highest traffic — Google and Facebook, for example.
In this way the online ad market is similar to the print ad market — excess revenue goes to wealthy owners, not to journalists.
“Since journalism, accountability and the general consciousness of accurate information are all benefits to society that cannot be captured or monetized,” Cooper explains, “the private sector does not invest sufficiently to produce them, and society is denied their value.”
The need for quality journalism
The need for quality journalism has become even more acute as corporate media domination has accelerated.
Why is traditional journalism valuable? A study carried out by the Pew Research Center in 2009 helps to explain our continuing reliance upon old media, even as web-based media platforms become predominant:
“A study by the Project for Excellence in Journalism that surveyed news gathering in Baltimore as an example of nationwide trends found that 95 per cent of stories with fresh information came from ‘old media,’ and the vast majority of that from newspapers.”
However, that same year, global print ad revenue dropped 20 per cent from the previous year. In plainer terms, the market lost an unprecedented $27.1 billion of revenue in a single year. American newspapers alone have lost 13,500 newsroom jobs since 2007.
The Pew article continues, “The effect of layoffs and other cutbacks on traditional sources of journalism has been severe. The Baltimore Sun, which is owned by the Times’ parent company, Tribune Co., produced 72 per cent fewer stories in the first 11 months of 2009 than it did during the same period in 1991.” It noted that on one topic — state budget cuts — only one-third as many stories were produced from all outlets as during a similar round of cuts in 1991.
Good journalism costs money
Good journalism costs money; this is why the information it provides is still so widely utilized, even though there is less of it. The failure of the market model to provide sufficient funding for journalism is discussed by McChesney & Nichols in The Death and Life of American Journalism. Reinvestment of profits into journalism is crucial, and was missing from the media ownership culture, according to McChesney & Nichols’ analysis:
“The industry became highly concentrated and vertically integrated, which led to a dramatic reduction in competition . . . the industry was less responsive to consumer demand, used its market power to influence demand, failed to innovate . . . The monopoly and oligopoly situation created perverse incentives to squeeze profits by cutting quality rather than investing in productivity.”
These problems are not confined to the U.S. In 1990, 17 per cent of the daily newspapers in Canada were independently owned. Today, there are only three: L’Acadie Nouvelle (Caraquet), Le Devoir (Montreal), and the Whitehorse Star. The other 92 are owned by large media companies such as Quebecor, Postmedia, and Glacier Media Group.
In a 2006 Parliamentary report titled Final Report on the Canadian News Media, media consolidation is considered with skepticism in the context of public interest:
“The media’s right to be free from government interference does not extend, however, to a conclusion that proprietors should be allowed to own an excessive proportion of media holdings in a particular market, let alone the national market. Yet the current regulatory regime in Canada does little to prevent such an outcome.”
In his essay What About the News? An Interest in the Public, U.S. FCC Commissioner Michael J. Copps notes that “All of the consolidation and ideological deregulation — rather than reviving the news business — have condemned us to less real news, less serious political coverage, less diversity of opinion, less minority and female ownership, less investigative journalism and fewer jobs for journalists.”
There’s always public media, right?
Funding for public media varies widely by country. Further along in his essay, Copps notes, “The Unites States will spend roughly $1.43 per capita on public media this year — about one-hundredth of what England and Denmark will spend, or about 5 per cent of what our neighbours to the north in Canada will commit.”
This brings up a question regarding the new Canadian reality of budget cuts to the CBC. If the private market cannot support the current big media business model, should we give extra consideration to the fact that journalism is a public good — like affordable health care is — when considering funding?
Sean Holman is an award-winning journalist and the founder of Public Eye Online, a local independent news website that relied on both ad revenue and reader donations for the eight years it operated. Unfortunately, Public Eye Online shut down in November 2011 due to financial unsustainability.
Holman explains that as the CBC is funded via the federal government, the government serves as a buffer between public media and the public, keeping the two separate: “Canadians aren’t very encultured to the idea of donating to media,” leading to an attitude of disengagement among Canadians about the need for private support of public media.
Holman says, “There needs to be a greater understanding and appreciation of the fourth estate in Canada. But I don’t know how we get there.”
Towards a new funding model
In the print media industry, community newspapers could be the ones best positioned to create vibrant new business models. Readers of free community papers in Canada include 74 per cent of the population, compared to about 20 per cent for paid dailies.
There is consolidation occurring among community papers too, but it isn’t nearly as bad as for paid dailies. Of the 1, 100 community papers across Canada, less than half (435) are owned by big media corporations. That leaves lots of room for innovation by smaller, locally owned papers.
In the meantime, journalists are being forced by the market to find new ways to fund their work. Various non-profit funding models are in place at the online news websites ProPublica.org (based in NYC), Grist.org (based in Seattle), and B.C.’s own TheTyee.ca.
Holman says that people “need to feel like they have some efficacy in the system where the change is supposed to come. When it comes to student government, you can see where there’s an opportunity for that. When it comes to local government you can see where there’s an opportunity for that.”
Holman argues for independent media funding itself though “transactional arrangements rather than philanthropic arrangements.” By this he means raising funds for specific media projects rather than for general operating expenses, vis-à-vis the crowdsourcing model Kickstarter or Indie-Go-Go. Holman uses the example of the Tyee raising money from its readers for election coverage.
As the media continues to transform, there remains a compelling argument for funding independent media: namely, to help newly-empowered citizen journalists gain the skills needed to cover events critically. Independent media can provide a crucial learning environment and practice-ground for amateur journalists of all backgrounds — younger, older, students, and community members alike.
As Sean Holman said to me at the end of our conversation, “We need to do a better job of demonstrating why the media matters.”
– Kristi Stripes (UVIC)[hr]