BY MARK JAMISON
According to members of Congress, American journalism is on the ropes. “Newspapers are locked in a life-or-death struggle with tech giants,” said Sen. John Kennedy (R-LA). “We have seen thousands of news organizations crushed by the monopolistic power of Big Tech,” according to Rep. Ken Buck (R-CO). And Sen. Amy Klobuchar (D-MN) argued “media outlets need a fighting chance when negotiating for fair treatment by the digital platforms.”
They propose to rescue journalism by passing the Journalism Competition and Preservation Act, which would allow news publishers to legally collude in negotiations with digital platforms such as Facebook and Google.
But as I explain below, the premise that Big Tech is choking journalism is false. Rather, many in journalism are refusing to adapt to a changing consumer landscape. Digitization has empowered people to change how they receive news and choose sources. Old-school journalism’s failure to adapt has decreased its relevance, but it was fading away even before the arrival of Facebook and Google. But rather than see the change as a business opportunity, traditional media is seeking government help. That’s a bad idea.
Most people prefer to receive news digitally, but this reflects a change in mode more than a change in sources
According to a recent Pew Research Center survey, 60 percent of Americans “often” get news digitally, compared to 40 percent for television and 10 percent for print.
But people still favor traditional news sources
Another Pew study found that 41 percent of Americans prefer news from television sources and 23 percent prefer news websites or apps. That’s 64 percent preferring traditional sources, but not necessarily traditional modes. Only 15 percent prefer receiving news from social media, which is about the same proportion that prefers print news (13 percent).
The rise of digital news also shows that many people want diverse news sources
According to the RAND Corporation, Americans think broadcast news is the most reliable (26 percent). But cable news (20 percent), online sources (17 percent), and print (15 percent) are not far behind. Another RAND report digs deeper: Those using social media platforms as news sources tend to be younger, female, and less educated. Those skeptical of news reliability tend to be older, have higher incomes, and identify as politically conservative. These types are also the least likely to be stuck in a news bubble: They check news reliability by seeking multiple sources.
The rise in digital formats accelerated the rate of decline in newspaper circulation but did not trigger the decline
According to Pew, circulation of weekday newspapers in the US peaked in 1984 — long before the first web browser — and was declining 1 percent per year (compounded) until around 2003. That year, US internet access reached 60 percent nationwide, at which time the annual circulation rate decline accelerated to 4.5 percent.
Despite declining relevance, many newspapers have maintained profitability
Even though a number of newspapers close their doors every year, research tends to find that newspapers are remaining profitable. This is due in part to large price increases. A recent study found that newspaper subscription prices in the US climbed 153 percent on average from 2008 to 2016 and newsstand prices more than tripled. This helps explain why newspaper distribution revenue in the US was near an all-time high in 2018 when it hit $11 billion.
Digitization dinged newspaper ad revenue by giving advertisers better options
On a global basis, newspaper circulation began its recent decline around 1989. But advertising revenue continued to climb until 2007. A decline in output accompanied by a rise in revenue is an indicator of rising market power. This isn’t to say that newspapers were exploiting advertisers — knowing that would require a much deeper study — but the free fall in newspaper advertising revenue once Google and Facebook launched their digital advertising services would indicate that newspaper advertisers were not receiving much value for their spending, relatively speaking.
The Journalism Competition and Preservation Act would make journalism less relevant
If news outlets were allowed to collude in negotiations, it would return to them the market power they appeared to possess and exploit about 15 years ago. This would enable and encourage them to hold onto a business model that customers find uninteresting, stagnant, and untrustworthy.
Customers would fare better if news producers learned how to compete with Big Tech. I suggested three possibilities in an earlier post.
It’s instructive that the two most popular news sites in the US are news aggregators: Yahoo News and Google News. This, plus the declining trust in brand-name news, indicates that customers want diversity in sources. That’s a business opportunity calling, not a call for protection.
(Disclosure statement: Mark Jamison provided consulting for Google in 2012 regarding whether Google should be considered a public utility.)
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