Newspaper Woes Intensify in Covid-19 Era: Widespread Job and Pay Cuts as Ad Revenues Fall
With many industries suffering due to Covid-19, the continued decline of newspaper industry staffing hasn’t gotten the attention it warrants. A non-paywalled story at the Financial Times, Coronavirus rips a hole in newspapers’ business models, attempts to fill that gap.
The fact that newspaper employment levels have taken another leg down this year may partly explain why coverage has seemed so skewed: a lot on the usual eyeball-grabbing Trump outraged du jour, reasonable attention to Covid-19, and a strong focus on not just Black Lives Matter protests and police reform, but on race issues generally. While these are all important topics, the sense I have as a professional news junkie is the intense focus on these hot topics has come at even-greater-than-usual expense of coverage on other issues, ranging from climate change, anti-trust, and Julian Assange.
The Financial Times highlights the steepening of the fall of newspaper fortunes:
At least 38,000 news company workers from journalists to commercial staff have been furloughed, laid off or taken pay cuts in the US since March, according to FT estimates…
The carnage has spread to every corner of the news business, from venture-capital backed upstarts like Vice to century-old local newspapers and magazines.
I’ve had trouble finding a baseline, since the widely-cited surveys, such as by Pew, cover only “newsroom” employees, as in those who produce content, and not those on the business side. Nevertheless, Pew reported that US newsroom employment had fallen to 88,000 in 2019.
The pink paper describes how the collapse in ad revenues has led even storied publications like the Atlantic to make deep cuts (20% of headcount). And evenmid-tier publications like the Minneapolis Star Tribune, which has seen an uptick in readership due to its George Floyd coverage, has lost 40% of its ad revenues during the Covid-19 crunch and have been reducing staff hours.
More generally, a bifurcation is under way. The biggest publications have been able to attract more paid subscriptions while the also-rans struggle:
But the pandemic has exposed the growing divide between a handful of publishers with more than 1m subscribers each, and the rest struggling to make ends meet. In the first quarter of 2020, The New York Times added 587,000 digital subscriptions — more than all of the 100 newspapers owned by Gannett, the largest US print publisher, and more than the paying online readership of the Los Angeles Times and The Boston Globe combined….
A few premium publishers — The New York Times, Wall Street Journal, Washington Post and Financial Times — amassed more than 1m digital subscribers each. More niche publications — such as Politico for policy and politics, The Athletic for sport and The Information for technology — have also been able to command a premium to sustain smaller newsroom operations….
“Subscription revenue is more sustainable, it is recurrent, it has a lot of advantages,” says Kristin Skogen Lund, chief executive of Schibsted, the biggest publisher in Scandinavia, the region with the world’s highest density of news subscriptions. “The problem . . . is that the revenue base is simply not large enough. You would need to charge so much for a subscription to sustain the entire cost of running a media site.”
Newspaper publishers have been in decline since 2000. The internet wiped out classified ads, which had been half of their total ad revenue. From my vantage, the industry seemed to be in denial about the death spiral of print papers (and I greatly prefer reading a physical paper) and even worse, was slow to recognize the way Google and Facebook were eating their lunch. Even so, this grim picture has only become more dire. The Financial Times reports that some publications have seen their ad revenues fall by 50% to 90%.
And those willing to pay for publications are highly selective and dying out:
Research by Oxford university’s Reuters Institute for the Study of Journalism has shown that even the minority willing to pay for news largely do so for one publication — creating “winner-takes-most” markets. While the audience for online news jumped to new highs during the pandemic, most sites convert fewer than 1 per cent of website visitors into paying readers. Although there are no sector-wide figures, some publishers admit most of those that do pay in America and Europe are older, more wealthy and white.
The newspaper industry increasing looks as if it is carrying a beggar’s bowl, looking for munificent squillionaires….
One particularly seductive idea has been for wealthy benefactors to swoop in and backstop news organisations against losses. The trend has gained more attention since Amazon founder Jeff Bezos — the world’s richest person — bought the Washington Post for $250m in 2013.
But even when the independence of news output is protected, recent examples have revealed the shortcomings of such a business plan. Mr Taylor is worth an estimated $3.5bn, but that did not stop the Minneapolis Star Tribune from asking reporters to take unpaid leave this year. “The billionaire ownership model doesn’t mean that billionaires want to lose money on their newspapers,” says Michael Klingensmith, the newspaper’s publisher.
….and for welfare, um, grants, from the tech titans that stole their ad money:
Some bigger news organisations have their eyes on Facebook and Google, which, after years of resisting, are stepping in with larger grants and direct payments to news groups for their content. This is particularly vital for digital publishers such as Huffington Post and BuzzFeed, struggling businesses once heralded as the future of journalism…
In recent years Facebook and Google have each committed $300m to support US news publishers. As the pandemic shattered the economy, Facebook said it would expedite $25m in emergency grants to struggling local news groups.
Um, even $600 million a year is less than $16,000 per the 38,000 jobs that disappeared since March….not enough to pay those salaries, let alone fully-loaded costs. And pray tell, how is that dough doled out? They appear to be dispensing it through a straw:
“For them to step in with $50,000 grants or $100,000 grants . . . that’s not going to fix a newsroom,” says Nancy Dubuc, chief executive of Vice Media. “The scale of these platforms were built on other people’s brands. Facebook walled [in] those audiences. [The platforms] are going to emerge only stronger [from this crisis]. And at the expense of what?”
Executives worry about content being skewed to cater to the taste of those better off, older subscribers, of difficulty of supporting local news rooms, and of Google and Facebook continuing to eat their lunch:
Some media executives warn that relying on Big Tech has dangers, especially if publishers want to develop new products for subscribers. “The problem going through the platforms is that very often you are almost cut off from your own data,” says Ms Skogen Lund. “And that is almost like being cut off from your money, because it makes you blind to your own product.”
As we’ve said, if your business depends on a platform, you don’t have a business. But some publications may have gone too far down that path to easily extricate themselves.
More generally, while some readers may not see the continued decline of the newspaper as a big deal, I suggest you rethink that view. Opinion, commentary, and analysis all depend on having a foundation of facts on which to build. Sometimes those can key off government or private sector reports, but even then, what’t the discovery process? Are analysts at the vagaries of what gets picked up by prominent figures on Twitter? And how do you do vetting if you aren’t a subject matter expert or don’t have access to one? Even if the independence and objective of the mainstream press is sometimes questionable (witness WMD in Iraq), navigating informational hall of mirrors of having to sort through competing spin-doctors is taxing.