Information rules (Part 8: The decline of the newspaper and publishing industries)

Information rules (Part 8: The decline of the newspaper and publishing industries)

Phuah Eng Chye (13 February 2021)

In the industrial economy, the inventions of radio and television collectively triggered a massive information boom that benefitted the newspaper industry. Today, the invention of platforms poses an existential threat to newspapers. The shift from print to online has caused circulation and advertising revenues to plummet and to shrink the newspaper industry. Frances Cairncross notes “in 2018, the Reuters Institute for the Study of Journalism reported that 74% of UK adults used some online method each week to find news, and 91% of 18-24 year olds. Most online news is available for free and much of it is carried by aggregators such as Google News or Apple News, posted on Facebook’s news feed, or sent from one person to another…sales of both national and local printed papers…fell by roughly half between 2007 and 2017…print advertising revenues…declining in a decade by 69%…To cut costs, there have been mergers, as well as heavy cuts in staffing: the number of full-time frontline journalists in the UK industry has dropped from an estimated 23,000 in 2007, to 17,000 today”.

In the US, the House subcommittee[1] reported “since 2006, the news industry has been in economic freefall…advertising has declined from $49 billion in 2006 to $16.5 billion in 2017…While the decline of advertising revenue has most severely affected local news publishers, prominent digital publishers have also been affected. In January 2019, Buzzfeed announced layoffs of 220 employees, about 15% of its workforce, due to advertising losses…Despite a recent boost in the number of digital subscriptions and the level of online traffic for the top newspapers in the United States, these increases did not offset losses in online advertising or circulation in the industry overall”. “Over the past two decades, hundreds of local news publishers have been acquired or gone bankrupt. In some cases, private equity firms and hedge funds have purchased major regional chains and newspapers, resulting in mass layoffs of journalists and increased debt burdens for publishers…a reduction in newspaper employees, who have seen employment fall by half over a recent eight-year period, from 71,000 in 2008 to 35,000 in 2019. In 2019 alone, 7,800 media industry employees were laid off. The Bureau of Labor Statistics estimates that the total employment of reporters, correspondents, and broadcast news analysts will continue to decline by about 11% between 2019 and 2029. Researchers at the University of North Carolina School of Media and Journalism found that the United States has lost nearly 1,800 newspapers since 2004 either to closure or merger, 70% of which were in metropolitan areas. As a result, the majority of counties in America no longer have more than one publisher of local news, and 200 without any paper”.

Platform aggregation and bargaining power

The House subcommittee[2] notes “in recent years, news consumption has largely shifted to a model of content aggregation, through which platforms consolidate content from multiple news sources…publishers across the spectrum say they have little choice but to participate in content aggregation, particularly those run by dominant platforms because the aggregators use of news publishers content does send substantial traffic to news publishers. But this can also prevent traffic from flowing to newspapers. As some publishers have noted, news aggregators package and present content to users using attention – grabbing quotes from high points of stories, which can make it unnecessary for the user to click through to the publisher’s website. As these publishers noted, this dynamic forces news organizations to effectively compete with their own content, lowering the potential revenue from user traffic to news organizations websites”. “Several news publishers noted that the dominance of Google and Facebook allows them to pick winners online by adjusting visibility and traffic. For example, an update to Google’s search algorithm in June 2019 decreased a major news publisher’s online traffic by close to 50% even as their referrals from other sources – such as their home page and apps – grew during the same period”.

“The Subcommittee has also received evidence that the dominance of several online platforms has created a significant imbalance of bargaining power…dominant firms can impose unilateral terms on publishers, such as take-it-or-leave-it revenue sharing agreements…Consequently, in response to changing terms and algorithmic treatment by platforms, publishers have little choice but to adapt and accommodate regardless of how the changes may negatively affect their own profitability…publishers have a collective action problem, stating that no news organization on its own can stand up to the platforms. The risk of demotion or exclusion from the platforms is simply too great.” There were complaints “Google effectively gave news publishers little choice but to adopt Google’s placement of news on accelerated mobile pages (AMP)…requiring the creation of parallel websites that are hosted, stored and served from Google’s servers rather than their own…when a publisher attempts to avoid this cost by moving its content behind a paywall, its rise in subscriptions was offset by declines in traffic from Google and other platforms”.

“Finally, because news is often accessed online through channels other than the original publication – including search results, voice assistants, social platforms, or news aggregators – journalism has increasingly become atomized or removed from its source and placed alongside other content…The aggregation of different news sources without editorial oversight can also cause reputational harm to news publishers, such as when highly credible reporting appears alongside an opinion-based news source. Indirectly, the atomization of news may increase the likelihood that people are exposed to disinformation or untrustworthy sources of news online. When online news is disintermediated from its source, people generally have more difficulty discerning the credibility of reporting online. This process may also foster ambivalence about the quality and nature of content that garners users’ attention, particularly among young people”. “Google leveraged its search dominance – demanding that third parties permit Google to take their content, or else be removed from Google’s search results entirely”. “Through misappropriating third-party content and giving preferential treatment to its own vertical sites, Google abused its gatekeeper power over online search to coerce vertical websites to surrender valuable data and to leverage its search dominance into adjacent markets. Google’s conduct both thwarted competition and diminished the incentive of vertical providers to invest in new and innovative offerings”.

The House subcommittee noted observations that “Google’s conduct has sapped investment, as investors don’t want to invest in companies that are producing content that relies on Google traffic, resulting in less capital invested in companies reliant on traffic from Google…Google’s business practices have also skewed the website’s own investment decisions, leading it to allocate the vast majority of its revenue to creating news-like temporary content rather than evergreen contentif we could trust that Google was not engaging in unfair search practices, we would be producing different content…Google’s conduct had held the firm’s growth at bay and risks reducing innovation over the long term, as providers whose growth is capped by Google may be more reluctant to invest and expand”.

Consequences and responses

Cristina Caffarra and Gregory Crawford notes widespread concern about the impact of platforms on “the quality of journalism, a key input into the standards of political debate and a pillar of democracy. Quality journalism needs funding. Yet publishers’ sites have been long used as a source of free content by Google and Facebook to populate their pages; and while this has added to the consumer experience by linking to information of interest, it has also weakened the economics of publishing”. “The tradeoffs get more complicated in the long run – factoring in the reduction in publishers’ quality and even ability to produce news”.

There are wide-ranging consequences from the decline of the newspaper industry. The industry decline, particularly the gutting of local newspapers, meant a loss of good career jobs, a loss of expertise (thinning the pool of subject matter experts) and a vacuum in coverage and analysis of local communities and public forums (e.g. courts).

Frances Cairncross explains “the switch to online has changed the way people find news and the way they absorb it. They are much less likely to see the mixed bundle of politics, finance, entertainment and sport that constitutes many papers, and more likely to see an individual story, chosen by a computer program and not necessarily clearly labelled with the name of a particular publisher. This unbundled experience has implications for the visibility of public-interest news and for trust in news”.

The responses of newspapers, governments and platforms have been varied. Newspaper companies have attempted to reposition their business but success has been limited. Ben Thompson notes The New York Times has a “good subscription business model, which has allowed it to make better journalism by hiring more and better talent”, their ability to scale will be limited by “the Times’s subscriber base” locking the paper to “a certain kind of news and opinion” and “the act of requiring readers to pay to read”. Generally, success stories have been rare.

Newspapers have attempted to migrate online but they found it difficult to generate sufficient subscriptions or advertising revenue to compensate for the loss of traditional income. Ben Thompson argues “publishers and ad networks are locked in a dysfunctional relationship that doesn’t serve readers or advertisers, and it’s only a matter of time until advertisers – which again, care only about reaching potential customers, wherever they may be – desert the whole mess entirely for new, more efficient and effective advertising options that put them directly in front of the people they care about. That, first and foremost, is Facebook, but other social networks like Twitter, Snapchat, Instagram, Pinterest, and others will benefit as well”.

The “free” publications supported by advertising model has been questioned. Ben Thompson notes BuzzFeed’s content is mostly “about anything other than news or ideas, and its primary distribution network is Facebook…It also has an advertising kitchen sink business model, with a combination of premium advertising, programmatic advertising, affiliate marketing, e-commerce, etc., all of which only make sense at scale”. He concludes “what is indisputable, though, is that the nature of information and its spread has been fundamentally altered in a way unseen since the printing press. It affects…one increasingly suspects, the very fabric of society and the foundation of our political institutions and organizing principles. And, if this is right, we are only now at the end of the beginning”. Hence, the current attempts to achieve scale by generating content tailored to consumer demand results in the disappearance of “serious news” coverage and thoughtful commentaries which leaves a content vacuum in a democracy.

Governments have sought to intervene; particularly to address the “disparity in bargaining power” that allows dominant platforms to extract the bulk of the value from news. Cristina Caffarra and Gregory Crawford reports “the Australian Competition and Consumer Commission (ACCC) has just proposed new legislation to establish a Mandatory Bargaining Code to cut through a long-standing stalemate between giant ad-funded platforms (Google and Facebook) and the publishing industry about payment for use of publishers’ news content…involving an obligation for the two sides to reach a bargained solution for a payment in favour of publishers, specifying also a particular type of backstop (final offer arbitration) should negotiations fail”. They suggest “this approach has desirable properties – because it leaves it to the parties themselves to shape an agreement, and the backstop of baseball-style arbitration leverages their private information while reducing the arbitrator’s discretion”.

In the Australian Draft Bill, “news businesses can bargain either individually or collectively” with digital platforms “over compensation payable to the latter over the use of news content”. “It also covers non-price elements such as giving 28 days’ notice for algorithmic changes that are likely to have a significant effect on the ranking and presentation of news; giving original news content recognition through branding; and providing information about how and when they use users’ data collected through their interactions with news content”. “Importantly, the draft Bill also grants to both sides information gathering powers to allow them to gauge the benefits (direct and indirect) to digital platforms of using news content and the costs to publishers of producing news”.

Cristina Caffarra and Gregory Crawford point out “the rules for compensation… adoption of a compulsory final offer arbitration on payment if negotiations within a fairly tight deadline (three months) do not produce an agreement. The arbitrator must decide on one or the other offer within a month, taking into consideration “the direct and indirect benefit that the content of the news business provides to the digital platform’s service”, “the cost to the news business of producing news content”; and “whether a particular payment amount would place an undue burden on the commercial interests of the digital platform”. The outcome is binding while the regulator is limited to only making a submission to the arbitrator. “There are also provisions that digital platforms cannot discriminate in any way against news businesses on the basis of their participation in the code (specifically including favoring international over Australian content), and penalties for non-compliance”.

In addition, they argue “the data collected by digital platforms on Australian consumers’ news consumption may have significant value.  The draft bill requires a list and explanation of the data digital platforms collect about news publishers’ users from all their services, as well as how publishers can gain access to [this] data…As such data is jointly produced (i.e. by virtue of a user on a digital platform being presented with publishers’ news content),  it would seem reasonable that it would be jointly owned, and that the minimum standards be expanded to include a right for news publishers to have access to the data that currently only the digital platforms have, particularly data that links news consumption of a given publisher to a specific individual over time”.

Cristina Caffarra and Gregory Crawford acknowledge “not everyone shares our positive assessment of the ACCC’s proposal” and that, in some quarters, this can be viewed as “a shakedown of Google and Facebook for no other reason that they make a lot of money, which the Australian news media business feels entitled to”.

Joan Calzada and Ricard Gil notes the complaints of news publishers “motivated the amendment of copyright laws in several countries”. In “2014, a reform of the Spanish intellectual property law established that firms posting links and excerpts of news stories had to pay a compulsory link fee to the original publishers. Consequently, on 16 December 2014, Google News decided to shut down its Spanish edition, arguing that under the new regulation the service would not be profitable. Our results show that after the shutdown, Spanish news outlets experienced a reduction in the number of daily visits of between 8% and 14%, with a growing impact during the first six weeks”.

Joan Calzada and Ricard Gil note “on 26 March 2019, the European Parliament passed a new copyright directive to protect content creators (music industry, book publishers, news media, etc.) in the digital age…prohibits service providers such as news aggregators from linking to news outlets or publications without the prior authorisation by the publisher”. “Under the new legislation, compensation could entail government-mandated payments, negotiated payments between publishers and aggregators, or could even imply a reversal to any payment by publishers in exchange for being indexed by aggregators”.

Már Másson Maack reports platforms warned about the “catastrophic effects on the creative economy in Europe by hampering user uploads and news sharing”. “According to Google‘s own experiments, the impact of it only showing URLs, very short fragments of headlines, and no preview images would be a substantial traffic loss to news publishers…experiment demonstrated that many users turned instead to non-news sites, social media platforms, and online video sites – another unintended consequence of legislation that aims to support high-quality journalism.” Hence, some critics argue these rules are “actually doing the bidding of big publishers rather than protecting quality journalism, and will ultimately threaten freedom of speech”.

Proposed regulations to make platforms responsible “for monitoring user behavior to stop copyright infringements before they happen” could lead to broader censorship, leaving free speech vehicles – like parody, satire, or even protest videos – potentially untenable”. Már Másson Maack notes “similar legislation was trialed in Spain and Germany in 2014 and failed – but opposing sides argue over what exactly led to the failure. That’s why people had high hopes when EU member states failed to agree on Article 13 earlier…But the disputed articles are even more likely to become law because France and Germany…agreed on an even worse version of Article 13, which won’t exempt smaller platforms”.

In Australia, there is considerable US pushback to the draft bill. Calla Wahlquist reports the office of the US trade representative complained the legislation is designed to exclusively target (as an initial matter) two US companies and that it “called on the Australian government to shelve the proposal, arguing that directly intervening in the market to distribute advertising revenue was extraordinary and a significant step that needs to be carefully thought through and justified” given these laws “may result in harmful outcomes”. The US expressed concern with the broad discretion given to subject a tech company to a highly prescriptive, burdensome code without having first established a violation of existing Australian law or a market failure” and the fundamentally imbalanced preferential treatment of media outlets “because it requires the arbiter to take into account the cost of news production and its value to the digital platform – but not the cost of running and hosting content on a digital platform and the value that gives to the news company”. The US also asked whether the draft law was in full compliance with free trade commitments in relation to the arbitration process, the disproportionately punitive restrictions, the requirement for tech companies to provide data on users accessing news content, advance notice of changes to proprietary algorithms and the exclusion of foreign media (while subjecting tech companies) from the requirement to compensate Australian news companies.

The reaction of platforms has so far been uncompromising. Facebook earlier indicated it might “block the sharing of news on Australian user accounts”[3]. Recently, Calla Wahlquist notes “Facebook said it was willing to pay Australian publishers for news content so long as it is subject to genuine commercial consideration but said the mechanism in the legislation was not connected to commercial reality and had already discouraged it from investing in Australia. Facebook was intending to launch Facebook News in Australia late last year but instead launched it in the UK”. “Google said the proposed code remains unworkable, saying that forcing Google to pay for links and snippets that appear in Google Search would break the way search engines and the internet work for everyone…Google said it would work out commercial agreements with publishers to appear in its Google News Showcase service – which it was already doing. It also said the arbitration provisions were skewed toward media companies and should be replaced by a standard commercial arbitration mechanism”. Both platforms have not clarified whether their other services would be affected.

David Gilbert notes Facebook filed a lawsuit in reaction to the Irish Data-Protection Commissioner’s (DPC’s) preliminary order “to stop the transfer of data about European customers to servers in the U.S., over concerns about U.S. government surveillance of the data”. In its affidavit, Facebook complained it wasn’t “contacted about the inquiry prior to judgment being handed down”, that the three weeks it was given to respond was “manifestly inadequate” and of the “inadequacy of the investigative process” and “independence of the ultimate decision-making process”. Facebook noted “no other big tech company” was being similarly scrutinised and that “if [Facebook] alone is being investigated and subject to a suspension of data transfers to the U.S., this would be liable to create a serious distortion of competition”.

Facebook said if the decision is upheld, “it is not clear to [Facebook] how, in those circumstances, it could continue to provide the Facebook and Instagram services in the EU”. David Gilbert notes a Facebook spokesperson later clarified “Facebook is not threatening to withdraw from Europe” while others comment “Facebook’s ultimatum is little more than an empty threat”.

Heidi Tworek points out “history reminds us to consider failures, such as German attempts in both the interwar period and in 2013 to push for IP rights in news. In the late 1920s, the new technology of radio seemed to threaten newspapers’ revenue. Newspapers and news agencies pushed the Weimar government to try to create a law to cement copyright in news…Then, as now, much of the discussion revolved around basic questions. Who owned the news? Were publishers entitled to more revenue because they had invested in producing news articles? Could IP rights save newspapers from the new technology of radio? In the end, the Weimar law foundered on disputes around the length of time to protect news, what counted as news and, eventually, the rise of the Nazis”. “In 2013, the German government attempted something similar, passing a new and controversial ancillary copyright law for press publishers (Leistungsschutzrecht für Presseverleger). The law allowed German publishers to charge online news aggregators such as Google News for reproducing parts of their content. As the legislative process drew to a close, the law was watered down to allow news aggregators to display very short excerpts of news articles for free. Nobody, including the German Ministry of Justice, could define exactly how long very short excerpts actually are or whether they were the same as snippets”.

Heidi Tworek notes predictably “Google responded by opting all German publishers out of Google News and asking them to waive their right to compensation if they opted back in…After some websites experienced enormous dips in traffic, more than 90 percent of news companies agreed to relinquish their rights”. “In 2019, for technical reasons, the Court of Justice of the European Union ruled that Germany’s ancillary copyright law was invalid”.

Nonetheless, it is not in the interests of platforms to see its sources of quality content dry up. In its own self-interest and to pre-empt harsh regulatory actions, platforms are voluntarily offering grants and direct payments to news groups for their content. Sara Fischer reported recently “Google will pay publishers more than $1 billion over the next three years to create and curate high-quality journalism for a new set of features called Google News Showcase…The Google News Showcase, launching first in Brazil and Germany, includes a new set of features that Google hopes will help guide readers to higher-quality information and boost traffic to participating publishers’ websites. The biggest feature…is panels…which allow publishers to package stories with greater context…The new Showcase product is different from Google Search or News because it relies more heavily on the editorial choices of individual publishers. Panels will still be surfaced by the same algorithms used to rank content in Google News or Search, but within them publishers will be curating what’s featured…The panels are also designed to promote a publisher’s brand within Google’s products…Publishers have often complained that platforms like Google don’t just steal their revenue but minimize their brands. The panels link to the publishers’ sites, where publishers can fully monetize the traffic. Google says it will share anonymized data with publishers about performance…allow users to personalize feeds within the Google Showcase, so that they can follow specific publishers”. Progress appears promising with some reports suggesting “Google is on the verge of striking an agreement with Australian regulators…While the product is initially launching in Brazil and Germany, Google says it’s signed deals with more than 200 publishers in Germany, Brazil, Argentina, Canada, the U.K. and Australia”.

The publishing industry

Digitalisation also had a major impact on the publishing industry. MacKenzie Smith notes “where social media platforms like Facebook profit from – and indeed, would not exist without – the content generated by users, the parallel is true for academic journals. Companies like Elsevier receive articles from university faculty and other researchers for free, summarizing research that was often publicly funded by government grants. Then other faculty and researchers serve on their editorial boards and peer-review those articles for free or a nominal fee. Finally the company publishes them in journals available only behind a paywall”.

He points out “under the new business model of licensing access to journals online rather than distributing them in print, for-profit publishers often lock libraries into bundled subscriptions that wrap the majority of a publisher’s portfolio of journals – almost 3,000 in Elsevier’s case – into a single, multimillion dollar package. Rather than storing back issues on shelves, libraries can lose permanent access to journals when a contract expires. And members of the public can no longer read the library’s copy of a journal because the licenses are limited to members of the university. Now the public must buy online copies of academic articles for an average of US$35 to $40 a pop”.

MacKenzie Smith argues although digitalisation drastically reduced costs, “the cost to libraries of licensing access to them has continued to experience hyperinflation…articles are not readily available to everyone, subscription costs have continued to rise, and subscribers’ rights have eroded, including what they can do with articles they buy and their ability to provide long-term access to them”. 

Peter Walter and Dyche Mullins argues “publishers have created de facto monopolies. In this industry, normal market forces that control pricing through competition are entirely absent. Every paper we publish is a singular product, and every academic library is obliged to provide access to it. Otherwise, we, the scholars, cannot perform our jobs. Because of this mandate, publishers can increase prices virtually at will…To compound the issue, we blithely accept most publishers’ demand to sign over copyright of our work, allowing them to control access to it and maximize their profits”. This is because “journal titles are used as yardsticks to measure accomplishments…authoring papers…are perceived as significant drivers in hiring, promotion, and funding decisions. In addition, for-profit journals can afford to maintain talented editors to review contributions to ensure published work represents reliable, true advances of knowledge”.

MacKenzie Smith adds that while the costs of professional editors, peer review (for accuracy and quality), marketing and long-term preservation are significant, nonetheless “revenues far exceed these costs”. Peter Walter and Dyche Mullins note “the industry made more than $10 billion in 2015…every time we pay a $3000 article processing charge, only $1800 supports the publishing process, while the remaining $1200 goes directly to Elsevier shareholders…This money is effectively a surcharge, or tax, on scientific research imposed not by a government but by a for-profit industry. Imagine how much research could be carried out using these resources if they were channeled back into our academic enterprise…Most of us pay publication charges from grants funded by taxpayer money. After this, our libraries, also funded (directly or indirectly) by taxpayers, pay a second time to gain access to this published work”.

It remains to be seen if content monopolies can be defended. Negotiations between Elsevier and universities sometimes break down, with Elsevier cutting off electronic access to its journals while facing cancellations and boycotts by universities. Peter Walter and Dyche Mullins note “some universities have opted to publish their work in open-access venues, the emergence and widespread use of illegal download sites that provide free access to millions of copyrighted publications…The phenomenon of content leakage, be it through pirate sites or scholarly peer-to-peer collaboration networks such as ResearchGate, nowadays provides widely used alternatives to access publications otherwise locked away behind pay walls and increasingly empowers libraries at the negotiation table”.

Overall, MacKenzie Smith argues “paywalls and online subscriptions may make sense in other parts of the media ecosystem, but it’s not a good model for academic publishing, where authors and reviewers are paid by universities and research grants (with public money) rather than by publishers. The open access movement would get rid of paywalls and let anyone read anything for free…another option…authors, or their funders or institutions, pay the publisher a fee to cover the cost of publishing each article. In exchange, the articles are made freely available for everyone to read online…Article quality is preserved by the same unpaid peer-review system. Libraries at research institutions could shift their payments from licenses and subscriptions to publication fees for their affiliated authors. The cost is theoretically the same, but everyone can read everything for free…Now, UC’s researchers will have to find other ways to get Elsevier journal articles than the online access they have become accustomed to. Many of those articles are already freely available on the web and the rest can be borrowed from libraries or requested from authors. There are also a growing number of tools like Unpaywall, which searches the web for free copies of articles, to help researchers with that transition”.

Peter Walter and Dyche Mullins notes major universities and funding agencies are supporting a movement that advocates adoption of principles such as authors retention of copyright; publishing under an open license (e.g. Creative Commons); the establishment of robust criteria and provision of incentives for compliant open access journals and platforms; and standardisation and capping of fees. “Plan S states that by 2020, research funded by public grants must be published in open access journals or platforms”.

Alex Shephard notes the book publishing industry continues to consolidate. “America’s biggest, most powerful book publisher, Penguin Random House had reached an agreement to purchase Simon & Schuster, the nation’s third-largest publisher, for $2 billion. The resulting conglomerate would publish at least a third of all books sold in the United States, and transform Penguin Random House, already a superpower, into an industry-dominating behemoth, with potentially serious consequences for authors, publishing employees, and diversity of thought. That extraordinary level of concentration will dramatically lower competition in the publishing industry, likely leading to job cuts, lower advances for authors, and fewer non-blockbuster books being published by commercial publishers”. While some suggest a book megapublisher “will be better positioned to take on the most dangerous force in the industry, Amazon…use its might to garner better terms or to fight back against its steep discounting, which has had a deleterious effect on physical bookstores. But PRH has never used its gargantuan scope to challenge Amazon”.

Conclusion: The insights of Robert McChesney[4]

There has been much policy focus on the role of platforms in causing the decline of the traditional newspaper and publishing industries. However, Robert McChesney provides important insights that the causes and consequences extend beyond competition from platforms.

He relates “the commercial basis of the decline of journalism, why it has made so much sense economically to junk the reporters. Fox News found out…get rid of your reporters and then tap into a section of the market that watches TV news and give them the take on the news they will appreciate, that’s really inexpensive. And you can build a name for yourself. That’s why Fox News was as brilliant a commercial idea as it was a political idea. It was a truly brilliant commercial idea…But they’re still within the boundaries of sort of elite thought…There’s no lane for the sort of investigative journalism that even our mainstream media provided in the ’60s, ’70s and ’80s in our great newspapers where you’d see some deep, wonderful digging. That doesn’t exist anymore. What we have is commercially driven, this journalism-free pontificating, especially on cable TV news, satisfying an audience by sort of just talking to the same talking heads and covering the same two or three stories in every cycle”.

Robert McChesney notes “in the 1980s and ’90s…there was a lot of emphasis on concentration, ownership, the influence of the profit motive and concentrated ownership and monopolistic markets of news. That scholarship called, basically, for opening up more competitive markets and more public-funded voices to give some better journalism. I think it was proper analysis at the time. But something has changed fundamentally…journalism is no longer profitable. No one’s investing to do traditional journalism anywhere if they’re out to make money. They might be doing it because they have a political edge they want to push. They might be doing it for this reason or that. But it’s lost all its commercial value. It is no longer profitable. The capitalist class has basically abandoned journalism altogether. The only people buying up media outlets today are these hedge funds and equity funds that are buying them to strip them for parts. They don’t care about journalism. That’s the only people in the market. You can’t find an investor to buy papers to do news or to buy news media to do news if they want to make a profit on their investment”.

In addition, “in the last fifteen years, advertising has left journalism. They no longer need to support a local newspaper to reach their target audience…They found much better ways, much more cost-effective ways, to target their audience to reach it…The only thing we’re left with is subscribers…There’s just not enough money coming from subscribers…The problem is the whole system’s dead…three stations that don’t do any journalism. They basically have a bunch of people sit around and gossip about the news. They don’t break any news. They talk about it. If you watch it, you won’t have any idea what’s going on, for the most part, in the country or the world. But you know what the chattering classes think is important for us to hear about, depending on your perspective. Political spin. That’s not journalism…So, there’s room for one paper. There’s room for one newspaper that can make money nationally and do what The New York Times does”.

Robert McChesney points out “our free-press tradition…there actually be a free and independent press, was forgotten by the time the commercial media giants came along in the 20th century…It required massive public subsidies to…have this plethora of diverse views in newspapers which were foundational to our political democracy…There wasn’t a single social movement of value from abolition to the suffragettes to labor…that wasn’t led by editors, that wasn’t led by news media. The media was the center of democracy. Those media only survived because they were supported by the post office providing free distribution or really inexpensive postage that covered all their distribution costs. That’s our American tradition…that you need a news media to have a functioning democracy and we can’t bank on the market to provide it. And we’re in a situation now where the market clearly has given up. It’s failed. This is a public good, news media. It’s something society desperately needs, but the market won’t produce in sufficient quality or quantity. So, how do we solve that? The great political problem: how do you get sufficient public funds to support independent, uncensored news media, but without letting the government control who gets the money and how it’s used?”

Robert McChesney notes “now we’ve got to come up with how we do it in the digital age…Local media disappears in the digital era because once you go digital, localness means nothing…You basically have an international audience automatically. Localism is stripped out of the technology. And for that reason, we’ve got to come up with a way to have local media that covers communities, that draws people together – independent, competitive media that’s functional and accountable…It’s utterly frightening to see QAnon and to see this other stuff that’s being widely circulated as legitimate. The reason for that is that conspiracy theories are the only theories trying to make sense of the world. No one else is trying to explain how to understand the world. You don’t have journalism. We’ve got to get journalism, in competitive groups, back in communities explaining the world to people. Not just one voice, but multiple voices”.

Hence, “we’ve got a bigger problem than just who owns the media”. Robert McChesney argues “the framework for American journalism is sort of what elites consider relevant issues, what they’re debating. And this clearly is not especially relevant issue for the elites of this country because they’re not encouraging this debate whatsoever. Their politicians aren’t encouraging it. They’re not paying for politicians to encourage it. And we’re living with the consequences. Theoretically, in a democratic society, even if the people who run the country don’t want to talk about it, there’s a news media that’s focused on the issues that aren’t always going to be popular with people in power. That’s what a free press is for, and they would be doing exactly this. They would be beating the drum on this issue, publishing the work, talking to people, talking to activists about what they’re doing. So, if you live in a community, you’d know what people are doing in the community on this issue”. However, “these are places in America …where there’s no really credible journalism covering your state, your community…Most people don’t have any clue of what’s going on in their city or their community… They’ll have no idea why it’s a big deal. They’re clueless and it’s not their fault. I mean, you say, well, they should know. How are they supposed to know about something if you’ve never heard about it?” Hence, getting resources to have an independent, uncensored news media that’s actually covering our communities “is the foundation of democratic theory”.

This is thus the critical question: Will the current platform-centric reforms be able to restore the legacy newspaper business models such that it can overcome the challenge of misinformation and re-establish the information order? It is evident the problems are deeper than platform dislocation. The more critical factor is information disruption which has changed the way content is produced, distributed and consumed and data is managed. Quality and thoughtful content are important to a democracy but misinformation and disinformation abounds for both demand and supply reasons. Hence, there is a need to deepen our understanding of the economics of content and to adopt a more information-centric approach to reform.


Alex Shephard (26 November 2020) “Pretty soon there’ll be just one big book publisher left”. New Republic.

Australian Competition & Consumer Commission (ACCC) (26 July 2019) “Digital platforms inquiry final report”.

Ben Thompson (23 November 2020) “The idea adoption curve”. Stratechery.

Calla Wahlquist (18 January 2021) “US attacks Australia’s ‘extraordinary’ plan to make Google and Facebook pay for news”. The Guardian.

Calla Wahlquist (19 January 2021) “Australia’s proposed media code could break the world wide web, says the man who invented it”. The Guardian.

Cristina Caffarra, Gregory Crawford (26 August 2020) “The ACCC’s bargaining code: A path towards decentralised regulation of dominant digital platforms?”. Voxeu.

David Gilbert (21 September 2020) “Facebook says it will stop operating in Europe if regulators don’t back down”. Vice.

Frances Cairncross (12 February 2019) “The Cairncross review: A sustainable future for journalism”.

Heidi Tworek (30 October 2020) “Is news property? How digital platforms are resurrecting a centuries-old question”. Centre for International Governance Innovation (CIGI)

Joan Calzada, Ricard Gil (30 April 2019) “News aggregators and the reform of the copyright legislation in Europe”. Voxeu.

Már Másson Maack (8 February 2019) “Google warns news sites may lose 45% of traffic if EU passes its Copyright Reform”. The Next Web.

Paul Jay (12 December 2020) “Robert McChesney: The decline of American journalism”. Originally published at

Phuah Eng Chye (2015) Policy paradigms for the anorexic and financialised economy: Managing the transition to an information society.

Phuah Eng Chye (7 November 2020) “Information rules (Part 1: Law, code and changing rules of the game)”.

Phuah Eng Chye (21 November 2020) “Information rules (Part 2: Capitalism, democracy and the path forward)”.

Phuah Eng Chye (5 December 2020) “Information rules (Part 3: Regulating platforms – Reviews, models and challenges)”.

Phuah Eng Chye (19 December 2020) “Information rules (Part 4: Regulating platforms – Paradigms for competition)”.

Phuah Eng Chye (2 January 2021) “Information rules (Part 5: The politicisation of content)”.

Phuah Eng Chye (16 January 2021) “Information rules (Part 6: Disinformation, transparency and democracy)”.

Phuah Eng Chye (30 January 2021) “Information rules (Part 7: Regulating the politics of content)”.

Reuters (1 September 2020) “Facebook threatens to block news sharing in Australia over royalty law”.

Sara Fischer (1 Oct 2020) “Google will spend $1 billion to pay publishers for news showcase”. Axios.

Subcommittee on Antitrust Commercial and Administrative Law of the Committee on the Judiciary (2020) “Investigation of competition in digital markets: Majority staff report and recommendations”.

[1] See Subcommittee on Antitrust Commercial and Administrative Law of the Committee on the Judiciary.

[2] See Subcommittee on Antitrust Commercial and Administrative Law of the Committee on the Judiciary.

[3] See Reuters.

[4] See Paul Jay.