Pay-per-read: The Cost of Revitalizing the Newspaper Industry
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The first published newspaper in the United States predated the founding of the nation itself. For more than two hundred centuries, news companies across the nation have printed timely, important updates and other information for their readers. However, starting in the 1980s, the estimated circulation of newspapers in the U.S. began declining. Coincidentally, the Internet was invented in 1983 and was destined to change the future of printed newspapers.
From 1984 to 2020, the circulation of newspapers decreased by nearly an estimated 40,000,000. From 2002 to 2020, newspaper publishers’ revenue dropped from $46.2 billion to $22.1 billion. In the decade spanning from 2008 to 2018, newspaper publishers’ advertising revenue declined by 62%, decreasing from $37.8 billion to $14.3 billion. Moreover, newspaper employment at U.S. newspapers dropped by 47% from 2008 to 2018.
While revolutionary, the Internet did not single-handedly contribute to the decline of newspapers. Over the course of the 20th Century, radio and television gained popularity and many Americans consumed news through those forms of media as well. However, in the current digital age, the shift to online news benefits advertisers, large news publishing companies, Big Tech, and readers alike.
From 2014 to 2020, the average monthly unique visitors to the top 50 U.S. newspapers by circulations websites nearly doubled. In 2020, the total estimated advertising revenue for the newspaper industry was $9.6 billion for publicly traded newspaper companies. Although substantial, that estimate fell 25% short of the total estimated advertising revenue for the newspaper industry in 2019. The shift to online news benefitted advertisers and top newspaper companies; from 2011 to 2020, the percentage of newspaper companies’ advertising revenue from digital advertising jumped from 17% to 39%.
On top of advertising revenue, many news publishers that are prioritizing online news monetize their content by charging readers for digital subscriptions. In many cases, readers can access a limited number of articles gratis before needing to pay a fee to access more content. Readers who pay for online news subscriptions generally do so because they believe they can consume higher quality news compared to free news and because they want to fund quality journalism.
On paper, it seems like the Internet revitalized the newspaper industry, ushering in a prosperous future for larger publishers. While that may continue to be the case for well-known news publishers like The New York Times and The Wall Street Journal, small news publishing companies found themselves at a disadvantage. Whereas large news publishers like The New York Times employ around 5,000 employees, small and local news publishers employing significantly fewer employees began disappearing across the United States.
Impoverished, small, and rural communities across the country face adverse effects of losing their newspapers and living in news deserts. Around 7% of counties in the United States have no local news outlet and roughly 20% of Americans live in communities that are at-risk of becoming news deserts. The UNC School of Journalism and Media’s Center for Innovative and Sustainability in Local Media defines a news desert as “a community, either rural or urban, with limited access to the sort of credible and comprehensive news and information that feeds democracy at the grassroots level.”
The United States loses two newspapers per week and roughly a fifth of the nation’s population lives in areas with no local news organizations or one at-risk news organization. Perhaps unsurprisingly, many communities losing their local newspapers are located in impoverished, under-educated areas: only 20% of adults living in news deserts have bachelor’s degrees and the average median annual income of a home located in a news desert is $15,000 less than the average U.S. household. While those living in news deserts can turn to television and the Internet for global, national, and regional news stories, access to local news is vital. Local newspapers are credible sources to help to connect and educate communities and shine a spotlight on community, business, and governmental bodies on a local scale.
Smaller news companies are already in danger and the loss of local news can grow worrisome. Some policymakers believe that Big Tech companies, like Google and Facebook, are key players in the loss of local news. These policymakers have proposed The Journalism Competition and Preservation Act of 2021 (JCPA), a bipartisan bill that would allow news publishers to collectively negotiate with dominant online platforms for fair compensation for the use of content. A significant goal of the JCPA is to preserve local journalism by maintaining readers’ access to local news coverage. Supposedly, Big Tech has driven many local news outlets out of business and these dominant online platforms have too much economic and political power in society.
Those involved in the creation of the JCPA believe that Big Tech sets the rules for news publishers and determines how journalism is displayed, prioritized, and monetized. The JCPA seeks to ensure that Big Tech companies do not take advantage of smaller news companies; those in support of the bill purport that local newspapers would potentially be able to monetize their content and improve advertising effectiveness, redirecting subscription and advertising revenue dollars to publishers.
Additionally, the JCPA would enable smaller news companies to overcome antitrust laws by way of its “limitation of liability” clause. The clause permits news content creators to not be held liable under antitrust laws for collectively withholding content from, or negotiating with, an online content distributor regarding distribution terms.
In late September 2022, the Senate Committee on the Judiciary voted 15-7 to advance the JCPA. While the heart of the JCPA may be creating an even playing field and slowing the rate at which news deserts emerge across the nation, the JCPA puts in a lot of work singling out Big Tech companies and platforms. In one way, the JCPA faults these dominant online platforms as the reason why small news companies continue to vanish. Providing safe harbor for small news companies to form collectives to stand up against the Googles and Facebooks of the online world cannot be the only solution to deterring the growing number of news deserts.
Those living in news deserts can still consume news by tuning in to television stations covering local news, for example. However, in some cases, the nearest local television station for remote or small-town communities is many miles away and local news does not actually apply to communities in news deserts. Some local news companies have found signs of success by following the lead of larger news publishers and utilizing online subscription models, which could provide one solution to the emergence of news deserts. Rather than single out companies that attract multiple millions of users, perhaps policymakers can find other tangible ways to help small, local news publishers disseminate local news that meets the standard of the local newspapers that many have lost or will lose.
Dissemination of news is vital, but in a world dominated by smartphones and social media, the appeal of local newspapers may not revert to what it once was. Given current concerns about the environment, access to technology, and a slew of other reasons, the print newspaper may very well become extinct in a matter of years. However, to combat the ill-effects of news deserts, The Journalism Competition and Preservation Act presents one way to preserve local news but ultimately may not address the root cause of emerging news deserts.
Ciannah Gin is a second-year law student at Cornell Law School. She obtained her degree in English at the University of Southern California. Prior to starting law school, Ciannah wrote and produced affiliate marketing content for Forbes and Business Insider.
Suggested Citation: Ciannah Gin, Pay-per-read: The Cost of Revitalizing the Newspaper Industry, Cornell J.L. & Pub. Pol’y, The Issue Spotter, (November 8, 2022), https://live-journal-of-law-and-public-policy.pantheonsite.io/pay-per-read-the-cost-of-revitalizing-the-newspaper-industry/.