This year has witnessed an alarming trend as virtually every sector of the news business experiences a simultaneous wave of layoffs, raising questions about the sustainability of journalism in the current landscape. Despite a seemingly thriving economy, audiences for news are dwindling, and thousands of journalists are facing job losses. The term “market failure,” typically relegated to economic discussions, is now being whispered within the journalism community, reflecting a sense that the normal rules of economics no longer apply, with potential dire consequences for society.
Evidence of Distress: A Plethora of Layoffs Major news outlets, including the Los Angeles Times, The Washington Post, The Messenger, Sports Illustrated, Vox Media, and Vice Media, have resorted to substantial layoffs, raising eyebrows across the industry. Billionaire-owned entities, such as the Los Angeles Times under Dr. Patrick Soon-Shiong and The Washington Post under Jeff Bezos, are not immune to financial challenges. The perplexing aspect is that substantial investments, as in Soon-Shiong’s case, have failed to stave off losses.
The Enigma: Why the Sudden and Widespread Cuts? Various theories attempt to explain this year’s unprecedented cuts, from the collapse of journalism’s middle ground to the impact of declining print and digital businesses and restless billionaire owners. However, these explanations fall short in elucidating the magnitude of the crisis. The prevailing sentiment among journalists is that the private market has failed, with a multitude of factors coalescing to create a precarious situation.
The Google Quandary: A Precipitous Decline in Traffic Social media platforms, once conduits for news dissemination, have witnessed a decline in traffic to news sites. Notably, Google’s algorithm changes have led to abrupt drops in traffic for some sites, illustrating the vulnerability of businesses heavily reliant on a single distribution channel. The dominance of tech giants—Google, Meta, and Amazon—in the online ad market is identified as a critical factor, requiring government intervention.
Addressing Power Disparities: A Call for Government Action Industry experts, including Victor Pickard, emphasize that resolving journalism’s crisis necessitates addressing the overwhelming influence of tech giants. Calls for government action to push these companies to elevate journalism’s visibility are gaining traction. Perverse incentives within the digital advertising and social media space, favoring low-quality information, are identified as a political economy problem requiring scrutiny in the antitrust arena.
A Paradigm Shift: Recognizing Journalism as a Public Good As the challenges facing journalism appear systemic, there is a growing consensus that the industry may be an example of classic market failure. Victor Pickard suggests viewing journalism as a pure public good and proposes funding it through tax credits and state and federal funds. This shift in perspective reframes the narrative, likening journalism to public education and prompting consideration of government intervention to ensure its vitality.
The Urgency for Action: A Broader View of the Crisis While blaming tech platforms is a common narrative, Pickard warns that this oversimplification won’t address journalism’s deeper structural problems. With over a third of U.S. newspapers and two-thirds of newspaper journalists lost since 2005, the industry’s struggle is indicative of a historical anomaly. The call for a practically utopian approach to locally owned media companies and substantial government support becomes imperative.
A Glimpse into the Future: Embracing Change As the news industry contends with an uncertain future, many agree that expecting a new business model to emerge is a fantasy. The pressing need for a new perspective on journalism and its value prompts conversations about potential government interventions, challenging traditional market-driven approaches. In a landscape fraught with challenges, reimagining journalism’s role and funding it as a public good may offer a lifeline for an industry grappling with market failure.**