New Bad Things

Instead of lamenting the death of old legacy papers, journalists should confront the challenges ahead of them. It’s time to reconsider a public funding scheme.

An intriguing US-based website, newspaperdeathwatch.com , tracks American newspapers’ deaths. The recent closures of the Financial Times Deutschland (Germany), the Frankfurter Rundschau(Germany), France Soir(France), the hard copy version of Newsweek (US), the Diário de Natal (Brazil), and of 242 UK local newspapers between 2005 and 2012 show that it’s not just the US newspaper cemetery that is filling up.

Moreover, a long illness usually precedes the death of a paper: journalists are sacked, newsgathering budgets are cut, pagination is reduced, and potential consumers are excluded by price rises – there are survivors, but for how long? The Guardian media group lost £129m last year. Alexander Lebedev, the “savior” of two UK papers (the London Evening Standard and The Independent has signaled the need for another investor to share his papers’ losses.

The two big sources of revenue, which for more than 100 years in the “West” sustained a reasonably diverse, reasonably affordable and reasonably high quality public media are in decline. In aggregate, advertising revenues are falling (in 2013, predicted UK newspaper advertising revenues will fall by 9 percent) and the internet is taking a bigger and bigger share of the declining market: Ebay has slaughtered classified advertising; Google search substitutes for display ads; recruitment websites have decimated the job ads which once sustained many newspapers. Moreover, electronic media are increasingly displacing newspapers as news sources particularly among the young. Of course there are exceptions (notably China and India) but in aggregate this is a general global story.

Broadcasting has more or less survived this change by developing a new, subscription-based, business model (and, particularly in Germany and the UK, through generous funding of public service broadcasting) but this hasn’t happened in the print sector. There, habits of consumption have shifted (few other than the elderly now read hard copies) in response to the easy availability of online media (which offer timely updates and pervasive anytime, anywhere availability) and in response to the offerings of public broadcasters, such as the ARD and BBC. These changes compromise the viability of pay walls for online “newspaper” copy as well as the traditional, cover price, newspaper user-pays model. Crowd-sourced finance for journalism (see, for example, www.spot.us ), the repurposing of newspapers as retailers, and the spotty success of free sheets do not provide viable bases for the relatively diverse and relatively high quality journalism to which Europe and North America have become accustomed.

True, oligarchs like Lebedev sustain some titles rather as 18th century patrons sustained their pet artists; and a few democracies try and sustain their “legacy” print media through subsidies. But these are unlikely to be sufficient to replace the advertising and endow our future with the kind of public media and authoritative journalism to which we are accustomed.

These fundamental changes to newspaper revenues mean that public access to affordable content (most importantly, news) will decline; content quality and diversity will decline; as will the plurality of sources of content as firms merge or close to reduce costs and/or as control of bottleneck essential facilities endow a few firms with the market power to exercise dominance. Are there remedies for these problems?

There seems to be no sign of a viable new business model for the newspaper sector. What of public intervention – the classic liberal democrat response to a failed market? The last UK Labour government (which lost office in May 2010) proposed to fund three pilot schemes to provide news (located in northern England, Scotland and Wales), but this was aborted. And France has tried to levy a turnover tax on telecommunications to fund newspapers.

But all of this seems too much like backing the winners of yesterday’s races. Rather than sustaining failing “legacy” media (which, increasingly, the young are renouncing) we need a fundamental rethinking of public finance for the mass media. A few years ago, in 2004, the UK regulator Ofcom tentatively proposed diverting some of the funds devoted to public service broadcasting to support a “Public Service Publisher” – a PSP. Whether or not a PSP, funded by some of the licence fees currently devoted to broadcasting, is the way to go remains to be seen. But the comprehensive re-assessment of the whole of the mass/public media environment, which such a policy would entail, would be healthy – and would be more likely to yield a solution than a focus on separate sectors – broadcasting, newspapers, films etc – which are converging, anyways.

Clearly a PSP type remedy for media market failure would raise challenging constitutional issues in countries like Germany. There are no easy solutions. But, as we say in the UK, when you’re in a hole, stop digging. We’ll stay in the hole if we continue to think (and dig) as if the newspaper sector’s future can be separated from the future of the new media and other “legacy” media sectors. It’s time, as Brecht enjoined, to consider the bad new things rather than the good old ones.

Read more in this debate: Jonathan Cook, Chris Anderson, Wolfgang Michal.

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