The News is Dead, Long Live the News

Billionaires and greedy corporations didn't kill the news industry.

After the Democratic Party invited 200+ social media creators to the Democratic National Convention in August, a lament rose up from traditional journalists who saw this as a sign of the end times. Mene mene tekel upharsin, judgement has come, democracy dies in darkness, and all that is left is to huddle for warmth around the burn barrels outside of shuttered newspapers and speak of the before-before times prior to the coming of the Dark Lord Elon.

This sparked a lively — albeit only sporadically well-informed — debate between old news media journalists and new news media creators about what exactly ought to count as journalism. Given how many of the neo-newsies were themselves once under-paid employees of news outlets before launching their sundry newsletters, podcasts, and social media accounts, the fight quickly turned into a rout. If journalism is a process or a product rather than merely a term used to describe those within the Pale of incumbent journalistic institutions — print outlets, J-schools, august awards, etc — then of course folks like Ben Thompson, Matthew Yglesias, and Bari Weiss perform a function that is recognizably similar to journalism. (Whether or not they are good journalists is beside the point.)

What was more interesting than that tired debate was the question of who precisely is to blame for the decline of Journalism with a capital ‘J’. This came up in a Thread from TikTok news creator Vitus Spehar of UnderTheDeskNews, who, it is worth noting, has nearly twice as many followers (3.1 million) as the number of primetime viewers of Fox News (1.7 million). (To be fair, Fox News wins that head-to-head if you add up the total ages of all viewers; although it loses if you calculate by remaining life expectancy.)

Spehar fixes blame for the death of local news on two parties, 1) union-busting corporate syndicates like Sinclair & Ganett and 2) billionaires buying up and degrading news outlets, ie Jeff Bezos and the Washington Post.

To put it baldly, this makes no sense. Think about the proposed mechanisms of decline. News outlets couldn’t attract enough subscribers to pay the bills, but somehow boosting instead of busting unions — and presumably raising journalists’ wages — would have changed that calculus?

This take is what comes from confusing the consequences of decline for the causes of decline. Think about it. Hedge funds and equity aren’t typically in the business of buying healthy companies in thriving sectors. No, they buy struggling firms in stagnant industries in order to break them up for parts and maximize short term profits. We can argue about whether or not this process serves a useful salvage function, but even if you believe it to be a horrid spectacle of late-stage capitalism, blaming billionaires and hedge funds for acquiring and stripping down news outlets is a bit like blaming a vulture for killing the dear whose carcass it picks over.

No, this is thinking too small. It’s focused on the proximate rather than the ultimate and on the retail rather than the structural. The traditional news industry is in its death throes because of much bigger and broader forces than anything mentioned above. TLDR, the internet lowered existing barriers to informational transfer, busted apart the old news semi-monopolies, and transferred the collected rents back to consumers and to news-agnostic advertising platforms.

Bear in mind that pre-internet, the typical newspaper dedicated 70% or more of its pages to advertising, which were responsible for 75% of revenue. And while visions of sugar plum Don Drapers ginning up clever advertisements might be dancing in your head, the largest chunk of that money actually came from classified ads and legal notices.

Inasmuch as billionaires play a major role in this story, they appear long before techies like Bezos enter stage left. By the mid-20th century, it had become apparent that classified ads were — as News Corp CEO Rupert Murdoch once put it — “rivers of gold.” The secret of the game was to buy up competing local papers, consolidate them behind a single regional monopoly masthead, and then rake in the profits. It was so easy that, as Warren Buffett once said, “If you have a monopoly newspaper … your idiot nephew could run it.”

It was a game of deep moats and high returns. Sure, you might dole out a dollop of those profits on Pulitzer-bait projects like investigative journalism, but the general news product was filled with lazy ads, boring newswire rewrites, and fan service for local politicians and corporations. News outlets had a semi-captive audience and frequently acted like it.

But that all changed with a list. The rise of Web 1.0 had enabled the creation of online listing platforms like Craigslist and Ebay, which quickly trounced the newspapers in the classified ads space. The math was simple. In the early-1990s, you could pay $5 for a 15-word classified ad (which would be ~$12 today) in the back of a local paper that might, if you were lucky, be seen by a few dozen or few hundred readers, some of whom might interested in buying your used waterbed or several hundred pound CRT television. By the late-1990s, that same item could be advertised on Craigslist for free or listed on eBay for a small fee, reach a far larger potential audience, and likely earn the seller a higher return.

While these platforms financed a few fortunes — eg, eBay provided Pierre Omidyar with the billions to bite the invisible hand that fed him — most of these new efficiencies went straight to consumer surplus. This was terrible for incumbent media outlets, which had been coasting for decades at this point. If it weren’t for state laws mandating print legal notices, the decline would have been even more rapid and complete.

Yet the loss of classified rents was just the first of the one-two punch of internet-induced structural transformation for the news industry. Newspapers and news channels also lost their geographical semi-monopolies. If you wanted to be a reasonably well-informed citizen in a pre-digital age, you all but had to subscribe to your local newspaper (and maybe a regional or national newspaper for the high information news gourmand). Likewise, display advertisers that wanted to reach a mass audience had to pay $$$ to newspapers and news channels. News outlets sat in the middle and collected rents.

But display advertising was also under pressure post-internet. The competition today is not between offline news and online news; it is now a contest between offline news and online everything. News outlets have to compete with limitless user-created content, from makeup tutorials on Instagram to let’s plays on Twitch. The cleverest outlets have adapted by morphing their core product. Even the New York Times is now, as one wag put it, a “gaming company with a news division” attached. (It’s not much of an exaggeration.)

This is the point in our tale where I ask you to reflect on the age-old question, “Rabbi, who did sin, these billionaires or these corporations, that the news died?” The answer is still neither. Jeff Bezos didn’t start Craiglist. Union-busting corporations didn’t give us eBay. The internet just gave people more freedom of choice over what they could spend their time looking at; and it so happens they chose en masse to stop looking at a dated, printed product composed of a few milquetoast articles surrounded by boring ads.

I don’t want to leave you in the doldrums. There is good news! The fat, contented, lazy news industry of the late 20th- century is being replaced by a leaner, meaner “new news” media, which I’ve written about and discussed extensively. The reason for this is simple: people still want the news and are willing to pay for it! A web of independent journalists, news creators, and local experts is spreading rapidly. And they may be able to provide not only a substitute for the old, dead news industry but a superior alternative.