It’s my holiday tradition to bring tidings of discomfort and sorrow to my colleagues in the news business. One year ago, I described the media apocalypse coming for both digital upstarts and legacy brands. Vice and BuzzFeed had slashed their revenue projections by hundreds of millions of dollars, while The New York Times had announced a steep decline in advertising.
Twelve months later, it’s end times all over again. There have been layoffs across Vox Media, Vice, and BuzzFeed (and dubious talk of an emergency merger). Mic, once valued at $100 million, fired most of its staff and sold for $5 million. Verizon took a nearly $5 billion write-down on its digital media unit, which includes AOL and Yahoo. Reuters announced plans to lay off more than 3,000 people in the next two years. The disease seems widespread, affecting venture-capital darlings and legacy brands, flattening local news while punishing international wires. Almost no one is safe, and almost everyone is for sale.
It’s tempting to think that this is the inevitable end game of Google and Facebook’s duopoly. The two companies already receive more than half of all the dollars spent on digital advertising, and they commanded 90 percent of the growth in digital ad sales last year. But what’s happening in media right now is more complex. We’re seeing the convergence of four trends.
1. Too many players
It’s not just Facebook and Google; just about every big tech company is talking about selling ads, meaning that just about every big tech company may become another competitor in the fight for advertising revenue.
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Amazon’s ad business exploded in the past year; its growth exceeded that of every other major tech company, including the duopoly. Apple is building tech that would skim ad revenue from major apps such as Snapchat and Pinterest, according to The Wall Street Journal. Microsoft will make about $4 billion in advertising revenue this year, thanks to growth from LinkedIn and Bing. Uber is reportedly getting into the ad business as it eyes new revenue sources to beautify its forthcoming IPO. AT&T is building an ad network to go along with its investment in Time Warner’s content, and Roku, which sells equipment for streaming television, is building ad tech. Oracle, Adobe, and Salesforce are using their cloud technology to collect data that could be used for ad targeting, as Axios reported.
These tech companies have bigger audiences and more data than just about any media company could ever hope for. The result is that more advertising will gravitate not only toward “programmatic” artificial-intelligence-driven ad sales but also toward companies that aren’t principally (or even remotely) in the news-gathering business.
2. Not enough saviors
As advertising has migrated to digital platforms, the news media have converted to hero worship. The iPad was going to save media. Then it was venture capital. Then it was the mystical promise of “Hulu for news.” Then it was Facebook’s video platform. No, podcasts!
Each savior has proved fleeting or fictitious. The iPad is great for many purposes, none of which is the resuscitation of mid–20th century business models. Venture capitalists blithely expected media companies to produce tech-company returns, and many pulled back when they learned what any journalist could have told them: News isn’t a profit gusher. Companies such as Mic that went all in on Facebook turned themselves into glorified subletters—and they ended up on the street when the social network changed its priorities.
3. No clear playbook
News organizations are experimenting with anything and everything.
For the past two years, many newspapers and magazines have reoriented their businesses around subscriptions, asking readers to make up the revenue lost from advertisers. Some magazines and papers (including The Atlantic and The Correspondent) are asking diehards to become not just subscribers but members who pay a premium to go deeper with their favorite journalists. Axios, Crooked Media, BuzzFeed, Vice, and Vox have built out TV production studios and sold shows to HBO and Netflix. BuzzFeed is opening a store in New York City and selling kitchen merchandise with Walmart.
Ultimately, however, the market might not support some forms of journalism. For example, the number of local reporters today is at its lowest point since the 1970s, despite the fact that the U.S. population has grown by 50 percent. Research has shown a direct connection between declining local journalism and less civic engagement. If local news is a public good, it may deserve public support—perhaps in the form of government subsidies. But asking for public assistance might seem like an act of pure desperation.
4. Patrons with varying levels of beneficence
Publications that were once the crown jewels of publicly traded firms are finding refuge in the arms of affluent patrons. Many legacy titles have already landed with millionaires and billionaires, including Time (bought by Marc Benioff, the founder of Salesforce), Fortune (bought by Chatchaval Jiaravanon, a Thai businessman), and The Washington Post (owned by Jeff Bezos, the founder of Amazon). Emerson Collective, an organization founded by the billionaire Laurene Powell Jobs, purchased a majority share of The Atlantic in 2017.
Those nostalgic for the lucrative old days might curl their toes at the mention of a Medici-esque sponsorship model. But billionaire-supported investigative reporting is surely better than no investigative reporting at all. So what’s the matter with patronage?
A patron is a person. A person can change his or her mind—and often does. Chris Hughes junked The New Republic when losses eclipsed his idealism. Phil Anschutz snuffed out The Weekly Standard. Michael Bloomberg has made noises about selling off his political desk if he runs for president, or offloading his entire eponymous media empire, which employs several thousand people.
This sounds downright awful. But the business of news has always been unsteady. It seems safe to say that, going forward, media organizations will get by on some combination of subscription, patronage, and auxiliary revenue from sources such as events and licensed content. Whatever happens, advertising will almost certainly play a lesser role.
To understand the future of post-advertising media, let’s briefly consider its past. During a period of the early 19th century known as the “party press” era, newspapers relied on patrons. Those patrons were political parties (hence “party press”) that handed out printing contracts to their favorite editors or directly paid writers to publish vicious attacks against rivals.
That era’s journalism was hyper-political and deeply biased. But some historians believe that it was also more engaging. The number of newspapers in the United States grew from several dozen in the late 1700s to more than 1,200 in the 1830s. These newspapers experimented with a variety of journalistic styles and appeals to the public. As Gerald J. Baldasty, a professor at the University of Washington, has argued, these newspapers treated readers as a group to engage and galvanize. Perhaps as a result, voting rates soared in the middle of the 19th century to record highs.
It was advertising that led to the demise of the party press. Ads allowed newspapers to become independent of patronage and to build the modern standards of “objective” journalism. Advertising also led to a neutered, detached style of reporting—the “view from nowhere”—to avoid offending the biggest advertisers, such as department stores. Large ad-supported newspapers grew to become profitable behemoths, but they arguably emphasized milquetoast coverage over more colorful reader engagement.
As the news business shifts back from advertisers to patrons and readers (that is to say, subscribers), journalism might escape that “view from nowhere” purgatory and speak straightforwardly about the world in a way that might have seemed presumptuous in a mid-century newspaper. Journalism could be more political again, but also more engaging again.
That’s already happening.
For example, in just the past few decades, The New York Times’ revenue has shifted from more than 60 percent advertising to more than 60 percent reader payments. As its business model has changed, so has its coverage. “Look at The New York Times in 1960 vs. 2010; the reportage is more interpretive,” observed the late James L. Baughman, the communications theorist and University of Wisconsin professor.
Mid-century newspapers were as broad and unobjectionable as department stores, because department-store advertising was their business. News media of the future could be as messy, diverse, and riotously disputatious as their audiences, because directly monetizing them is the new central challenge of the news business.
Every once in a while, somebody asks me whether we’ll ever get back to a place where the country can agree on a “single set of facts.” Those asking the question tend to be nostalgic for the 1950s, when they could count the number of television channels on one hand and rely on Walter Cronkite and a local media monopoly to control the flow of information.
That past is dead and irrecoverable. We’ve accelerated backward, as if in a time machine, whizzing past the flush 20th century to a more distant, more anxious, and, just maybe, more exciting past that is also the future.