Over the past 15 years, the newspaper industry has faced a constant problem: declining revenue. Aside from increases for the big three—Washington Post, New York Times and Wall Street Journal—after the 2016 election (dubbed the “Trump Bump”), the industry has used slash-and-burn tactics to stay alive, often leaving local news behind in a smoldering pile. This trend has led to paywalls, adblock blockers, native-advertising, whatever sponsored Buzzfeed quizzes are trying to do and, perhaps the saddest gimmick, The Nation’s post-election Caribbean cruise.
COVID-19, and the impending economic disaster, is putting this phenomenon on steroids.
Compared to its in-print prime, the news business has been contracting for decades now. Even during an explosion of digital advertising, newspaper ad revenue has fallen to roughly 29 percent of what it was at its 2005 peak. Nowadays, most companies prefer to advertise on tech giants, like Facebook and Google, drawing money away from traditional publications.
According to Industry Analyst Ken Doctor, who writes for Newsonomics, revenue dropped 19 percent for newspapers after the 2008 financial crisis. In an interview with Buzzfeed News, Doctor said that for some publications, “it is the full extinction event. I don’t know how they come back.”
Big publications are already firing employees, cutting pay and rolling back hours.
Last month, Jim Spanfeller, CEO of G/O Media—which owns The Root, Gizmodo, Jezebel, The Onion and more—sent an email to employees with the subject line, “Brace for Impact,” saying, “This will not be an easy nor fun period for our company let alone just about any other company with our dynamics.” They then laid off 14 employees, in what they deemed a “small restructuring.”
Gannett—the media conglomerate that owns USA Today and the Des Moines Register, among others—announced massive furloughs and pay cuts last month. CEO Paul Bascobert asked employees to make a “collective sacrifice” to keep the company afloat.
Buzzfeed opted for a similar strategy: graduated pay cuts across the company to weather the disaster. This seemed to be the best option, as one Buzzfeed employee told The Daily Beast, “People are willing to make the sacrifice to keep their colleagues employed.”
The crisis is hitting smaller publications, such as weeklies and bi-weeklies, the hardest. Many regional outlets rely on local advertisers, such as restaurants, bars and theaters. But with social distancing in place, small businesses are taking an austere approach to everything, including advertising.
Seattle-based bi-weekly and Pulitzer Prize winner, The Stranger temporarily laid off 18 employees from all branches of the outlet. In a plea for donations, the publication writes, “90% of our revenue—from advertising, ticketing fees, and our own events—is directly tied to people getting together in groups. The coronavirus situation has virtually eliminated this income all at once.”
However, lots of publications have never had higher readership. According to The New York Times, many outlets, such as The Los Angeles Times, Wired, The Wall Street Journal and The Times themselves, nearly doubled their number of readers.
But even with the increased numbers, The Times is still predicting a 10 percent drop for their own revenue this quarter. With lots of publications un-paywalling their coronavirus coverage, they need the ad revenue from increased readership, but it’s just not happening.
Part of the issue is brands don’t want to appear next to coronavirus coverage. Buzzfeed News reported that 1.3 billion ads were blocked in March by IAS, a brand safety monitor tasked with removing ads from distasteful digital environments. IAS is just one firm, there’s no telling how many ads were actually blocked and how much possible revenue was lost.
UPDATE on my story revealing how coronavirus-related keyword blocking caused significant ad revenue loss for news sites. IAS tells me it blocked 1.3 BILLION ads in March due to coronavirus keywords, up from 63 million in Feb. and 38.4m in Jan.
— Craig Silverman (@CraigSilverman) March 27, 2020
The government bailout package provides some relief. Most local papers, weeklies and biweeklies (those most desperately in need) are eligible to receive low-interest loans from the Small Business Administration’s almost $400 million funding allocation.
A more ambitious solution, penned by New York Times Media Columnist Ben Smith: let the local papers die. The piece advocates a government bailout for journalists individually, scraping the left-over carcass that is the existing local news apparatus and transferring those journalists to nonprofit outlets serving regional communities, on the model of The Texas Tribune.
President and co-founder of the media advocacy nonprofit Report for America, Steve Waldman, doesn’t totally agree. He wants to get resources to local media now while also fostering an environment for nonprofit news to flourish. He advocates for, among other things, a “deconsolidation fund,” to assist profit-to-nonprofit transitions, and making online targeted ads illegal, to open up the well of advertising revenue that was once at local news’s disposal.
In his Columbia Journalism Review Essay, he writes, “ironically, COVID-19 – and the need for fast-moving bailouts – has briefly made it possible to make major legislative reforms. Let’s use this moment to create a local media system that will help us survive the pandemic and better serve communities in the decades to follow.”