The Political Economy of Journalism

The Political Economy of Journalism

Nick Gisiber

Journalism in the United States and abroad has long stood as an institution of public knowledge, evolving greatly over the past two centuries from political party-centric promotional media, through the introduction of broadcast radio and television, and into a tenuous relationship with digitalization in the Internet age. Recently, many scholars have written on the ‘Crisis of Journalism,’ or the major problems stemming from the inability of major newspapers to maintain the revenues necessary to provide extensive, investigative coverage as they struggle to monetize their content within an online market that has established a precedent of free information sharing. At its core, the political economy of journalism must be examined so that this impending crisis cannot just be understood, but remedied either within the capitalist structures inherent of news corporation ownership or through the public provision of news. Academic research into the political economy of journalism focuses strongly on the evolving landscape of journalism, and the wide reaching effects that the failure to make digital news sufficiently profitable has had. These effects can be broken down into a basic framework of three major themes: decreasing newspaper revenue’s direct effect on the size and capabilities of major news outlets, attempts at reforming the institution of journalism in the face of increasing digitalization, and finally a dispersion of authority in regards to which pundits and outlets the viewing public trusts to report substantive, fair news. While each theme has played a distinct role in the ongoing journalism crisis, it is clear from this framework that the changing financial landscape of news consumption has become the common thread that ties the three together. Journalists and news providers must adapt to the needs of an evolving audience if they hope for a monetary infusion large enough to stem journalism’s recent decline.

Decreasing newspaper revenues have played a major role in the developing crisis of journalism, as the days of daily newspaper consumption have been replaced instead by a growing trend towards online news readership. Much of the academic literature that focuses specifically on revenue streams and decreases of newspapers heavily evoke the concept of ‘the 21st century’ as a leap into the future, and a leap away from reliance on traditional sources of advertising and circulation income. Researchers who have specifically tackled this problem include Richard Schmalbeck in “Financing The American Newspaper in the Twenty- First Century” and Loreto Corredoira and Sanjay Sood in their essay, “Meeting New Readers in the Transition To Digital Newspapers: Lessons From the Entertainment Industry.” Schmalbeck’s research cites the declining financial stability of the daily newspaper industry as the epicenter from which journalism’s decline in overall quality stems. After briefly discussing the inability of newspapers to adapt to 21st century profit-making strategies, Schmalbeck focuses on seven ways that newspapers could fortify their financing structures, including tolerating operating losses as a form of altruism within the existing corporate structure, redefining daily newspaper operators as nonprofit corporations exempt from federal income tax, or having pre-existing charities run the daily newspapers either directly or through a taxable subsidiary corporation. He also suggests the re-classification of newspaper operators as low-profit liability companies that can retain tax-exempt status while accepting donations from both normal and charitable investors.1

Similarly, Corredoira and Sood point to “the rise of the Internet and the availability of information for free”2 as the major cause of declining newspaper revenues since 1940. Rather than focus on the re-definition of existing daily newspaper operators within the U.S.’s established tax codes as a means of saving revenue, Corredoira and Sood point towards the success and methods of online streaming services as a means of adapting daily newspapers to the needs of 21st century consumers. The two suggest the existence of a “distinct digital consumer segment for newspapers to target,”3 and that the salvation of the newspaper industry is contingent on marketing to this segment, which is composed, in part, of Netflix, Hulu Plus, and iTunes subscribers. News producers must also alter the means by which news itself is offered to consumers, by allowing consumers to control when/where they consume their news, homogeneity amongst digital news-providing platforms’ usability, and bundling of news products with other content.4 Corredoira and Sood’s analysis centers entirely around the assumption that the future market for digital news mirrors those who subscribe to entertainment streaming services like Netflix and Spotify, and that this segment has, up to this point, been unexplored despite its potential to fortify the financing structure of daily newspapers.

The theme of falling revenues—and the means to rectify the lack of profit within the newspaper industry—is apparent throughout the academic literature of journalism in the 21st century, as daily newspapers are viewed as the main source of critical analysis provided to a mass audience, especially through the provision of investigative journalism. There is a mass consensus that the inability of news providers to adapt to the digitalization of content, namely their difficulty in combating the increasing availability of free information, is the main culprit behind the financial hole newspaper owners find themselves in today. However, beliefs on how to reinvigorate newspaper revenue vary a great deal amongst academics, as the two examples above show. Scholars seem divided on how to stem the decline-by either working within the existing tax structure or attempting to tap into the demand market for streaming music, television, and movies. Schmalbeck, in his overview of tax and corporate re-definition options available to news outlets, appears to underestimate the financial straits of the news industry. The Pew Research Center reports that newspaper print ad revenue has fallen every year since 2005, producing $16.4 billion worth of revenue in 2014, down from $46.7 billion in 2004.5 While any revenue savings measures will help, Schmalbeck’s tax options seem to be too small of a fix for a problem that has compounded greatly over the past decade. He insists we must “recognize that newspapers continue to have some ability to generate revenue,”6 but misses the mark in his failure to address the true size of revenue losses for daily newspapers, and his lack of suggestions on how these papers can survive beyond incremental savings, and into the future of an increasingly digital world.

Comparatively, Corredoira and Sood do a much better job of putting the future of daily newspapers into perspective, and explain how appealing to the same markets targeted by streaming services may hold the key to upholding journalism, even if traditional journalism has to move online. The two simply understand the need for newspapers to change to fit the digital paradigm. Pew reported in March 2014 that several native digital news organizations have been growing their staff, with several online news sites hiring editors and columnists from traditionally print companies; for example, New York Times assistant managing editor Jim Roberts was named chief content officer at Mashable in October of 2013.7 Corredoira and Sood recognize the growing importance of the “digital consumer segment” of the market, and do a good job of identifying ways in which that market has been consolidated into an audience of online streaming websites. However, it may be difficult for traditional newspaper sites to raise the usage of their online offerings in the face of direct competition from native online sources that have already attracted this market. Additionally, as long as native digital journalism sites like Mashable, Yahoo, Huffington Post, and others provide free news and begin to produce their own original stories, it will be difficult for organizations like the New York Times or The Washington Post to keep their online content behind a paywall. While Corredoira and Sood have established a solid foundation from which to build, identification of a potentially lucrative market segment and the monetization of that segment are two very different challenges. Any attempts by print sources to improve their online sales will face stiff competition from native online digital news sources, but failure to do so will spell financial ruin for non-digitally conforming news outlets.

The declining revenue involved in print newspapers has opened up analysis into the content of the journalism itself, and the several ways that profit losses have altered, and even worsened, news stories. Much of this analysis focuses on reforming journalistic content at its foundation—within the curriculum of journalism classes themselves. In their 2012 article, “Searching for the Core of Journalism Education: Program Directors Disagree on Curriculum Priorities,” Blom and Davenport acknowledge the impact of the “economic climate” and of “innovative technology” on the industry, but also note that “the principal tenet of journalism has remained the same—using good news judgment to give people the news and information they need to make good decisions to lead productive lives.”8 Throughout their essay, the two reflect upon curriculum suggestions offered to them by professors of journalism themselves, including the need for a wider liberal arts background to allow journalism students to further contextualize their stories within the broader “social, cultural, economic, and political worlds they inhabit.”9 Blom and Davenport also note that, in a survey of university journalism program directors, no consensus could be established on exactly which types of classes should be offered overall, but the majority agreed that greater attention should be paid to the topic of media ethics and law.10 Other scholars have echoed Blom and Davenport’s analysis. For example, Lizette Rabe, in “Arguing the case of the ‘Janus element’ in journalism education: Journalism history as essential element in journalism curricula in developing democracies,” coins the phrase ‘Janus effect,’ which describes the need for journalism students to learn journalism history as a means of further interrogating modern events through lens refined in past experiences.11 This academic insight is fascinating in its assertion that small changes to the very foundation of journalistic learning may have an immense influence on rectifying what some have seen as a decline in news quality.

The opposite side of media reform literature focuses on remedying professional news industry as a whole, a more macro approach when compared to the micro-focused remedy of journalism education. Robert McChesney has written extensively on the systematic failures of print journalism, and his book The Death and Life of American Journalism, co-authored with John Nichols, re-establishes the Internet as the main cause of newspapers’ struggles after asserting the reliance of original, investigative journalism on the print medium.12 The Internet has taken away classified advertising, taken away readership, and offered a “radically” lower means of production that makes it difficult to justify the continue production of print copy newspapers.13 Perhaps much more radical than his peers, McChesney argues in favor of socialist policymaking in the regulation of the media industry. He takes a hard stance in Blowing The Roof Off The Twenty-First Century against the capitalist structures that have guided U.S. media policy making to this point in history, and proposes instead several leftist solutions that would put the state “in the middle of the creation of media,”14 including ending the Internet Service Provider (ISP) “cartel,” breaking up corporate media monopolies, and, most importantly, treating journalism as a public good.15 Adapting Milton Friedman’s description of ‘neighborhood effects’ to journalism, McChesney argues that everyone will benefit from an informed citizenry and informed institutions that monitor those in power, and so the U.S. government should heavily subsidize the free press system through a voucher system that allows Americans “over the age of 18 to direct $200 of government money annually to any nonprofit medium of his or her choice.16 The voucher system would fund a thriving, non-commercial news system powered by citizen choice rather than government puppetry.

Media reform critique has taken on a plethora of definitions and methods, from the micro-level solutions of journalism school curriculum changes to the macro-level changes that would make government subsidies the major source of funding for a new, non-commercial news industry. These two drastically different approaches highlight both the many weaknesses of modern day journalism and also the true breadth of media reform scholarship, but while education reformists offer practical and direct solutions, academics like Robert McChesney intent on changing the news industry at a market level offer solutions that are perhaps too radical to be realistically implemented. A status quo within the news industry exists, as evidenced by the reticence, and ultimate difficulty, in adapting to digital technologies. Attempts to make journalism a public good would hit back against an industry with immensely lucrative historical roots. And while it is possible that newspapers could reach such dire financial straits that they back a shift to a non-profit, voucher system as suggested by McChesney, convincing Congress that a previously privatized industry should now be granted taxpayer dollars will be incredibly difficult, as support will be, at best, split along part lines as Republicans will most likely advocate instead for freer market solutions. Michael McGrath also explores the already existing successes of nonprofit news in “Nonprofit News: The Future of American Journalism?” and points out that several sources like the Associated Press and ProPublica have found great success in producing strong investigative journalism within the non-profit model.17 So while McChesney’s vision is certainly one that needs to be examined, and perhaps even implemented, it appears that a governmental intervention may be unnecessary if some news sources are already finding success as non-profits within the current, commercially-dominant system.

So far, the connection between the weakening revenue streams of daily print newspapers and declining production of original journalism, especially investigative journalism, has been explored. However, the connection between this relationship and a declining trust in the news industry as a whole raises the question of who now holds authority in the U.S. media landscape. Many scholars argue that it now lies in the hands of citizens themselves, through citizen journalism. Mitchell Stephens, a Journalism professor at NYU, writes in a blog post that journalism is currently becoming less and less about ‘being there,’ because as recording technologies become more widespread, so too has the ability to witness newsworthy events. To Stephens, authority has slipped away from those who observe events, stating, “As journalism becomes less about collecting the who, what, and when, and more about explaining why and what’s next, geographical authority is increasingly less important than intellectual authority.”18 There is more than one type of authority, in Stephen’s view, and professional journalists still have an upper hand over citizen journalists in their ability to digest and contextualize important events. Riaz and Pasha further explain how citizen journalists are given authority by their readership because they can appeal to more niche audiences. They say that, “many segments of society [are] unrepresented by the mainstream media,”19 but also that citizen journalists have initiated discussions from the local to the international level. Citizen journalists have an opportunity to speak for those who are not being already being spoken for, smaller market segments that are overlooked by the mainstream press, and perhaps have more authority than traditional press within these more specific readership groups.

The question of authority and how it relates to citizen journalism is an important one, because those who view it as a viable alternative to traditional news sources like the daily newspaper will cut deeper into the traditional sources’ revenue losses. Blogs posted online are almost always free to the public, and can be created by anyone with Internet access. However, it remains to be seen if the allowance for a diversity of voices makes up for an increasingly apparent lack of investigative ability on the part of citizens. Because of newer recording technologies, especially the growing spread of cell phones throughout the world, almost anyone can become a citizen journalist simply by recording news worthy events. While the authors appear to accept this as one of citizen journalism’s valid definitions, it seems apparent that simply providing raw footage—and raw data—should be interrogated for its use of the word ‘journalism.’ The loss of printed news publications has caused much concern for the future of original stories, stories that require technical skill to properly narrativize and contextualize. Pictures and videos are a vital part of news story telling, but it is important as well to understand why a certain event is being covered; the ramifications of a story being printed. While it is important, as Riaz and Pasha established, for citizen journalists to be able to speak to a more localized, and often centralized audience, which mass media publications have difficulty doing because of a wide degree of needs across the country. Ultimately, the best way to reaffirm the authority of traditional media sources may be to have citizen and professional journalists work together to provide for the news needs of marginalized voices while also providing the contextualization and technical skills necessary to understand the true extent of a news piece.

In attempting to answer the question of who has authority in today’s media landscape, a newer source of news must be examined: comedic punditry and satire. Over the past two decades, shows like The Daily Show With Jon Stewart, The Colbert Report, and the more recent Last Week Tonight With John Oliver have become a major source of news, especially among teens and young adults. In fact, as of 2012, 43% of The Colbert Report viewers and 39% of The Daily Show viewers were between the ages of 18 and 29. Over 75% of each show’s audience was under the age of 50.20 While comedic, each of these shows has been lauded for its news coverage and commentary, and each has won the Peabody Award for public service. They have had real-world impacts, perhaps most notably in Stephen Colbert’s creation of (and subsequent expose on) a Super PAC and John Oliver’s segment on net neutrality, which caused the FCC’s website to crash after it received a deluge of public comments. While academic research into the journalistic proclivities of these shows is still a largely developing field of study, Hart and Hartelius have condemned the cynicism of The Daily Show as a cause of decreasing trust in the U.S. political system21 while Dannagal G. Young has found that viewers of political satire shows watch, in part, because they view them as an unbiased source of news.22 Ultimately, there is a lack of academic critique of satirical, “fake news” shows as journalistic entities. Just as in the citizen versus professional journalism debate, contextualization is a key responsibility of professional journalists. Comedic satire of the news has proven to be an unintimidating gateway into several complex political and economic topics-from the war in Iraq to Super PACs to government surveillance.

This review of the political economy of journalism has focused on three main themes centered around the crisis that journalism is currently facing- traditional news sources such as daily, print newspapers have not been able to adapt to a burgeoning demand for digitalized news content forcing cuts to the size of newsrooms that have directly affected the quality of investigative journalism. The first theme of revenue sources examined literature that called for the use of tax breaks to aid the profits of daily newspapers as well as posited that a new market for online digital content can be found within the same market targeted by online streaming websites like Netflix, Hulu, and Pandora. Reforming the content of journalism itself was the second theme, and focused on a micro-level solution in a reform of journalism education and a macro-level solution of re-classifying journalism as a public good supported by a governmental voucher system. Finally, the changing role of authority in the U.S. news system called for an analysis of citizen journalism and how it compared in trustworthiness and persuasion to professional journalism. Satirical news shows like The Daily Show, The Colbert Report, and Last Week Tonight were also examined, as a large percentage of young adults view them as a primary source of news, and questions have been raised as to whether or not these shows are producing journalistic content. Overall, it appears that the most important factor in ensuring a strong, continued news industry in the U.S. is to re-stabilize the revenue of the daily newspapers, the main source of original journalism. They are imperative as sources of original news sources, which free online news websites often use as a basis for their own stories. Even if this can be accomplished, all newspapers must brace themselves for the inevitable re-location to a purely online model. Because it is unlikely that Congress will ever be able to enact such a wide scale reform as the provision of journalism as a full public good, more theoretical models must be established. Academics must be rational and realistic in their suggestions for saving the institution of journalism. Ultimately, they must work to reform journalism within the current market system of the U.S., rather than try and alter the market system itself.

While this literature review is not exhaustive, it has become apparent that several important questions in the field of the political economy of journalism have gone unanswered. Much analysis has been done from the perspective of traditional daily newspapers trying to move online and formulate a digital business model, but do native online sites like Mashable, Buzzfeed, and the Huffington Post have a leg up on them? A lot of focus is placed on the shift of companies from traditional to digital, but what about a company like Mashable, which is inherently digital and is now trying to provide more traditional, investigative news stories? Additionally, scholars need to question just how malleable the capitalist overtones of the U.S. economy are. What is the best way to reform journalism- through changes to journalism itself, through changes to the market system, or a combination of the two? Journalism is a pillar of a functioning democracy, and it is imperative that complex, comprehensive investigative journalism be allowed to flourish. Whether it occurs online or offline, the press must be able to check those with power, and traditional newspapers must discover how to adapt to the demands of a 21st century audience if the institution of journalism is to thrive in the digital age.

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