U.S. SENATOR MARIA CANTWELL
Local journalism—America’s trusted source of unbiased and accurate information—is disappearing. Over the past two decades, the local newspaper industry has lost around 70% of its total revenue.
Local broadcasters are facing similar difficulties, with advertising revenues down more than 40%.
These losses are leading to news deserts. Already, 200 counties nationwide have no newspapers covering their communities, and half of all U.S. counties are down to just one, a problem that is particularly acute in the South. Newspapers have been forced to let go more than 40,000 newsroom employees, a full 60% of the journalistic workforce that creates unique local content.
America’s local newsrooms now have thousands fewer watchdogs exposing crime, corruption, and keeping elected officials accountable to their constituents. Small businesses have less information on local conditions and fewer opportunities to reach customers in their community. Communities are losing access to trusted, non-partisan information that keeps our civil institutions cohesive and resilient.
Americans want and appreciate the accurate and unbiased reporting that local journalists provide. According to a 2019 Knight-Gallup study, Americans favor local news over national news to “report the news without bias” by a two-to-one margin. A 2018 Poynter Media Trust Survey likewise found that three of every four Americans have a “great deal” or “fair amount” of trust in local media.
Similarly, polls find that more than eight in 10 Americans want journalists to be personally engaged with their local area and understand their community’s history.
Local news is irreplaceable because other sources do not have the economic incentive or capability to credibly report on local issues. The loss of thousands of experienced journalists is the loss of a highly valued resource that cannot be easily replaced. These are the professionals with the necessary expertise to sort through news reports to determine what is real, what is not, and what matters most to the communities they serve.
The COVID-19 crisis provides a sobering case in point, as Americans are turning to local media at unprecedented levels for information about local pandemic response and disease spread. In a public-health crisis compounded by an economic downturn and political acrimony, local journalism is uniquely positioned to provide unbiased facts and stories that strengthen our communities.
Unfortunately, the revenue losses and employment trends affecting local journalism are now becoming acute, as the COVID-19 crisis makes an already difficult situation nearly impossible. Newspaper newsroom employees may all but vanish in the next few years and, if pandemic-related revenue losses continue for TV and radio broadcasters, local broadcasting could face a similar fate.
The root causes leading to the destruction of local journalism are complex but can be attributed to two primary factors.
The first is that the rise of the internet and digital information has fundamentally altered how Americans receive and digest the news, disrupting journalism’s historic business model. Besides the loss of dependable classifieds revenue, the more than 80% decline in advertising revenues since 2000 has been devastating. The mass transfer of content and advertising online, combined with a proliferation of news sites, has dramatically lowered ad value and siphoned dollars from the local newspapers that produce the content supporting those ads. Many of today’s online consumers expect to get their local news for free.
The second major challenge is that local news has been hijacked by a few large news aggregation platforms, most notably Google and Facebook, which have become the dominant players in online advertising. These trillion-dollar companies scrape local news content and data for their own sites and leverage their market dominance to force local news to accept little to no compensation.
At the same time, the marketplace for online advertising is now dominated by programmatic ads, with digital advertising services claiming half of every ad dollar, further diverting funds away from local journalism. Today, Google and Facebook alone control 77% of locally focused digital advertising revenue.
When other countries have challenged these dominant players to provide reasonable compensation or fairer terms to news publishers, they have responded with threats, ultimatums, and actions focused on cementing the status quo. Now, regulators across Europe and in Australia are taking steps to ensure that local publishers can continue to monetize their content and reach consumers. Partly in response to these regulatory actions, Google and Facebook have announced plans to provide limited compensation to a small slice of the news sector. Whether this compensation will be sufficient or negotiated on fair terms remains to be seen.
The loss of local journalism is also correlated with a rise in corporate takeovers and consolidation of formerly independent news outlets. Hedge funds have scooped up venerable local newspapers at fire-sale prices and then enacted severe cost-cutting measures that have gutted content for the sake of short-term profits. Today, just 25 newspaper publishing groups control the fate of nearly two-thirds of all daily papers.
These market dynamics are further compounded by a lack of public awareness of the crisis facing local journalism. A recent poll found that 71% of Americans believe their local news media are “doing well financially.”
To their credit, facing massive disruption in the online marketplace, local news outlets have already taken big leaps into a new business model that is based on the trust they have earned with their audience. Local news is adjusting to the shift in print advertising revenue by adopting digital content delivery practices, engaging with readers through paid events and partnerships, partnering with philanthropic organizations, and exploring non-profit models, among other initiatives that strengthen connections between their audience and its community. In recent years, other media industries have shown that it is possible for media businesses that have been disrupted by the internet to successfully evolve and thrive in the digital economy. Local journalism could be on the same path.
To realize this potential, local journalism is benefiting from the fact that Americans trust local news more than other news services. Public surveys have confirmed, by as much as a two-to-one margin, that Americans are more likely to trust local news sources. Readership levels and audience engagement have also increased during COVID-19, as Americans are seeking out trusted news and information specific to their communities. Many local news outlets are taking advantage of this strength and are creating a new business model that earns revenue by building on established news brands that stand for trustworthiness, highly relevant local content, and greater levels of community engagement.
Leading advertisers who are growing frustrated with digital ads due to concerns of ad fraud, market opaqueness, and the placement of ads next to questionable content, are turning to local news to differentiate their products and to be seen as trusted brands within the communities where they do business.
With these changes, a more balanced subscription and advertising model is emerging for local journalism, which is now laying the foundation for future growth. But congression-al action is needed to help local news survive the global pandemic and onslaught of unfair practices by the dominant online platforms.
Local news needs new laws and regulations to make sure it can compete fairly and provide its true value to local communities and American democracy.
This report first appeared on the website of Sen. Maria Cantwell, Oct. 1, 2020, and was reprinted by permission.
This article originally appeared in the Oct. 8, 2021, issue of The Norwegian American. To subscribe, visit SUBSCRIBE or call us at (206) 784-4617.