Local news outlets struggle to survive coronavirus fallout
A massive surge in online readership during the coronavirus outbreak is coinciding with a sudden drop in ad revenue that could cripple local news outlets already struggling to survive.
Several newspapers and alt-weeklies have announced pay cuts and layoffs, with some shutting down operations altogether. The turmoil has also brought fresh scrutiny on big tech platforms such as Google and Facebook, who critics say had already seriously weakened the news industry.
“The industry was in a dangerous place four weeks ago, before the coronavirus [outbreak],” said John Stanton, a former BuzzFeed News reporter and co-founder of the Save Journalism Project, a nonprofit highlighting Big Tech’s impact on the news industry. “The fact we’ve had so many layoffs so fast — news outlets getting shut down, the furloughs, all of these things combine together to really drive home what bad shape we are in.”
Stanton said that was “in large part due to Facebook and Google’s predatory and monopolistic business practices.”
Critics say Google and Facebook’s dominance in digital advertising — the companies together made up nearly 60 percent of the internet ad market in 2018 — helped lead to declining profits for traditional news outlets, as they siphoned away crucial ad revenue. Ad revenue for the newspaper business fell 60 percent between 2008 and 2018, according to a Pew Research Center analysis.
David Chavern, president and CEO of News Media Alliance, a trade group representing about 2,000 media organizations in the U.S. and elsewhere, told The Hill that news publishing was already a “stressed business” before the pandemic.
Newsroom employment has declined by about 25 percent in the past decade and roughly 1,800 local newspapers have closed since 2004, according to a University of North Carolina report.
Those problems were exacerbated by the outbreak, as many local restaurants, venues and other businesses scale back advertising amid mass closures. Meanwhile, some media buyers are blocking digital ads from appearing on stories related to the coronavirus, another hit to publishers trying to monetize their biggest stories.
Nearly 90 percent of publishing executives now say the coronavirus pandemic will cause their organizations to miss business forecasts, with 85 percent anticipating a loss in ad revenue, a Digiday Research snap survey found.
“Right now – 2020 could end up 20-25 percent down in local advertising,” Corey Elliott, vice president of Research at Borrell Associates, a local advertising analysis company, told Axios.
A quick succession of news outlets, many of which have axed paywalls for coronavirus-related content, have announced layoffs and reductions in pay as a result, even as their web traffic surges.
The New Orleans Advocate and Times-Picayune announced that despite web traffic running “three to four times above normal” and digital subscriptions doubling, it would have to furlough a tenth of its staff and require the rest to work four-day weeks. Newspapers and alt-weeklies across the country have made similar decisions. The Stranger, a Seattle-based alt-weekly, temporarily laid off all of its staffers and suspended publication.
Digital-only news outlets are also experiencing setbacks; BuzzFeed announced a reduction in salary for a majority of its staff ahead of an expected decline in profit.
Facebook and Google weren’t solely responsible for the state of American journalism before the pandemic, but their enormous influence over the digital ad marketplace became an undeniable factor as publishers struggled, Stanton said.
Stanton, who was laid off by BuzzFeed News in January 2019, helped launch the Save Journalism Project last summer to highlight the harm he says Facebook, Google and Apple are causing the industry. The group formed right as state and federal officials began increasing their scrutiny of Big Tech.
Federal and state lawmakers have opened more than a dozen inquiries into those companies’ business practices, scrutinizing possible anti-competitive behavior, including with Google’s search and ad business and Facebook’s advertising tools.
The efforts have included bipartisan legislation introduced in the House and Senate that would grant a four-year antitrust exemption to publishers, allowing them to collectively negotiate with Google and Facebook on the terms of how their content is distributed.
Rep. David Cicilline (D-R.I.), one of the co-authors of the House bill, said that the coronavirus pandemic is highlighting how urgent legislative action is.
“Local news outlets were on life support before the COVID-19 outbreak,” Cicilline said in a statement to The Hill. “This public health crisis has highlighted the urgent need in communities across our country for accurate, trustworthy local news. At the same time, this crisis has pushed many newsrooms even closer to extinction.”
The bills, however, don’t address the underlying problems with the digital advertising model, said Sarah Miller, the executive director of the American Economic Liberties Project, an anti-monopoly advocacy group, in particular the ability of tech giants to target ads to specific consumers.
“Our fear is that you can’t have a vibrant democratic society if you just allow local and independent news to fall victim to Google and Facebook’s rapacious and pernicious business model,” Miller said, calling for banning the tech giants from selling digital advertising.
“If you don’t allow Facebook and Google to sell advertising, that will eliminate or at least mitigate substantially the shift of news revenue from local and independent institutions to [these companies],” she added.
Miller cited the loads of data Google and Facebook amass to enhance their ability to target ads, noting that they have the most sophisticated stores of data that other businesses can’t compete with. An advertising ban would send “revenue towards news sites that have more integrity,” she claimed.
Industry groups have proposed a less drastic approach.
Chavern said that the News Media Alliance is in “active discussions” with industry players and elected officials about how the government could specifically address the crisis for local news outlets, but he declined to offer details.
He noted that small business provisions in the stimulus package approved by Congress could “prove pretty useful” for many publishers and help them retain staff. He said less is certain about larger businesses.
Chavern asserts that much of the industry’s struggles stem from a digital ecosystem that doesn’t “reward quality journalism.” The News Media Alliance, which has lobbied for the antitrust exemption, and other industry advocates have called for Facebook and Google to share a bigger piece of the ad revenue they gain when sending users to links from news outlets. The alliance claims that Google makes billions off news content, but many contest those figures.
In a series of tweets last July, Bell said the larger problem was not Google and Facebook’s revenue but “the concentration of money and data in the advertising market.” She said that conversations about the platforms should be part of a broader effort to create a more sustainable business model, which the industry has so far failed at.
Framing Google/FB and the effect on the ‘news industry’ in terms of $ amounts is not very helpful. Framing it as the concentration of money and data in the advertising market is a better. Google and FB do not ‘owe’ the news industry any fixed amount, however …5/x
— emily bell (@emilybell) June 10, 2019
In the face of criticism, Google and Facebook have poured hundreds of millions of dollars into programs and charitable grants to support the news industry.
Facebook last year began offering news outlets millions of dollars to license its content in a news tab. The company earlier this month pledged $1 million to go towards local newsrooms covering the coronavirus outbreak. Google in 2018 pledged $300 million to support a news initiative providing digital tools to journalists.
The company’s Search and News products also account for about 24 billion clicks to publishers’ sites each month and its ad services are utilized by thousands of outlets. The company has claimed that publishers would lose substantial revenue if personalized ads went away.
“We’ve worked for many years to be a collaborative and supportive technology and advertising partner to the news industry as it works to adapt to the new economics of the internet,” a Google spokeswoman told The Hill. “At this critical time we are exploring additional ways we can continue to help.”
A Facebook spokesperson told The Hill that it’s “committed more than $300 million to quality journalism” and that it’s “proud of the millions we’ve invested in partnerships with news publishers — and it’s a commitment we stand behind.”
Tech companies are not immune to the economic downturn. Facebook and Google are expected to experience significant declines in ad revenue. But the economic fallout ahead could be especially devastating to local news.
In 2019, when Stanton was laid off from BuzzFeed, approximately 7,800 people working in media lost their jobs. He predicted many more journalists will lose work in the coming months.
Over the years, news outlets have floated a number of new business strategies, from more focus on subscriptions to adopting a nonprofit model. While some of the models led to successes, no strategy has emerged as an industry-wide cure.
Miller said a focus should be on Big Tech’s stronghold on digital ads, arguing that it’s also behind problems with misinformation and competition.
“You have to get at the underlying incentives that’s creating them,” she said. “And that’s really the digital advertising generated business model [of Facebook and Google].”