In the late 1990s, we all bought into a world in which high-quality news coverage would be made freely available and supported solely by online ads. This free content spurred a revolution in how publications presented news stories and addressed their audiences.
For a little while, it appeared that dream might actually become reality. In a 2009 Guardian article, Jeff Jarvis reported how the Los Angeles Times’ claimed the year prior that its online advertising revenue was paying for the paper’s entire editorial payroll.
Even then, however, skepticism reigned. “The LA Times newsroom got to this point because it was cut to a shell of its former self (from 1,200 staff to 660),” Jarvis wrote. Also, making payroll isn’t the same thing as covering all expenses; newspapers also have costs like rent, utilities and supplies.
When newspapers cut staff to reduce costs, the quality of news coverage almost always suffers. Access may suffer, as well, because there’s less coverage of key events or because the most in-depth pieces get placed behind paywalls. With this work harder to reach, and with its low-quality competition easy to access, readers end up consuming even more bad reporting or even fake news content.
High-quality, in-depth content is essential for informed participation in today’s society. However, creating this content requires time, effort and resources. How can newsrooms and other content creators balance these needs when free content has become the norm?
Eyeballs = Profit: How a False Assumption Undermined Journalism
Twenty years ago, advertising was heralded as the savior of news media. With no publishing costs and access to larger audiences, the assumption was that both digital and print news media could be supported by advertising alone. The news itself would be freely available; the ads would pay for its creation and release.
“It wasn’t obvious 20 years ago that by going down that road, publishers — who traditionally differentiated on brand, quality, and audience — were entering a commodity business that would be dominated by software and scale. And, even if it was, was there a better option?” says Ev Williams, founder of Medium.
At the time, of course, online advertising was novel. The first banner ads had initial clickthrough rates of up to 78 percent, says John McCrea, CMO of Amplify.ai. The fact that those rates were driven by novelty (and later dropped to below 2 percent) escaped notice beneath the promise of an entirely ad-funded news world.
The race for reader attention was on, and it was rewarded. “How will you pay for what you provide?” became a little-asked question.
“If revenues were insufficient to cover the costs of providing the content or service, it didn’t matter — what mattered was audience growth, as a site with tens of millions of loyal users would surely find a way to generate revenue,” says Ethan Zuckerman, director of the Center for Civic Media at MIT.
The goal became attracting readers by offering content, and lots of it. Every click to a new page meant more ad revenue in the site’s pockets. What news sites failed to consider, however, was that their ad space was only valuable in the first place because it, and reader attention, are a finite resource.
“Ultimately, what the web did was to unleash access to a never before seen supply of attention, essentially crashing the market for it,” says Felipe Gaúcho Pereira, a partner at Paradigma Capital and cofounder of Paratii. Getting eyes on content remained a way to prove journalism’s relevance, but it failed to become the sole way journalism paid its own costs.
How Social Media Has Changed Our Relationship to News
Newspapers and news outlets spent approximately 10 years moving to a model in which ads paid for the labor of creating coverage. In 2009, a report in the Columbia Journalism Review by Leonard Downie Jr. and Michael Schudson noted that both newspapers and television news were losing audience, ad revenue and resources to the free news online model.
“Newspapers and television news are not going to vanish in the foreseeable future, despite frequent predictions of their imminent extinction,” Downie Jr. and Schudson wrote. “But they will play diminished roles in an emerging and still rapidly changing world of digital journalism.”
But this decade-old ad-based model hasn’t been journalism’s only challenge. Social media was rapidly gaining traction when Downie Jr. and Schudson wrote their piece.
“While the newspaper industry is in crisis and less time and resources are available for newsgathering, social media turns out to be a convenient and cheap beat for (political) journalism,” researchers Marcel Broersma and Todd Graham wrote in a 2012 study published in Journalism Practice, analyzing the use of Twitter as a source of political news during UK and Dutch elections.
Today, more US readers get their news from social media than from print newspapers, says Elisa Shearer at the Pew Research Institute. Social media’s ease of use, and its status as a primarily non-news-providing source, have profound impacts on the behavior of those who use it, including their interest in discerning fake news from considered, in-depth factual reporting.
In fact, the social aspect of social media may have exacerbated the problem of widespread, low-quality news by turning nearly anyone into a news source, researcher Hunt Allcott and Matthew Gentzkow write in a 2017 paper in the Journal of Economic Perspectives, analyzing the rise of fake news during the 2016 US elections.
On social media, “content can be relayed among users with no significant third party filtering, fact-checking, or editorial judgment,” Allcott and Gentzkow say. “An individual user with no track record or reputation can in some cases reach as many readers as Fox News, CNN, or the New York Times.”
When this content isn’t paywalled or buried in ads, it’s easier to access and therefore easier to consume. Even discerning readers may find themselves reading more low-quality news content than high-quality pieces.
When Journalism Gets Faker
In the interest of saving the ad-funded journalism model, new ways of integrating advertising into journalism have emerged.
For instance, both content marketing and native advertising offer ways to better connect journalists and advertisers, Lewis DVorkin at Forbes writes. These methods embed advertising content more closely within the ecosphere of the publication in which the ads appear. Instead of being pelted with banner ads or pop-ups, for instance, visitors to a news website might read more sponsored articles or advertorials.
If the goal is to improve the quality of journalism, however, these options may not be ideal, even if they do pay the bills. Among other things, advertising-based content raises ethical questions, especially when it’s hard for readers to tell that what they’re reading is sponsored, David Weinberger writes at the Harvard Business Review.
“If advertorials become effectively indistinguishable from editorial, aren’t we in danger of destroying the village in order to save it?” asks Andrew Sullivan at The Dish.
But Will Readers Pay for It? Journalism and Sustainable Monetization
According to Pew, more US readers still prefer news websites to social media to stay informed (although, as noted above, social media still beats print). In addition, the readership of news websites has increased from 2016 to 2018. Shearer says these sites mostly stole ground from television news, whose viewership declined in those same years.
News sites, however, continue to struggle with two competing demands. On the one hand, paywalling quality journalism puts it at a disadvantage against freely-available fake or low-quality news by making it harder to find, read and share. On the other, generating the revenues required to produce quality journalism solely from advertising has proven impossible.
Recently, several major news outlets have approached the problem by partly or completely relying on paywalls. For instance, The Washington Post and The New Yorker now limit readers to a certain number of free articles per month.
Some commentators have questioned whether this paywall model won’t mean the demise of news outlets. But the argument that people won’t pay for news they’ve been getting for free is based on two major misconceptions, Ev Williams writes. First, it assumes that people will be able to get that same content for free elsewhere, and it also assumes that they’ll be asked to pay for exactly the same content they were getting for free.
Relying on direct reader support may also change the way the news is reported by various outlets. For instance, as The New York Times’ revenue has shifted from 60 percent ad revenue to 60 percent reader payments, “the reportage is more interpretive,” says James L. Baughman, communications theorist and University of Wisconsin professor.
Appealing to audiences by offering additional value in exchange for paid access requires a sustainable content monetization strategy that focuses on increasing the quality of price-tagged news. Interpretive content may be one way to do this, and its rise indicates that it is well-suited to its environment.
It can be difficult for journalism to balance the responsibility of producing accurate reporting with the increased labor and resource demands of that reporting, especially in a world in which inaccurate reporting is easier than ever to generate and publish. Thoughtful pricing, however, may offer a way to support high-quality journalism and communicate its value at the same time.
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