Sunday, March 3, 2019

Smart money is betting on local, trustworthy news

This blog post started out as an explanation to my friends and family in Cleveland and Columbus, Ohio, why their local newspapers had become shadows of their former selves. Why their newspapers were so thin. Why news coverage was so shallow. Why they felt like they weren't getting their money's worth.

From trust to distrust in one decade. Pew.
And we will get there in a minute, but first, some good news. It was heartening to see the Knight Foundation's recent announcement that it was committing $300 million over five years to strengthen journalism, from the ground up, by focusing on local news and on encouraging collaboration.

 “We’re not funding one-offs. We’re helping to rebuild a local news ecosystem, reliable and sustainable, and we’re doing it in a way that anyone who cares can participate,” said Alberto Ibargüen, Knight Foundation president.

Gradually, civic minded individuals and organizations have realized that the loss of local news coverage threatens democracy and citizen participation. Citizens don't know what's going on, which leaves elected officials unaccountable for how they provide services and spend the public's money. “Reliable news and information are essential for people to make democracy work,” said Jennifer Preston, Knight Foundation vice president for journalism.



But why was all this intervention needed in the first place? We can't get there without first talking about where we were 30, 40, 50 years ago, in the Golden Age of media, before the internet.

To get up to the present, where most people say they do not trust the news media, we have to talk first about
  • The impact of cable news on news content and credibility
  • The impact of the internet on news content and credibility
  • And the impact of news media arrogance on credibility (but please, don't jump to the end; work with me on this). 

1. The Way It Was--Highly Profitable

Newspapers had more than 100% market penetration into the 1960s. That is, total circulation exceeded the number of households (detailed in How I Ran My Newspaper Monopoly.) Today total newspaper circulation represents less than one-tenth of the U.S. population.

Up until about 20 years ago, newspapers enjoyed hefty profit margins of 20%-30%, about three times that of a typical manufacturing company at the time, according to a study by Lou Ureneck in Nieman Reports.

In the 1950s, '60s, and '70s, Wall Street discovered what cash cows newspapers were and began buying them up. Those hefty profit margins mentioned above got them thinking: we could make them even more profitable by centralizing purchasing, marketing, and administrative functions. And so they did. The news business became less community oriented and more corporate oriented.

It was still a pretty good business in 2010 when multibillionaire Warren Buffett, whose company owned one newspaper, The Buffalo News, said:
“If you’ve got a good enough business, if you have a monopoly newspaper, if you have a network television station, I’m talking in the past, you know, your idiot nephew could run it.” (see p. 2 of this transcript for the quote).
Buffett put his money where his mouth was, and in the next several years bought 28 more dailies. Well, those properties have lost their monopoly advantage faster than expected, and Buffett has had to bring in someone other than a nephew to run them (Wall Street Journal)
 
The news business is even bad now for television and digital news media. 

Digital media businesses that were hoping to reach profitability by achieving enormous audience scale with video have been laying off staff--BuzzFeed, Vice Media, Vox Media, Mic, and HuffPost. And now many of those digital newsroom staffs are attempting to unionize.

And last year, a historic moment: digital advertising revenue for the first time exceeded that of television, which has long been the 800-pound gorilla in the media business.

Why are all the news media suffering? The advertising revenue that used to subsidize news has gone to technology platforms, mainly Google and Facebook, which control an estimated 73% of all digital advertising in the U.S.

2. The Way It Was--Trusted, mostly

Results of a survey done this year for the Knight Foundation by the Gallup Organization showed that  "between 2003 and 2016, the percentage of Americans who said they have a great deal or a fair amount of trust in the media fell from 54% to 32% before recovering somewhat to 41% in 2017 as trust among Democrats rebounded."

Those numbers are in line with the results of Pew Research surveys (graphics at left) showing that newspaper credibility went from mostly trusted to distrusted in one decade, 2002-2012.

Part of the reason we were trusted before has to be that we were the only game in town. There were fewer alternative news sources to compare us to.

When I started my career in newspapers in the late 1970s, there were no national newspapers. As the wire-service and front page editor at the late lamented Painesville, Ohio, Telegraph, I would select international news. For example, a story like "Cyclone in Bengal, thousands believed dead", might get a paragraph on page 2. It would get a photo if we didn't have any local stuff. It would be gone from the news in a few days. We were the authority. If we didn't report it, it didn't happen. It might make the national network TV news.

Did you know that a cyclone in Bangladesh actually killed 300,000 in 1970? How did we miss that? There were no national newspapers in the 1970s and this was before 24-hour cable news: CNN launched in 1980; USA Today in 1982.

Newspapers fed the Associated Press and United Press International, which in turn fed the local TV and radio stations. Even today, newspapers, as weak as they are, provide much of the fuel for television. John Oliver, a satirist and entertainer more than a journalist, put together a video montage illustrating just how dependent TV is on the investigative journalism of newspapers.


3. The Way It Is Now--Less Profitable




Ad revenue grew steadily for newspapers well into the 2000s, but it peaked in 2006, began to plunge dramatically, and today is a third of its peak. Now the big chains of dailies are focused on reducing costs or changing strategy: they are severely cutting staff, reducing the number of copies and pages printed, reducing the days of home delivery, hiving off their less-profitable newspaper assets in companies separate from their still (for now) more profitable TV assets, or trying to get really big so they dominate all the major U.S. markets.

Advance Publications, owner of The Cleveland Plain Dealer and Sun Newspapers and more than 30 other dailies, is a private company controlled by the Newhouse family. It also owns all the Conde Nast magazines, such as The New Yorker, and the 40 business papers I used to work for, including Business First of Columbus and The Baltimore Business Journal. Advance has reduced staff at The Plain Dealer and cut home delivery to four days a week. It has made similar service cuts in other newspaper properties.

Gatehouse Media has been acquiring dailies and now owns 146, including my former employer, the Columbus Dispatch, and has been ruthlessly cutting staff and expenses since it acquired the paper in 2015. Page design functions are now done at a center in Austin, Texas. Ninety advertising jobs were outsourced to India. Mike Reed, CEO of the company managing The Dispatch, revealed his "do more with less" philosophy in an interview this year that riled up newsroom employees:

". . . we first want to get the production expectations correct. If I acquire Columbus, Ohio, and I have three guys in there that have been in the newsroom for 30 or 40 years and each of them shows up a couple times a week and they produce a story every two or three weeks…That’s what we found in Columbus. So, what we said is, 'Okay. We should take those three jobs, make it one job, and have that person do four stories a week.' We can have a really good reporter do four stories a week, so over the course of three weeks, you get 12 stories, where before, I had three guys coming in, doing one story every two or three weeks."
What he didn't say is that in-depth reporting takes time. It is not an assembly line job. A veteran reporter with excellent contacts, working carefully, needs weeks or months to document the system failures or corruption that result in bad public service to taxpayers.

Gannett Co., best known as publisher of USA Today, is the biggest news chain as measured by total circulation. It grew to 79 newspapers in 1979 and today has print and digital properties in 109 markets across the U.S. It has continued to post losses, its stock has been falling, and is a takeover target of Digital First Media, which is owned by a hedge fund.

Knight Ridder grew to 32 dailies (including The Miami Herald, The Philadelphia Inquirer, and The San Jose Mercury News) until 2006 when it was bought by much smaller McClatchy Company, in a merger of two struggling chains.

4. Fear and Anger--The Cable News Effect

Cable TV news arrived in 1980 with CNN and completely changed the way we perceive news. In 1996 it was joined by Fox News (founded by Rupert Murdoch's News Corporation) and MSNBC (a partnership of Microsoft and General Electric).

Newspapers and network TV get higher credibility ratings than cable TV from the public at large (bars at left). But users of those cable networks (bars at right) give them higher credibility. From Reuters Institute Digital News Report 2018.
When people complain about "the news media", data like the chart above suggest that cable TV is a disproportionate part of the problem. All television lives and dies by ratings, but cable TV has a unique problem: Fill 24 hours, seven days a week, with enough content to keep enough viewers so that they keep enough advertisers (here are the top advertisers on CNN, Fox News, and MSNBC).

They have a huge content hole to fill, are desperate for ratings, and push ever-more-sensational content that is designed to fear and anger. Emotional responses keep people watching. Above all, cable TV needs lots and lots of dramatic video footage from whatever part of the world.

Explosions, pundits confronting each other, building collapses, tsunamis, police firing tear gas at crowds, refugees drowning, floods, California burning--the footage can come from anywhere in the world because the important thing is not the relevance to the audience at home but the dramatic appeal of the images.

So, a natural disaster in the Philippines, flooding in Tennessee, or a blizzard in Buffalo that would have received scant news coverage a generation ago will be on the cable channels for days, not because we are necessarily more sensitive and caring for our fellow man; it's just that the cable networks need to fill the time with something, and these video images hold people's attention. And in media, time and attention are monetizable.

And let's face it, journalists look like rabble to the general public. The news and movies are filled with images of a mob of journalists with cameras and microphones chasing after a public figure and shouting like a pack of hyenas: "Governor, does your wife know about your girlfriend?"

5. Lots of Competitors with Free Content


In the days before cable television, and especially before the internet, newspapers did readership surveys once a year. Editors did not have an overnight ratings book. Newspapers were so profitable, and the information about readership so hard to get that nobody really worried if 50 or 100 people were upset about an article and canceled their subscriptions. They usually came back.

There were plenty more people in the market. People weren't buying the newspaper for the news anyway. They bought it for the crossword or the funnies or the sports or the coupons or the obituaries.
 
But the newspaper distribution monopoly is over, and now editors and publishers are competing with hundreds of digital publications that are stealing their audience with coverage of lifestyle, travel, entertainment, sports, cooking, puzzles, health, even obituaries and weddings.

Newspapers and local TV stations have seen their audiences flee to the web, and most of the traditional buyers of print ads and 30-second spots have gone with them. But these media still rely heavily on advertising and need to show advertisers that people are coming to their websites.

What attracts large numbers of users? Crime, violence, photos of cute kids and pets, celebrity sex scandals, tweet battles between sports figures, sensationalistic content. Reporters covering traditional news beats like government, politics, how tax dollars are spent--the watchdog coverage that holds public officials accountable--usually see their stories generating less traffic.

Digital media have a financial interest, it turns out, in writing more stories about politicians who make controversial statements because they are far more likely to generate clicks, web traffic, and revenue. The latest politically incorrect tweet has more potential economic value to a digital news site than a politician's policy statement on a campaign issue. See Les Moonves on Donald Trump: "It may not be good for America, but it's damn good for CBS".

6. Why You Might Hate "the Media"

If you look at a political map of the U.S., the blue states (Democrats, liberals) lie on the coasts, and so do the traditional media centers--New York, Washington, and Los Angeles. And it is no surprise to me after years of working in newsrooms, that only 7% of journalists identify themselves as Republican, down from 25% in 1971, according to studies done at the University of Indiana.

As much as my colleagues and I do our work conscientiously, trying to avoid bias in our news coverage, we are kidding ourselves if we say that there is no liberal media bias. (This is written by someone who has voted for every Democratic presidential candidate since 1972). We live in a bubble. It partly explains why we could not imagine the outcome of the 2016 presidential election.

And now, media I respect and trust--The New York Times, The Washington Post, The New Yorker--sometimes go overboard in their campaigns of "resistance" to the new president. While there is plenty to criticize and question about the new group in the White House, the attitudes of reporters are creeping into their news columns and social media. It annoys me and surely it annoys people with different political views. Most common are "analyses" that offer more opinion than insight and snarky comments on petty issues like the president's spelling in a tweet of his wife's choice of Christmas trees. Pick bigger issues, please; there are plenty of them.

Most dislike the "politically correct"

Our personal and political views, whatever they are, affect the topics we choose to write about, who we choose to quote, the dramatic frame of our stories, how we depict ideological conflicts, the specific words we choose to write, who we hold accountable or who gets a free pass, the photos we select, and the headlines we write. You can all find examples of bias from both sides.

The cumulative effect of newsrooms in a bubble is that some Americans--and possibly a majority--might regularly feel that the media do not respect who they are and the values they hold dear. There is data to support this in a 160-page study, Hidden Tribes: A Study of America's Polarized Landscape done by More in Common, an international initiative to build societies and communities that are "more united" and more resistant to the "threats of polarization and social division."

The study was based on 8,000 online interviews and six focus groups. (Yascha Mounk has done a fine analysis of the study in The Atlantic.) Among its conclusions: About two-thirds of Americans belong to the "exhausted majority" whose voices "are rarely heard above the shouts of the partisan tribes." They fear being attacked by people of either extreme. We are not just two groups but seven "tribes" spanning the spectrum from extreme conservative to extreme liberal. A full 80% of ordinary Americans think "political correctness is a problem in our country", and that includes three-fourths of African Americans, the study found.

7. Solutions rather than fear

We in the news media are misreading the views of Americans. We often talk down to the public and adopt an arrogant attitude of ethical superiority by trumpeting our political correctness. We shouldn't be so quick to criticize. If a person worries about immigration, that doesn't make them racist. If a person favors abortion, it doesn't mean they are murderers. If a person has more formal education, that doesn't mean they are smarter or superior or better informed than those who don't. It just means they spent more time in school. What happened to tolerance of other people's life experiences and decisions? See The Demise of the Moderate Republican in The New Yorker.
 
We in the media are very good at identifying problems and chronicling disasters. We defend ourselves by saying that we are just reporting the facts, holding a mirror up to reality. But we can certainly do better than that. Reporting about problems without pointing to possible solutions makes people feel powerless, part of the reason 38% of Americans often or sometimes avoid the news.

We have a divided political system that is paralyzed by partisanship, so journalists need to find a different path in order to serve and improve our communities. And there are many efforts under way.

  • The journalism website ProPublica selects topics to investigate based on the possibility that they can have real world impact, according to their mission statement. Their work has led to changes in immigration enforcement, more funding to reduce infant mortality, and protection for debtors from unscrupulous collection agencies.
  • An organization called Solutions Journalism Network shows journalists and educators how some news organizations are responding to problems in their communities not just covering them. It offers training to help media organizations shape a different kind of coverage.
  • One innovative example of a digital publication advocating for "constructive journalism" is Perspective Daily, founded by two German scientists who believe that the science promoted in headlines only describes problems, not solutions. They publish articles that acknowledge problems such as air and water pollution but direct readers to scientific studies that show how these problems can be mitigated or solved. The publication, in German, has more than 13,000 "members" paying 60 euros a year (about $70).
  • A recent study of 100 digital media startups in Latin America that I participated in as an editor and researcher found that these organizations were having impact locally, nationally, and internationally, despite their small size. One of them, Animal Político of Mexico, revealed a vast, multimillion-dollar embezzlement scheme by the governor of the state of Veracruz, leading to his arrest, conviction, and imprisonment.
  • Personally, I am optimistic that journalism generally will get better at serving the public and recently blogged about it--The Benevolent Virus That is Saving the News Media.
Things are bad, but pessimism leads to inaction and despair. You have to be optimistic. It gets you into action. That's the way to go.

Related:

This hub nurtures investigative journalism in Latin America
20 years ago, he predicted Brexit, Twitter, and Trump
Buenos Aires: land of opportunity in digital media


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