During the past 20 years, many U.S. newspapers have experimented with online news delivery, but they’ve had just limited success. It’s true that consumers are increasingly getting news online, but most turn to news aggregators such as Yahoo News and Google News or social media like Facebook.
The problem is most aggregators and social media sites do not produce original news content. Rather, they republish news stories produced by newspaper reporters and ultimately benefit from such content without having to pay much, if at all, for it. Some newspaper publishers even get really upset – calling Google a “digital vampire” sucking “newspaper blood.”
With a huge user base that attracts a large amount of ad spending, Google and Facebook have evolved into tech giants with unprecedented global market power. In contrast, most of the 1,300 U.S. daily newspapers operate in narrowly defined geographic areas with average weekday circulation under 30,000 – and dropping. For these newspapers to compete with Google and Facebook online is like a local diner trying to compete with McDonald’s. There is simply no chance of winning.
It is against this backdrop that the News Media Alliance is requesting a limited antitrust exemption from Congress so that newspapers can negotiate with Google and Facebook collectively. It is unclear what kind of “negotiation” the organization plans to conduct, but this indicates a new way of thinking that is long overdue.
Part of the problem is self-inflicted. Most newspapers have been actively sharing their content on these big platforms – for example, many have hired social media editors to distribute content on Facebook and Twitter for free. As a result, many online readers have stopped visiting newspaper websites, and social media sites have become a major source for news — 44% of U.S. adults now get news on Facebook.
This has affected newspapers’ advertising revenue. After 20 years of experimenting with digital, newspapers’ online advertising revenue has remained underwhelming, increasing only slightly from $3.2 billion in 2007 to $3.5 billion in 2014. In contrast, Google and Facebook have enjoyed tremendous successes in the online world. Google reported $89.6 billion in global revenue and Facebook reported $27.6 billion in 2016. As a reference, total U.S. digital ad spending was $72.5 billion in 2016.
So, all evidence suggests that U.S. newspapers have lost this digital battle – in terms of audience attention and advertising revenue. The reason they are still here is that their print editions, despite substantial declines, still generate advertising and subscription revenue that pays the bills.
The good news is major metro newspapers still reach one-third of the local adults in their markets, and surprisingly, the vast majority of them are print, paying readers. This is good news because newspapers remain the most important institutions providing much-needed local coverage that no Facebook, Google, Twitter, or Instagram would even consider producing. Tens of thousands of journalists are still doing their jobs covering our communities as best they can, often under stress, sometimes humiliation, when management makes decisions to address problems they didn’t create.
Now newspapers are trying to redefine their relationships with Facebook and Google through an antitrust exemption. On the one hand, this exemption, even if granted, would not easily change the result of a losing game – one that’s between a local diner and McDonald’s – especially if the newspaper industry does not first address some of the unwise, short-sighted decisions it made in the name of “digital transformation.” On the other hand, it is of the utmost important that policymakers recognize how market power has shifted toward digital giants that are indeed swallowing journalism (and everything else).
In a market that truly encourages competition, consumers have the final say. Just as health-conscious consumers managed to propel McDonald’s to offer healthier choices, there is a lot news consumers can do, if, and only if, they care.