Victor Pickard: A new business model for journalism

NIALA BOODHOO: Every day it feels like more bad news…for journalism.

VICTOR PICKARD: We no longer have a commercial market that can support the levels of journalism that democracy requires.

NIALA: One professor's plan for a new economic model…to preserve the news industry.

VICTOR: There are creative ways to really not just decommercialize, but also democratize the system.

NIALA: I'm Niala Boodhoo – from Axios, this is 1 big thing.

Last year was one of the worst in recent memory for layoffs across media. Job losses in digital, broadcast and print news increased 70 percent41% from 2022, according to a recent report from Challenger Gray & Christmas.

SARA FISCHER: In 2023 and so far in 2024, there have been more cuts, layoffs, cost cutting measures than the industry has seen since perhaps the financial crisis in 2007 and 2008.

NIALA: Axios Media Reporter Sara Fischer says there are three main reasons for this:

SARA: One, the stagnation in the ad market. Two, high interest rates has made it really hard for media companies to raise debt or even to finance mergers and acquisitions. And then three, there's been a slowdown in news consumption ever since the end of the Trump era.

NIALA: And 2024's already started off with more cuts.

VICTOR: In recent weeks it seems particularly bad.

NIALA: Victor Pickard is a professor of media policy and political economy at the University of Pennsylvania.. He says this downward trend goes back some 20 years.

VICTOR: Since 2005 we've seen a loss of two thirds of our newspaper journalists and about a third of our newspapers. Really what this speaks to is the collapse of the advertising based revenue model. Digital advertising pays pennies to the dollar of traditional print advertising. And, of course, much of this digital advertising is going to meta and Google. So, really, we've reached a point of no return, I think, for the broader commercial journalism sector…

NIALA: And to fix it? That requires bold new thinking from Americans, says Victor. This week I asked him to break down the problem – and his solutions.

--

NIALA: Hi Victor, welcome!

VICTOR: Thanks so much for having me, Niala.

NIALA: People who are news junkies may have seen a few alarming headlines that include the phrase market failure when it comes to the industry. Do you think that's happening and how would you describe that?

VICTOR: Yes, it is. In fact, I would go just a bit further to say it's systemic market failure.

So traditionally, in economic textbooks, you might find a mention of market failure, but it's usually presumed to be a temporary problem in markets that government may have to intervene to make little tweaks, and then overall the market will be self correcting. What we have with journalism is a classic public good, and public goods have never been well supported by the market, and that's one of the reasons why I call it systemic market failure.

I think in many ways, this was baked into the DNA of the commercial media model, this over reliance on advertising revenue going back to the late 1800s, as much as 80 percent of newspaper revenues derived from advertising. So I think this was always an imbalance to begin with, but once we lost this, this model, once that advertising subsidy, you might call it, fell apart.

We no longer have a commercial market that can support the levels of journalism that democracy requires. So, in other words, you have market failure when the market does not allocate resources in a socially beneficial way. And I don't see any market correction to this. I think we're gonna have to look outside the market for a structural fix to this problem.

NIALA: I'm sure there are people who are listening to this, Victor, who are thinking, what about the New York Times? They are arguably the largest, most successful news organization in the country. They're doing great.

VICTOR: That's right. And they have such a readership base that even if a percentage of their readers will pay for subscriptions to the New York Times, and of course, often times it's through games and recipes and, and other, clever outlets, they're really in this category of their own and it gives a little bit of a false impression that a paywall model will sustain the kind of journalism that we need. When in fact it's only a precious handful of large newspapers and maybe a few niche outlets that can really rely on subscriptions. Study after study shows that overwhelmingly people are unwilling or unable to pay for journalism. And those that do pay, tend to be wealthier and white households. So we're really talking about disenfranchising many members of society, if we go to a purely paywall model to support the news that we need.

NIALA: And so the model for a lot of newspapers in many cases seems to be, let's find a billionaire to invest in us. Whether that's Jeff Bezos in the Washington Post or the L. A. Times. But we've seen outlets owned by billionaires go down or suffer despite those deep pockets. Why do you think that is?

VICTOR: That's exactly right. And so if advertising isn't supporting journalism, paywalls aren't supporting journalism, then many people think the so called benevolent billionaires will save us. And of course, not only does that beg the obvious observation that not all billionaires are benevolent, but many of them, as we're seeing with the L. A. Times and Washington Post, both billionaire owned newspapers, even billionaires suffer sticker shock. They're unwilling to lose tens of millions of dollars a year on these kind of pet projects of theirs. And so, at best, we could hope that billionaires or even, I would say, philanthropists and foundations might be able to prop up or save, salvage a newspaper here and there, but it's not a systemic fix, that there's simply not enough private capital to support the kind of journalism that we need.

NIALA: I wanted to ask you about philanthropy. I'm talking to you this week from Miami, where the Knight Media Forum is convening. And the Knight Foundation, as well as MacArthur, and a bunch of other foundations, philanthropic organizations, recently pledged 500 million over five years for local journalism. This was celebrated in the journalism philanthropic world is a really big deal, but to your mind, is this not enough?

VICTOR: Unfortunately, it's not enough. Though, I do want to step back and say that this is a glimmer of hope and I think it would not be hyperbolic to say that we are living through a new golden age of nonprofit reporting, all these experiments are rising up on a monthly basis, largely because of these philanthropic contributions that are focusing specifically on local journalism, which is something I should have underscored from the very beginning: that's what we're seeing completely fall apart. We're seeing vast news deserts spread across the country where tens of millions of Americans have access to little or no local news media whatsoever. And this is causing all kinds of problems for democracy. So philanthropists are helping out tremendously and I so I think it's again not a systemic fix, will not solve the news deserts problem across the board, will not guarantee that all members of society will have access to the media that they need, so, you know, it's not enough.

NIALA: And what is your assessment of these different local non profits that are popping up, how does that compare to the news ecosystem that used to exist solely with newspapers and TV and radio?

VICTOR: So I think in many cases, you see these experiments serve local communities, especially communities of color who were never well served by the commercial media system. I'm thinking of, for example, Outlier Media in Detroit. There's just so many of these hard hitting, investigative, journalistic institutions that are rising up. So that gives me hope, but we need to figure out how we can scale them up and how we can make that more systemic in all communities across the country.

And that's where I really do come down to. Our last best hope is a public option, a public media model, and I don't just mean NPR and PBS, which I'm, you know, I think they do great work, but I'm thinking that we need to expand this, quite ambitiously, to make sure that all communities have these kinds of newsrooms, that they can access and also tell their own stories, right? I think we have to emphasize that our ideal should be that local communities can tell their own stories through their own media.

NIALA: So this is your one big thing for how journalism can be saved, if I'm understanding you correctly, which is public funding? Is that the way you think that we should be able to fix this?

VICTOR: I do think public funding is absolutely necessary for the future of local journalism in particular. I don't think there is a silver bullet to this, to this problem, right? I think that just because we're talking about, or we should be talking about public funding for journalism, there are so many different models, it would look different in different communities. So I don't think there's a one size fits all fix for this problem, but I don't see any way, there's simply no commercial future for many kinds of journalism, especially local journalism that we need, that democracy requires. So, yes, that would be a big thing that I'm calling for.

NIALA: Tell me a little bit more about how you think this would work, and if you think there are models in other countries where this is successful.

VICTOR: What I'm calling for does not yet exist. Uh, we have to create something new from scratch, and I think we start out with resources, though these resources should be federally guaranteed, but locally owned and controlled.

So immediately, although the money is coming from, you know, from, straight from the treasury, or we can find more creative ways, taxing the big platforms, for example, since they are doing so much damage to journalism. We can find various ways to fund this independent trust that will then be allocated democratically to all communities across the country.

It should be devolved to the state level and then to the local levels. We could have local news bureaus that help allocate these resources. Those bureaus could be based on elections in terms of who's serving on them or it could be like jury duty. We're just randomly selected to serve on our local media bureau, but I think there are creative ways to really not just decommercialize, but also democratize the system.

NIALA: In a moment – more with Victor Pickard. This is 1 big thing, from Axios.

--

Welcome back to 1 big thing from Axios – I'm Niala Boodhoo. Victor Pickard, professor of media policy and political economy at the University of Pennsylvania, is calling for big changes to the business model for journalism…namely: a move away from billionaire outlet owners…and a push for public funding.

NIALA: So what you're describing, in a way, I'm thinking immediately of the BBC, right? Which is in large part funded by a tax on television licenses. Is that kind of what you're thinking of? But instead of taxing individual citizens, you're talking about Big Tech.

VICTOR: Yeah, well, Big Tech would be one example and one revenue stream.

I don't think we could rely on Big Tech alone to provide the kind of resources that we need. But I do think the BBC is a good conversation starter because even for Americans who are very hesitant to welcome public subsidies into their media system, Americans tend to have warm, fuzzy feelings towards the BBC.

And sure enough, the BBC does tremendous journalism, especially international journalism. But they spend about 100 dollars per person per year towards their public media system. Americans, at the federal level, spend about a buck fifty per person per year. We're almost literally off the chart compared to Northern, Western, uh, even Canada and Japan…many democratic countries around the world. So, this is something that even if we were to rise to global norms, we would suddenly have tremendous resources that we could put towards a new public media system. And many countries are doing this and not sliding towards totalitarianism. In fact, quite the contrary. It's often positively correlated with being a strong democracy. Strong democracies tend to have strong public broadcasting systems.

NIALA: And I wanted to ask you about the political reality of that. Because as someone who has spent much of my career in public media, I am very familiar with how much controversy gets attached to that 1.50, for that model–so we have a hard enough time agreeing politically on just the tiny amount that public broadcasting gets funded for.

VICTOR: That's right, and there are a couple data points that I would leverage that might give us some hope that this model would be possible. First, we should look historically and remind ourselves that public media subsidies are as American as apple pie. Going back to the postal system, which from its beginning was essentially a newspaper delivery infrastructure, up to 95 percent of the weight of the post, well into the 1800s, was based on newspapers, which were heavily subsidized. The delivery of newspapers was subsidized so that all communities would have access to newspapers.

Go beyond that, even today in our more libertarian times. Polling data shows again and again that even among Americans who might distrust the media, when it comes to their local media, they tend to have much higher levels of trust. And this is even true for public broadcasting, relatively speaking, there are higher levels of trust across the political spectrum towards public media.

So, I do think, especially if local communities are directly involved in creating their own media, if there's constant dialogue between the newsrooms and the communities, that the newsrooms actually look like the communities that they're supposed to serve, I think we would see higher and higher levels of trust. And we could actually build this new kind of public media system.

NIALA: Victor, do we have any American examples of this working at a smaller scale as you're talking about the local or state level?

VICTOR: We do have two broad categories I would point to. One is that we're seeing a growing number. of partnerships between public broadcasting stations and local print outlets.

So that those local print outlets are essentially being publicly subsidized in various ways. But I think an even better category we should be looking at is at the state level. If we look at states like New Jersey, California, most recently Wisconsin has introduced a number of bills. That would have government subsidize local journalism initiatives in democratic, uh, ways.

So that local communities would be very involved in these local media outlets. And they're doing this through grants, through fellowships. So I think that is a proof of concept. That if we're doing it at the state government level, we could scale this up to the federal level.

NIALA: You mentioned that public funding isn't the only big thing. What else needs to happen here?

VICTOR: Well, I think public funding is sort of the step one. Step two is that we need to radically democratize. So we really do need to see the crisis as an opportunity to create something entirely different, to really try to create a system that allows journalists to be journalists, to do good journalism.

I don't think the incentives were always there historically, especially under a commercial model of a profit driven model, so that we can reimagine what journalism could and should be and how it might serve democracy. So you know, this is going to be a long slog, but I do think that eventually Americans will feel invested in this new model, especially if we consider what happens if we don't do it.

NIALA: Victor, you've mentioned democracy a few times here. What is at stake if people continue to lose access to high quality journalism? Why should this matter to everyday Americans?

VICTOR: Yes, that's an excellent question, and it often seems like an abstract problem for many Americans, especially because on the surface level, it seems like we have access to more news and information than we've ever had before.

But in fact, what we're seeing is that our local school boards aren't being covered, city halls aren't being covered, we don't know what's going on in our backyard or even at our state governments. So, many of the things that often aren't thought of as the sexy kinds of journalism, the kinds of journalism that really grips our attention and sells advertising services, clickbait, what have you.

That's the kind of journalism that we still need reporters on the beat covering day in and day out. That's what democracy requires. And so I think, oftentimes, it's these subtle losses that we're not immediately aware of, but it's directly impacting our daily lives. And if we think about things in our recent past, like around vaccines or where to vote, these are very basic forms of community information that historically newspapers have delivered and that's exactly what's disappearing. And if we think about, you know, health, uh, communication and, and, you know, this really does become a life and death issue, if we need to know, is it safe to go outside, or, you know, is there some sort of natural disaster happening right now and we don't have any local media to report on this. So, you know, these are all examples of where we're all suffering from this journalism crisis.

And this is something that despite all the doom and gloom, I remain cautiously optimistic that we will be able to turn this around. We just have to be open minded and reimagine what journalism could and should be.

NIALA: Victor Picard is a professor of media policy and political economy at the University of Pennsylvania. Victor, thank you for taking the time to speak with us.

VICTOR: Thank you so much, Niala.

--

NIALA: One more piece of this story before we go…

Those local and nonprofit news organizations popping up that Victor talked about--many are moving beyond traditional print and even digital models, and finding new ways to connect with--and get news to--their communities. Karen Rundlet, CEO of the Institute for Nonprofit News, says that's giving her hope.

KAREN RUNDLET: There's so many different journalists out there who are using tools like WhatsApp, like Nextdoor, to have conversations in community. Connect to Arizona is using WhatsApp to convene community and talk about important issues in Spanish, for instance. And there's also City Bureau, documenters. They're training citizens and paying them to go to meetings, cover those meetings, take the notes, and partner with journalists to, to produce written stories, audio stories, video stories. They're holding the leaders accountable in those meetings to answer to certain questions, to make sure the data is correct. City Bureau and documenters are an example of journalists training citizens how to commit acts of journalism.

So there are a lot of grassroots organizations doing things to connect people and inform them so that they can be empowered and active in their communities that you may not have heard of.

NIALA: Karen Rundlet is the CEO of the Institute for Nonprofit News.

And that's it for this week's edition of 1 Big Thing. And before we go, I have a favor to ask of you. If you have a moment I'd really appreciate it if you could leave us a rating or review at Apple Podcasts. It makes it easier for other people to find our show.

The 1 big thing team includes Supervising Producer Alexandra Botti and Sound Engineer Jay Cowit. Alex Suigura composed our theme music. Aja Whitaker-Moore is Axios' Executive Editor, and Sara Keuhalani Goo is Axios' Editor in Chief.

I'm Niala Boodhoo. Thanks for listening, stay safe, and we'll see you back here next Thursday.