This year, something unusually dark is happening in an industry that is, by design, quite used to handling bad news. In a strong economy, with unemployment near a 50-year low, virtually every single part of the news business—digital media, local news, TV, print, podcasts, and documentaries—is laying off people at the same time. Audiences for news are shrinking. Thousands of journalists are losing jobs.
In conversations I’ve had recently, with both execs and workaday journalists like myself, people have started privately whispering two extremely grim words to describe what’s happening: market failure.
This term, normally reserved for economists and policy types, describes what happens when a free market gets so distorted that the normal rules of economics no longer apply—to the point where that market begins to exact a toll on society. Now, in the wake of this terrible year, the journalism world is starting to wonder if its market isn’t just struggling but has outright failed. And if indeed it has, no amount of hustle, innovation, or ingenuity would solve the crisis.
Consider the evidence: At least 115 journalists were laid off last month by the Los Angeles Times, which cut 20% of its newsroom and is losing upwards of $30 million to $40 million per year, despite being owned by billionaire Dr. Patrick Soon-Shiong. The Washington Post, which is owned by mega-billionaire Jeff Bezos, was on pace to lose $100 million last year. It offered buyouts to 240 journalists. The Messenger, which launched only a year ago, hired about 300 people and raised $50 million. But it will now shut down entirely. Sports Illustrated magazine’s layoffs could extend to its entire staff. Vox Media underwent two rounds of layoffs last year. Vice Media filed for bankruptcy. Job cuts have plagued TV, nonprofits, even a beloved music site. (By way of disclosure, I’ve worked at The New York Times, The Washington Post, Vox, and Vice. Maybe not surprisingly, I hope they all succeed.)
So why is all of this happening at once? Ezra Klein of The New York Times posits that journalism’s “middle” is collapsing, leaving us only with large news orgs like The Times on one end and entrepreneurial Substackers on the other. Semafor editor-in-chief Ben Smith and CNN’s Oliver Darcy both point to an array of factors, including declining print and digital business and antsy billionaire owners.
None of these are sufficient to explain the sheer size of this year’s cuts. Nor can they explain why money, even large amounts of it, seems to be of no help. At the Los Angeles Times, Soon-Shiong has put nearly $1 billion into the paper since buying it in 2018, according to the company.
For journalists at these struggling outlets, there’s another explanation. “The private market has failed,” says Matt Pearce, a reporter at the Los Angeles Times and the president of Media Guild of the West. “Part of what’s so scary is that I don’t think you can narrow it down to any one thing. It’s a multitude of things that are kind of failing simultaneously.”
Or falling precipitously. Social media traffic to news sites has been dropping for years, as platforms become actively resistant to news. Google has since become the largest driver of traffic for many big and small digital publishers. But since roughly 2022, thanks to changes in the platform’s algorithm, execs at some sites I spoke to say they’ve seen big drops in Google traffic—as much as a 40% drop almost overnight.
Imagine running a business in which one of your main modes of distribution can fall that quickly.
Google, Meta, and Amazon absolutely dominate the U.S. online ad market, and experts and insiders say there’s no way out of journalism’s crisis without addressing their power. For Victor Pickard, a professor of media policy and political economy at the University of Pennsylvania, “there needs to be some sort of government action to push these companies to raise the visibility of journalism.”
Pearce agrees, noting, “Right now, there are perverse incentives for the platforms to elevate low-quality information and deplatform high-quality information. There’s a political economy problem in the digital advertising and social media space that has to be addressed in the antitrust arena.”
This kind of multifaceted market failure sounds complicated, but it’s a simple concept. In a failed market, the free market produces too much or too little of a particular good, and the consequences of that mismatch hurt society. The incentives in a failed market tend to make the world worse. Think of a market that makes it profitable to pollute, for example. Or a digital platform that incentivizes clickbait.
There’s no rational business strategy or innovation that can fix a market failure. In fact, free market approaches can often distort things further, making bigger or less-scrupulous players even more powerful.
Failed markets can be tricky to spot, in part because some elements of the market can seem to be working just fine. For one, The New York Times has become a full-on media success story. And industry-focused publications are still doing well. Promising startups like Platformer, Defector, and 404 Media have made seemingly sustainable businesses during all this chaos.
But these are exceptions. The larger picture is clear: Since 2005, the U.S. has lost almost one-third of its newspapers and roughly two-thirds of its newspaper journalists, according to one measure. Getting into this industry—or staying in it—now amounts to an exercise in beating the odds. Getting the news you want, or need, is perhaps even tougher, given that more than half of U.S. counties have little or no access to local news.
Which is why it’s time to start thinking about the journalism industry as an example of classic market failure. This isn’t just semantics. Conceptualizing the journalism market as fundamentally broken changes how we’ll need to fix it.
The truth is that markets fail all the time and the government inevitably steps in. The private market simply would not make enough high-quality roads, bridges, or schools without government action to support them. “If we start thinking of journalism as we think of public education, then it really changes the calculus,” says Pickard, the author of Democracy Without Journalism? Confronting the Misinformation Society.
But blaming the tech platforms won’t solve all of journalism’s problems. “There’s a lazy narrative that the internet broke journalism,” Pickard says. “But in my view these are symptomatic of the deeper structural problems.”
For Pickard, the past 100 years of the media industry have been a kind of historical anomaly. The regional advertising monopolies that newspapers and TV stations enjoyed essentially supported journalism that largely served the public good. Once those monopolies broke down in the digital era, Pickard says, “the marriage of convenience between advertisers and publishers” splintered.
Pickard suggests something a little radical: viewing journalism as a pure public good and funding it with a combination of tax credits and state and federal funds. He adds that the U.S. is an outlier among wealthier countries in how little it allocates to subsidizing journalism. Other countries, including Canada, Australia, the U.K., and some Nordic countries, subsidize journalism in creative ways. And Pickard calls for “practically utopian” thinking about locally owned media companies.
In the last few years, the LA Times’s Pearce and his union have gone from bargaining with struggling newspapers to pushing public policy solutions. His guild supports the California Journalism Preservation Act, which would require tech platforms to pay news organizations to host links on their platforms. A similar federal bill has been stalled in Congress. “The country has a long history intervening to regulate media markets,” Pearce says.
In comments after his newsroom’s layoffs last month, Soon-Shiong said that he has urged Congress for years to act to support local journalism. The Washington Post declined to comment, including on whether it supports state or federal action.
Without a new way of looking at journalism—and the value it provides—Pickard argues, it’s a fantasy to expect anything different from the next few decades of a news industry that’s primarily profit-driven.
These are not just his views. No one I’ve spoken to in and around the news business is particularly optimistic right now. “These problems are unfortunately going to get worse in the short term,” Pickard says. “There is no new business model to be discovered, in my view, for most kinds of journalism.”
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