Five myths about the news business

News publishers face a devastating paradox: While the Internet has delivered tens of millions of readers, finances are worse than ever, especially for local news outlets. Tech giants now stand between publishers and readers, and Americans value common facts less than ever. Solutions will require overcoming persistent myths about how news publishing works.

Myth No. 1: "Clicks" pay for newsrooms.

"The more page views an article gets, the more money it can make from advertisers," one industry watcher wrote in 2018. "This dynamic drives stories that get higher traffic rather than higher quality stories." Even today, Google routinely touts the value of the traffic it sends to news publishers from search.

But as online advertising evolved to focus on data and individualized targeting, a majority of those dollars started to flow to Google and Facebook. Moreover, tech companies have come to dominate all of the systems for selling and delivering ads, such that even when readers go directly to a news site, much of the advertising revenue goes to digital platforms and intermediaries. Studies indicate that publishers can receive as little as 50 cents for every dollar spent on advertising on their sites. EMarketer reported that "nearly one-third of US advertiser spending on programmatic display ads goes to tech and software intermediaries." This is a primary reason publishers have pivoted to emphasize subscriptions and other forms of direct reader revenue.

Myth No. 2: Subscriptions alone will pay for journalism.

Tech commentator Ben Thompson has written that for local news publications, "everything must start with the business model, of which there is only one choice — subscriptions." Likewise, media scholars Jennifer Hoewe and Brett Sherrick recently wrote, "If Americans want to receive high-quality, accurate information, they must be willing to pay for it."

And many publishers are successfully attracting new subscriptions. The New York Times recently passed 6 million digital subscribers, The Washington Post has around 3 million and there has been extraordinary growth in subscription newsletters. But there are limits on readers' capacity to pay for all the journalism they need. "Subscription fatigue" is a phenomenon that constrains how many sources readers are willing to pay for. There are also many sources of reporting — notably local TV and commercial radio — that have no history of direct audience support, even as their content moves online. Moreover, there should be real concerns about "information inequality" if all important journalism moves behind paywalls and becomes inaccessible to broad segments of the public. If widespread quality journalism is to survive — and reach the people who need it most — publishers will need to get more financial return from the tech platforms that control access to readers. Music has shown that it is possible to have a financially sustainable business that also makes content widely available.

Myth No. 3: Newsrooms depend financially on coverage of Trump.

In early 2016, then-CBS Chairman Les Moonves famously quipped that the rise of Donald Trump "may not be good for America, but it's damn good for CBS." Conventional wisdom says that the ratings and traffic increases that news outlets have enjoyed since 2016 are due to the "Trump bump." On Election Day in 2016, for instance, the Guardian saw "the highest level of voluntary support in the history of the company," according to TheStreet. Some in the news business worry that, as Trump leaves office, "this gravy train is coming to an end," as one cable news host told Vanity Fair.

It's no secret that digital subscriptions have increased for many publishers during Trump's tenure, but correlation does not necessarily equal causation. There are strong reasons to believe that the public's overall interest in news isn't dependent on one man. First, the increase in subscribers at some larger news publishers was temporary, and many publishers — especially smaller local outlets — saw no significant change in subscribers related to Trump.

Meanwhile, though the digital news audience increased 12% between 2015 and 2016 thanks to the "Trump bump," the growth has since slowed, keeping pace with the past decade. Local news publishers have also seen increases in digital subscribers, though relatively little of their content focuses on the president.

Myth No. 4: Billionaires will save the news business.

In 2014, CNBC asked, "Can billionaires save the American newspaper?" A CNN columnist answered: "Even-handed billionaire owners have been able to invest in legacy titles and help them transform digitally, giving them the chance to compete." Others have argued that "the last hope for newspapers is for more hands-off multi-billionaire White Knights to step up." Mother Jones didn't like the trend but opined that "billionaires are the only business model left" for newspapers and magazines.

Billionaires and foundations are investing in and growing some of the most important media properties in the world. Jeff Bezos, the founder of Amazon, is the owner of The Washington Post. Healthcare entrepreneur Patrick Soon-Shiong bought the Los Angeles Times in 2018. Salesforce CEO Marc Benioff owns Time magazine. But there simply aren't enough rich patrons of news to support a whole industry. And direct aid from the ultrawealthy to the news media has focused on national or big-city regional outlets. No white knight swooped in to buy struggling local papers like the Union Times in South Carolina or the Washburn County Register in Wisconsin — which were forced to shutter this year. And even wealthy owners want their news properties to be financially self-sustaining.

Further, while wealthy owners don't often attempt to dictate news coverage, we should all want publishers to be as independent as possible from entrenched political and economic interests. Warren Buffett, who was a long-term supporter of news, ended up selling his chain of mostly small-market papers. And as Jeff Bezos has noted, and Mike Bloomberg highlighted, owning a news property can be a "complexifier" for both owners and newsrooms. Economic independence is really the best path to journalistic independence.

Myth No. 5: "Spotify for news" will rescue journalism.

Some believe that journalism's woes can be solved by news aggregators or bundling programs such as Apple News or Google News that allow consumers to access stories put out by different publications from a single entry point. Similar to Spotify, such products offer consumers a one-stop shop to pay for a variety of news at a steep discount. As Vox reported in 2019, Apple pitched its service to publishers with the promise that it would help "save journalism." Surveying its readers, Press Gazette suggested that "there may be an untapped market for bundled news subscriptions."

A recent Axios report says the news aggregation business is "exploding," providing a notable counterpoint to the referral services offered by the tech giants, which also want to corner this market. But this business model has not proved financially sustainable. Pay-per-article product Blendle hasn't been able to turn a profit and last year indicated that it was moving away from micropayments. Apple News+ had strong initial numbers (200,000 subscribers at $9.99 a month) but then stalled. Google News provides traffic but little revenue to publishers. Flipboard, which allows users to essentially create their own digital "newspaper" by selecting topics and outlets they'd like to view, saw its referral traffic drop significantly in recent years.

Music streaming works because those publishers have a strong consolidated licensing system that allows them to benefit from a one-stop shop for content. But, despite a lot of effort, news aggregation just hasn't been an answer.

Chavern is the president and chief executive of the News Media Alliance, a trade organization representing almost 2,000 news publishers including The Washington Post.