It’s no secret that local news outlets in the United States have been struggling financially for years. Internet and the abundance of subscription options made revenues for local papers scarcer. Still, there have been multiple initiatives to save them in recent years, from donations, fellowships, and grants, to public subsidies and novel revenue models. Conclusions? On the one hand, private funding initiatives require readers to step up their game and open their wallets, which they have not done so far. On the other hand, if news organizations need public subsidies, they must prove that local news outlets are a common good.
We have been hearing prophecies of the death of local news for years, mostly from their own newsrooms. But, among the general public, the impression remains that local papers are not an endangered species. According to the Pew Research Center, 71% of Americans believe local outlets are doing well financially, although only 14% pay for local news. As readers don’t feel their papers are struggling, they don’t see the need to support them.
In the meantime, local outlets have tried to survive by changing their business models. First came advertising, but with the over-abundance of websites, ads were not a reliable source of income (read The Internet has few winners; local papers are not them.) The newspaper industry advertising revenue has declined 67% since 2005; and even local TV has seen a 17% decline in ad revenues between 2015 and 2017. When ads stopped working or did not work as well as they should to maintain a staffed newsroom, local outlets turned to paywalls. But getting subscribers to pay for local news through fixed monthly fees is very complicated. Local news pieces are generally available for free online or on social media. If a reader is willing to pay for a subscription, he/she will generally opt for the ‘larger’ offer with brand recognition, that is, for a New York Times, Washington Post, or Wall Street Journal subscription.
In this context, local outlets cannot survive on their own. They have a very hard time competing in the ‘free market.’ If they can’t remain competitive, they will disappear. That’s the spirit of capitalism, and many believe it should be respected. But local news is not any kind of product. They are part of society’s ‘common good.’ Communities need papers to keep an eye on local governments, to question regional powers and to inform their constituents. In short, to ensure democracy at the local level. Six out of ten Americans consider their local newspapers a symbol of civic pride, according to Gallup, with 47% saying local publications should be preserved even if they can’t do it on their own. If we accept that local outlets are a necessary infrastructure in our society, there are two possible paths to ensure their survival: private funding or public subsidies.
Private sources of funding include (1) advertising models and paywalls, (2) small donations and crowdfunding, which do work for certain outlets through membership models, and (3) large contributions from philanthropies. Advertising and paywalls are not working so far, and we are therefore left with either small reader donations or large philanthropies. For the former, to donate small amounts of money readers need to be aware their papers need their help. Gallup found out that when people are told about the financial conundrum facing local outlets, they give more to organizations that support them (54%) than if they remain unaware of the problem (40%). Awareness campaigns could work to rally readers’ support.
For the latter, philanthropies already donate large amounts of money to papers through foundations. A report from Media Impact Founders revealed that journalism philanthropy has quadrupled in the last ten years. It’s also not surprising that Americans favor private sources of funding for local news over public subsidies, with most of them (from 60 to 66%) opposing federal or state government grants. Since the late 19th century, philanthropies in the US have taken care of services that in many countries belong to the state, such as improved education, music, museums, etc. Andrew Carnegie, probably the first and best known US philanthropist, published an essay in the late 1800s called the “Gospel of Wealth.” In it, he advocated for public use of private wealth, meaning that fortunes should be donated to institutions that could reduce inequality. Since then, multiple foundations have taken this approach to the funding of common goods, such as educational programs. Now it’s the turn for local news outlets. However, this approach is very tricky: common goods depend directly on the will of the 1%. Moreover, some papers that rely on grants may feel the need to report on specific issues or through certain angles, as the fellowships depend on it. Philanthropy does not ensure editorial independence, and a very strong exercise of transparency is essential to defend it.
Public sources of funding are scarce. Generally, it is assumed in the US that the government should not intervene nor finance outlets, which could reduce their editorial independence. While NPR and PBS are public TV stations funded partially by the government, local outlets rarely get public grants. However, in New Jersey, the government has recently passed a bill to provide funds to local news innovation, with the help of the advocacy group Free Press. According to the Nieman Lab, the amount allocated is between $1 million and $2 million. The Lab adds that the bill was passed so fast (only two years) because local authorities were seeing their papers die off. Other proposals include the taxing of tech companies and the use of that tax revenue towards funding local news.
Two conclusions therefore come to mind. First, papers and advocating groups need to rally readers’ support in order to get their donations. Small donations create a community, a sense of responsibility, and ensure editorial autonomy. Second, there needs to be a shift in the way public subsidies are perceived in the US. Initiatives like the one in New Jersey could ensure the survival of small outlets in local communities. The state should take some responsibility for the thriving of a common good such as local journalism. For now, let’s see how Congress and the presidential elections shift the public’s attention towards tech companies, which collect the majority of ad revenues at the expense of newspapers.
If we agree that local outlets must survive, then we need action, either from private citizens or the state.