A Terrible Year for Newspapers, a Good Year for News

In the wake of the 2014 newspaper purge, there is no such thing as the news business. Instead, there are dozens of different businesses that happen to publish the news.

The demise of newspapers is hardly a breaking news story, but 2014's summer of spin-offs has created one heck of a news peg.

In the last decade, newspapers' weekday circulation has fallen 47 percent, ads have fallen 55 percent, and about seven in ten newspaper readers are now older than 45. Stats like these provide the background music to events of the last few months, when News Corp, Time Warner, Gannett, the Tribune Company, and E. W. Scripps all unloaded their journalism divisions. Including the Washington Post's sale within the last 12 months, this means that seven of the ten largest newspapers in the country have been dumped in an annus horribilis for print.

Many of these divorces were executed to isolate these companies' profitable TV businesses. This reflects a central truth about media conglomerates: They're certain how to make money in video entertainment and uncertain how to make money on news.

TV networks, in particular, have a straightforward and reliably successful business model: collect cable subscription fees from ~100 million pay-TV households and sell ads. Most of the most financially successful networks are those with highest monthly fees, like ESPN, or those with large audiences to support advertising, like CBS.

Journalism's sink-or-swim moment makes the news business terrifying, but also thrilling. Since the central business model of journalism, adjacent print advertising, has evaporated in the last decade, this has opened a vacuum into which solutions are flooding. As Jacob Weisberg wrote this week in the Columbia Journalism Review:

The New York Times’ solution involves weak content restriction. The FT’s is strict restriction. The Guardian’s is a charitable trust. At The Washington Post and The New Republic, it’s new, wealthy owners. The Atlantic has an events business. At The New Yorker, it’s dramatically higher subscription pricing...

(The diversity of business models is even broader. BuzzFeed, which just pulled in $50 million in new funding, is a viral-ad distribution center looking to push into feature-length videos.)

There is no universal portable formula for making money on the news. "Do great journalism" isn't a distribution plan. "Do worthless journalism" isn't a business plan. Paywalls work, but only sometimes. Higher subscription pricing works, but only sometimes. With so many business plans sort-of-working, continuing to madly experiment seems preferable to doubling down on any one idea.

The good news—and it is really, really good news—is two-fold. First, since distributing news over the Internet is much cheaper than distributing print, outfits that don't have large legacy costs are starting off at a huge advantage.

Second, even as public companies are shedding print news, private investors are still embracing new digital experiments, like VoxThe Intercept, BuzzFeed, and Business Insider. Unlike the recently spun-off news divisions, these businesses don't have quarterly earnings reports that create pressure show profitability in the next few months, or even the next few years. As nice as it is to have VC money, the backing of trusts and billionaires can be even nicer. Income inequality is pernicious for democracy, but there are silver linings: Extraordinarily wealthy people will continue to look for ways to use their prodigious wealth to buy things that are truly scarce. Supporting prestigious, attention-creating media organizations will continue to be attractive for as long as prestige and attention are considered scarce and valuable.

There is no "news business." There are many distinct businesses that use various (and, sometimes, totally opposite) methods of financing the production of articles. And the few businesses we can identify right now could be the beginning of a vaster group of publishing models that we can't even guess. Whether this evolution will be good for journalism is complicated: Local reporting might be endangered, national news has never been more abundant, and the effect of filtering technologies like Facebook has a dubious effect on serious news. But the financial success of currently publicly traded news companies and the broader success of news are two separate ideas, and it's possible to be lugubrious about the future of the former and wildly bullish on the viability of the latter.