Is the sun setting on local news in America?

Local newsrooms struggle to take advantage of new technology and business models

Business trends for national news

National news outlets, like The Washington Post, The New York Times, The Wall Street Journal and The New Yorker, are well positioned to invest in technology. Large publishers can take advantage of technology trends to grow their readership and increase subscriptions and advertising dollars. From an economics perspective, larger outlets have an advantage when it comes to investing in technology, because publishers can defray large fixed costs across many customers.

First, large publishers will get control of their user data and learn to use this data to improve ads and personalize content resulting in a better user experience in their digital products.

Second, national publications will transition to mobile technologies: emails, podcasts and, of course, mobile apps. Newspapers are already experiencing growth in mobile traffic, according to the Pew Research Center.

Mobile apps allow publishers to brand their content, control the user experience and harvest user data. This data will push publishers towards more content focussed on readers’ wants and needs. So, journalists will also produce more stories that focussed on self-improvement, like The New York Times “Living Well” section, because readers like these stories.

Finally, publishers will also invest in automation, like algorithms and bots to tell stories that use structured data or routine information.Technological efficiencies will free up more human time to conduct investigative journalism and write long form stories.

Business tends for local news

It’s uncertain if local newsrooms, with circulations under 50,000, can take advantage of the technological trends that larger outlets are embracing. Small newsrooms are resource strapped and have less access to a tech-savvy workforce. Publishers have fewer customers to defray the cost of new technology. Their customer data is lacking. And platforms allow local ad targeting to larger audiences, undermining publishers’ ability to generate revenue from digital advertising.

Local newsrooms will continue to publish news both online and in print. The bulk of local news customers is older people who want to read a physical newspaper. The website is often an afterthought, although a recent survey of small-market publishers by the Tow Center by Christopher Ali and Damian Radcliffe suggests journalists in local newsrooms are increasing the time spent on digital.

Staying with print is logical for publishers where the print edition generates ad and subscription revenue in small communities. Some small publishers, understandably, fear digital will cannibalize their print edition. Ali and Radcliffe, quote one survey respondent who explains why he or she thinks digital is a mistake for their paper with a circulation of 5,000:

Personally, I think we are shooting ourselves in the foot at our paper by publishing our stories for free on our website, because we have no local competition. We are competing against our own print product with a free internet product that consumes staff time but doesn’t generate a lot of revenue.

Many small town papers’ websites are dated and not optimized for the user experience, and sadly their mobile presence, if it exists at all, is even worse.

This is a problem because studies show how poor user experience on mobile apps, besides being annoying, actually undermines the credibility of the publication, according to a survey by the American Press Institute in 2016.

Local news will continue to have a “brain drain.” Reporters and editors say they have long working hours for low pay with few opportunities for advancement, (Ali and Radcliffe). Young people invest in education to avoid these conditions. As a result of being unable to engage a younger demographic, the local news industry will continue to see consolidation, layoffs and a general decrease in investigative reporting.

More reporters will transition to PR and Content Marketing roles, moving information production away from media and into the corporate realm. Some journalists will transition into the growing “niche” or “vertical” news market.

Niche publications serve very specific information demands, like trade publications, product reviews, or information on laws and candidates. The Information or PandoDaily are examples of online subscription publications that successfully serve tech industry news to workers in Silicon Valley. Similarly, non-profit news organizations with specific missions like environmental justice or investigative journalism may very well flourish in the coming years, powered by robust donor and foundation support. A significant portion of journalism will shift to the nonprofit sector, through both new mission-driven publications and partnerships with exciting foundations and local non-profits.

Finally, both niche and non-profit publications will benefit from memberships, subscriptions’ sentimental sister. Membership means a lifetime relationship with the customer that transcends any singular product or service, said Robbie Kellman Baxter, author of The Membership Economy, in an interview. Membership also offers the benefit of recurring revenue.

Many news outlets now offer benefits like access to reporters and experts online or at events, exclusive information, or sneak previews to their members — benefits that use the elements of journalism in new ways.

No essay on news trends would be complete without considering the role of digital advertising. Advertising dollars are consolidating in the top 5 platforms, who take half of digital marketing revenue in the US, according to the State of the News Media 2016 report by the Pew Center. It’s difficult for publishers to compete with platforms. There’s a lot of research on the declining digital revenues, but very little actually focuses on small-market papers.

At the same time, advertising dollars are shifting to the growing mobile channel. So, digital advertising is moving away from print and online channels, I think local publications will continue to struggle. I argue that local news should shift to subscriptions as the main revenue source because platforms are squeezing ad dollars out of large, well-resourced publications. Yet, local newsrooms could sell sponsorships or ads to local businesses who are invested in reaching that unique audience.

In the film Mad Max: Fury Road there is a scene where road warrior Charlize Theron, having escaped her tormentors, decides to follow her childhood dream and travel with her badass lady motorcycle gang into the desert, searching for a new life. Tom Hardy (Max) urges her to give up her old plan, return to the citadel where she was held prisoner to fight the overlords and free her people.

Tom Hardy (Max) tells her, “You know hope is a mistake. If you can’t fix what’s broken, you’ll go insane.”

Like Theron, local news is at a crossroads. Publishers, editors and reporters must decide whether to follow the old paradigm and drive into the desert, hoping to find something better, or whether to go back to change things. Max says, “Look, it’ll be a hard day. But I guarantee you that a hundred and sixty days ride that way… there’s nothing but salt.”

And after 10 years of layoffs and declining revenue, small publishers need more than hope. They need a plan.

— -

I want to express my sincere gratitude to Dr. James Hamilton, economist, Director of the Stanford Journalism Program, author of Democracy’s Detectives: The Economics of Investigative Journalism, and the first two-time winner of the Goldsmith Academic Book Award. Dr. Hamilton read a first draft of this essay and gave feedback on the economic underpinnings of these trends, which I incorporated into this post.

This post is part of a series of essays I’m writing for a self-directed study on local journalism with Dr. Hamilton’s as an advisor. (I did not, however, include the Mad Max bit in the version Dr. Hamilton read, so that’s on me.)

One clap, two clap, three clap, forty?

By clapping more or less, you can signal to us which stories really stand out.