Image: Matthias via Flickr under Creative Commons

Audience revenue won’t save journalism if people don’t have money to spend

The journalism industry is pivoting to audience revenue. It is a fundamentally different pivot than those of recent years. Those pivots have been to different news products. This a different way of funding all of those news products. Where once journalism businesses courted advertisers, they must now court their audiences.

And why court the audience? Because the advertising floor fell out from underneath publishers in the last two decades, with 65 percent of all digital advertising revenue now going to Verizon, Twitter, Yahoo, Google, and Facebook. And their share of the pie is only growing.

So, organizations converting audience members into financial supporters makes sense. It will also begin to spur a long overdue culture change in news and journalism that will make newsrooms accountable to the people they serve, not private business interests or a self-serving moral code.

But as wealth inequality continues to increase, the opportunity for the audience to contribute in any way to the news process — consumption, participation, or compensation — decreases. That means that just as newsrooms are turning to audience revenue to bolster their businesses, that pie is already shrinking.

In fact, inequality has already contributed to the decline of journalism.

How the main driver of inequality undermined local news

Local journalism’s decline is mirrored in the decline of all independent, local businesses.

From a report by Stacy Mitchell for the Institute for Local Self Reliance:

Between 1997 and 2012, the number of small construction firms declined by about 15,000, while the number of small manufacturers fell by more 70,000.23 Local retailers also saw their ranks diminish by about 108,000 — a drop of forty percent when measured relative to population. As recently as the 1980s, independent retailers supplied about half of the goods Americans bought in stores; today their share is down to about one quarter. The number of community banks and credit unions has likewise fallen, dropping from 26,000 to 13,000 since 1995. These local financial institutions held nearly half of bank assets twenty years ago, but today they control just twenty-three percent. All told, between 1997 and 2012, the share of total business revenue going to firms with fewer than 100 employees fell by nearly one-fifth, from twenty nine to twenty four percent.

These lost businesses were once a part of a local newsroom’s advertising pool.

And in the last 40 years, this advertising pool has shrunk as a result of market concentration, the main driver of inequality.

The U.S. government announced a pivot on antitrust law in 1981 when William Baxter, head of Reagan’s antitrust division at the U.S. Department of Justice, said “I have no hostility against large mergers, as such.”

Since then, many local businesses have been replaced by national chains. Just in the last 20 years, three-fourths of U.S. business sectors have become more concentrated.

That means that local advertising budgets have been replaced by national budgets. And that means national ad buys with publishers who can reach a national audience — not a local one.

It’s one of the reasons we’ve seen so much media consolidation over the same period of time. Like other forms of market concentration, it reduces the quality and quantity of its product: news. This only further undermines local economies.

The state of journalism today is a result of the growth in wealth inequality over the last 40 years. Fortunately, it’s an industry well positioned to push back on the trend. Here are my suggested editorial and business approaches.

How newsrooms can stop perpetuating inequality

Democratize your editorial agenda

The most significant editorial approach to combating inequality is community engagement. Journalists should invite their audience’s direction and input into as much of the editorial process as possible.

A lot has been written about how to do community engagement. Fundamentally, it’s a way for the news to reflect the needs of most people, not a few newsroom leaders. It’s also the best way to do journalism.

It’s the kind approach that tends to tell stories of inequality and solutions to it in order to serve the vulnerable and afflicted.

Cover systems and their beneficiaries

The news is great at covering symptoms and not their underlying causes. It’s easier to report on quarterly jobs reports or crime statistics than question the underlying assumptions of those facts and who benefits from them and at what cost.

Instead of just reporting Amazon’s quarterly earnings, cover the social and economic elements that lead to them. That could be low-wage labor throughout the company’s supply chain or a market that rewards consumerism.

Don’t just report on the U.S. president’s executive orders — explain the powers and limitations of the executive branch and the interests that influence it.

Report on the fundamental causes and people behind events — not just the events themselves. Fair warning: that likely means frequent mentions of capitalism, white supremacy, and the patriarchy.

But better and more inclusive reporting won’t be enough. The business has to change, too.

How publishers can stop perpetuating inequality

Give labor its due

The journalism business must begin to operate in a way that combats inequality. The most effective way is to give labor real decision-making power.

When labor power is high, income inequality is lower, both within unionized or cooperative organizations and in the industries they occupy.

Journalism is at the intersection of many industries, which means its impact would be wide spread. The network effect of reducing inequality in the journalism will be profound throughout the economy.

If publishers first priority is the longevity of their journalism business, it’s a case where the goals of labor and management align pretty well.

Set new internal standards

While publishers examine their power sharing options with labor, they can begin setting internal standards that combat inequality.

First, they can increase wages for their lowest paid workers to the real cost of living in their communities.

They can use the cost of living to set wage ratios for their highest paid employees.

They’ll also need to do the following: publish salary information, adjust for race- or sex-based pay inequities, provide parental leave, offer sick leave, fund healthcare, invest in retirement accounts, pay interns, recruit inclusively, and encourage a healthy work-life balance.

If you think those are all easier said than done, you’re correct. But we’re talking about the viability of news and journalism in the United States.

The greatest challenge will be overcoming legacy people

These are major structural changes that need to happen inside and outside of news organizations for audience revenue to be the thing that keeps journalism alive. But these reforms will not appeal to some people working in the field. You can try to win them over or you can go out and build an alternative. I’m happy to help either way.

Simon Galperin is a community engagement and business development consultant. He is an engagement advocate at GroundSource and director of The Community Information Cooperative. Follow him on Twitter here. Contact him via direct message or via his website.