Journal of Free Speech Law: "Structuring a Subsidy for Local Journalism," by Prof. Kyle Langvardt

Just published as part of the symposium on Media and Society After Technological Disruption, edited by Profs. Justin "Gus" Hurwitz & Kyle Langvardt.

The article is here; here is the Introduction:

The commercial market for local news in the United States has collapsed. Many communities lack a local paper. These "news deserts," comprising about two-thirds of the country, have lost a range of benefits that local newspapers once provided. Foremost among these benefits was investigative reporting—local newspapers at one time played a primary role in investigating local government and commerce and then reporting the facts to the public. It is rare for someone else to pick up the slack when the newspaper disappears.

The local newspapers that do remain in operation are badly diminished. Most have cut their print circulation either by narrowing geographical reach, distributing the paper only a few days a week, or moving to an online-only model. Almost all surviving newspapers have made severe cuts to reporting staff. These cuts have diminished the quantity and depth of local coverage. Investigations that dig beneath the surface of police reports and press releases are costly and beyond most surviving newspapers' means. It is much more convenient, and much more common, to run low-cost pro forma stories that merely repeat the official line.

Local newspapers of the twentieth century had their own problems, but overall these problems were much less dire. When newspapers made cuts and their quality suffered, it was usually because management wanted to report high profit margins to investors. But revenues themselves remained quite high.

Revenues were high because twentieth-century papers inhabited a technological "Goldilocks zone." The high cost of printing created economies of scale—big papers with big printers incurred less cost per page, so markets naturally encouraged papers to grow their operations. Distribution costs went up over long distances, though, so it was not generally in a publication's interest to grow the audience by acquiring long-distance subscribers. Instead, the most successful operations achieved scale by saturating the local market.

Under these conditions, most local markets could only support one or two such printer/distributors—and this monopoly or duopoly on printing and distribution served as an anchor for a newspaper's entire operation. The lack of competing publisher-distributors, in turn, created opportunities to package and sell a "bundle" of sports, lifestyle, home and garden, and local and national news. The inclusion of classified ads and advertiser-friendly "soft" content in the bundle allowed newspapers to cross-subsidize the costly work of investigative reporting.

The Internet has destroyed the Goldilocks zone that made this business model possible. Today the marginal cost of distribution is zero, and geographical distance is irrelevant. Economies of scale remain, but local journalism institutions are in no position to capture them. Many readers access content on an a la carte basis, typically mediated by some type of online recommendations platform, and the old bundle of "hard" and "soft" content, "local" and "national" content, is no longer marketable.

These market changes have not wiped local news out completely. Some high-quality paywalled products have enjoyed significant success. Mega-papers such as The New York Times or The Guardian can still thrive by marketing a multimedia super-bundle to far-flung subscribers. But this model only seems possible in very large urban markets, and even when it works, the need to reach out-of-town readers can create pressures for a newspaper like The New York Times to divert reporting resources away from New York City concerns.

Other publications have found success by publishing some kind of a smaller product, such as a newsletter, behind a paywall. The Charlotte Ledger, for example, offers a daily Substack letter to about 2,000 subscribers for $99 per year. Downtown Albuquerque News offers a weekday online-only paper to 450 subscribers for $100 per year. This appears to be a sustainable business model, but one that is probably incapable of producing a volume of content that is comparable to that of a traditional paper.

Some philanthropy-funded, donor-funded, and/or VC-funded outlets have emerged as well, and these often produce high-quality content. But even in large markets, these outlets are unlikely to have the bandwidth to produce the volume and variety of content found in a traditional newspaper, or to achieve the market saturation necessary to play the central role in community life that local newspapers did during most of the twentieth century.

At one time, many hoped that the Internet would create new opportunities for volunteers to produce free community journalism—and at some level it has. Quite a bit of social-media activity involves communications that some might consider reporting—even on the low-profile app NextDoor, users "report" (and misreport) suspicious activity on their block. But volunteer reporting, typically uncoordinated, has obvious limits as a substitute for an industry that employs full-time professional reporters. Indeed, the low-quality information that amateurs and saboteurs circulate on social media and in similar settings only intensifies the public need for professional journalists to play a corrective role.

This is all to say that there is little reason to expect the private sector to produce any reliable, widely reproduceable model to recover what has been lost—or that it is unlikely, at least, that any such model will emerge on an acceptable time scale. If commerce, philanthropy, and volunteerism will not sustain high-quality, wide-circulation local journalism, then the only viable models for journalism will have to depend for financial support on the government.