We need to support our local newspapers, really | COMMENTARY

In the context of coronavirus, impeachment, caucuses, primaries and spring training, the bankruptcy of McClatchy, America’s second-largest newspaper chain, could not be expected to garner much attention. But such matters are of importance nonetheless, including for our fair city of Baltimore.

McClatchy is the publisher of the Miami Herald, the Charlotte Observer, the Kansas City Star and other newspapers across the nation. The start of the newspaper company dates back to 1857 with the start of a four-page paper in Sacramento that eventually became The Sacramento Bee. McClatchy continues to operate in bankruptcy, but financial challenges will persist.

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That’s because, as is well-known (or at least one would have thought so), the traditional newspaper business is struggling. According to the Pew Research Center for Journalism and Media, estimated total U.S. daily newspaper circulation including both print and digital “in 2018 was 28.6 million for weekday and 30.8 million for Sunday, down 8% and 9%, respectively, from the previous year.”

Last year, New York Times Executive Editor Dean Baquet bleakly predicted that “most local newspapers are going to die in the next five years.” That would merely represent an extension of what has already been occurring.

According to a recent report from PEN America, nearly 20% of all U.S. newspapers have closed since 2004 and the industry lost 47% of its jobs. At least 225 counties nationwide lack a local newspaper and half of all U.S. counties, which translates in more than 1,500 counties, have just one, typically a weekly, according to a recent story in The Washington Post, quoting data from Penny Abernathy, the Knight chair of journalism and digital media economics at the University of North Carolina.

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Among the nation’s remaining 7,200 newspapers, at least 1,000 are deemed to be ghost papers, meaning they have become so damaged by cutbacks that they produce little original reporting, according to PEN.

In response, one might suggest that this is merely the market speaking. And why would an economist argue against the workings of a free market? Because I believe this to be market failure.

At the heart of what is transforming the newspaper industry has, of course, been the internet. We receive our information in novel ways these days, and so newspapers are not as relevant. This is, it would appear, the logic of the market. But it is illogic.

Here’s why. By 2015, Google and Facebook comprised about 75% of new digital advertising dollars in America, according to a recent story in The Financial Times. The issue is that while these platforms represent sources of information, they are not news organizations, and certainly not local ones. The proverbial financial rug has been pulled out from under local newspapers, and that puts all of us at risk.

You might ask why if local newspapers are so valuable that they can’t charge enough to make the numbers work. Indeed, there are apparently many people who think that newspapers are doing just fine. Seventy-one percent of U.S. adults believe that their local news outlets are financially sound, according a 2018 Pew survey. But if you drill down further, just 14% have paid for a local news source. These are mutually incompatible views held simultaneously.

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The reason newspapers can’t charge enough is because: there is dishonesty, with many people free-riding on the subscriptions of others; newspapers have to compete with effectively free sources of information, including the nightly local news. Not enough of us are consistently interested in in-depth understanding of the daily workings of our communities.

But we should be, and when there is good reporting, say when The Baltimore Sun uncovers the presence of Unhealthy Hollies in our midst, we pour en masse onto the newspaper’s website to read a free article made available to us on such a basis in order to lure us potentially into actually purchasing a subscription. That’s where the market failure comes in — collectively, we don’t pay enough for the value we derive.

We need local reporting because we need vetted information to help us improve our communities, whether from The Sun, the Baltimore Business Journal, Daily Record, etc. This is not to say that we agree with everything written in these publications; quite the opposite. But we are faced with a loss of these types of publications given the present trajectory of such things and that is not a loss we can afford — not now, probably not ever.

Anirban Basu (abasu@sagepolicy.com) is CEO Sage Policy Group, Inc.