A dying read

Newspapers are dead. Long live the newspaper.

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The news that several Afrikaans newspapers will soon be shutting down hits many readers like a punch in the stomach.

It does for me too. ‘The newspaper’ – specifically Die Burger – was an institution in my parents’ home. Breakfast was quiet time with ProNutro and the newspaper. In grade seven, I started my first job as a news delivery boy; every morning, I got up at half-past four to fold about 50 newspapers – thin ones in squares, thick ones in rectangles – and then load them into heavy homemade bags over my skinny shoulders to serve the neighbourhood the day’s news. I did this for four years, six days a week, 49 weeks a year, except for the three weeks of summer vacation. The stand-in delivery person always got the Christmas gifts.

In high school, I was the editor of the school newspaper. In 1999, I won the prize for the best online newspaper and a dinner with the Naspers team in Cape Town. I sat next to Ton Vosloo. I remember little from school, but this conversation is crystal clear in my memory. Ton told a wide-eyed aspiring journalist that the future of newspapers is home printing. ‘Computer and printing technology are getting better and better. Soon you will simply turn on your computer every morning and print out the day's newspaper. This way, you eliminate printing and distribution costs.’

What about the newspaper delivery people, I wondered.

Ton wasn’t entirely wrong. While we don’t print our newspapers, we do download and read them on our computer or phone screens. If the kids allow me, I still enjoy quiet time, but now just with a phone next to my cereal bowl rather than papers that would later be used for cleaning the braairooster.

And this is indeed the story of the newspaper industry worldwide.

But why? What explains the dramatic decline in readership?

It helps to understand the economics of newspaper news. In his book All the News That's Fit to Sell: How the Market Transforms Information into News, James Hamilton explains that the high fixed costs of a newspaper – for example, reporters who need to establish long-term networks – together with the non-excludable nature of the news product, typically lead to a suboptimal provision of news. One factor that helps counter this suboptimal equilibrium is the professional norms of reporters (and editors) who prioritise ‘hard news’ over the cheaper-to-produce but more popular ‘soft news’. Local advertisers supported this news monopoly equilibrium. There were thus sufficient financial resources for reporters to tackle political news and other ‘hard’ subjects, attracting good people to the profession, but also enough ‘soft news’ to keep readers and advertisers happy.

But this news model was a relatively recent phenomenon. In the nineteenth century, for example, newspapers were mostly the propaganda arms of political parties. It was only in the twentieth century, with the tremendous increase in economic growth and, consequently, the growth in advertising revenue, that the ideal of an independent press staffed by professional journalists became the standard. Regardless of our own life experiences, the newspaper as we know it is a recent creation.

However, the speed of change has significantly increased over the last three decades. The main culprit is the advent of the internet. Almost overnight, Hamilton’s equilibrium collapsed: news could now move faster than ever, which reinforced its non-excludable nature. While reporters could now gather information more quickly, the internet also made other professions possible, and the best reporters seized these opportunities. But most importantly, the internet provided new advertising opportunities. Not only did new companies emerge that sold everything online – like Amazon – but existing companies realised their customers were spending more time online. The newspaper, which had previously been the marketplace for traders large and small, was now displaced by cyberspace.

The best illustration of this is Craigslist in America. Craigslist is the world’s largest online classified ads platform. It consistently ranks among the top 20 most visited websites. Created in 1995 by Craig Newman as a way to inform people in San Francisco about local activities, it began expanding to other cities like Boston, New York, and Chicago in 2000, and then to smaller markets. In 2005, it served 115 cities and towns; in 2008, it was 331, and today it is 416. The platform has basically remained the same over the years and includes no display advertisements or news content.

The authors of a new article in the authoritative Review of Economic Studies use this phased introduction of Craigslist across America between 1995 and 2009 to measure the effect on local newspapers. The advantage of such a study is that the effect of classified ads can be distinguished from other changes brought about by the internet. Newspapers that were more and less dependent on classified ads can also be compared.

The results unequivocally prove that Craigslist’s entry into the local market hampered newspapers. ‘We find that, after Craigslist’s entry, local newspapers dependent on classified ads experienced a significant decline in the number of management and newsroom staff, including editors covering political topics.’ The effect is also not small: each newsroom with a classified ad manager had to cut an average of three positions after Craigslist’s arrival.

Did this loss of staff also affect content? To answer this, the authors analysed more than 100 million news articles in over 900 newspapers. They indeed found that the reduction in staff led to a decrease in news coverage, especially of political topics. Readership numbers also significantly dwindled afterwards.

One might think this is enough to prove that the internet era broke the 20th-century newspaper model, but the authors go even further. They show that changes in newspapers also influenced political outcomes – specifically votes for political parties. By analysing regional election data for the same period, they demonstrate that in areas where newspapers’ political content declined, voters were more likely to choose ideologically more extreme candidates for the U.S. House of Representatives. Thus, the print media helped to moderate polarisation; without it, there is a greater chance that radical voices will be amplified.

It is important to note that these findings likely underestimate the effect of the internet. The study focuses only on Craigslist’s entry; naturally, there are many other entrants to the digital space that have siphoned both advertisers and readers away from printed newspapers. The closure of Afrikaans newspapers should, therefore, come as no surprise; the bigger surprise is instead that they managed to last so long against the overwhelming power of the internet – and the disintegration of their business model.

So what now? What are the alternative models for media houses? The first is an online subscription offering, like News24, which recently surpassed the 100,000 subscriber mark. Although there are still fixed costs for such a model – reporters still need to establish networks – there are many other variable costs that can be eliminated, such as printing and distribution costs. (Information technology services to run the websites are a fixed cost; the marginal cost for each additional reader is essentially zero.) A variation of this is a voluntary payment model, although the success of this is uncertain. Daily Maverick’s digital offering is one such example.

The problem with free access to digital news, and thus poorer quality journalism, is that there will be more and more artificial intelligence competitors. I have elsewhere referred to this as the problem of information pollution. When one simply maximizes the number of ‘clicks’, sensationalism triumphs over stories with gravitas. This is precisely when radical ideas prevail and polarization worsens.

The problem of information pollution

It’s not all bad news though. Digital mediums can connect the writer directly with the reader. This means that ideas which previously couldn’t see the light of day can now find an audience. Look, for example, at how Substack, an online platform, provides writers with a new model to build their own audience – and be rewarded for it. To mention just two examples: Noah Smith, an American economist, has a blog with more than 220,000 readers, of which over 12,000 are paying readers at $100 per year. A quick calculation gives you an annual income of $1.2 million or north of R20 million. Not too shabby for someone who previously earned a fraction of that as a columnist for Bloomberg.

Or take Brad DeLong from my own discipline, economic history. DeLong is a professor of economics at the University of California, Berkeley, but in his spare time, he writes the Grasping Reality-blog. He has more than 25,000 subscribers, of which over 1,000 are paying subscribers. South Africa doesn’t have the same purchasing power as America, of course, but the fact that there are opportunities – even for writers with niche interests – is as clear as daylight.

In short: the internet offers new ways to share news and opinions. It’s exciting, but it also forces us to consider what impact this alternative mix of news offerings will have on our society.

Newspapers are dead. Long live the newspaper.

An edited version of this article was published on Litnet. Support more such writing by signing up for a paid subscription. The images were created with Midjourney v6.