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A collection of news media that is set to disappear by June 2024
A collection of news media that is set to disappear by June 2024

MediaMarch 11, 2024

Duncan Greive: What is wrong with the news media?

A collection of news media that is set to disappear by June 2024
A collection of news media that is set to disappear by June 2024

I started writing this column in February. In less than four weeks, the number of people working in our news media has declined by more than 200. 

First, you need to understand the old media world

By the old world, I mean the before times, when the internet was a place you visited occasionally, rather than lived. In that era, media was largely something you consumed, rather than created. There were fairly limited options for your attention: newspapers, magazines, radio, television, movies, games.

It was expensive to own and create a media product – due to the cost of printing presses, TV studios etc – but that didn’t matter, because any person or organisation that wanted to reach a lot of people had little choice but to pick a media form and pay to advertise in it. And because the average person saw around 500 advertisements a day a generation ago (versus 5,000 and rising now), advertisements were much more effective, and therefore commanded a higher price.

This was the governing reality: very limited options, high barriers to entry, expensive ads and a high functioning local media that used journalism (among other things) as a hook to get you to pay attention, well-funded by ads which sat in and around that content. 

Now, think deeply about the present – and how you behave

All of this is to say that the financing of high quality news and current affairs is essentially a happy accident. You might think (I do) that it’s also a bedrock of society, and something you would want as part of being a grown up democracy in the same way you do legal aid, medical care, the police, free education and so on. Sadly, because it was once well-funded through advertising revenues, we’re only now having a panic-stricken conversation about how else you could pay for it.

Essentially, the internet changed advertising deeply and irrevocably, from being a scarce commodity strongly tied to the production of news, to something pinned to every digital surface and almost entirely decoupled from news. It has impacted almost everything once accomplished by legacy media, and often is a long way from news production. If you wanted to sell your bike, you advertised in newsprint (now: TradeMe or Facebook Marketplace). A curtain company was once likely to advertise on local radio (now: Google search ads). A hit new novel wanted a page in The Listener (now: Amazon). 

Additionally, we all create media now (on Facebook, Instagram, X, TikTok and YouTube), massively increasing the supply and changing our relationship to news media. We also both make and consume media using the same device on which we consume professionally made journalism (assuming we do that at all). The upshot of all this is that a small handful of platforms which host this media gain incredibly rich data from it, and use that to make highly targeted advertising products.

As journalists are now finding out, many advertisers never did care about funding news – they just knew news was an efficient way to reach people. Now they do it through other platforms, alongside other content. Some of that might look like news, but can be made up – but they’re not too bothered, because it’s often cheaper and still sometimes works.

Image: Archi Banal

How has this impacted the news media?

It hasn’t gone well. Some of the most lucrative advertising products in the world now sit under the term performance marketing. They’re the last place you go before you spend money. A Google search ad for an electric car costs a huge amount of money, even if you’re only searching for one after reading a news story about a new EV brand. 

There are countless examples of this – Amazon’s profit margin is largely made up of people paying to put their products at the top of categories or searches. UberEats now routinely puts sponsored restaurants atop category pages. Real Estate listings on TradeMe are given greater prominence, for a fee. Performance marketing could be conceived of as digital rent, rather than branding – but because it works and often comes from the same marketing budget as news ads, it gobbles up an ever-larger share of digital advertising spend.

This is why the news media’s digital products can embody a seeming dichotomy: they are very highly viewed but don’t make nearly enough money to cover their costs, because they’re competing with products from Google and Meta which have immense reach and sophistication and no content costs. 

There are many other issues: a more polarised society wants increasingly personalised digital products, which are only really achievable at huge scale (Netflix) or without content costs (Instagram, TikTok). Brands largely rely on huge media agencies to distribute their marketing campaigns, and they often find it easier to buy from YouTube and Instagram than deal with local news producers. Some advertisers would rather not advertise alongside news. Google owns many ad exchanges, and takes 50c or more out of every dollar that might otherwise go to publishers. The list goes on and on and on.

Has the news media just not innovated enough? Or is this just consumer preference?

This is a really common critique, one floated by media minister Melissa Lee and  the prime minister, Christopher Luxon, who said media needed to “try and find innovative business models”. A friend echoed this in a more sophisticated way recently in a LinkedIn post (there’s an irony – that platform also generates huge advertising revenue, in part due to hosting a lot of wealthy business people discussing the news).

“There has been so much advertising effectiveness research and marketing science that’s shown that, in order to grow, brands need to reach broad audiences with creative that works in a completely different way to performance marketing,” they wrote. “And yet none of our media companies have done anything much to use this research to defend themselves. While the social platforms walk all over them, in front of their customers, they’ve just laid there.” 

I’m not sure many news media sales people would agree with the idea they’ve just laid there. But it is true that Meta can spend huge amounts on marketing science studies, in part because it pays little local tax and has no cost of content. Whereas local news companies are essentially running two businesses at once – the original TV or print operation, with audiences falling all the time, and the digital one, which is in brutal competition with the biggest companies in the world. They have to pay for technology, just like Meta does, but they also have to pay journalists too.

To be clear, it’s not wrong to say media companies need to innovate. But media companies innovate all the time – Newshub, for example, created “Paddy Gower has Issues” just last year, a major formal innovation in the current affairs format, in an attempt to reach younger audiences that might not like the style of the 6pm news. But innovation needs to happen across form, and delivery, and technology.

It’s also true that technology companies encouraged a particular type of innovation, only to change their minds. For years Facebook founder Mark Zuckerberg talked about wanting Facebook to be a “personalised newspaper” and encouraged news organisations to post directly to Facebook (Instant Articles) or pivot to making video. So news organisations did. It now wants nothing at all to do with news, meaning all that innovation and investment was largely wasted.

There really has been considerable innovation in news media. For example, Axios created a short, digestible text news format. Substack helped writers go direct to audiences through email. Locally, Shit You Should Care About created a Gen Z-focussed news service with a massive global audience on Instagram. BusinessDesk has innovated through email as delivery, and AI for NZX releases. The Spinoff (ahem) pioneered a new partnership approach with advertisers, and an innovative ‘pay-to-keep-the-paywall-away’ funding model through members.

Maybe it’s just a hard category in which to innovate? If Jeff Bezos, arguably the greatest innovator on earth, can’t figure out how to make the Washington Post profitable, perhaps there could be something else going on.

What might the future look like, unless something changes?

There are a few things it pays to keep in mind here. 

  • Gathering news – information which is not already public, checking that it’s accurate, going to impacted parties for comment – is expensive
  • Distributing it – on news platforms or social / UGC platforms is cheap or free
  • Once the expensive part is done, almost anyone – a competitor, a TikTokker, an X account – can take parts of that work, add their own commentary and post it
  • Once it’s on social platforms, being discussed, almost all the value goes to the social platforms
  • You don’t have to consume news to benefit from it existing

This is ultimately the basis of the problem with news – reporting has value, but cannot be copyrighted and the way that people consume it has become built around their own fragmented preferences. Some people like the way someone recaps news on TikTok, others hearing deep analysis on a podcast, others scrolling headlines, others angrily attacking the outlet in Facebook comments, other prefer data journalism… A news organisation is expected to be in all those places at once, despite only some having any revenue possibilities, and even those rarely come close to meeting the costs of production.

So how might this look at the end of the decade? We seem to be heading towards a news environment that looks like this:

  • One general national news service as a paywalled brand, wrapped tightly around the interests and political leanings of its audience – ie people willing and able to pay for news.
  • Assuming their funding remains stable, RNZ and Whakaata Māori will create freely accessible primary news and current affairs products, which are consumed by a relatively small group of people
  • A handful of sub-scale services which are wrapped around a niche – business news most obviously, potentially a few regional services if they are in a wealthy area and execute a digital transformation incredibly well.
  • A few Substacks and podcasts built around well-known personalities with a real edge to their analysis – what Bernard Hickey has done with the Kākā is the model here
  • Some fresh news products funded by wealthy individuals with specific political beliefs, such as The Platform
  • Social and UGC apps which feature personalities who take information from behind the paywall, or the few remaining news services, and recap it for their audiences
  • A large number of people who consume US, UK or other international news at far greater volume than local, because of the style, quality and technology – services like the New York Times, the Guardian or Al Jazeera, who might employ tiny local bureaus to satisfy small local audiences

Unavoidably that indicates that the majority of our major news organisations can no longer create news at any kind of scale. It imagines that the number of journalists we employ will shrink from the miserable current total to something no one can ever pretend is adequate to cover this country. I know that sounds doomy, but I just don’t see another path, unless a new revenue line emerges. TVNZ just shut down Sunday, easily the best current affairs outlet we have. Three just shut down all of Newshub.

On that basis, what I describe above isn’t just possible, it’s inevitable.

Keep going!