by Clara Hendrickson

Thousands of local newspapers have closed in recent years. Their disappearance has left millions of Americans without a vital source of local news and deprived communities of an institution essential for exposing wrongdoing and encouraging civic engagement. Of those still surviving, many have laid off reporters, reduced coverage, and pulled back circulation.

Over 65 million Americans live in counties with only one local newspaper—or none at all.

The traditional business model that once supported local newspapers–relying on print subscribers and advertising to generate revenue–has become difficult to sustain as the audience for local news continues to shrink and advertising dollars disappear.

Few Americans today hold print subscriptions, and newspapers have struggled to amass digital subscribers. Meanwhile, news consumers have become less inclined to follow local sources of news, instead preferring to read, listen, and watch content from outlets focused on national news coverage. And, as the digital age has facilitated the emergence of a greater number of national news sources and highly specialized outlets, the reach of local news has diminished.

At the same time, newspapers have seen a longtime source of financial stability and success–advertising dollars–dry up. Between 2008 and 2018, the newspaper industry experienced a 68% drop advertising revenue.

As newspapers have seen revenues from digital advertising grow in recent years, they have experienced a sharp decline in their total advertising revenues. Digital advertising, in other words, makes up a growing share of a shrinking pie.

Facebook and Google aggregate and distribute news content which helps publishers reach news consumers, but they also serve as news publishers’ greatest competitors in the digital advertising market. The dominance of Facebook and Google in digital advertising poses a particular challenge for local newspapers. While the two companies account for 58% of digital advertising revenue nationally, the two companies account for 77% in local markets–squeezing local news publishers.

“The declining capacity of newsrooms to investigate potential stories not only renders newspapers less valuable to news consumers, but also results in a newspaper that is less valuable to its community.”

Aggressive cost-cutting pursued by some the nation’s largest local newspaper holding companies is also to blame for the local news crisis that confronts thousands of communities across the U.S. Whether cash-strapped from the erosion of advertising revenue or under-resourced due to cost-cutting measures pursued by owners, newsrooms find themselves in the impossible situation of trying to do more with less as their newsroom staffs have been cut in half.

Few newspapers today send journalists to statehouses or maintain Washington bureaus, and issues from public health to education are often under-covered. The declining capacity of newsrooms to investigate potential stories not only renders newspapers less valuable to news consumers, but also results in a newspaper that is less valuable to its community. When important stories are not told, community members lack the information they need to participate in the political process and hold government and powerful private actors accountable.

The local news crisis has also precipitated a general disengagement from local democratic life. As Americans have shifted away from local news, turnout in state and local elections has fallen, and communities that have lost reporters have seen fewer candidates run for local office.

But the decline in local journalism is not just a local concern, it is a national one, too. Voters in communities that have experienced a newspaper closure are less likely to split their vote between the two major political parties, contributing to national political polarization. And, with local news struggling to survive and compete with national news outlets for consumers’ attention, partisan reporting and coverage of national partisan conflict has come to dominate news consumers’ diets.

The big question confronting the industry today is whether the challenges confronting local newsrooms reflect a process of creative destruction or demonstrate market failure. Ongoing threats to the commercial viability of local newspapers as well as the development of nonprofit models for local news suggest that the market for local journalism, if left alone, will continue to undersupply local coverage. This is a serious public problem; those who read, listen, and watch the news are not just consumers, but citizens that rely on news publishers to meet the demands of living in a democracy.

Policymakers should intervene and ensure a sustainable future for local journalism in every community in the U.S. by pursuing the strategies outlined below.

1) Provide public funding for local journalism

• A tax deduction for personal subscriptions to eligible local news organizations might incentivize more individuals to pay for local journalism and boost the revenues of local outlets.
• Tax offsets for eligible production expenditures incurred by newsrooms could help defray the costs associated with original reporting.
• The tax code could encourage more newspapers to operate as nonprofits by treating newspapers’ advertising and subscription revenue as tax exempt and contributions as tax deductible.
• A public fund for local journalism could provide grants to local newsrooms to experiment with new models and fund local reporting fellowships.

2) Address the ways large online platforms undercut the business model for local news

• A tax on large online platforms for displaying publishers’ content would force companies that aggregate and distribute publishers’ content to share their profits with content creators.
• A temporary exemption from antitrust laws would give news publishers the ability to collectively negotiate with large online platforms and create a fairer, more balanced relationship between publishers and platforms.
• An antitrust investigation into Facebook and Google’s conduct in digital advertising would determine whether the companies’ dominance in the market is due to anti-competitive behavior and address practices in the digital advertising market that unfairly disadvantage news publishers.

The need for local journalism has not changed over time, but the economic dynamics capable of sustaining a profitable model for local journalism have. The result is a local journalism crisis confronting many communities in the U.S. that threatens to become worse. While a constitutional and public commitment to a free press on its own will not ensure the future economic viability of local news, public intervention can help sustain and support strong, independent media for every community in the U.S.