The News Industry

Until this past week, it seemed as though the most hated industry in the U.S. was the news industry. And not without cause. From allegations of “fake” news throughout the 2016 Presidential Election Cycle to cases of shockingly poor fact-checking, the industry has been losing its grip in the eyes of the public. A 2016 poll by Gallup found that only 32% of Americans have a great deal or fair amount of trust in the media, down from a 72% high in 1976.

Despite public sentiment, the economics have been trending upwards, showing an inverse relationship between revenue and viewer sentiment as a whole. Likely fueled by today’s chaotic political climate, Pew Research Center reported that Fox News, CNN and MSNBC saw a nearly 20% growth in total revenue from 2015 to 2016.

One possible explanation is the polarization of America. Americans may believe that while the news industry as a whole is no longer trustworthy, their side has it right.

Another possible explanation is that America is addicted to news. Through push notifications, sensationalism and constant coverage, its plausible (err, probable) that the news industry is competing with social media to capture your attention.

Explanations aside, what’s unique about the increasing revenues is that they are almost entirely driven by cable ads and fees - a segment that should soon be seeing migrations to digital streaming options. Unsurprisingly, newspapers are continuing to see a decline, both in subscribers and revenue. When turning attention to the digital streams, few, if any, digital publications are turning profits, despite more and more viewers receiving their news online (93% as of 2017).

This makes for an interesting time to think about the future. More and more Americans are getting hooked, both offline and online, to an industry seen as polarized and untrustworthy. All the while digital news is struggling to figure out its monetization strategies.

The Current Trajectory of Digital

If we use the past as a predictor for the future, it’s likely that the the industry (specifically digital news) only ratchets up the pressure. I say this because the notion of “shareholder value” is a very real one.

As most news organizations are corporations, they have a duty to their shareholders. The 1919 decision on Dodge v. Ford Motor Co states that “a business corporation is organized and carried on primarily for the profit of the stockholders.” In the news industry, the most common driver of profits is advertising. For digital publications, this loosely translates to page views. Why do page views matter? They matter because page views come from more articles, more sensationalism, and capturing a higher percentage of consumer attention. The more viewers, the more ads, the more revenue.

So what does this mean for news? Journalistic standards suffer. Stories are constantly re-run. Fact-checking is not done to its fullest. Polarization increases. Opinions become news. Irrelevant events are made to look like the next all-too-important global crisis.

In their book Warp Speed: America in the Age of Mixed Media, former journalists Bill Kovach and Tom Rosenstiel argue that the 24-hour news cycle led to this exact evolution in cable news. And this is the news medium that is profitable. If digital isn’t consistently profitable but the organizations know that more page views equals more revenue, it takes no genius to put two and two together.

The Virtues of Subscriptions

Potential solutions depend on how realistic we want to be. Some would argue that news organizations have a corporate responsibility that extends beyond primarily returning a profit for their shareholders. Richard Sylla of NYU Stern School of Business notes that “if you’re younger than 50 or 60, you’ve lived in a world where everyone taught you that this is what a corporation is supposed to do—maximize profit and shareholder value. But the world used to be different.” He wants a return to when corporations had greater responsibilities.

While a critique of the notion of “shareholder value” and a questioning of Milton Friedman should definitely occur, I would argue that any shift in industry would take decades to propagate fully and any hope that CNN becomes a B-Corp is a bit too utopian.

To bring us to more near-term solutions, one way I see a path forward is in a push towards subscription models by publishers. With a subscription model, a reader pays a fixed monthly or annual price. In return, the reader is given access to premium content. It’s no new invention, but it seems like the only one that can align incentives in the industry.

With subscriptions, news publications do not need to push for more, faster, more extreme. Instead, they need to deliver value through strong journalism. They differentiate themselves by how thoughtful, interesting, and accurate their pieces are. The poster children for this are the New York Times and the Wall Street Journal.

Yet subscriptions are not without their problems. Two immediately come to mind. The first is the general aversion of Americans to pay for content on the internet. The vast majority of content on the internet is there for free. The second is the lack of variety that comes from a single platform subscription. While Netflix can offers hundreds of T.V. shows and movies, the New York Times can only offer the New York Times.

The first problem is by far the biggest, and I don’t know if it can necessarily be conquered by business tactics. It may very well require a shift in consumer views. If Americans view journalism as important and not purely entertainment, then paying for quality content seems reasonable.

The second problem seems to be less of a problem and more of a business opportunity - something similar to what the Basic Attention Token is doing: awarding publishers with revenue that’s pro-rated for viewer attention. While we don’t want to take the current flaws of the news media and implement a $5/month tax for the same attention competition behind a paywall, something along these lines may be worthwhile to investigate. If you combine this monetization scheme with crowdsourced quality controls (indicators for political leaning, historical accuracy, fact-checking, etc), then digital news can set itself up for a healthy, profitable future. As cable slowly looses out to digital streaming, a similar approach can be done with news shows.


The role of the news industry is critical, now more than ever. A subscription platform would definitely not solve all problems, but seems like a solution that should exist. That being said, I am no journalist and am sure I have blindspots to nuances that would make for a better solution. If you have any thoughts or feedback, please drop me an email!