Attack of the Middlemen

Photo: AP

Today, Apple is set to unveil its new subscription news service, which will charge a monthly fee to access hundreds of major publications. A possible revival for the struggling news business? My friends, it’s quite the opposite.

If you are reading this it is probably not news to you that major swaths of the journalism-producing business are struggling, because journalists have been complaining about it nonstop for the past decade, as they clean out their desks. The first major blow, beginning about 20 years ago, was the rise of the internet, which devastated print media like newspapers and magazines. But that evolution came with a silver lining: the hope that all of the jobs being lost would not be destroyed, but rather would be replaced in new online media outlets. And some (though not all) of them were. It seemed vaguely possible, at least, that that particular upheaval would in the long term be a change of platform more than it would be an utter destruction of the means of producing journalism.

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That was... kinda true. For the late-career newspaper journalists who lost their jobs, there was no hope. But for thousands of younger people who began their careers in digital media, the future seemed momentarily bright. The internet revolution did in fact destroy about a quarter of the journalism jobs that had existed in the newspaper era, but it is still reasonable to hope that, with time and creativity and the launch of new publications, newsroom employment—and with it, the net total of American journalism—would creep up again.

Lately, though, the media has been dealing with an entirely new crisis. It turns out that it is now quite so simple as saying “the print media jobs that are destroyed will be replaced online, because this is primarily just a change in the technology that people use to get their news.” Besides the fact that the classic advertising-supported model does not work on the internet—something that publishers are still struggling to figure out, and which has itself destroyed the business of local news—there are now enormous vampires to deal with. Those would be Facebook, Google, and now Apple: online platforms that deliver, but do not create, news, and which suck up a huge portion of the advertising revenue that used to go to media companies themselves.

It is not hard to see how this is a bad situation if your concern is the production of journalism. Media companies invest a ton of money to hire journalists and produce news, but they are unable to recoup that money from readers because vastly powerful middlemen have inserted themselves between the news companies and the readers. Facebook sells ads against its own newsfeed; Google News sells ads against its collection of news content; Apple will reportedly keep half of the money from its new subscription news service, sharing the other half with the actual publishers. The business model of news is broken because the revenue from news is being siphoned off by middlemen who do not produce news. (I sometimes laugh ruefully to myself when I recall the olden days of newspaper reporters arguing that bloggers were parasites destroying the news; we were all little minnows bitching at one another just before the Great White Shark Tech Companies came and swallowed us all up.)

There is still demand for journalism. There are still readers of journalism. There are still enough customers for journalism to be a viable business. But investing the resources to produce journalism is not a good business proposition when the money people pay for it ultimately does not make it back to you.

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Besides the constant media layoffs and increasing impossibility of earning a livable wage in what should be a steady industry, the most frustrating aspect of this situation is the fact that Google, Apple, and Facebook could quite easily invest in producing a ton of news if they wanted to. Apple alone has $245 billion of cash on hand. Total annual revenue for the entire US newspaper industry is well under $30 billion. Apple on its own could invest a negligible amount of money and essentially rebuild the entire news industry in an up-to-date, internet-friendly fashion, thereby saving local news and ensuring a steady supply of journalism for decades to come. (You may have noticed that Apple is in fact doing this very thing in the TV space.) Google and Facebook could both do the same. Instead, these companies, which are each worth many hundreds of billions of dollars, find it easier to simply suck off the profits of news by leveraging their status as gatekeepers of the internet. They are classic middlemen. They produce little, and they profit much. They are the modern rentiers that the media has to deal with. They could choose otherwise, but they don’t. And they are slowly starving the Golden Goose of journalism as a result.

Waiting for mega-tech companies to grow a civic conscience is, frankly, stupid. The real solution to our current situation needs to come from the government. Journalism, no matter how much you may despise individual publications such as SplinterNews.com, is a public good. Legislation can be crafted that will require that the middlemen open the economic floodgates and allow more revenue to pass through to the actual creators of what people are reading. The longer that tech companies act as mere vampires, the greater the backlash will be in the end. Either invest in journalism yourselves, or let us get enough of our money back to survive, or wait until you have to face the wrath of Elizabeth Warren. You fucking idiots.

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About the author

Hamilton Nolan

Senior Writer. Hamilton@SplinterNews.com