New England Diary

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David Warsh: To come back, print editions of newspapers must solve intricate production problem

SOMERVILLE, Mass.

The off-lead story in the Sept. 18 New York Times, illustrated by a fraying American flag, was one of a series: “Democracy Challenged: twin threats to government ideals put America in uncharted territory.” Senior writer David Leonhardt identified two distinct perils: a movement in one major party to refuse to accept election defeat, and a Supreme Court at odds with public opinion. Leonhardt’s argument was well reasoned and deftly written, enough to fill four pages after the jump.

To my mind, though, The Times is overlooking a problem even more fundamental to the conduct of American democracy:  the concentration of power in the quartet of daily newspapers that remain at the top of the first-draft-of-history narrative chain. The loss of diversity of news and opinion among metropolitan newspapers in the 50 American states over the last thirty years has not been well understood.

Media proprietor Rupert Murdoch bought The Wall Street Journal from the Bancroft family, in 2007. Amazon founder Jeff Bezos bought The Washington Post from the Graham family, in 2012.  Japanese media group Nikkei acquired the Financial Times from Pearson publishers, in 2015. The New York Times, a fifth-generation family-controlled firm, retains its independence. But Bloomberg LP, an all-digital software analytics and media company, also based in midtown Manhattan, remains looking over its shoulder.

Meanwhile, major metropolitan daily newspapers across the country have been sold and diminished, or collapsed altogether, in the 32 years since the World Wide Web was introduced.  These include the Chicago Tribune and its many subsidiaries, among them the Los Angeles Times, The Baltimore Sun, The Hartford Courant and the New York Daily News; The Providence Journal; The Philadelphia Inquirer and 31 other Knight Ridder newspapers, including The Miami Herald and San Jose’s Mercury News; Cleveland’s Plain Dealer, Portland’s Oregonian and New Orleans’s Times-Picayune, among the Newhouse newspaper chain; the Louisville Courier-Journal; the Arizona Republic; Las Vegas Sun, and Dean Singleton’s Denver Post. The Daily Bee, founded in Sacramento in 1857, part of all but the last surviving family-owned newspaper chain, declared bankruptcy in 2020, though  the Atlanta Journal-Constitution remains the flagship of Cox Enterprises. Only Texas and Florida maintain several competitive metropolitan newspapers. The Christian Science Monitor ceased publishing a paper edition in 2009, while maintaining a digital presence.

What happened?  Google and Facebook entered the advertising business. Antitrust newsletter writer Matt Stoller recently described Google’s rollup of the search-intermediary industry over the course of a decade, notably its 2007 acquisition of DoubleClick, into the voracious advertising sales business that the former “free” search engine enterprise has become. Facebook did much the same. The result was that newspapers lost some 80 percent of their advertising revenues in a decade. More than 2,000 papers went out of business altogether.

In a similar vein, The New Goliaths: How Corporations Use Software to Dominate Industries, Kill Innovation, and Undermine Regulation (Yale, 2022), by James Bessen, makes a compelling case that “dominant firms have used proprietary technology to achieve persistent competitive advantages and persistent market dominance,” by more effectively managing market complexity in industries of all sorts.

Strengthening antitrust enforcement is a good idea, Bessen says, but breaking up firms is unlikely to solve the “superstar problem.” A more effective solution has to do with opening up access to knowledge, which means addressing ubiquitous intellectual-property bottlenecks. Market-driven unbundling – the process that, in the 1970s, led IBM to open its proprietary software to independent applications, and, in the Oughts, Amazon to make its information technology software available to other vendors on its proprietary servers – offer more promising possibilities, he asserts in a closing chapter. Bessen heads a research initiative at Boston University’s Law School. The New Goliaths is an important book. Let’s hope it get the attention it deserves.

American democracy is not doomed to a future dominated by four or five national newspapers. There is reason to believe that the market for home-delivered newsprint newspapers is much broader than it now seems, though it may take years to revive it.  Radio returned to prosperity after television advertising all but destroyed its formerly lucrative advertising business.  Newsprint thrived for nearly a hundred years despite the entry of both.

To come back from the online onslaught, however, print newspapers must solve an intricate coordination problem, involving every aspect of the business. These include the cost of newspaper production, from newsprint to software to printing facilities; the riddle of subscription pricing; the restoration of home delivery networks; and the reconstruction of advertising sales. Moreover, the new newsprint goliaths must cooperate with big city dailies seeking to regain market share if the problem is to be solved.

Take, for example, a narrow slice of the cost of production problem: the software that enables editors to simultaneously assemble and publish both print and online content.  Dan Froomkin, a former Washington Post columnist, reports in The Washington Monthly, that Amazon’s Bezos, upon acquiring The Post, discovered that the process was wildly inefficient, whereupon he tasked chief information officer Shailesh Prakesh to fix it.

The result: a best-in-class publishing platform, Arc XP, that the Post  now uses to publish its own product, and licenses to 2,000 other media and non-media sites.  But the license, Froomkin says, is expensive. His suggestion: that Bezos do as Andrew Carnegie did with his libraries more than a century ago, and make Arc XP available free to other newspaper publishers, along with its companion Zeus Technology ad-rendering platform.  It is an interesting proposal. So is the multi-state antitrust lawsuit against Google and Facebook, slowly making its way in a U.S. District Court. Meanwhile, the bipartisan Journalism Competition and Preservation bill inched forward last week, when the Judiciary Committee voted 15-7 to send it to the Senate floor

What size might be the market for subscriber-based print, supplemented by traditional advertising? At what annual price? There is simply of no way of telling besides customary trial and error. Let’s hope that the new newsprint goliaths will participate in the learning. True, the four national papers and Bloomberg do a pretty good job of gathering news on their own. But it seems clear that the American democracy functioned better when there were more strong voices scattered across its landscape. It makes sense to search for ways by which those circumstances can be restored – plenty of fodder for future columns.

David Warsh, a veteran columnist and an economic historian, is proprietor of Somerville-based economicprincipals.com.

Editor’s note, a few newspapers, most notably in New England The Boston Globe, now under control of the Boston-based Henry family, still retain much, but far from all, of their former journalistic package.