Wednesday, June 6, 2018

Media change denial is not like climate change denial

Rasmus Kleis Nielsen provocatively assails those he calls “media change deniers” by comparing us to the natural scientists who, despite overwhelming evidence, refuse to go along with the consensus on global warming. The insulting inference is that those of us who take a contrary view from the mainstream of media researchers are similarly – as the illustration which accompanied his polemic on the NiemanLab website reinforces – deaf, dumb and blind. NiemanLab has refused to run my reply, which is why I post it here. The gist of Nielsen’s argument is that those who swim against the current should refrain from making assertions without data to support their positions. By doing so, he asserts, they are “doubling down on arguments that are directly contradicted by a growing consensus in the best available peer-reviewed scientific research.” He then adds parenthetically: “Don’t get me started on whether print ‘has a future’ or the notion that linear scheduled television is doing just fine.”

If you can't sufficiently insult dissenters with words, try using pictures like this
As I have done no research on linear scheduled television, I will focus in answering Professor Nielsen on whether print has a future. I submit that he needs to get out from under his own filter bubble and consider data-based, peer-reviewed research of which he is either unaware or perhaps simply ignores because it contradicts his cocksure consensus. I would argue that considering different types of data is important in researching a question in order to get different perspectives and thus a better grasp on it.

Take the future of print. The overwhelming consensus, of course, is that print is dying. Even supposedly skeptical scholars assume as much simply from reading headlines that tell of falling newspaper circulations, multi-million-dollar corporate losses, mass layoffs of journalists, and even the bankruptcy of numerous newspaper chains. Failing to understand how the newspaper business works, and having no inkling of the arcane rules of accounting, they neglect to look under the hood to diagnose what is really going on. That is what I did for my 2014 book Greatly Exaggerated: The Myth of the Death of Newspapers, (PDF) which was based on data published that same year in the peer-reviewed and A-ranked Newspaper Research Journal. (PDF) I’ve had lots of reviews written of my books, but never before one of a journal article I had written. The European Journalism Observatory took note of this one, but perhaps that didn’t register in the hallowed halls of Oxford, where Nielsen is Director of Research for the Reuters Institute for the Study of Journalism. I even took them a copy of my book the last time I was in town, but I guess it somehow fell through the cracks.

I looked at the financial statements of all publicly-traded newspaper companies in the U.S. and Canada from 2006-2013, a period during which print advertising revenues fell by 62 percent in the former and 36 percent in the latter. (They have continued to fall.) Using the standard profitability measure of EBITDA – earnings before interest, taxes, depreciation, and amortization – I found that despite this shock to their business model, none of the chains suffered an annual loss in any year during this period. Most were still making double-digit profit margins in 2013. Some had profits as high as 20 percent. It turns out those multi-million dollar losses the headlines reported were mostly on paper, as under standard accounting rules companies may deduct from their operating profits the reduced value of their business as an “extraordinary” loss. The newspaper chains that went bankrupt were actually among the most profitable. They only went broke because their owners took on too much debt in making acquisitions before the advertising bubble burst and they were unable to service that debt with reduced revenues. Their newspapers, being profitable, continued publishing throughout and emerged on the other side under new ownership. Unfortunately they often went to cagy hedge funds which had bought up their distressed debt for pennies on the dollar and are now squeezing them for everything they’re worth.

Their shrinking circulations and the mass layoff of journalists are newspapers’ way of coping with reduced advertising revenues. Newspapers counter-intuitively lose money on every copy sold, so printing more and trucking them farther and wider now makes little sense. They more than make up the difference, of course, by selling advertising, for which there remains sufficient demand to keep their core business well above water. Most of their needed cost cutting, unfortunately, has involved throwing journalists overboard. This is undeniably bad, but the “adapt or die” meme that emerged a decade ago after a few second-place dailies folded has seen newspapers stubbornly survive. Most have sought more revenues from readers by boosting their cover prices and erecting paywalls that require payment for digital access.

More recently I have focused on UK newspaper companies with similar but more varied results. Some titles, such as the venerable Times, lost money for years before bringing in the paywall, which has put them in the black. At the Guardian, they simply asked readers to send them money while keeping online content free. Millions of pounds have since poured in, all but assuring its future. Other researchers have found rich datasets that corroborate my findings, such as Keith Herndon in a forthcoming Newspaper Research Journal article and Miriam van der Burg in her recent dissertation on the Belgian newspaper industry. Iris Chyi and Ori Tenenboim of the University of Texas recently found that the 25 largest U.S. dailies more than doubled their subscription prices on average between 2008 and 2016, with the price increases accelerating after 2012.

The French have a saying: Plus ça change, plus c'est la même chose, which translates as “the more things change, the more they stay the same.” Media are undeniably changing. It would be folly to claim otherwise. The question is how radically the media landscape will change, ie. whether the future will be online only or if print and broadcasting will endure. Empirical evidence is mounting to support the latter conclusion, at least as far as print is concerned, however unpalatable that may be to digital usurpers like Nielsen. For him to better foresee the future will require him to broaden his perspective.

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