Saving the News From Big Tech
The media industry is in crisis, and the very profession of journalism is under sustained ideological and physical assault. Newsrooms all over the world are shuttering, and media companies are struggling to make ends meet. The root cause of this crisis is complex, but it is largely due to the greedy and myopic actions of media companies and the growing influence of Big Tech companies. In this article, we will explore how news companies shot themselves in the face and how Big Tech companies are continuing to bleed out the press. We will also discuss how we can save the news from Big Tech.
How News Companies Shot Themselves in the Face
Right around the time that personal computers were finding their way into home offices and kids’ bedrooms, news media underwent an orgy of consolidation. Media outlets across the country merged, and national chains took over from family proprietors. They raised prices and fired reporters, turning to wire services and chain-wide correspondents for subjects of national interest. They also fired locally focused salespeople, consolidating classified and display ad-sales to national call-centers. They sold off their buildings and presses and logistics networks, leasing them back. These cuts yielded dividends to the chains’ investors, dividends that were augmented by liquidating the papers’ cash reserves and “rainy day” funds.
As a result, the media had no cushion when online advertising came along. With heavy debt loads, a generic product that emphasized wire stories and national correspondents servicing dozens of outlets that purported to be “local” newspapers, the impact hit hard. A national sales office that merchants call to place ads makes sense when you’re the only game in town for reaching local customers, but when local websites spring up to offer cheaper advertising, the national “sales force” of people who sit around waiting to take orders and credit-card numbers won’t cut it.
Moreover, the financialization of news media weakened it, and the finance sector continues to bleed out the press, with waves of private equity debt-loading and rollups that reduce one-great newsrooms that filled iconic Deco skyscrapers to a few underpaid reporters working out of a remote concrete blockhouse the size of a Chipotle.
Enter Big Tech, Binge-Eating Little Tech
The companies we call “Big Tech”—Google, Apple, Microsoft, Meta, etc.—attained their scale and reach primarily by buying out their potential competitors, not by inventing new technologies that were so amazing that they beat the competition.
That’s true of Facebook, whose founder, Mark Zuckerberg, candidly told his executives, “It is better to buy than to compete,” before going on to buy Instagram and WhatsApp, among dozens of other firms. Apple buys companies more often than most of us buy groceries.
Google is a company that had one genuine innovation—a best-of-class search engine—and then used its access to the capital markets to buy a video-sharing company; a mobile operating system company; many, many ad-tech companies; a maps company; a document-sharing company, etc. Notably, Google’s own in-house products have been a nearly unbroken string of flops, with the main exceptions being a copy of Microsoft’s Hotmail and a browser based on Apple’s old browser engine.
And then there’s Microsoft, a convicted monopolist with its own long, long list of acquisitions, a list that grows longer by the day.
These companies converted the internet to “five giant websites filled with screenshots of the other four,” replacing the dream of “disintermediation” with a new oligarchy of gatekeepers. Together, these companies rigged the ad-market, the app market, and the market for social media.
The result is a system that pleases no one—except the tech monopolists’ shareholders. Ads cost more, and media companies get paid less for them. Half of every ad dollar is gobbled up by tech intermediaries. Sure, media companies can switch to a subscription model—and hand over 30 cents out of every dollar in “app store taxes” levied by the mobile duopoly. Media companies can try going direct to their readers on social media, but the only way to reach your subscribers on big platforms is to pay to “boost” your posts, otherwise, they’ll be hidden from the users.
– The Reagan administration’s deregulation of the financial markets and, later the Clinton administration’s Telecommunications Act stripped away the already weak restrictions on media consolidation.
– Heavy debt loads, a generic product, and the rise of online classified advertising sites devastated the media industry when it had no cushion.
– The financialization of news media weakened it, and the finance sector continues to bleed out the press, with waves of private equity debt-loading and rollups.
– Big Tech companies attained their scale and reach primarily by buying out their potential competitors, not by inventing new technologies.
– Together, Big Tech companies rigged the ad-market, the app market, and the market for social media.
The media industry is in crisis due to a combination of media consolidation, the rise of online classified advertising sites, and the financialization of news media. Big Tech companies have made matters worse by buying out competitors, rigging the market, and bleeding out the press. Media companies can switch to a subscription model or go direct to their readers on social media, but they will still face challenges due to the power of Big Tech. To save the news from Big Tech, we need a new approach that prioritizes the needs of journalists and readers over the interests of tech monopolists’ shareholders.
The media industry is facing an existential crisis, and the rise of Big Tech has made matters worse. We need to save the news from Big Tech by prioritizing the needs of journalists and readers over the interests of tech monopolists’ shareholders. This will require a shift away from the financialization of news media and the restructuring of the ad-market, app market, and social media market to ensure that media companies get paid what they deserve for their work. It will also require new approaches to journalism that emphasize local reporting and investigative journalism. Only by working together can we save the news from Big Tech and ensure a vibrant and independent media for generations to come.