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Nov. 18, 2019, 9:14 a.m.
Business Models

Americans are more willing to pay for local news when they know local newspapers are in trouble, a new study says

“This gap suggests a market failure — many recognize the benefit of the product to the public but are unwilling to pay for it.”

More than half of Americans believe that local news organizations are doing well financially, according to a new report published today by the Knight Foundation and Gallup. But if you tell them otherwise, they’re more likely to think supporting local outlets is a good idea.

The Putting a Price Tag on Local News study surveyed more than 2,700 adults across the United States and found that 56 percent think local news outlets in their area are doing very well or somewhat well. And even more, 63 percent, think that outlets outside their area were in good shape financially.

Of course, the reality is different. Local newspapers, the engines that create most local journalism, have faced more than a decade of cuts and layoffs, and the financialization of the industry has led to waves of consolidation, often led by companies seemingly more interested in milking them dry than in treating them like community assets. Just last week, we saw the two largest newspaper chains merge into one, driven by the desire to cut up to half a billion dollars in costs, and the next-largest chain, McClatchy, lost 82 percent of its market cap in one week because it can’t afford to pay its pension obligations.

But the survey findings offer newsrooms and management new evidence to avoid a potential market failure, according to John Sands, Knight’s director of learning and impact. “We think this report points to the fact that Americans do value the good that’s being provided to them by local news organizations. They think that by and large, everyone should have access to quality local news, even if they don’t pay for it,” Sands said. “We think that now that there’s empirical evidence that shows that Americans are thinking of local news more as a public good, what sort of policy pathways open up to potentially sustain it?”

Sands said Knight/Gallup wanted to study news consumers’ behaviors along with their perceptions of local news. Researchers conducted an experiment where they asked respondents what their perception of a news organization’s financial health was before and after providing them with Pew data that showed the decline of newspaper circulation and staff between 2006 and 2017.

The results indicate that Americans are “more willing to support local news when made aware of its plight,” the report says. The survey also found that Americans were more likely to subscribe or otherwise support their local newspaper if it were the only one in their area and at risk of shutting down.

Other notable findings include:

    • Democrats (37 percent) are the most likely to pay a monthly or annual subscription fee for local news, compared to independents (27 percent) and Republicans (25 percent).
    • Democrats and frequent local news consumers are also far more likely to think local news is vital and should be preserved than Republicans and less-frequent consumers. Among Democrats who consume a lot of news, 81 percent say it’s a vital resource; among Republicans who don’t, that number’s only 17 percent.
    • Only one in five Americans has supported a local news organization with a donation, subscription, or renewal in the past year, but 86 percent of all Americans think everyone should have access to local news.
    • Americans are divided on how to salvage local news. Less than half (47 percent) think local news should be preserved even if the business is failing, but 52 percent think a news organization should be allowed to fail like any other business. (People who know local news orgs aren’t doing well are slightly more likely to think they should be allowed to fail than those who don’t.)

  • At the same time, 60 percent oppose funding local news through local tax revenues, while 66 percent oppose supporting it through federal tax revenue.
  • Younger people may not be the most voracious local news consumers, but they are more likely than older Americans to say “private or government institutions should guarantee funding” for local news — 62 percent for ages 18–34 vs. 29 percent for ages 55 and up.

“What our report is suggesting is two things: that there’s an enormous need for some sort of structural, high-level policy conversation to happen,” Sands said. “The second is that, until that policy conversation yields some sort of potential path forward, there are small, incremental educational tactics that local news organizations can use now that there’s evidence that can change news consumers’ behaviors.”

Photo of newspaper boxes by Lance Grandahl.

POSTED     Nov. 18, 2019, 9:14 a.m.
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