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How the COVID-19 Pandemic has Ravaged the News Industry

Editor, TRANSFIN.
Jun 17, 2020 9:45 AM 6 min read
Editorial

The news industry is no exception to the vagaries of COVID-19. The advent of millions being forced to work from and stay at home has sparked significant changes for the Fourth Estate - some positive, some not quite.

In this article, we will look at the lasting changes being brought about in the news industry by the COVID-19 pandemic.

Impact of COVID-19 Pandemic on News Industry: Key Trends

The Reuters Institute recently released its annual Digital News Report, surveying more than 80,000 people in 40 markets (excluding India, unfortunately!) over two time periods - around January/February (before the pandemic) and in April (when the pandemic was peaking in many countries).

Here are some of the major takeaways:

News consumption has increased substantially.

COVID-19 has had far-reaching effects on news consumption. Most of us are consuming more news now - be it via broadcast channels, social media platforms or newspapers. Within these categories, while consumption via television news and digital media have risen, consumption of printed newspapers has fallen in most places (though India has bucked the trend here).

FYI: An analysis of over 3,000 high-traffic sites, including The Wall Street Journal, Bloomberg, NBC, Conde Nast, Slate and TechCrunch found that article views have jumped by 50% since early March. Web traffic alone is up 30% for the top news sites and has even doubled for some publishers.

Usage of digital media outlets and social media has surged amidst the quarantine and lockdown-related restrictions.

WhatsApp saw the biggest growth in general with increases of around 10 percentage points in some countries that were surveyed, while more than half of those surveyed (51%) used some kind of open or closed online group to connect, share information or take part in a local support network.

Interestingly, across age groups the use of Instagram for news has doubled since 2018 and looks likely to overtake Twitter over the next year.

How the COVID-19 Pandemic has Ravaged the News Industry
Source: Reuters Institute Digital News Report 2020 (screenshot)

Trust in media coverage remains high but most would prefer if journalists don’t push a point of view.

This might come as a surprise to some of us - people’s trust in media outlets is relatively high (at the same level as trust in national governments), especially when it comes to information about COVID-19. But the majority (60%) would prefer news that has no particular point of view over news that shares or reinforces their views.

Concerns about misinformation and fake news remain high.

Payment for online news outlets has gone up.

While most readers still don’t pay for online news consumption, the numbers of those who do have surged in recent months, especially in richer countries like the US and Norway. The most important factor for those who subscribe is the distinctiveness and quality of the content. While this may be good news for media outlets, which have seen ad revenue tumble, it has a negative side too, which we’ll discuss in a minute.

The generational variation in news consumption persists.

This was true even during the pre-pandemic days. Older generations tend to watch more TV news or newspapers while Millennials might use apps or websites more often; Generation Z (those in the age group 18-24), meanwhile, prefers to get their news via social media.

Podcast-listening has shot up.

And Spotify has become the number one destination for podcasts in a number of markets, overtaking Apple’s podcast app.

 

Bad News is the News for the News Industry

There was probably never a time when the news business has not been undergoing tectonic change. But recent years have been particularly disruptive. 2017 was characterised as a “media apocalypse” as even top names in the industry like Vanity Fair, The New York Times and Time reported losses, missed targets or announced layoffs.

In the years since, the situation has aggravated. There have been layoffs across Vox Media, Vice and BuzzFeed. Verizon took a nearly $5bn write-down on its digital media unit, which includes AOL and Yahoo. Reuters announced plans to lay off more than 3,000 people in the next two years.

 

What’s Up With the News Industry?

A lot of this news-related pandemonium has to do with the technological revolution. As more media consumption has moved online, news organisations’ reliance on websites, apps and social media to get the word across has increased. So too has their dependence on ad revenue. 

This is where it gets bad, because the online advertising industry is dominated by the Facebook-Google duopoly (the two companies already receive more than half of all the dollars spent on digital advertising, and they command 90% of the growth in digital ad sales) and a bunch of other tech giants. 

News companies need these tech platforms to remain relevant. But while they invest a lot of money into original reporting and content creation, most of the profits are eaten up by tech companies, whose search engines regulate traction and social media platforms determine distribution - to say nothing of the treasure trove of user data these tech cos command! Disadvantage: news industry.

You might say - why don’t news companies diversify their revenue models? This is logical, and a lot of them have been doing just that. That’s why there are paywalls and subscription packages asking you to pay for the news you consume. But there are problems with this. For starters, not all of us are willing to pay to read news articles. If a piece of original reporting on The Washington Post is behind a paywall, we might just be content with reading excerpts of it shared on social media or an abridged version of it on someone’s blog or a just long Twitter thread about it. Moreover, larger outlets can “afford” a paywall without repelling readership; the same cannot be said for new or smaller organisations. Disadvantage: news industry.

 

The News Industry in the Age of COVID-19

COVID-19 has seen a considerable reduction in ad revenue - other businesses are shut down, so why would they invest in digital promotions right now? This meant that media companies that were already too reliant on digital advertising were now caught between the devil and the deep blue sea, despite the increased traction and readership numbers. India’s TV news industry, for example, saw a nearly 40% drop in ad revenues.

Many were forced to cut wages, furlough staff or resort to layoffs. And some managed to stay afloat with their subscription packages - after all, more people are willing to pay for the news now, right?

But there’s a catch. Subscription-based models may be bad for the Fourth Estate and for readers alike. It leads to consolidation and monopolisation - after all, you would rather buy a subscription of the hallowed New York Times rather than buy a subscription to a local news organisation that is also doing serious reporting but doesn’t have the glitz or glam of the NYT. This would mean already-established names benefit from more subscriptions; smaller, up-and-coming outlets are left out. Disadvantage: news industry.

As for you and me: you might be able to afford an NYT subscription. But I may not. Eventually, you end up with easy access to first-class reporting while I’m left scraping the barrel. This means uneven distribution of vital information. Disadvantage: news ethics.

 

The Crux of the Matter

In the end, the moral of the story for the news industry is similar to others we’ve dealt with in previous emails: The coronavirus didn’t necessarily cause the problems the industry is facing - instead, it has aggravated existing fissures and faultines and made things worse. This is true for MSMEs, banking, healthcare, movie theatres, automobiles or even the home-delivery of liquor for that matter.

The pandemic will likely accelerate trends that were already in place for the news industry. This means a shift to digital and mobile platforms and a shift to non-advertising-based revenue models. Larger names may pull it off. For smaller outlets, mayhem and bankruptcy could beckon.

As with the pandemic, the most vulnerable businesses may not survive.

FIN.

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