Political chaos = money for news organizations

How do we find a better way to stay informed?

In the four months since Joe Biden took office, ratings for cable news have plummeted, with the biggest drop coming for news organizations that were typically adversarial to the previous administration. Here’s a chart of the downturn, from The Hill:

Before I continue, I’ll note that most of the discussion of CNN and MSNBC’s falling ratings comes from their ideological competitors, like Fox News and The Hill (which is a conservative-leaning politics publication). However, it’s all based on neutral Nielsen data, and today, rather than using those numbers to tease the less-popular networks (as some of the conservative commentators are doing), I want to look at it in the context of how political chaos affects the revenues of organizations that report the news.

Regardless of whose policies you prefer, I think we can all agree that the past four months of American governance have been less of an emotional rollercoaster than the previous four years. My opinion is that this is a good thing – the government was operating in a chaotic, unprofessional and often incoherent way under the Trump administration. Even if you agreed with all the administration’s policy goals, you should still want more competence and care in pursuing those policies. As citizens, we benefit from more thoughtful governance and less time spent posting mean stuff on Twitter.

However, we are starting to see where the incentives of news organizations (of all ideologies) diverge from the incentives of good citizenship.

For many news organizations, Trump’s antics were a financial bonanza. This includes not just cable news, but also The New York Times, The Atlantic and The New Yorker. Here’s the data from late 2016 and early 2017, just after Trump’s election:

“In the magazine world, January was the biggest subscription month ever for Conde Nast's The New Yorker. Between the Nov. 8 [2016] election day and the end of January [2017], the 92-year-old title sold 250,000 subscriptions. That's up 230% compared with the same three-month period a year ago. January alone produced 100,000 subscriptions, a 300% increase over January 2016. The magazine now has its largest circulation ever, at more than a million.

Its fellow magazine hard-charger, The Atlantic, also broke records. First, November saw an all-time record number of subscriptions to the magazine. Then, December doubled the November numbers. Those two months accounted for one-third of all subscriptions placed online for The Atlantic in 2016. January continued to see outsized growth, up 200% year over year, though down some from December. Even single-copy newsstand sales – the laggard of magazine sales – jumped both in January (with a 40,000-issue reprint, due to demand) and 15% for the year.”

Source: The Street, March 2017

All this subscription money doesn’t even begin to address the spending on political advertising, much of which goes to the major networks (NBC, CBS and ABC) and cable news, and which totaled more than $2.5 billion for TV ads alone (Source: PBS in October 2020). Part of the reason for increased political spending is the extreme anger and political chaos that we (in theory) should try to avoid, as well as the “corporate personhood” laws that allow nearly unlimited political spending, a policy which I think clearly harms most people who don’t have the means to spend millions on political influence. (More on corporate personhood from Wikipedia.)

In France, by contrast, it’s illegal to run political ads on TV and overall campaign spending is extremely limited (Source: Reuters), and voter turnout is still higher than in the U.S. (Source: Pew Research). (Turnout is low in the U.S. in part because our voting laws are more restrictive, and also because the goal of a lot of political advertising is actually to depress turnout among your competitor’s voters rather than to encourage citizens to participate in democracy.)

My interpretation of this data is that political ads have no positive effect on citizenship and simply create a perverse incentive for media companies, who make more money in an environment with unconstrained political spending and high levels of social strife. The same dynamic increases revenue for tech companies like Google and Facebook, who capture the bulk of digital ad money. It’s difficult to build a better world when your stock price depends on chaos and despair.

We all know that most publications do a good job of building a “wall” between their journalists and their business and advertising sales departments, and none of this suggests that there’s anything uncouth going on in what the journalists themselves are producing.

But ultimately, everybody needs to get paid. And political chaos sure seems to have helped many publications pay the bills.

I hope we’re entering a calmer period in American governance. But if that means less money for news organizations, how do we handle the fact that bad news is more profitable than good news? How do we run profitable (or least stable) news publications while simultaneously pursuing a goal of having a stable government?

One option is to build news organizations that are more democratic themselves – for example, employee-owned companies with a more limited profit motive that doesn’t require anyone to build a “media empire.”

These organizations wouldn’t rely on billionaire owners (like Amazon founder Jeff Bezos buying The Washington Post) or the largess of wealthy philanthropists (who, while often well-meaning, also don’t have much to gain from an environment with less spending). For a news organization to really champion transparency and democracy, I think it needs to be less about maximizing profit (which is inevitably creates huge conflicts of interest) and more about creating a stable environment where journalists can be protected and properly compensated whether the news is good or bad.

In the meantime, I view with skepticism any news organization, of any ideology, that claims to want a better America while relishing the profits generated by American carnage. One of the most important projects we can embark on as journalists and entrepreneurs is figuring out a way to keep citizens informed without falling prey to the financial incentives of non-stop, angry, sensationalist news.