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Addressing the decline of local news, rise of platforms, and spread of mis- and disinformation online - The Center for Information, Technology, and Public Life (CITAP) [1]
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Date: 2024-02
A Summary of current research and policy proposals
By David Ardia, Evan Ringel, Victoria Smith Ekstrand, and Ashley Fox
UNC Center for Media Law and Policy, University of North Carolina at Chapel Hill
To print or save: download a PDF of the full report or a PDF of the executive summary.
Contents
Executive Summary
Workshop Description
Part 1: The Decline of Local News
Part 2: The Rise of Platforms and Growing Spread of Mis- and Disinformation
Part 3: Regulatory and Policy Solutions
Next Steps
Appendix A: Workshop Participant Biographies
Appendix B: Research and Resources
Executive Summary
Social scientists who study the impact of the Internet, social media, and other forms of digital information sharing paint an alarming picture of the health of American democracy. Our current media ecosystem produces too little high-quality information; we have a tendency to be attracted to information that confirms our existing biases about the world and to share this information with little regard for its veracity; and there are an increasing number of actors who seek to leverage these observations to distort public discourse and to undermine democratic decision-making.
Framing the Problems
The Decline of Local News
Technological and economic assaults have destroyed the for-profit business model that sustained local journalism in this country for two centuries. While the advertising-based model for local news has been under threat for many years, the COVID-19 pandemic and recession have created what some describe as an “extinction level” threat for local newspapers and other struggling news outlets. More than one-fourth of the country’s newspapers have disappeared, leaving residents in thousands of communities living in vast news deserts.
The latest report by Penny Abernathy, Knight Chair in Journalism and Digital Media Economics at the UNC Hussman School of Journalism and Media, titled News Deserts and Ghost Newspaper: Will Local News Survive? reveals an increasingly dire situation for local news. The economic fallout from the coronavirus has accelerated the decline in local newspapers – at least 30 newspapers closed or merged in April and May 2020, dozens of newspapers switched to online-only delivery, and thousands of journalists at legacy and digital news operations have been furloughed or laid off. All of this raises fears of the collapse of the country’s local news ecosystem.
Key takeaways related to the decline of local news:
The scope of the problem is far worse than most people realize. In the U.S., 200 counties do not have a local newspaper, nearly 50% of counties only have one newspaper, usually a weekly, and more than 6% of counties have no dedicated news coverage at all. Other media sources have been unable so far to fill the gap. Digital startups are focused on population-dense communities rather than the rural areas most often abandoned by local newspapers, while many subsidized public media outlets rely primarily on non-original content.
In the U.S., 200 counties do not have a local newspaper, nearly 50% of counties only have one newspaper, usually a weekly, and more than 6% of counties have no dedicated news coverage at all. Other media sources have been unable so far to fill the gap. Digital startups are focused on population-dense communities rather than the rural areas most often abandoned by local newspapers, while many subsidized public media outlets rely primarily on non-original content. The issues facing the local news ecosystem are systemic. The newspaper industry enjoyed prolonged success due to a stable business model, but the industry’s inability to evolve in the face of financial adversity and technological change has rendered that model largely obsolete. Online platforms capture a significant portion of overall advertising spending by leveraging user data. Local news organizations cannot offer the same level of targeting and have been unable to attract the advertising revenue necessary to remain financially sustainable. Many local news sources have been forced to scale back their reporting efforts or rely on third-party content.
The newspaper industry enjoyed prolonged success due to a stable business model, but the industry’s inability to evolve in the face of financial adversity and technological change has rendered that model largely obsolete. Online platforms capture a significant portion of overall advertising spending by leveraging user data. Local news organizations cannot offer the same level of targeting and have been unable to attract the advertising revenue necessary to remain financially sustainable. Many local news sources have been forced to scale back their reporting efforts or rely on third-party content. The information vacuum left when communities lose dedicated news coverage can have wide-ranging effects. Local news outlets play an important role in informing community members about local government, elections, and other civic events. They also help to shape community views around common values and beliefs, creating a sense of shared purpose that can be a powerful uniting force within a town or county. Without a source for local news, community members get most of their news from social media, leaving them vulnerable to mis- and disinformation and exacerbating political polarization.
The Rise of Platforms and Growing Spread of Mis- and Disinformation
As local news sources decline, a growing proportion of Americans are getting their news and other information from social media. This raises concerns, including the spread of misinformation and the use of platform infrastructure to engage in disinformation campaigns. Platforms wield significant advantages over local news sources in the current information environment: the dominant platforms possess proprietary, detailed caches of user data, which the platforms use to force advertisers, users, and news outlets into asymmetrical relationships. In the vacuum left by the disappearance of local news sources, users are increasingly reliant on information sources that are incomplete, and may be misleading or deceptive.
Key takeaways related to the rise of platforms and growing spread of mis- and disinformation:
Platforms leverage user data as a key source of power over other actors. Data collection gives platforms power over users, who are generally unaware of how platforms use data to manipulate their behavior, and advertisers, who need access to a platform’s proprietary data to target consumers. The use of micro-targeting is sidelining many traditional news sources, who no longer control the relationship between advertiser and consumer.
Data collection gives platforms power over users, who are generally unaware of how platforms use data to manipulate their behavior, and advertisers, who need access to a platform’s proprietary data to target consumers. The use of micro-targeting is sidelining many traditional news sources, who no longer control the relationship between advertiser and consumer. Platform dominance contributes to news outlets’ inability to retain readers and attract advertisers. Local news providers face challenges in having their content seen and monetized on online platforms. Platforms are able to offer their services to users without charging a fee. As a result, consumers have become increasingly unwilling to pay for news when they can access content on social media for free, creating a vicious cycle where a continued decrease in readers/subscribers leads to even less advertising income for news organizations. Moreover, because the market power of online platforms is concentrated and platforms enjoy varying types and degrees of network effects, consumers have limited incentive to switch to alternative platforms.
Local news providers face challenges in having their content seen and monetized on online platforms. Platforms are able to offer their services to users without charging a fee. As a result, consumers have become increasingly unwilling to pay for news when they can access content on social media for free, creating a vicious cycle where a continued decrease in readers/subscribers leads to even less advertising income for news organizations. Moreover, because the market power of online platforms is concentrated and platforms enjoy varying types and degrees of network effects, consumers have limited incentive to switch to alternative platforms. The decline in local news reporting has created an information vacuum where misinformation and disinformation have flourished. Social media platforms are designed to disseminate content using algorithms that can modify patterns of individual exposure in opaque ways, often prioritizing content that provokes extreme reactions from users. Furthermore, users’ self-selection of content can create homogeneous, polarized clusters and increase the diffusion of misinformation over social media. This problem is exacerbated when local news sources are unavailable to fill needed information gaps or to counteract the spread of misinformation.
Social media platforms are designed to disseminate content using algorithms that can modify patterns of individual exposure in opaque ways, often prioritizing content that provokes extreme reactions from users. Furthermore, users’ self-selection of content can create homogeneous, polarized clusters and increase the diffusion of misinformation over social media. This problem is exacerbated when local news sources are unavailable to fill needed information gaps or to counteract the spread of misinformation. Platforms want guidance as they struggle with content moderation practices and policies. Although the platforms enjoy wide latitude to decide what content to allow on their services, they are ill-equipped to deal with the problem of mis- and disinformation on their own. Several platforms have explicitly acknowledged these difficulties, with Facebook and others calling for additional federal regulation combating election interference and addressing data privacy. Though platforms are working to respond to harmful content, they view themselves as lacking the legitimacy and capacity to serve as “arbiters of truth.”
Regulatory and Policy Solutions
A number of regulatory and policy responses have been proposed to address the decline of local news, the rise of platforms, and the spread of mis- and disinformation. Some proposals focus on increasing the supply of – and demand for – local news, including increased public education and expanded support for journalists and local news organizations. Other proposals focus on market-based reforms that address the growing power disparities between news producers and platform operators as well as between platforms and their users.
Recent regulatory and policy proposals include:
Educating the public to explain the work of journalists and the value of local news. This is an obvious and important step to address the public’s declining support for journalism. This means helping people to better understand the harms associated with the collapse of local news, and to develop strategies for evaluating the information sources they currently use.
This is an obvious and important step to address the public’s declining support for journalism. This means helping people to better understand the harms associated with the collapse of local news, and to develop strategies for evaluating the information sources they currently use. Empowering journalists to serve the needs of local communities. Rebuilding local news begins with ensuring that local news organizations have the resources to hire enough reporting staff and giving them the tools and training they need to succeed. This support can range from direct government funding to indirect support in the form of regulatory, tax, and other legal changes that strengthen journalism and allow local news organizations to thrive.
Rebuilding local news begins with ensuring that local news organizations have the resources to hire enough reporting staff and giving them the tools and training they need to succeed. This support can range from direct government funding to indirect support in the form of regulatory, tax, and other legal changes that strengthen journalism and allow local news organizations to thrive. Reducing the power of the “data oligarchy” of Google, Facebook, and Amazon. Platforms enjoy a significant competitive advantage stemming from their ability to collect and monetize user data. Multiple solutions have been offered to increase competition and alter the power dynamics between platforms and their users. One such approach is data portability and interoperability legislation, which would allow platform users to access their data and take it with them to another platform or use it cross-platform. A complimentary approach is comprehensive federal privacy legislation, which would establish stronger consumer protections, lessen pervasive data collection and limit its uses.
Platforms enjoy a significant competitive advantage stemming from their ability to collect and monetize user data. Multiple solutions have been offered to increase competition and alter the power dynamics between platforms and their users. One such approach is data portability and interoperability legislation, which would allow platform users to access their data and take it with them to another platform or use it cross-platform. A complimentary approach is comprehensive federal privacy legislation, which would establish stronger consumer protections, lessen pervasive data collection and limit its uses. Using antitrust and other competition laws to address the systemic advantages platforms currently possess. The conclusion that platforms have a significant competitive advantage over news providers has prompted advocates for local news to look for ways to use existing antitrust and competition laws to level the playing field. A proposal that has recently gained traction in Congress is to create an antitrust exemption that would allow news organizations to negotiate jointly with the platforms over licensing fees for their content. Another proposal in Congress would instruct federal agencies to presume that some acquisitions and mergers by dominant platforms are anticompetitive.
The conclusion that platforms have a significant competitive advantage over news providers has prompted advocates for local news to look for ways to use existing antitrust and competition laws to level the playing field. A proposal that has recently gained traction in Congress is to create an antitrust exemption that would allow news organizations to negotiate jointly with the platforms over licensing fees for their content. Another proposal in Congress would instruct federal agencies to presume that some acquisitions and mergers by dominant platforms are anticompetitive. Expanding antitrust law to deal with the monopoly power of platforms. Many critics assert that new antitrust exemptions and stricter merger controls will not be enough to rein in the power of the dominant platforms and that more significant change is warranted. This includes extending the Sherman Act to prohibit abuses of dominance by online platforms; prohibiting the use of monopoly power in one market to harm competition in a second market; and reestablishing the “essential facilities” doctrine for platforms, which would impose a requirement that dominant platforms provide access to their data, infrastructure services, and facilities on a nondiscriminatory basis.
Many critics assert that new antitrust exemptions and stricter merger controls will not be enough to rein in the power of the dominant platforms and that more significant change is warranted. This includes extending the Sherman Act to prohibit abuses of dominance by online platforms; prohibiting the use of monopoly power in one market to harm competition in a second market; and reestablishing the “essential facilities” doctrine for platforms, which would impose a requirement that dominant platforms provide access to their data, infrastructure services, and facilities on a nondiscriminatory basis. Breaking up dominant platforms by imposing structural separations and prohibiting platforms from entering adjacent lines of business. Some experts assert that antitrust and competition laws are simply not up to the task of addressing the anticompetitive behaviors of platforms. They point to the explosive growth of Google in search and advertising, Facebook in social networking, and Amazon in online retailing as demonstrating that these digital markets have winner-take-all characteristics that tend to leave just one dominant player. Because dominant platforms enjoy uniquely durable market power, they argue that reliance on traditional antitrust remedies is misplaced and that the government should impose ex ante restructuring to limit anticompetitive practices.
While many of the proposals described above face significant industry and political opposition, recent congressional hearings directed at technology companies and the October 2020 report on Competition in Digital Markets by the Majority Staff of the House Judiciary Subcommittee on Antitrust, Commercial, and Administrative Law recommending significant changes to U.S. antitrust law may mark a turning point in terms of support for more significant government action to limit the power of online platforms. Indeed, the antitrust lawsuit against Google, which was filed by the U.S. Department of Justice and eleven state Attorneys General as we were finalizing this report, is further evidence of this shift to a more aggressive posture by the government.
Regardless of whether the government moves to limit the power of the platforms, many supporters of local news are optimistic that Congress – and state legislatures – will take action to address the dire situation local news organizations face. “It’s as if for the first time, people on the Hill care about newspapers,” Seattle Times publisher Frank Blethen recently told researchers at the UNC Hussman School of Journalism and Media. In News Deserts and Ghost Newspapers, Penny Abernathy wrote that the shift in support is apparent both in the number of concerned lawmakers and in the breadth of their proposals to address the decline of local news. As 2020 ends, there are several serious proposals to direct funds to local media, and hundreds of lawmakers from both parties have written to House and Senate leadership expressing their support.
Next Steps
Solutions to the difficult problems we face will require a multifaceted, multi-disciplinary approach. No one lever within the market, law, or society will deliver a magic bullet. Instead, experts and policymakers will need to pull at multiple levers using a new vocabulary to talk across the different disciplines – a set of new propositions that recognize the legal, social, journalistic, and economic principles at stake, particularly the harm done to democracy if the status quo continues.
We are still in the early stages of understanding how technology is transforming our democracy and the ways we receive and engage with information. This work will require cross-disciplinary research and collaboration in order to develop a comprehensive understanding of information environments focused on the interaction of information and technology, particularly in the context of misinformation, partisanship, polarization, propaganda, and political institutions.
Funding for this report was provided by the Hearst Foundations and John S. and James L. Knight Foundation.
Workshop Description
In November 2019, the UNC Center for Media Law and Policy; UNC Center for Innovation and Sustainability in Local Media; and UNC Center for Information, Technology, and Public Life brought together experts on the decline of local news, the rise of online platforms, and the spread of mis- and disinformation for a workshop that was part of a two-day, interdisciplinary conference titled “Fostering an Informed Society: The Role of the First Amendment in Strengthening Local News and Democracy.” The conference began with a symposium at the UNC School of Law hosted by the First Amendment Law Review, which examined the role of the First Amendment in creating an informed society and explored whether the First Amendment places affirmative obligations on the government to ensure that citizens are informed.
The workshop, which is the subject of this white paper, commenced on day two. The goal of the workshop was to convene a diverse group of media executives, economists, social scientists, lawyers, and others with expertise in journalism, media business models, antitrust, FCC policy, intellectual property, and constitutional law to discuss the problems facing local news organizations and to examine the regulatory and policy solutions that have been offered to address these problems. The workshop took place at the UNC Hussman School of Journalism and Media and was co-led by Philip Napoli, James R. Shepley Professor of Public Policy at the Sanford School of Public Policy at Duke University. A full list of workshop attendees is included in Appendix A.
What follows is a report of the day’s proceedings. It is organized in the same way we structured the workshop, starting with an overview of the decline of local news followed by a discussion of the rise of platforms and the spread of mis- and disinformation online. We then examine a number of regulatory and policy responses to the problems identified in the earlier sections and conclude by offering some suggestions for next steps. Throughout this report, we have included the affiliations of workshop participants when referring to their contributions to the workshop. In Appendix B we provide a list of recent research and resources available for those who wish to engage in more study of these important issues.
Acknowledgements
We are grateful to all of the participants at the November 2019 workshop and to members of the First Amendment Law Review who helped make the symposium and workshop possible, including Alyssa Leader, Alison Rossi, and Rachel Ann Stephens. We are also grateful to Kathryn Johnson and Isabela Palmieri for assistance in drafting this report and to Kathryn Peters and Joanna Burke for editing, formatting, and promotion. The Hearst Foundations provided funding for the workshop and funding for the preparation of this report was provided by the Hearst Foundations and John S. and James L. Knight Foundation.
Part 1: The Decline of Local News
Over the past two decades, the United States has experienced a significant reduction in the number of local news organizations like newspapers and locally focused news websites. Penny Abernathy (Professor, Hussman School of Journalism and Media, University of North Carolina), a former executive at the Wall Street Journal and the New York Times, kicked off our workshop by describing her recent research on the rise of “news deserts”: counties and municipalities that lack access to a dedicated local news source. Her 2020 report, News Deserts and Ghost Newspapers: Will Local News Survive, paints a bleak picture of an industry in crisis.[1] According to Abernathy, more than one-fourth of American newspapers shut down in the last 15 years, including many news outlets focused on local communities.[2] In that same time period, more than half of all local journalists were let go, leaving many remaining newsrooms staffed by a small number of reporters burdened by excessive workloads and unable to dedicate themselves to particular topics of local interest.[3]
Ghost Newspapers and Disappearing Local Coverage
Abernathy refers to many remaining newspapers as “ghost newspapers,” operating as shadows of their former selves and lacking the financial resources and manpower to fully cover their communities.[4] Though the industry was decimated by the 2008 economic recession, newspapers have continued to struggle even as the economy has improved; since fall 2018, more than 300 newspapers closed, with another 6,000 journalists fired and more than 5 million fewer print newspaper subscribers.[5] The coronavirus pandemic and corresponding economic downturn has “turbo-charged” the decline of print journalism, with early data indicating that more than 30 newspapers have been forced to shut down or merge with other media outlets since COVID-19 began to spread in the United States.[6] Even among newspapers that have survived, many that remain have been forced to reduce their circulation from daily to nondaily or weekly in an effort to cut costs.[7]
This decline in local newspapers has left many American communities without sufficient local news coverage or any available local news source. Abernathy stated at the workshop that more than 1,500 of 3,031 American counties have only one newspaper, usually a weekly, while more than 200 others have no newspaper at all. Of course, there is wide variation in population among U.S. counties, with more than half of all residents living in just 143 counties.[8] Nevertheless, the residents of America’s emerging news deserts are often its most vulnerable citizens: they are generally poorer, older, and less educated than the average American.[9] The collapse of the newspaper industry, however, has not spared wealthier communities. The one million residents of Montgomery County, Maryland, a Washington, D.C. suburb and one of the 20 wealthiest counties in the United States, were left without a local newspaper when their last remaining local newspaper, The Sentinel, was shuttered in January 2020.[10] Urban areas have also been affected. Youngstown, Ohio became the first city of any size without a local newspaper after its 150-year-old newspaper shut down in August 2019.[11]
Although the loss of newspapers is widespread, participants at the workshop highlighted the connection between poorer communities and the lack of a local newspaper. Most of the counties in danger of losing a newspaper or without a newspaper altogether are in the American South and the average poverty rate is “substantially higher” in counties without newspapers than in counties with local news coverage.
Key Takeaway Most of the attendees at the workshop were generally aware of the decline in local news sources. However, Abernathy’s presentation and research offered statistics that revealed the true scope of the problem. Nearly 50% of U.S. counties only have one newspaper, usually a weekly, and more than 6% of counties have no dedicated newspaper at all. More than 25% of American newspapers have shut down since 2004, while many more have cut back on their previous daily circulation by reducing their coverage reach or printing on a nondaily or weekly basis. Abernathy noted that other media sources have been unable to fill the gap. Digital startups are focused on population-dense communities rather than the “flyover areas” most often abandoned by local newspapers, while many subsidized public media outlets rely primarily on non-original content. Abernathy also identified a correlation between counties without newspapers and a higher poverty rate, meaning that economically disadvantaged communities are especially vulnerable to the decline of local news.
Alternative media sources have been unable to fill the vacuum left by the disappearance of local newspapers. The lack of consistent broadband access in rural areas limits the ability of rural communities to get news in a digital format. Many communities that lack access to a local newspaper or to a reliable high-speed internet connection rely on either television or radio to provide local news. Though television stations remain on the air, broadcast journalism may not plug the local news gap left by the disappearance of local newspapers. Local television news typically focuses on either national stories or the local stories most likely to attract viewers, leading to extensive coverage of crime, car accidents, and natural disasters.[12]
The emphasis on maximizing viewership in order to bring in advertising dollars comes at the cost of local news stories. A 2018 report from the Knight Foundation refers to local television news as a “headline service with periodic forays into meaningful investigations,”[13] and those at the workshop expressed concern that television news is not filling the void left behind when local news outlets disappear. At the workshop, Melanie Sill (Executive Director, NC Local News Workshop) depicted local news stations as covering ever-increasing markets and focusing on a few big stories, arguing that “any domestic murder in America” would be considered a “local” story on the evening newscast. Workshop participants also identified the increasing time commitments for station staff as a barrier to community-level local news coverage. As television stations continue to add additional broadcasts and digital/social media responsibilities, journalists lack the time and resources to devote their attention to stories that, though informative to the community, might not guarantee maximum attention from viewers.
As the realities of commercial broadcast television limit its viability as a dedicated local news source, policymakers and others have cited public broadcasting as a potential mechanism to provide local news coverage to underserved communities.[14] Congress allocates limited funds to the Corporation for Public Broadcasting, which subsidizes both PBS television stations and NPR radio stations, while most funding comes from contributions from individual viewers and listeners. However, Abernathy noted that less than one-fourth of public media outlets used any sort of originally created content, and that much of the original “local news” content came in the form of talk shows that featured moderators interviewing journalists from other outlets who had covered a local news story.[15]
Others have suggested that digital media startups can fill the need for local news. North Carolina has had some limited success with sector-specific nonprofit digital media outlets. During the workshop, Sill cited three NC-based nonprofit organizations as potential success stories: NC Policy Watch, a daily news and commentary outlet run by a left-leaning think tank; Carolina Journal, a similar outlet run by a right-leaning think tank; and Coastal Review, an outlet operated by the North Carolina Coastal Federation dedicated to covering stories in North Carolina’s coastal regions. However, these startups are heavily reliant on social media to distribute stories and attract viewers, perpetuating a business model where platforms hold the advantage. [We discuss this in depth in Part 2.] Despite these limited successes, digital startups have struggled to fill the void on a national level. Abernathy noted that 95% of local digital startups are located in urban areas, meaning that even rural and less-populated communities with reliable internet access lack an online local news alternative. Ethnic media have faced similar difficulties, running mainly on shoestring budgets with small staffs unable to fully cover a particular region.
The decline of local news has several causes and it predates the rise of the Internet. As far back as the 1950s (and even earlier), newspapers were on the decline due to competitive challenges first from radio and then from television. But the Internet has accelerated the decline. As the changing demands of news consumers became apparent in the early 2000s, news organizations were initially reluctant to change what had largely been a successful model, which led to a lack of innovation until the situation was already dire. In addition, news organizations and the digital start-ups that attempted to supplement or replace them failed to engage with audiences in new ways, limiting outreach to consumers who viewed newspapers as anachronistic. While newspapers may have failed to evolve, a main cause of the decline of local news is the collapse of the advertising-driven for-profit business model that newspapers relied on for decades. In an era where few media sources existed, newspapers were able to position themselves as an effective way for advertisers to target consumers in a particular market. The rise of platforms like Facebook and Google has destroyed that model.
“[W]e have relied on a for-profit model for newspapers. What especially happened after 2008 is that the problems on Wall Street came down to Main Street so you lost the last of the retail advertising that was supporting the very small and midsize papers going forward.” —Penny Abernathy
As discussed further in Part 3 of this paper, platforms can identify the users who will be most likely to purchase a particular product or service by collecting detailed data about an individual’s browsing history, purchasing preferences, and other personal information. They can then offer advertisers a more efficient use of advertising money, allowing them to target only those who are ostensibly more likely to be interested in their product. Andrew Gavil (Professor, Howard University School of Law) argued that platforms are able to offer “higher value, higher quality targeted ads in a local community.” Newspapers do not have the data, and thus cannot offer the same level of targeted advertising. As a result, businesses have diverted their advertising efforts from traditional local news sources to online platforms. According to Abernathy, in some markets as much as 80% of advertising revenue goes to Google and Facebook, leaving television stations, newspapers and radio stations fighting over a fraction of the advertising revenue they once received.
“Why is Google more successful than the News & Observer at selling advertising to [a business] in Chapel Hill? I think the answer is that Google can tell advertisers, much more credibly, ‘If you advertise with us, we can find exactly the people you, Joe Advertiser, are looking for, and you won't have to waste any money reaching people that don't give a damn about what you sell or how you sell.’” —Robert Kaiser, former Associate Editor and Senior Correspondent at The Washington Post
Platforms are able to use their leverage in a two-sided market (with consumers on one side and advertisers on the other) to make advertising more effective while also undercutting other local news attempts to collect the revenue needed to stay afloat. The platforms are able to mediate the relationship between news consumer and news producer, forcing news outlets to use platform-based services to reach their audience and collecting the profits from advertisers. Consumers increasingly rely on social media as their source for news, enhancing revenue for platforms at the expense of news providers who are losing advertising income while they still bear the cost of reporting the news.
Key Takeaway Speakers at the workshop emphasized the systemic nature of the issues facing the local news ecosystem. The newspaper industry enjoyed prolonged success due to a stable business model, but the industry’s inability to evolve in the face of financial adversity and technological development has now rendered that model largely obsolete. Online platforms capture a significant portion of overall advertising spending by leveraging user data. Local news organizations, which do not have the data, cannot offer the same level of targeted advertising and are unable to attract the advertising revenue necessary to remain financially sustainable. Many local news sources have been forced to scale back their reporting efforts or rely on third-party content. Due in part to a decrease in media ownership restrictions, many newspapers have been purchased by large investor-backed conglomerates interested in cutting costs and turning profits by any means necessary.
Even relatively successful news outlets who operate using a traditional, subscription-based model struggle in a platform-driven news ecosystem. At the workshop, Deb Aikat (Professor, Hussman School of Journalism and Media, University of North Carolina) referred to an increasingly common situation where a subscription-based newspaper (in this case, the Wall Street Journal) devotes significant time and resources into breaking a national news story. However, once the story is broken, platform-based outlets that are free for users to access report a nearly-identical story, with only a mere mention of it being “reported by the Wall Street Journal.” Those outlets siphon valuable user clicks and advertising money from the traditional media outlet, leaving the Journal holding the bill without reaping the corresponding financial benefit. This situation disincentivizes remaining news outlets from investing the time and energy necessary to cover news stories, an issue that is only exacerbated in local news environments where resources are tighter.
As their advertising revenue began declining, publishers took a number of steps to remain profitable. To cut distribution costs, newspapers in larger areas reduced their distribution area, leaving communities that once relied on metro newspapers without access to a print newspaper. For example, in 1996, the Atlanta Journal-Constitution sold 426,000 copies to people living in 124 Georgia counties; the paper now sells only 111,000 copies in only 32 counties.[16] To offset lost subscription income, many newspapers raised their subscription rates, which only accelerated the decline of subscribers who had become accustomed to accessing news and information on social media for free.[17]
Newspapers also began laying off newsroom personnel. The number of newspaper newsroom employees dropped by 51% between 2008 and 2019, from about 71,000 workers to 35,000, according to a Pew Research Center analysis of Bureau of Labor Statistics data.[18] Abernathy reported that the large regional dailies have shed the most journalists during that time period – an estimated 24,000 – or two-thirds of the total. Many large dailies, which often had several hundred journalists on staff in the late 1990s, today have only a few dozen.[19]
Consolidation and Decreased Quality
As newspaper and television media struggle to earn the revenue necessary to remain in operation, hundreds of news outlets have consolidated under the ownership of a handful of opportunistic investors. These mass acquisitions of media companies have been aided by a decline in regulations previously intended to diversify media ownership. At the workshop, Yosef Getachew (Media & Democracy Program Director, Common Cause) identified several regulatory changes that loosened restrictions on media ownership, including the elimination of the “main studio rule,” which required that broadcasters have full-time management and staff present during normal business hours and that television studios have the capability to originate content from their premises.[20] The removal of this rule makes it easier for broadcast television and radio stations to air in a community without actually having a local studio, potentially reducing the ability of a media organization to effectively cover local news.[21] The FCC also reinstated the UHF discount, a step that effectively raised the cap on how many television stations an individual conglomerate could own.[22] Getachew suggested that, due to the easing of ownership restrictions, companies like Sinclair and Nextstar hold so much of the media marketplace that they can effectively drown out other voices in the marketplace.
Newspapers have also seen significant consolidation of ownership. Penny Abernathy’s 2020 report finds that the largest 25 newspaper ownership chains own a third of the 6,700 surviving American newspapers, including 70 percent of the 1,260 newspapers that still circulate daily.[23] Many of these ownership chains are connected to hedge funds, venture capital, or other forms of private equity looking to acquire newspapers at a pittance and cut costs wherever possible in an effort to make money for investors.[24] In a 2016 report, Abernathy refers to these investment-backed newspaper publishers as “new media barons,” motivated by a focus on profits over journalistic standards.[25] These newspapers have instituted drastic cost-cutting measures, reducing staff and eliminating expenses like employee benefits and editorial writers.
The prioritization of profit suggests that the journalistic quality of these newspapers has become less important, and scholars have confirmed a perceived decrease in quality of the remaining newspapers serving local markets. In 2018, Phil Napoli (Professor of Public Policy, Sanford School of Public Policy, Duke University) released a study analyzing news stories from local media outlets gathered over a week in 100 randomly sampled U.S. communities.[26] The study found that 8 of the 100 communities had no stories addressing “critical information needs,” while 12 communities contained no original news stories and 20 communities contained no local news stories.[27] In addition, only 17 percent of the news stories provided to a community were “truly local,” actually about or having taken place within the community.[28]
At the workshop, Melanie Sill observed that local newspapers and media outlets owned by investor-backed chains have demonstrated an interest in focusing more on national stories in an effort to attract web traffic and consumers from a wider audience. By expanding their reach outside a local community, newspapers can pitch advertisers on huge, aggregated audiences and a wider advertising reach. Sill argued that, by targeting a national audience, newspapers tend to focus on drawing attention and clicks rather than effectively covering a local community.
“What I’m starting to see happening with local content is… there’s a big push on driving digital audience, driving page views, driving unique visitors, [and it] doesn't matter if they're in the market or not… So local newspaper news is becoming more like local television news: more crime, animal stories, things that drive traffic. And we're also seeing local reporters being mobilized to help supply national products.” —Melanie Sill
One casualty of the decline in local news coverage has been coverage of local and state governments. Napoli’s study finds that the presence of local government activity “fails to generate any increases in journalistic production,” suggesting that local-level government no longer demands a commitment of journalistic resources.[29] Sill also suggested that a weakening press “lack clout” at the state level, noting that legislative leadership at the North Carolina General Assembly moved the press room from the legislative building to a basement in an adjoining building, converting the existing press room into a members’ lounge for legislators. This decline in dedicated coverage for civic matters of interest like government and education makes it harder for local newspapers to effectively cover their communities.
Consequences of Declining Local News
The removal of a dedicated local news source from a market can have significant negative effects on community engagement and issue knowledge. Participants at the workshop discussed several key functions that local news outlets serve in a community. First, a local newspaper serves an important agenda-setting role within a community, helping community members understand their stances on issues. Local newspapers historically set this agenda by choosing which stories are published and how those stories are presented in terms of length, tone, and depth.
Second, the editorial function of a local newspaper is crucial in helping community members express and understand their feelings on a topic or candidate. Abernathy used her personal experience to argue for the importance of newspaper editorials and endorsements, suggesting that she often relies on a newspaper to evaluate the credentials and policy positions of candidates for statewide races she may not know much about.
Acquisition of local television stations by large national conglomerates can have a similar effect on local election information. A 2019 study found that local television news stations by the Sinclair Broadcast Group shifted away from airtime previously spent on local politics, instead dedicating increased coverage to national politics.[30] This change in priorities emphasizes that nationally-owned television stations may struggle to fill the gap left when dedicated local newspapers cease operation.
“I look at it from a very personal perspective. I cannot know in North Carolina what judges to vote for… I depend on an editorial staff to vet the judges. I depend on them to vet the Secretary of Agriculture. I mean, I don't know what makes a good Secretary of Agriculture and when we have the editorial staff stripped and not providing that, that provides a vacuum.” —Penny Abernathy
Third, local newspapers encourage regional economic growth and development. While local and regional advertising dollars once helped the newspaper economy flourish, that money has now been shifted to platforms like Facebook and Google. The closure of local newspapers has further hindered any attempts by businesses to advertise locally through print media. Fourth, local newspapers foster a sense of social identity. A newspaper has traditionally served as a key source of information for communities, spreading awareness of local events and election. Workshop participants expressed concern that the disappearance of a local newspaper, which has historically informed readers about candidates in local elections, leads to a subsequent decrease in local election participation.
“Part of our work is also going to local communities and talking to them about what they’re seeing in the news and we held town halls in Dayton, Ohio, in Charlottesville, in Chicago… And time and time again we've heard that… ‘we don't know what's going on with the legislature anymore or a school board or what’s happening at town hall.’” —Yosef Getachew
Studies have confirmed the fear that the decline of local news may negatively affect the ability of a community to engage in democratic self-governance. A 2010 study found that respondents living in suburban Los Angeles County who had access to a daily local newspaper were more likely to vote regularly than those living in communities without one,[31] while a 2019 report shows that mayoral elections are less competitive in communities where newspaper staffing cuts are the most severe.[32] Those who continue to participate in elections after the loss of a local newspaper are more susceptible to political polarization; a 2018 study found that counties that lost a local newspaper had fewer split-ticket votes in the 2012 election than those counties with a dedicated local news source. [33]
Key Takeaway Workshop participants identified several consequences of the disappearance of local news sources, showing that the vacuum left when communities lose dedicated news coverage can have wide-ranging effects. Local news outlets play an important role in informing community members about elections and other civic events, along with shaping community views around common values and beliefs. These news sources create a sense of shared purpose that can be a powerful uniting force within a town or county. Without a source for local news, community members get most of their news from social media, leaving them vulnerable to mis- and disinformation and exacerbating political polarization.
The disappearance of local news not only leads to a less-informed society, it also creates an information “vacuum” that aids the spread of factually inaccurate information creating a misinformed society. Local news outlets play a key role in combating the spread of misinformation by reporting local factual information and expert opinions. Brian Southwell (Program Director of Science in the Public Sphere, Research Triangle Institute) stated at the workshop that, as local news sources have disappeared, people have largely lost the ability to understand what is happening in their own local communities and how they are related to people in other communities. A recent analysis conducted by the Brookings Institute highlights the coronavirus pandemic as a prime example of the importance of accurate, local information in emergencies.[34] According to the Institute, as of April 1, 2020, 57 percent of counties with COVID-19 cases lacked a daily newspaper, and that these communities “may be particularly vulnerable as a result of insufficient news coverage.”[35] As a way to combat the spread of misinformation online, Southwell argued that communities should build media and social infrastructures with an eye toward increasing understanding among neighbors.
The absence of these infrastructures can leave a gap filled by opportunistic actors. A 2020 report from Napoli reveals the growth of partisan media outlets “masquerading” as local news sources.[36] The report identifies more than 400 partisan media outlets mostly owned and operated by a handful of conservative-leaning corporations or individuals. More than half of the sites identified in the report focus on local or hyperlocal communities, filling the space left behind by the disappearance of dedicated local news sources.[37] Napoli is skeptical that these “local” sites are actually operating within their purported communities, noting that one of the outlet owners was previously caught using content produced by Filipino writers under fake bylines.[38] The presentation of non-local, partisan media outlets as local news raises obvious concerns. A partisan slant on local news will likely increase the political polarization within communities, especially if opinion-laced coverage of local happenings is presented in a seemingly objective context. Inconsistent content moderation policies from platforms like Facebook and Google only exacerbate the problem. Mis- and disinformation can be difficult to differentiate from genuine news stories, and platforms are often incapable and unwilling to police the accuracy of content. In the absence of a dedicated local news source, an increasing number of consumers will rely on unreliable online or social media “news” to keep them informed.
Part 2: The Rise of Platforms and Growing Spread of Mis- and Disinformation
As local news sources have declined, a growing proportion of Americans are getting their news and other information from social media. This raises a number of concerns, including the spread of misinformation and the use of platform infrastructure to engage in disinformation campaigns. Platforms also wield a significant advantage over local news sources in the current information environment. The dominant platforms possess proprietary, detailed caches of user data. This information can be used to force advertisers, users, and news outlets into asymmetrical relationships favorable to the platform. In the vacuum left by the disappearance of local news sources, users are increasingly reliant on information sources that are incomplete, and may in fact be misleading or deceptive.
Platforms and Market Power
As a growing proportion of Americans get their news and other information from social media, market power has become more concentrated in online platforms like Facebook and Google. In 2019, the Pew Research Center found that over half of Americans (54%) either got their news “sometimes” or "often" from social media.[39] Pew also found that Facebook is far and away the social media site Americans use most commonly for news; more than half (52%) of all U.S. adults get news there. The next most popular social media site for news is YouTube [owned by Google] (28% of adults get news there), followed by Twitter (17%) and Instagram [owned by Facebook] (14%).[40] By 2018, social media had surpassed print newspapers as a news source for most Americans.[41]
Maurice Stucke (Professor, University of Tennessee College of Law) stated at the workshop that online platforms have captured two types of market power that are particularly relevant to the topic of fostering an informed society: a competitive advantage over traditional media outlets in harnessing advertising revenue and an information advantage over their users from whom they collect data.
Online platforms have a competitive advantage over traditional media outlets because they collect data from their users that the platform can use to disseminate targeted advertising while traditional media outlets, which do not have access to such data, cannot create that same personalized advertising experience. Advertisers view advertising with traditional media outlets, like newspapers, as a black box because there is no effective way for them to determine who actually saw their advertisements or to precisely target specific audiences.
“The Philadelphia retailer John Wanamaker famously said 50% of my advertising dollars are wasted, I just don't know which ones. What Amazon and Google have extracted over the last decade and a half is really the ability to get that 50%.” —Adam Candeub, Professor, Michigan State University School of Law
With their enormous user bases and sophisticated data collection practices, some online platforms are better positioned than others to capture these advertising dollars. A 2019 report on the market structure of digital platforms published by the Stigler Center at the University of Chicago Booth School of Business states that machine learning and big data have transformed the advertising industry to make advertising dollars work more efficiently for advertisers.[42] In their 2019 report, eMarketer explains that digital advertising accounted for 50.1 percent of total media ad spending worldwide in 2019, and most of this digital ad revenue went to Google and Facebook who, together, account for about 60 percent of the digital advertising market.[43] The Stigler report explains that these large online platforms have powerful economies of scale and scope. Platforms “can apply machine learning to extensive data sets to improve their products and expand their activities into new areas,” ultimately contributing to market concentration.[44]
At the same time, what data platforms collect and how that data are used creates an information asymmetry between online platforms and their users. Charlotte Slaiman (Competition Policy Director, Public Knowledge) reminded participants at the workshop that users often do not understand what giving up their data to these companies truly entails. According to a 2019 Pew study, eight in ten American adults are at least a little concerned about the amount of personal information that social media companies collect about them and 75 percent of adults believe there should be more privacy regulation for companies in general.[45]With their enormous user bases and sophisticated data collection practices, some online platforms are better positioned than others to capture these advertising dollars. A 2019 report on the market structure of digital platforms published by the Stigler Center at the University of Chicago Booth School of Business states that machine learning and big data have transformed the advertising industry to make advertising dollars work more efficiently for advertisers.[42] In their 2019 report, eMarketer explains that digital advertising accounted for 50.1 percent of total media ad spending worldwide in 2019, and most of this digital ad revenue went to Google and Facebook who, together, account for about 60 percent of the digital advertising market.[43] The Stigler report explains that these large online platforms have powerful economies of scale and scope. Platforms “can apply machine learning to extensive data sets to improve their products and expand their activities into new areas,” ultimately contributing to market concentration.[44]
Nor do users fully understand how these platforms use their data. To that point, a 2017 study, My News Feed is Filtered?, reports that U.S. college students were generally unaware how Facebook and Google use algorithms to personalize what users see in their news feeds.[46] In the study, 37 percent of students thought that every post made by their friends appears on their Facebook news feed. The students who did understand that not every post appears in their news feed were still largely “unable to explain how personalization works on Facebook.”[47] When asked about how search results appear on Google, “[n]o one referenced an algorithm and just one participant used the term personalization.”[48] Accordingly, as policymakers debate how best to create increased privacy protections to adjust the balance of power between large platforms and their users – a subject we discuss in Part 3 of this paper – one concern is whether consumers understand enough to make informed decisions about what social media service to use and to effectively take ownership and control of their data.
In recent years, companies that operate online platforms have also grown in size and competitive advantage as the result of several mergers, which, as Andrew Gavil (Professor, Howard University School of Law) noted at the workshop, have not always fit the types of mergers that traditionally receive closer scrutiny under antitrust law. Gavil explained that the United States currently has robust guidelines for evaluating horizontal mergers, or mergers of companies that sell similar, competing products, and less robust guidelines for evaluating vertical mergers, or mergers of companies that sell complimentary products or mergers of companies along a supply chain. However, Gavil stated that recent mergers involving online platforms do not easily fit within the definitions of either horizontal or vertical mergers in many cases. For example, Amazon’s merger with Whole Foods was not challenged because the companies were not viewed as operating the same type of business. While Amazon operates a digital marketplace, Whole Foods is in the grocery industry. Likewise, Facebook’s acquisition of Instagram avoided serious antitrust scrutiny because, rather than viewing both platforms as providing social media services, Instagram was viewed as offering a differentiated service focused only on photos.
Most recently, Google’s proposed acquisition of Fitbit is similarly being viewed as a merger between two firms offering very different types of products and services. Some organizations have questioned this reasoning. In a recent blog post, the Electronic Frontier Foundation argued that Google’s acquisition of Fitbit will decrease competition and “cement Google’s data empire.”[49] Though this merger may seem vertical, the effect on the market resembles a horizontal merger in the sense that Google can use the data acquired to increase their market dominance. This type of acquisition is designed to increase a major platform’s control over data, allowing it to further capitalize on the market advantage user data provide. At the workshop, Gavil and others wondered whether the traditional horizontal/vertical conception of antitrust should be adapted or revisited to allow for greater scrutiny of data-driven mergers.
“Do we need to deepen our thinking about what constitutes potential competition? Should we have viewed Instagram as a potential competitor of Facebook? Do we need to think about nascent competition?” —Andrew Gavil
Despite concerns about the communication environment created by concentrated market power and mergers, Robert Picard (Senior Research Fellow, Reuters Institute, University of Oxford) told participants at the workshop that online platforms lack many of the inherent monopolistic structures that produce competitive imbalances in other areas of telecommunications. While wired telephone service providers and internet service providers are concentrated based on physical infrastructure constraints, especially at the local level, digital media operations are not constrained by such barriers. Digital operations are much cheaper to operate than other forms of media. They also make it possible to serve niche audiences or small groups of people efficiently and promote competition more so than in an offline, non-digital environment. According to Picard, production of content is highly competitive. Though a large audience may not hear them, companies, institutions, and individuals alike can produce content without the barriers presented by other forms of communication.
Even if the structure of digital platforms may not be inherently monopolistic, several issues can lead to a lack of competition in online spaces, a point that Picard and other economists recognize. Network economics theory draws a direct connection between an entity’s utility and the number of consumers using the technology, which can lead to increased concentration and potential anticompetitive behavior.[50] In the same way that advertisers direct their advertising money to larger platforms like Google, Facebook, and Amazon due to their efficient, data-driven targeted advertising services, users prefer these larger platforms because they can offer more compelling and efficient services.
“There’s nothing in digital platforms that make it tend to monopoly.” —Robert Picard
These platforms and the revenue streams they provide are also attractive to investors. According to a March 2020 PricewaterhouseCoopers report, 7 of the top 10 global companies in terms of market capitalization (the total monetary value of a company’s stock) have an online platform component: Microsoft ($1.20 trillion) was second, Apple ($1.13 trillion) third, Amazon ($971 billion) fourth, Alphabet ($799 billion) fifth, Alibaba ($522 billion) sixth, Facebook ($475 billion) seventh, and China-based platform Tencent ($469 billion) eighth.[51] Picard suggested that the nearly unmatched financial power wielded by these platforms enables them to buy out competitors and innovators in their field, allowing the platform to bring more users into their network and increase concentration.
While a concentrated market may provide fewer alternatives for consumers and users, concentration does not necessarily lead to monopoly power. In a 2019 report by the International Monetary Fund (“IMF”) titled The Economics and Implications of Data, the IMF notes that concentration in the online sphere can be “consistent with innovation and competitive pricing” as long as the market can still be contested.[52] The IMF report suggests that a competitive market relies on the presence of “nonrival data,” information collected from platform users that would be widely shared to assist innovation.[53] However, private companies operating digital platforms have little motivation to share their data with competitors, and the report admits that “data hoarding” may limit market contestability.[54] Platforms are increasingly reliant on the proprietary data collected from users to attract advertising revenue and stay afloat financially, with Alphabet’s most recent annual disclosure to the SEC revealing that 83.9% of Google revenues came from advertising.[55]
Social Media Companies by Monthly Active Persons (MAP) in Millions as of Dec. 2019 [56]
As platforms continue to develop new ways to use harvested user data to offer microtargeted advertising, the incentive to share data with competitors is unlikely to increase. At the workshop, Maurice Stucke echoed the IMF’s concern that increased concentration among tech platforms is coupled with decreased innovation. In addition, he argued that an increase in profits among the top platforms may not be connected to an increase in efficiency, but rather a result of the platforms wielding their substantial market power to lessen competition and force parties that wish to use their services into terms favorable to the platform.
Key Takeaway As user data take on increasing importance in terms of both revenue and services, platforms have used their collection of user data as a competitive advantage and key source of power over other actors in the platform economy. Generating substantial profits from advertising, Facebook and Google are able to offer their services to users without charging a subscription fee. Data collection also gives platforms negotiating leverage over advertisers, who need access to the platform’s proprietary data hoard to efficiently reach the consumers interested in their products or services. The use of micro-targeting is forcing out many traditional news sources, who no longer control the relationship between advertiser and user in the way that they once did. Surviving local news outlets struggle to attract advertisers, who can target audiences more efficiently through platforms. Consumers are also increasingly unwilling to pay for news when they can access news content on social media for free, creating a vicious cycle where a continued decrease in subscribers leads to even less advertising income for news organizations.
Facebook, Google, and other online platforms operate what economists call a “multi-sided platform,” by providing services to users (generally without charge) and advertisers (for a fee). While platforms provide benefits to both ends of this two-sided market, they use their structure to create asymmetries that can be difficult to identify and control. In a 2016 paper, David Evans notes that multi-sided platforms defy typical market power and antitrust analyses, arguing that traditional economic models fail to account for the “interdependent demands” shared by users and advertisers utilizing online platforms.[57]
Platforms have used this asymmetry to their advantage on both sides of the transaction, reaping the benefit of network effects from each market. By collecting huge amounts of personal data from their users, platforms are able to outcompete traditional media and other content providers for valuable advertising income through their ability to provide targeted advertising. This advertising advantage allows platforms to force news organizations and publishers to concede certain requirements in a market that would otherwise create fairer transactions for them.
The two-sided market supports an advertising-based income model, allowing most platforms to offer access to users for “free.” Though users are not forced to pay money for the platform’s services, they instead must share their personal information with the platform, often without full knowledge of what they are giving up. Even when a user objects to the information the platform collects, they have little option but to stop using the platform. The market power and network effects wielded by the platform enables increased market concentration, frequently leaving the user without a viable alternative.
Market Failures in the Marketplace of Ideas
Many participants at the workshop used the term “market failure” to describe the current media ecosystem. This term, however, has a very specific meaning for economists. According to Mankiw’s Principles of Economics (Eighth Edition), market failure refers to a situation in which the market on its own fails to produce an efficient allocation of resources.[58] A market failure can be caused by several different factors, including externalities, barriers to entry, lack of property rights, market power, or the inability to monetize. A market failure can be a reason for government intervention, and many Chicago School economists view market failures as the sole justification for regulation.
According to Maurice Stucke, multiple characteristics of platforms might suggest a market failure worthy of recognition. Platforms like Facebook and Google have durable market power that allows them to accrue outsized profits. This market power allows platforms to exploit asymmetrical relationships with news organizations, publishers, and other content creators, along with creating an information and power asymmetry with users. At the workshop, Stucke specifically cited the incentive for platforms to collect data and use it to gain a competitive advantage on advertising, calling the advertising and data practices of the platforms “purposefully opaque.”
The differing uses of the term market failure by participants at the workshop expose an important disciplinary barrier among journalists, media scholars, and economists. This divide is important because it could harm interdisciplinary efforts to address the problems we are facing. While non-economists have used the term market failure broadly, economists use the term narrowly to refer to a specific set of market conditions. A misunderstanding around the term could lead to a lack of consensus around the challenges we are facing and potential solutions.
The First Amendment is often discussed using the analogy of a “marketplace of ideas,” a concept derived from the writings of John Milton and John Stuart Mill and developed by the jurisprudence of Justices Brandeis and Holmes. Under this framework, First Amendment scholars have used the term market failure expansively to describe failures in public discourse. In his 1997 piece How and Why the Marketplace of Ideas Fails, Paul Brietzke notes the possible utility of applying a market failure approach to free speech, claiming that “a badly-informed or misinformed public [is] a market failure itself” that may be worthy of government or judicial intervention.[59] He justifies his use of market failure by noting that the theory is not “well-developed,” adding that market failures “are literally matters of definition, of what we want markets to do that they are not doing.”[60]
Phil Napoli (Professor, Sanford School of Public Policy, Duke University) wrote a 2018 article identifying potential market failures in the marketplace of ideas stemming from the decreased effectiveness of counterspeech and imperfect competition of ideas.[61] Napoli points to the 2016 election as possible evidence that the speech marketplace is not working, noting that analyses show an “unusual degree” of voters failing to vote in their own self-interest and suggesting the potential influence of misinformation and disinformation via fake news.[62] Other media scholars have also used the term to refer to the state of journalism in the United States. A recent article in the Harvard Business Review refers to the market failure of local journalism as a “crisis for democracy” caused by the market’s inability to sustain the journalism required to operate an effective democracy.[63]
“I read a lot of papers where people are saying, ‘Oh, this is occurring because the market’s failing.’ So, if that’s the case, we have to have certain things to understand about what market failure really means, and a lot of people are particularly nervous in communications right now about market failure with no understanding of the economics of market failure.” —Robert Picard
Economists, on the other hand, view the term market failure more narrowly. At the workshop, Robert Picard was reticent to use the term market failure to describe the power of platforms, drawing a distinction between an environment in which privately owned platforms and companies are unable to give the public what they want (which would be a market failure) and one in which privately owned platforms and companies choose to provide certain kinds of content and not others (which would not be a market failure).
“I think it’s a vocabulary problem… [I]f local journalism is declining because there’s no demand or need for it, is that a market failure? No.” —Michelle Connolly
Andrew Gavil, an antitrust expert, also warned about misuse of the term market failure, suggesting that the use of a specific term of art as part of the larger debate around local news and online platforms could be a distraction. He argued that the decline of the print news media has a long history that predates the rise of the internet and that the failure of the traditional newspaper business model in the face of competitive challenges from radio, television, and now the Internet, should not be mischaracterized as a “market failure.” It may instead be a reflection of markets at work. Michelle Connolly also rejected the characterization of the local journalism crisis as a market failure. She suggested that the decline of local journalism due to lack of demand is not a market failure, expressing concern that inaccurate use of the term market failure could make the challenge of resurrecting local news even more difficult.
Key Takeaway One of the key takeaways from the workshop was that there is a disciplinary language barrier between economists and non-economists overuse of the term “market failure.” Non-economists typically use the term broadly to describe the breakdown in public discourse and knowledge within the current media ecosystem, including the increasing growth of news deserts (described in Part I). Economists at the workshop, however, cautioned against the use of the term market failure in such a general context, calling it a “very specific” economic concept describing a situation where a market is incapable of providing the desired results; market failure does not include a situation where private companies choose not to provide certain types of content. A misunderstanding around the term could lead to a lack of consensus around the challenges we are facing and the availability of potential solutions.
Regardless of whether the current media ecosystem suffers from a market failure, the concentration of online platforms raises concerns about anticompetitive practices. The power of online platforms is significant because they act as walled gardens for public discussion online, which is governed by the algorithms and content moderation policies that platforms utilize. Because the market power of online platforms is concentrated and platforms enjoy network effects where the quality of users’ experience increases as the platform gains more users, consumers have limited incentive to switch to alternative platforms. Consumers are unlikely to leave Facebook if their friends and family are only on Facebook because other platforms cannot provide the same user experience.
Furthermore, online platforms also act as gatekeepers for content produced by traditional media outlets as more people get their news from these platforms. A 2019 report published by the Australian Competition and Consumer Commission found that while users get news produced by media organizations through online platforms, media organizations themselves are kept at a distance, lacking access to user data, control over how snippets of their stories appear, and information about how algorithms affect placement of their content.[64] As a result, at the same time that media organizations struggle to compete with online platforms over advertising revenue, they also face challenges in having their content seen and monetized on online platforms.[65]
Key Takeaway The rise of platforms has coincided with – and some participants at the workshop say it has caused – a precipitous decline in local news reporting. The power of online platforms is significant because they act as walled gardens for public discussion online, which is governed by the algorithms and content moderation policies the platforms employ. Because the market power of online platforms is concentrated and platforms enjoy network effects where the quality of users’ experience increases as the platform gains more users, consumers have limited incentive to switch to alternative platforms. As a result, at the same time that local news providers struggle to compete with online platforms over advertising revenue, they also face challenges in having their content seen and monetized on online platforms.
The Spread of Mis- and Disinformation in Online Environments
The rise of platforms has coincided with – and some participants at the workshop say it has caused – a precipitous decline in local news reporting. This has created an information vacuum making it possible for misinformation and disinformation to flourish.
Although misinformation in media is not new, it spreads rapidly in today’s speech environments on social media. According to a 2018 study, The Spread of True and False News Online, researchers at the Massachusetts Institute of Technology found that false news stories on Twitter “diffused significantly farther, faster, deeper, and more broadly than the truth in all categories of information,” including information about terrorism, natural disasters, urban legends, and political news.[66] Specifically, the researchers found that falsity traveled six times faster than the truth online, and, while accurate news stories rarely reached more than 1,000 people, false news stories “routinely diffused to between 1,000 and 100,000 people.”[67] Similarly, a 2017 study found that the lifecycle of political misinformation on social media was longer than that of facts, and political misinformation tended to reemerge multiple times.[68]
According to Brian Southwell, misinformation presents a significant public health challenge. He and other public health experts noted in a recent paper that social media platforms differ from traditional media platforms in key ways that make them more susceptible to the rapid spread of misinformation.[69] For example, while traditional media outlets are relatively contained and limited in authorship, social media platforms allow “a wider range of authors,” are “less formally governed,” and have “relatively few regulatory controls over false, misleading, incomplete, and false-equivalence information.”[70] Moreover, social media platforms are designed to disseminate content through algorithms that “can modify patterns of individual exposure in opaque ways,” causing different people to see and hear different content.[71] Furthermore, according to a 2015 study, users’ self-selection of content creates homogeneous, polarized clusters or echo chambers that drive content diffusion, including diffusion of misinformation, over social media networks.[72] This problem is only heightened in an environment where local news sources are unavailable to counteract the misinformation spread on social media.
“We've got to take more seriously the idea that in information processes emotions are really key.” —Brian Southwell
Other experts suggest, however, that we should be skeptical of claims that misinformation has a significant impact on political views, noting that there is little empirical evidence showing that misinformation has had large direct effects on voter’s attitudes or behaviors.[73] Shannon McGregor and Daniel Kreiss (Professor, University of North Carolina Hussman School of Journalism and Media) have written that “[i]t’s not misinformation or targeted advertising that directly drives the vast majority of citizens’ political attitudes and voting patterns”; misinformation is less effective than we might think because rather than being swayed by a particular factual narrative, voters “see themselves as members of social groups and then in turn choose the parties that best represent those groups.”[74] Nevertheless, McGregor and Kreiss caution that misinformation is still a problem, but efforts to address it would be better served by focusing less on specific factual elements and giving more attention to the motivations, content, and drivers of mis- and disinformation.
“Vacuums are really problematic because people need to try to reconcile and to provide certainty for themselves. This is a situation where news can quickly spread. Situations where, similarly, there's a lack of … corrective information also can be problematic.” —Brian Southwell
Southwell explained at the workshop that peoples’ reactions to misinformation are often driven by sociological and psychological factors. According to Southwell, humans are social beings who look toward a hopeful future. However, when faced with uncertainty about that future, people can fill information vacuums with misinformation in an attempt to find certainty.[75] He suggested that we will continue to encounter misinformation in our online environments for four reasons. First, we tend to accept new information at face value before evaluating whether it is true or false. Second, we tend to share information because it connects us with others and not necessarily because it is true. Third, although we can correct misperceptions, it is difficult to ensure that corrective information gets the same level of attention as the original misinformation. And fourth, our legal tradition preferences allowing the public to evaluate the accuracy of information after it has been disseminated rather than preventing its distribution in the first place. Southwell proposed that understanding the psychological components of how people react to misinformation is an important aspect of learning how best to combat its spread, pointing to scholars like University of North Carolina professor Alice Marwick who have investigated why social media users share misinformation.[76]
Key Takeaway The decline in local news reporting has created an information vacuum, making it possible for misinformation and disinformation to flourish online. Social media platforms are designed to disseminate content through algorithms that can modify patterns of individual exposure in opaque ways, causing different people to see and hear different content. Furthermore, users’ self-selection of content creates homogeneous, polarized clusters or echo chambers that can increase the diffusion of misinformation over social media. This problem is only heightened in an environment where local news sources are unavailable to counteract the misinformation spread on social media.
Misinformation is not the only platform-based threat to an informed public. Deen Freelon (Professor, University of North Carolina Hussman School of Journalism and Media) has focused his research on disinformation, a “sibling concept” to misinformation which he defines as attempts to sway public opinion by using morally questionable techniques. At the workshop, Freelon drew a distinction between disinformation and misinformation based on the relationship between the person spreading the content and the users or organizations that are intended to consume the content. While misinformation is spread unknowingly or without regard to its veracity, the party spreading disinformation knows that the information is false and has an intention to damage other people or organizations. Freelon referred to disinformation as “propaganda information operations” and calls it a subset of information warfare.
Disinformation is produced by both individual actors and state-backed organizations. One of the main producers of disinformation on social media platforms is Russia’s Internet Research Agency (IRA), an organization backed by the Russian government that was responsible for many of the targeted posts ahead of the 2016 U.S. election. A 2018 report found that the IRA “leveraged social media to manufacture and spread junk news, manipulate public opinion, and subvert democratic processes.”[77] The state-sponsored disinformation campaign effectively reached millions of Americans, with more than 30 million Facebook users sharing IRA-created posts between 2015 and 2017.[78] The intention of disinformation to deceive and divide also means that disinformation content can target all sides of the ideological spectrum. The report’s identification of the top 20 most-liked Facebook pages managed by the IRA includes pages targeting veterans (Veterans Come First), liberals (Born Liberal), people of color (Brown Power), members of the LGBTQ community (LGBT United), and gun rights supporters (Defend the 2nd).[79]
Other foreign governments have also engaged in a targeted social media disinformation campaigns in the United States. Freelon noted at the workshop that disinformation content has also come from organizations affiliated with the governments of Iran, China, and Venezuela. Disinformation can also originate domestically. A 2017 report co-authored by Alice Marwick, Media Manipulation and Disinformation Online, identified online trolls, “alt-right” activists, men’s rights advocates, conspiracy theorists, influencers, hyper-partisan news outlets, and politicians as all playing a role in the spread of disinformation on social media platforms.[80]
Another element of disinformation’s effectiveness on social media is the varying forms it can take in order to appeal to different audiences. Freelon identified visual-based disinformation posts showing images of left-wing billionaire and frequent alt-right target George Soros, while another post shows an image of Donald Trump and Hillary Clinton holding hands with messaging intended to suppress voting in the Black community. Other types of disinformation can resemble a legitimate news report. A 2019 Buzzfeed article uncovered an Iran-linked disinformation campaign that produced more than 100 false articles and published them on websites impersonating legitimate news outlets.[81] The fake articles were convincing enough that one discussing the 2022 Qatar World Cup was covered by Reuters and subsequently spread by other legitimate news outlets.[82] If a reputable news agency can be misled by the apparent veracity of state-sponsored disinformation, social media users are also at risk. This ability to mimic authentic news sources is especially concerning as, in the absence of local news outlets, more people continue to use social media as their primary news source.
Regardless of whether disinformation campaigns have actually succeeded in mobilizing activists or persuading voters – and here, again, researchers have pointed to the dearth of empirical studies showing a direct impact on elections – there is reason to be concerned that the spread of disinformation is a threat to the stability of American democracy. David Karpf, Associate Professor of Media and Public Affairs at George Washington University, has written that “disinformation and propaganda do not have to be particularly effective at duping voters or directly altering electoral outcomes in order to be fundamentally toxic to a well-functioning democracy.”[83] He notes that disinformation “undermines some of the essential governance norms that constrain the behavior of our political elites” and warns that “[i]t is entirely possible that the current disinformation disorder will render the country ungovernable despite barely convincing any mass of voters to cast ballots that they would not otherwise have cast.” [84]
Platform Governance in Flux
The power of Google and Facebook is accentuated by the American legal system, which grants online platforms significant latitude to moderate content as they see fit. Section 230 of the Communications Decency Act, passed in 1996, provides legal protection for online intermediaries and websites that publish third-party content.[85] Specifically, § 230(c)(1) states that “[n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content,” which protects platforms from being civilly liable for content posted or published by a third party.[86] § 230(c)(2) offers further protection for platforms by allowing them to restrict access to “objectionable” material, regardless of constitutional protection.[87]
The Electronic Frontier Foundation has referred to the legislation as “one of the most valuable tools for protecting freedom of expression and innovation on the Internet.”[88] Without the protection Section 230 offers, platforms like Facebook, Amazon, and Google would be subject to potential liability for each individual piece of content posted on their sites, leading to enormous investments of time and resources to try and inspect each item in an attempt to avoid liability. Realistically, platforms would likely be forced to either eliminate many types of user postings entirely or impose stricter limits on wide swaths of content.
In a world where online entities are largely responsible for the policing of their user-created content with little government intervention or threat of liability, the self-governing role of platforms is a significant factor in shaping the online speech environment. Kate Klonick’s 2017 article, The New Governors: The People, Rules, and Processes Governing Online Speech, argues that platforms like YouTube, Facebook, and Twitter have created content moderation systems resembling a formal governmental entity.[89] In the same way that governments create codified legal frameworks, platforms create a “detailed list of rules” dictating the limits of acceptable content on their site.[90] Trained decisionmakers serve in an adjudicatory function for the self-governed platform.
Platforms frequently alter their content guidelines based mainly on external factors and influences. Daniel Kreiss (Professor, University of North Carolina Hussman School of Journalism and Media) and Bridget Barrett have coined the term “platform transience” to describe the rapid changes in a platform’s policies and procedures that result from external social and political pressures.[91] Kreiss and Barrett’s use of “platform transience” emphasizes the fluid and unpredictable nature of platform self-governance. Platforms like Facebook,[92] YouTube,[93] Twitter,[94] and Instagram[95] each have their own content moderation guidelines, and though there is some cross-platform consistency in addressing clear societal harms like child pornography, the platforms often take very different approaches to other content. While Facebook has repeatedly refused to regulate political advertising on the site, including advertisements that contain false or misleading statements,[96] Twitter announced in November 2019 that it would ban all political advertising, a decision that Kreiss referred to at the workshop as “part business, part public relations, and part normative desire.” Twitter’s CFO disclosed in an interview that the platform made less than $3 million in political ad revenue during the 2018 midterms, a total that would represent less than half a percent of Twitter’s revenue ($909 million) in the fourth quarter of 2018.[97]
“There’s a lot of interpretative flexibility in how these platforms have guidelines around content moderation.” —Daniel Kreiss
In addition to inconsistencies across social media platforms, platforms are also internally inconsistent in enforcing their own guidelines. Though most platforms prohibit “hate speech” on their sites, each set of guidelines defines the term differently and the definitions themselves are extraordinarily difficult to apply consistently. For example, Facebook includes “statements of inferiority” as a category of prohibited hate speech in their terms of service, an extremely broad category that Kreiss suggested gives the platform “a ton of flexibility” when making content moderation decisions.
Moreover, media companies and users whose content has been removed by a platform during the content moderation process have little recourse to contest the platform’s decisions. The decision to remove content is sometimes made by a proprietary algorithm, while in other cases, content moderators determine the acceptability of content through an adjudicative process that is closed to the public and generally lacking in transparency. The party whose content is removed is often unaware of the reasoning behind a content moderation decision. Facebook has attempted to address the process by establishing an independent oversight board that hears appeals of content moderation decisions and publishes the results publicly, but the board will only examine a small fraction of the content moderation decisions made on a daily basis by the company.[98]
Key Takeaway While Section 230 of the Communications Decency Act gives platforms wide latitude to decide what content to allow on their services, platforms are anxiously seeking guidance as they continue to struggle with content moderation practices and policies for misinformation and disinformation. Several platforms have acknowledged the difficulties, with Facebook and others explicitly calling for additional federal regulation combating election interference and data privacy. Though platforms are already working to address harmful content, they view themselves as lacking the legitimacy and capacity to serve as “arbiters of truth.” Inconsistency between platforms and within individual platforms has led to a muddled information environment.
A recent flashpoint in platform content moderation was the 2016 U.S. presidential election, where state-sponsored misinformation and disinformation spread widely on platforms like Facebook and Twitter, sowing chaos and potentially affecting the election results. A 2019 report identifies criticism after the 2016 election as the type of external pressure which Kreiss suggests leads to changes in social media platform guidelines.[99] Indeed, the report identified a “flurry of initiatives” announced by various platforms in response to election backlash, including changes to algorithms responsible for advertising and content moderation, partnerships with external fact-checkers, and support for “quality journalism.”[100]
Attempts to ensure better platform governance practices are especially important as online platform users increasingly turn to social media as their primary news source. A 2017 study analyzing the news consumption patterns of Facebook users found that increased polarization in online news consumption led social media users to focus on a small number of news sources and made the users more susceptible to fake news and misinformation.[101] An increase in news polarization can cause division within communities, with individuals on opposing sides of the aisle obtaining their news through like-minded family, friends, and media outlets. This reliance on partisan-leaning information sources (both legitimate and illegitimate) exacerbated an already-tense political climate. Researchers who study mis- and disinformation argued that platforms need to counter these affects by taking an active role in identifying and removing misinformation and disinformation from their sites. Without direct platform intervention, the information vacuum left by the disappearance of local news will only continue to grow.
Part 3: Regulatory and Policy Solutions
This part highlights the regulatory and policy responses that have been proposed to address the decline of local news, the rise of platforms, and the spread of mis- and disinformation online. Some proposals focus on increasing the supply of – and demand for – local news, including increased public education and expanded support for journalists and local news organizations. Other proposals focus on market-based reforms that address the growing power disparities between news producers and platform operators as well as between platforms and their users.
Public Education
Most Americans have no idea how badly local news providers are suffering. While the business model for local news has been weakening for many years, the COVID-19 pandemic and ensuing recession has further worsened the situation. As noted in Part 1, in the past two decades, more than one-fourth of the country’s newspapers have disappeared, leaving residents in thousands of communities living in vast news deserts. Despite the efforts of other media to fill this void, including commercial television and online-only sites, they have failed to slow the spread of news deserts, especially in economically struggling regions of the country.
Yet the Pew Research Center reports that most Americans think their local news media are doing fine financially. About seven-in-ten say their local news media are doing either somewhat or very well financially (71%), while only about a quarter say their local news organizations are not doing well (24%).[102] This disconnect – and corresponding complacency – needs to be addressed if local news organizations are going to survive.
In fact, most Americans still value the work of journalism. A recent Gallup/Knight Foundation survey reports that the vast majority of Americans (84%) say that the news media is “critical” (49%) or “very important” (35%) to democracy.[103] But Americans have increasingly polarized judgments about the work of media organizations and they described feeling overwhelmed by the volume and speed of news – in part because of the mix of news interspersed with non-news on the Internet, including social media. Moreover, nearly eight in 10 (78%) think misinformation online is the leading problem with news today.[104] In response to the abundance of information sources in the current media environment, a plurality of Americans (41%) say they only pay attention to one or two trusted news sources, while 1 in 3 (31%) try to consult a variety of sources to see where they agree. About 1 in 6 Americans (17%) stopped paying attention to news altogether.[105]
Public education to explain the work of journalists and the value of local news is an obvious and important step to address these findings. This means helping people to better understand the harms associated with the collapse of local news, but also helping them develop strategies for evaluating the information sources they currently use. Such efforts are aimed at creating more demand for high-quality journalism and developing better-informed consumers of news.
Media literacy is more important than ever in today’s world of media saturation. A recent study by the Stanford History Education Group analyzed the ability of 8,000 students (from tweens to college age) to evaluate credible sources of news.[106] The study tested the capability of students to evaluate evidence online and assess claims made on social media. The report demonstrated students’ inability to do either, noting that “[d]espite their fluency with social media, many students are unaware of basic conventions for indicating verified digital information.”[107] In response to these disturbing findings, the researchers proposed exercises for educators to instill skepticism and train students to become more discerning consumers of online information.[108]
Media literacy programs range from standard education programs to online games, like the “Bad News Game,” an award-winning fake news intervention designed by researchers at the University of Cambridge “aimed at building psychological resistance against online misinformation.”[109] The game teaches six different techniques used by fake news producers: impersonation, emotional exploitation, polarization, conspiracy, discredit and trolling. The game teaches users to recognize fake news tactics and become “inoculated” in their own media consumption.
Educators in public schools and institutions of higher education are also teaching their students to “read laterally” -- a tool for investigating unfamiliar online sources by leaving a webpage and opening a new browser tab to see what trusted websites say about the unknown source. Teachers demonstrate lateral reading and then students practice the strategy, determining who is behind a website and, ultimately, whether that website is trustworthy.[110]
These types of media literacy training are crucial. But equally important will be bringing back a well-supported and vibrant local news environment, a monumental task that will likely take more creativity among public leaders, journalists, educators, public-private partnerships and journalism institutions.
Expanded Support for Journalists and Local News Organizations
Empowering journalists to serve the needs of local communities begins with ensuring that local news organizations have the resources to hire sufficient reporting s
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