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6.1: Commodification of News

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    The phrase "commodification of news" refers to the process through which news is translated into a commodity, or a good or service designed to earn its producer a profit when it is sold in a market.

    News has been treated as a commodity in much of the world in recent decades. However, it is different from most other commodities. Since the invention of the telegraph, news has been a weightless product that can be transported over vast distances nearly instantaneously. It also has limited exclusivity and a short individual lifespan, as news quickly loses value as it ages and can be quickly repackaged by competitors. Additionally, one person’s consumption of news does not diminish its supply to the next person (unlike a pint of ice cream from Trader Joe’s). As such, the economics of news is unique in many ways, especially in a digital environment.

    Commodities are responsible only to the marketplace. They are indifferent to the quality of democracy or the values of a society so long as buying, selling, and private profit-making are permitted. Put another way, the more news is treated as a market commodity, the less certain it is to supply the kind of information a democratic society requires.

    Audiences and Advertising

    Within the context of commodities, commercial journalistic organizations typically operate in a dual-product market. They produce and market one product (news) so they can produce another product (audience attention) that can then be sold to advertisers, who covet audiences for their products.

    This relationship is particularly important because the majority of revenue for most commercial journalistic organizations today comes from advertising, and not directly from audiences via things like subscriptions. Indeed, since the invention of mass advertising, news has generally been subsidized (e.g., newspapers) or outright paid for (e.g., broadcast TV newscasts) by someone other than the audience. This has allowed news content to be more affordable for — and thus accessed by — mass audiences, who receive the content for far less than it costs to produce it.

    This dual-product market is further characterized by mutual interdependence: Journalistic organizations need advertising revenue to subsidize their journalistic activities, but the amount of advertising revenue is often related to the amount of audience attention that the organization can deliver. Put another way, in order to increase the revenue necessary to produce quality journalism, journalistic outlets must deliver larger numbers of readers, viewers, or listeners — even as, one would hope, quality journalism is what helps to bring in larger audiences.

    The Newsroom 'Wall'

    To combat the potentially negative influences of this interdependence on journalists' ability to serve as truth-seekers, professional journalistic organizations tended to implement throughout the 20th and 21st century a metaphorical 'wall' separating the business side of the organization from its newsroom operations. On one side of the wall, journalists and editors developed content for citizens, with limited regard for the business implications of their reporting. On the other side, managers and sales staff worked with advertisers to sell the audience attention.

    The purpose of the 'wall' was to grant journalists greater autonomy, or independence from business concerns, which would allow the organization to produce journalism. The 'wall' itself was often implemented through different social rules (and even physical obstacles) that reduced interactions between members of each side. This might include placing business personnel on one floor of a building and newsroom personnel on another, and having them report to different sets of supervisors. This was possible in large part because journalism was already a very profitable enterprise for much of the past century. (Although it may seem comical now, major newspapers were regarded as cash cows three decades ago.)

    Such a separation was reasonably effective for much of the past century. However, it was not always impervious. For example, the news hole (the amount of space available for news in a product like a newspaper) was often dependent on the amount of advertisements that were sold for that edition. If there were more advertisements, there would be more newspaper pages, and thus more space for news content. Additionally, workers on the business side would sometimes pressure editors, with varying success, to push for content that was advertising-friendly. This did not necessarily mean producing stories that were favorable to specific advertisers, like a happy story about Trader Joe’s. Instead, it meant ensuring the news product had some happy stories in it. That’s because Trader Joe’s would be happier if its advertisement appeared next to a story that already left the audience member in a positive emotional state, which in turn would make them more likely to transfer that feeling of happiness to the product being sold by Trader Joe’s.

    The industry’s economic challenges have resulted in that line becoming even more blurred in recent years, though. For example, one source of revenue newsrooms now tap into is called native advertising. This involves a newsroom having a team of 'content creators' (sometimes comprised of former journalists) who work directly with potential advertisers to create semi-advertisements that look and feel like a typical journalistic story. Such stories are often distinguished by being labeled as 'sponsored content' or with some other aesthetic signifier to show that they are not journalistic stories produced by the journalists at that organization. However, readers and viewers do not often make that distinction — indeed, the very appeal to advertisers is that those distinctions will not be made and that audiences will mistake native ads for editorial content. Although profitable, the downside to such efforts is that they may erode audiences' trust in a journalistic organization.

    Market Failure

    The tension between treating news as a market commodity and practicing journalism as a public service has been a central dilemma in journalism for over a century. Notably, advertising was first welcomed rather than criticized because it promised to end, or at least ease, the dependency of journalism on the political parties that used to finance newspapers. In the Utopian vision of ad-supported journalism, advertising would enable market forces to empower audiences, resulting in the production of news information that was even more useful to them. Conversely, others worried that market sensitivities would seed market-driven journalism characterized not by "all the news that’s fit to print" but rather "all the news that’s fit to sell."

    Scholars have argued that quality journalism provides multiple fundamental benefits to a democratic society that the market fails to adequately compensate. For example, all members of a society benefit when voters are well-informed and thus able to choose wise leaders and reward good governance. Similarly, all members of a society benefit from the deterrence of corruption and abuse that results from an actively monitorial journalistic environment, as bad-faith actors weigh the costs of getting caught against the benefit of doing a bad thing. Yet, in a market-oriented system, not everyone pays for news. In fact, only a very small proportion of people do. This creates a free rider problem, where people can experience many of the benefits of a product without having to pay for it. Consequently, what is civically valuable but goes unrewarded in the marketplace — such as expensive public-service journalistic investigations — ends up being under-produced, since there’s no economic incentive for it.

    Scholars have also found that the more responsive a newsroom is to market forces, the less it tends to serve the public interest through civic-minded efforts like 'watchdog' journalism. Again, this makes sense on multiple levels under rational-choice theories of economics. Rational managers and owners who seek to maximize their (or their investors') economic return should produce the least expensive content that can generate the largest audience of subscribers and/or consumers that are attractive to advertisers. Rational advertisers should seek the largest audience of potential customers at the lowest cost while favoring outlets that produce softer, simpler stories that leave potential consumers in a positive emotional state. And, audiences are not themselves paragons of rational self-interest. They do not always financially reward the content that benefits them the most in the long run.

    The confluence of these factors results in what economists call market failure, where there is inefficient production and distribution of goods and services within a free market resulting from the fact that the individual incentives for rational behavior do not lead to the best outcomes for a group (or society). This has become especially apparent as the economic underpinnings for commercial journalism in many parts of the world, including the United States, have been significantly challenged by sociotechnical disruptions.

    For example, the newspaper advertising market enjoyed robust growth from 1950 to 2000, and then declined to the 1950 levels in the next 12 years alone. Consequently, newsroom employment in the United States declined by 51% between 2008 and 2019. Additionally, hundreds of small community newspapers in the United States have been forced to close, creating a situation where in 2019, almost half of U.S. counties had a single local newspaper (that was often only published weekly). The coronavirus pandemic of 2020 only increased those economic pressures: A third of U.S. newspapers experienced layoffs that year, with large-circulation newspapers being most affected.

    This has required commercial newsrooms to significantly rethink how to serve their civic objectives while remaining economically viable — efforts that have, at least recently, guided them toward further diversifying their revenue models in order to make up for drastic losses in advertising. Even among local and national television journalism outlets, which have been less affected by those trends, there are more intense economic (and political) pressures to move away from expensive public-service journalism. There have been many calls to address the market failures within journalism, but the challenge has persisted.

    Key Takeaways

    • News is a unique commodity in that it often has a short lifespan, it is easily copied, and its supply does not diminish as it is consumed.
    • Commercial journalistic organizations often serve two markets at the same time: audiences and advertisers. Advertisers subsidize the content that audiences need and audiences give advertisers the attention they seek.
    • Historically, professional, commercial journalistic organizations separated journalists from business-people by creating a metaphorical 'wall' in the newsroom that promoted newsroom independence and autonomy.
    • In many countries, including the United States, commercial journalism operates within a context of market failure in terms of serving of the public good. A number of happy coincidences allowed that system to work reasonably well for many decades. However, those coincidences no longer hold true.

    This page titled 6.1: Commodification of News is shared under a CC BY-NC-SA 4.0 license and was authored, remixed, and/or curated by Rodrigo Zamith via source content that was edited to the style and standards of the LibreTexts platform.