The Take Bakery: How to save local journalism

Solving the supply and demand problem

Five years ago, a Pew Research poll found that 71% of U.S. adults thought their local newspaper was financially stable. So it must’ve been incredibly shocking for some of these readers to see their local news outlet close over the subsequent years. According to a study by the Medill School of Journalism, we lost 2.5 newspapers per week in 2023.

I very much sympathize with these readers.

For years, I munched softshell crab and fried shrimp paste at my favorite cavernous, and somewhat sparsely patronized Vietnamese restaurant in Denver. Until one day, I was shocked to learn from my favorite waiter that the restaurant was shutting its doors.

This restaurant and the local news industry both struggle with the same problem. They both serve (at least to me) an equally critical public service, but there isn’t enough audience demand to make it a sustainable business model.

The Vietnamese restaurant ended up downsizing to a smaller location. But substantially downsizing local news outlets inevitably leads to a worse product, and is usually the first step towards closure. So how do we save local news?

As much fun as it is to imagine an elegant and creative solution that will magically restore local journalism, the reality is that there are two, somewhat intractable issues at hand. The supply of local news has drastically fallen to the point where over 50% of the counties in the United States are now considered “news deserts.” And, as a result of our hyper-nationalized news environment, endless entertainment options, and our fruit fly attention spans, the demand for local news, even in areas with financially viable local newspapers, has generally been falling for years.

Solutions exist, but we need to separate those two problems and tackle them individually. But I’ll give you a hint: Every solution involves Uncle Sam.

Publicly funding local news

To some people, the words “publicly funded” and “local news” pair about as well as cacti and waterbeds. In a recent Washington Post column, George Will called it “a recipe to make journalism as trusted as government.”

But Tim Franklin, an associate dean and professor at Northwestern University’s Medill School of Journalism, told me that he’s come around on the issue after being opposed to it for decades. He said local news “is essential to a community just like a local library.” And he cited studies linking the decline of local news to lower civic participation, lower turnout in local elections, and even more wasteful public spending. Now he thinks it’s something government should pursue and that it should start at the state level.

But in his column, George Will critiques the Illinois Local Journalism Task Force recommendations for state funding, saying that subsidizing local news would make them “wards of the government.” As a conservative, he is obviously concerned about local news operating under the thumb of the Illinois state government’s more liberal agenda. But in fairness, one can imagine Democrats not really being comfortable with Ron DeSantis dispensing money to his favored outlets and withholding from those that disagree with him.

So what’s the solution? Since local news generally covers local politics, I agree that it’s important to keep public subsidies far away from any potential conflict of interest. That means the local or state government shouldn’t be the ones making the funding decisions.

But a reasonable idea was introduced during the 117th Congress by Representative Ann Kirkpatrick, and its dozens of bipartisan sponsors indicates that it isn’t the sort of partisan power grab that George Will fears.

The “Local Journalism Sustainability Act” gives local newspapers (organizations with 51% of their audience within a 200-mile radius) a $25,000 refundable payroll tax credit for each journalist on the payroll for the first year, and up to $15,000 for the following four years. It also includes a non-refundable tax credit for businesses to advertise in local newspapers, starting at $5,000 the first year and $2,500 in the following four years.

I’d say the legislation is definitely more of a bandaid than an organ transplant for our sickly local news patient, but it is a start. The tax credit will give newspapers some runway to hire some more staffers, or even allow more papers to open up in news deserts. The ad incentives will encourage businesses to start advertising on local news sites, helping to wrestle a bit of revenue back from the jaws of Google and Facebook—the advertising leviathans that previously ripped out the financial backbone of local news.

These are all important supply side reforms for local news, and I think they adequately walk the line between government support and government influence. I’d also argue that the first year of the payroll tax credits should be increased to actually cover a full journalists salary in order to properly account for the sheer decimation that many of these local news outlets have faced over the past decades.

But even if we enact these policies and build a greater infrastructure for local news, is there an audience that will read it? Or are we merely propping up an important but hollowed out industry?

Low-demand for low-quality news

I asked Tim Franklin about this audience demand problem, and he sounded sympathetic to the concern. But he emphasized that a strong audience for local news does exist. He noted that “original, unique reporting on local affairs drives traffic and drives habit-forming reading patterns.”

There is, obviously, truth to that statement. Good original journalism is, without a doubt, good. But, unfortunately, not all local journalism is good.

A 2018 study by Duke University analyzed 16,000 local news outlets and found that only 17 percent of published stories actually focused on news in the community, while 57 percent of stories were just republished versions of stories that existed in national media outlets.

An unnecessarily harsh critic would say that subsidizing news outlets that primarily reprint news from other outlets is akin to giving violins to cows and expecting Beethoven’s Ninth.

Of course, the decline in quality local news isn’t necessarily the fault of the hard-working journalists or the editors at these publications — and there are plenty of local news organizations that are delivering critical news. This article by Steven Waldman, the president of Rebuild Local News, illustrates some great examples of the social and economic value that local news provides.

But we can’t ignore the fact that a confluence of factors in the media landscape has just led to less demand for community focused journalism. A recent Pew study shows consistent decline in print and media circulation and a corresponding decrease in the amount of time readers spend on local news sites. We can’t cast a magic spell that’ll make the public as interested in an article about park zoning as they are in this video of a monkey hugging a kitten.

But we do need to address the fact that some of these news publications are in a sort of audience demand/content quality doom loop. The lack of subscription and ad revenue has led to many local news sites closing. Then, as this NBER paper notes, private equity increasingly swoops in on the surviving publications, and employs profit-generating measures such as employee lay-offs and nationalized new content or just the republishing of existing articles. Ultimately, we end up in the situation described in the Duke University study.

Solving the demand problem

The demand for local journalism might never return to what it once was, but 83% Americans still say they trust their local news source more than national news outlets. In an era of chronic civic distrust, that’s worth paying attention to. And it’s worth doing something about.

Let’s return to the “Local Journalism Sustainability Act.” In addition to the supply side measures laid out earlier, the proposed legislation also includes a refundable $250 tax credit¹ for readers to use on their local newspaper subscription.

This will essentially make local news free to those who choose to buy it, since the average cost of a digital local newspaper subscription costs roughly $181 per year. Interestingly, the approximately $70 discrepancy could let many papers raise subscription prices rather than leave subscribers with an unused subsidy. So I wouldn’t be opposed to even bumping up that tax credit to $400 to incentivize more investment in the sector. These are dire times!

I’d also make one critical change. We know that the majority of content printed in local news is a regurgitation of articles found in other publications. So in order to be eligible for these tax credits, the law should mandate that 80% of their news is original to the paper. And at least 30% of the coverage must focus on the local community (ie. 30% of the coverage in the Denver Post must focus on Denver).

That way we can both generate more local news subscriptions, and incentivize local news publications to actually provide local news. It’s not a surefire way to save the industry, but it will help unlock the massive civic benefits that quality journalism provides for the greater public.

And that’s a worthwhile goal.

1. I do understand the irony in advocating for a tax credit exactly one week after writing a piece that advocates wholesale abolishing them. But so it goes…