Will Inflation Break the News?

Netflix is ​​finding out what happens when everyone isn’t confined to their homes and chained to their TV sets. The combination of more available entertainment options and an inflation spike (including price increases from Netflix itself) that has budget-strapped families nixing discretionary expenses has reversed the streaming giant’s growth for the first time in a decade, sending its stock price tumbling by 35 percent.

In the aftermath, Netflix expects to slow its prodigious spending on movies and television programs, and “right-size” budgets for what remains. They’re also looking into establishing a lower-cost option with ads, something that was unthinkable just months ago. Such ideas will almost certainly be the response of Netflix’s streaming competitors, all of which face the same predicament: widened choices for entertainment dollars and reduced ability to spend due to inflation. Shares in just about every company with a streamer have recently failed.

the implosion of CNN+ after just a month shows that even well-endowed corporate parents behind them aren’t interested in pouring money into a losing streaming proposition. A month into the launch and after a decent-sized media campaign, CNN+ was attracting just 10,000 viewers at a time, and that wasn’t good enough to keep it going. Any leader of a subscription-based video service should be frightened by the fact that CNN+ only cost $5.99 per month, far less than other networks.

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The moment of Peak TV has likely passed because it’s no longer viable to float a streaming video site as a loss leader to encourage growth. That’s bad for writers and actors and producers, and also bad for the free flow of information, which we’re learning isn’t exactly free anymore.

But streaming video isn’t the only service reliant on subscriptions.

the Financial Times calls it “The Great Cancellation,” as families find whatever unnecessary expense to cut out of their strained household budgets. Meal kits, fast-fashion delivery apps like Rent the Runway, Peloton memberships, and countless other subscription-based services are under threat of seeing their numbers diminish.

There are obvious risks to inflation-fueled cutbacks, from large-scale collapses of subscription-dependent companies to the possibility of consumer spending losses. triggering a recession. But one consequence hasn’t been explored as much: This turn against subscriptions comes at a time when most of the nation’s newsgathering companies have shifted to that exact model to fund all or at least part of their daily output.

If people cut news out of their budget, that could kill off hundreds of outlets at a stroke. There have always been subscriptions for newspapers and magazines, but they sat alongside other revenue streams, from advertising to classified sections to branded event planning to (in the case of nonprofit news) philanthropic donations. But Google and Facebook’s online advertising dominance you have slowed that stream to a trickle. Increasingly, online subscriptions have been seen as the savior for the future of newsgathering, propping up outlets that may not be viable without them.

That’s doubly true of Substack, which finally provided independent journalists a way to solicit contributions from readers directly and make a living off the basis of their talent and fan base. According to the New York Timesthere are over one million paying subscribers to various Substack sites. But that could see some serious erosion if inflation remains high and consumers look for charges to drop.

The loss of trust in journalism is tied up with a loss of access.

the purchase of Twitter by Elon Musk has led to some delusions that this will spark a restoration of the old blogosphere. But it wasn’t just commentary moving to Twitter that killed blogging; most blogs withered because there wasn’t a way for writers to earn a living from them. The current inflationary environment is only going to make that harder.

This leads to my larger and somewhat idiosyncratic point that the greatest threat to democracy as it relates to the media is not the spread of disinformation, but the spread of paywalls. The information that an informed citizenry needs to make choices about who governs them and what is happening underneath the surface has been privatized, gated, and kept from those with an inability to pay. Some sites (for example, this one) offer subscriptions to monthly donors without holding back the articles for everyone else, but that’s a rarity. By and large, news companies have decided that the only way to fund their business is through blocking the information from everyone except for those who pay for it.

Now, one can understand why this happened—these publications felt, thanks to long experience, like they had no choice. And you had to pay for a magazine or a newspaper in the days of dead-tree media. But it has led to two problematic trends.

First, in a bid to increase specialness and attract eyeballs, companies have put their best stuff even further out of reach of the ordinary reader, creating a class system for information. Those with access to a Bloomberg terminal or Politico Pro or special tiers of The Wall Street Journal (which can cost hundreds or thousands of dollars per month) have a much more fine-grained understanding of what is actually going on in the nation and the world. They can act on that information, and they frequently do. ace to 2015 Washington Monthly report about paywall journalism explained, the consumers of insider outlets and tip sheets are typically investors, lobbyists, and other government influencers. They get the “real” information and can twist it to their ends.

At the other side of the class divide are those who cannot afford to surmount any paywalls. They grab whatever bits are available on broadcast and cable news, or more likely from social media. The loss of trust in journalism is tied up with a loss of access—the coverage vacuum in many cities has led many to turn to paranoid, reactionary Facebook groups. If your average diet comes from the equivalent of McDonald’s, you’re not going to be able to work it off as easily.

Second is what will happen to remaining publications. With media outlets going all in on paywall subscriptions as their best hope for economic success, a shift toward frugality can turn news and information into a luxury good, dropped by anyone who is not rich. Not only does this create an inequality of knowledge, it’s also probably an existential event for a lot of reporters and news companies. Watch for discussion of layoffs and shuttered sites in the weeks and months to come. It was already a regular event in the journalism industry; I fear it will get worse.

I’m obviously biased in talking about these issues. I strongly believe we need a thriving fourth estate as a critical piece of a democracy, but then as a journalist I would say that. I do think that the bigger problem is how by subjecting journalists to the ebbs and flows of the macroeconomy, we’ve made it steadily harder and harder for reporters to eke out a reasonable living.

There are ways to break free of that cycle, which I’m sure you’ve heard ad nauseam: public support for news, the use of nonprofit status, break up the Google/Facebook online ad duopoly, and so on. The only thing that’s really worked so far involves finding a rich dowager to carry the news outlet and accept losses, and even then that doesn’t always last beyond a few years. I don’t really have an answer to this problem. I only know that this economic environment is likely to make the problem feel more real. I don’t think pushing people out of the free flow of information was viable as an ethical strategy or an economic strategy. I hope we can figure out what comes next.

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