American mainstream news thrived in the post-war period because of a complex, interlocking set of subsidies. Advertisers subsidized American newspapers to reach the mass market of consumers. By the mid-20th century, advertisements brought in about 80 percent of newspaper revenue. Readers paid the remaining 20 percent, which roughly equaled the cost of delivery.
Readers also subsidized each other. The newspaper offered something for everyone. The reader who disregarded hard news paid for the paper to find out about sports scores, television listings, and job ads. Expensive news, like investigative journalism, was paid for by people who very often didn’t read it.
These subsidies were anomalous, however. Newspapers grew more profitable because others failed, allowing the survivors to attract ever-larger audiences. In effect, the rich became richer. But this set in motion a self-defeating dynamic. How could a newspaper acquire appreciably more readers when it was the only one in town? This might not have made a lot of difference for family-owned papers, who still enjoyed a decent income. But with increasing public ownership, growth matters. Stockholders wanted to see their value of their holdings appreciate beyond the rate of inflation. Cutting expenses for news-gathering was one way to achieve that.
Then there was the matter of competition from new media. Radio and television — which were “new” media once upon a time — initially provided a limited amount of news and in any event co-existed with newspapers, who came to realize that they attracted readers by including radio and television schedules in their news pages.
But the next wave of new media was a different matter. Competition soared with the Internet, because there was now such a low barrier to entry. Besides this, the Internet unbundled news. Consumers who wanted sports scores could get all they wanted online, all day, for free. Those consumers no longer subsidized other readers with different interests to the same extent. We all know what happened next: lost advertising revenue, accelerating declines in newspaper penetration, journalist layoffs.