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Why the U.S. Media Industry Is in Meltdown

Between the layoffs at Sports Illustrated, Pitchfork’s absorption into GQ, and many other hits to major news organizations, the U.S. news industry is in a dire situation

Sports Illustrated Lays Off Its Remaining Staff Photographers Photo Illustration by Joe Raedle/Getty Images

Sports Illustrated layoffs. The demise of independent Pitchfork. Hundreds of millions of dollars in losses at major newspapers like The Washington Post and the Los Angeles Times. The state of the U.S. news industry is dire. How did we get here? Who knows the way out? The Ringer’s Bryan Curtis joins the show, with contributions from an interview with NPR’s David Folkenflik.

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In the following excerpt, Derek and Bryan Curtis walk through what led to Sports Illustrated’s latest death and the general demise of the news media.

Derek Thompson: Great to see you. I want to do a few things in our time together. I want to talk about the news of the moment, this sad and strange cavalcade of bad news for the media business. And then second, I want to broaden the lens and get some context for why the 21st century has been such an unrelenting mess for media economics. And then finally, we’ll talk about bright spots and the lessons that we can glean from the bright spots. But I really want to start with Sports Illustrated because this is, again, a sad death, a strange death. It’s a very strange story. I think it’s weirdly emblematic of this awful moment in news economics.

Sports Illustrated holds a very special place in my heart. It might have been the first magazine I subscribed to. It’s definitely the first magazine I truly loved when I decided I wanted to become a journalist. You have an article up on that points out that Sports Illustrated’s demise was really death by a thousand cuts. Can you explain who owns SI and how that strange ownership model contributed to its demise?

Bryan Curtis: I can certainly try, but you just have to walk me through this because I’m still making sure that I have my mind around it. They’re owned by Authentic Brands Group. Authentic Brands Group is a company that manages brands. Now, what brands, you might say, Derek? Well, that includes Muhammad Ali, that includes Dr. J’s brand, that includes Elvis, that includes Billabong and other companies that you might have been familiar with at a different age of your fashion. Authentic Brands Group then licenses Sports Illustrated to a second company, which is called the Arena Group. The Arena Group’s website says that they are an innovative technology platform and media company with a proven cutting-edge playbook that transforms media brands.

OK. So we got the brand-owning company that is licensing Sports Illustrated to the brand-transforming company. And the second of those companies failed to pay their licensing agreement, and so the agreement is dissolved. That’s where we are with Sports Illustrated.

Thompson: And I guess a slightly bigger story would be that Sports Illustrated used to be owned by Time Inc. Time Inc. sold Sports Illustrated, or at least the rights to publish Sports Illustrated and all of its archives, to the owners of the Muhammad Ali and Dr. J brand. And then they licensed out the rights to publish new articles under the SI brand to this other group that then failed to make its quarterly payments.

I mean, you don’t get into a mess like this if the economics work in the first place. And what’s so sad to me is that the very fact that Sports Illustrated had become something licensed, to be licensed, to be published, is emblematic of how far a storied brand like this, a storied magazine like this, has fallen in the last few decades. And clearly it’s not just SI; it’s not just Pitchfork. As I recounted in the open, it’s Vice, it’s GawkerGawker 1 and Gawker 2—it’s Jezebel, Condé Nast is laying off [5] percent, WNYC. Two of the biggest newspapers in the country, The Washington Post and the L.A. Times, reportedly lost a combined $150 million last year. Why do you think this moment, especially when the economy is growing, why do you think this moment has been so particularly gnarly for the news media?

Curtis: We almost need a list. It’s like an old-school Vulture ranking of problems, but I’ll throw a few out for you and you can put them in any order you want. Management missteps, no. 1. No. 2, probably the end of the Trump bump and, if you believe the Semafor article that came out yesterday, a new Trump bump that is not quite as big as the old one. I would also put on that list rich proprietors that are tired of losing money or at least tired of losing money on the scale that they’re losing it, especially in the case of The Washington Post and the L.A. Times. And then the fourth one I would say was, especially in the case of newspapers, the fact that The New York Times is gobbling up people that in another time line would be subscribing to their local newspaper. How’s that for a list?

Thompson: It’s a good list. There’s one biggie that I definitely want to talk to you about, and that’s technology, because there’s two stories that I think I could tell about the last 20 years. If someone said, “What’s the grand narrative here? Why is it not just one or two magazines or one or two newspapers that are struggling? It’s dozens of newspapers closing every year. It’s dozens of magazines failing every decade.” To me, you can tell this as a pure technology story, or you can tell it as a people story.

The technology story is that the internet comes along and really starts to pick up steam with Craigslist and Google in 2000, 2004, 2005. Facebook obviously takes over around the late 2000s, 2010s. And the internet does a few things. It increases supply. Suddenly anybody can become a blogger, can compete with old-fashioned newspapers for people’s attention. And when it comes to analyzing the news, writing about the news, no. 1, it increases supply. No. 2, it destroys local advertising monopolies, like The Washington Post. I grew up in Washington, D.C. The Washington Post had a local advertising monopoly for car ads, for apartment listings. Those monopolies are absolutely destroyed when the internet comes along and you can just go to Edmunds or to figure out what car to buy. You don’t have to buy a bundle that has news about Fallujah and also car advertisements in the back.

So it destroys local monopolies and the cross subsidies that they created. It also nationalized the news. I think there’s something about the internet that allowed people to—you’re living in St. Petersburg, Florida, you’re living in Peoria, and it’s easier to follow national news. And maybe as a result, more attention and more dollars flow to national publications, and that starves local media. So I’d say the internet does all these things—increases supply, destroys local monopolies. You could say it’s a tech-determinist story, or, and this is where your point comes back in, you could say, “No, Derek, tech is just a tool. It’s a story about people who use this tool badly. Newspapers were badly managed in America in a lot of different places: at the local level, at the national level on both coasts.” So when you think about the tech story and the people story, how do you fold those together?

Curtis: I think the answer is almost certainly both, but let’s go to the people story for starters. The thing people always point to as the great error of newspapers is that when they went online first in the late ’90s, early 2000s, that they were all free and they did not say, “Hey, guess what, folks? You got to pay for news. This is important. Put your credit card in here.” And we could argue that at that period of the internet, that would have been a weird thing to do to try to pay for news. We weren’t used to that. The New York Times was free at that point. So we might still have picked the glittering, big, fat, national newspaper over the skimpier local paper, but there was certainly some truth to that.

I think also, just the one thing I’d add to your technological story that’s so fascinating to me is I grew up in Dallas–Fort Worth. Not only did they have a local advertising monopoly, they also, the Dallas-Fort Worth newspapers, had a national news monopoly in Dallas. If I wanted to know about politics, I wasn’t reading The New York Times. I was reading them. If I wanted to read about international news, I was reading my local paper. So as soon as you stripped that away for all the reasons you elegantly laid out there, what was left? It’s that school board meeting that everybody cites. “Who’s going to cover the school board meeting? Who’s going to cover the mayor’s office?” Totally worthy beats, but a very, very tough sell when you’re trying to get people to pay for news.

This excerpt was edited for clarity. Listen to the rest of the episode here and follow the Plain English feed on Spotify.

Host: Derek Thompson
Guests: Bryan Curtis and David Folkenflik
Producer: Devon Baroldi

Subscribe: Spotify