Some reasons digital media probably won't offset the decline in traditional journalism jobs

The long-term decline in journalism jobs appears quite serious because Internet-based firms don’t have a business model that can generate enough new jobs to replace the jobs that are being lost.

The Pew Research Center's Journalism Project recently weighed in on this issue, providing new information about the number of journalists employed at Internet firms. The data in the Pew report are limited, but they are in line with what we know about Internet business models.

 

Internet business models are not designed to support many jobs

 

The largest Internet firms – search engines and social media – use a micropayment system to generate small amounts of advertising revenue for each unit of production. Google makes pennies on each search result it delivers. Facebook and Twitter make a few dollars per year from each of their millions of members (these firms produce information about members that is used to target ads).

 

So Internet firms must keep their production costs low if they want to remain in business. These firms rely on automation – high speed computers and Internet connections – to deliver ads and information to their users. The firms also keep costs low with free access to the content that they index or display. Internet firms could not afford to pay for the content they need even if they wanted to.

 

Journalism firms that rely on Internet advertising revenue will have to charge the going rate, which means those firms must also rely on micropayments. So Internet-only journalism firms will probably only hire small numbers of journalists.

 

The Pew findings are in line with this expected outcome. Pew surveyed what it called 438 small digital news outlets focused on local coverage and found “an average of 4.4 jobs per outlet.”

The report also examined large digital organizations, some with national and international audiences, and the findings were striking. Only five of 29 large organizations[1] employ more than 100 journalists. Another six organizations employ 70 or 50 staffers, and the remaining 18 organizations employ fewer than 50 journalists.

Unfortunately, the Pew report did not include information about wages or the markets where the digital organizations operate. The report did not attempt even simple comparisons between digital and traditional media firms such as the number of journalists for a given audience size.

 

Comparisons would have been helpful because traditional media such as newspapers and television stations still employ the bulk of journalists in the U.S. Traditional firms don’t (yet) operate on a micropayment model. These firms still have substantial advertising or circulation revenue from their print and broadcast editions.

 

Some trends in markets for journalism jobs

 

So what are the current trends in jobs at traditional and digital media organizations?  A complete answer is beyond the scope of this post. However, I’ve examined trends for one important category of journalism jobs to illustrate how we might begin to answer these questions.

 

The category is employment of reporters and correspondents in the U.S. Reporters play a vital role by gathering raw information that is used to produce news stories. These statistics are from the Bureau of Labor Statistics, here and here,  and don’t include editors, photographers, or newsroom managers.

Bureau of Labor Statistics Reporters and Correspondents in the U.S.
	2008		2013	Difference	Pct. Difference
Total employment	50,960		43,630	−7,330	−14.3%
Nominal avg. wage	$44,030		$44,360	$330	0.7%
Inflation adjusted (2008)	$44,030		$40,998	−$3,032	−6.8%

The illustration begins in 2008, the year after the recession hit and advertising revenue at traditional media organizations went into a steep decline. The illustration ends six years later in 2013, when a sluggish recovery from the recession was well underway.

 

This first table shows the 2008 total of 50,960 reporters declined by 14.3 percent in those six years.  The average annual wage of $44,030 in 2008 increased by just $330 in those six years. I converted the 2013 wage to inflation-adjusted 2008 dollars, and the result shows that real wages actually declined by 6.8 percent.

 

Declining real wages are exactly what you would expect in a profession where employment is declining.

 

Reporters and Correspondents at Newspapers, Periodical, Book and Directory Publishers
	2008		2013	Difference	Pct. Difference
Total employment	37,500		27,420	−10,080	−26.8%
Nominal  avg. wage	$40,560		$40,240	−$320	−0.8%
Inflation adjusted (2008)	$40,560		$37,190	−3,370$	−8.3%

The second table shows the number of reporters working at newspapers, periodicals and other publishers. There was a 26.8 percent decline in the number of reporters in this category from 2008 to 2013. Nominal wages also declined by $320 a year. After adjusting for inflation, real wages declined by 8.3 percent.

Here again, a decline in real wages is expected because of the significant decline in the number of jobs. The decrease in jobs probably resulted from declines in newspaper and periodical circulation and advertising revenues.

 

Reporters and Correspondents in Radio & Television Broadcasting
	2008		2013	Difference	Pct. Difference
Total employment	9,670		10,370	700	7.2%
Nominal avg. wage	$51,410		$48,110	−$3,300	−6.4%
Inflation adjusted (2008)	$51,410		$44,464	−$6,946	−13.5%

This third table shows reporters working in radio and television broadcasting. There was a 7.2% increase in the number of reporters employed. However, the absolute increase was small – just 700 new jobs in six years – and did not result in an increased wages. Instead, real wages declined by 13.5%.

Why did wages for radio and television decline when the number of jobs increased?

 

One possibility is supply and demand.  We know, for example, that the supply of journalism graduates seeking television jobs far exceeds the demand.  Another possibility is that broadcasters adjusted to declines in ad revenue by laying off expensive older workers and hiring inexpensive younger workers to replace them.

 

However, there is not enough information in the table to be sure what the cause might be.

 

Reporters and Correspondents Other Information Services.
	2008		2013	Difference	Pct. Difference
Total employment	1,830		3,910	2,080	113%
Nominal avg. wage	$71,200		$57,830	$−13,370	−18.7%
Inflation adjusted (2008)	$71,200		$53,447	−$17,753	−24.9%

The fourth table shows reporters working for “Other Information Services.” This broad category with 242 occupations includes computer programmers and web developers. So this may include reporters working for digital firms.

Jobs in this category increased by 113% in six years. The percentage is high because the 2008 base of 1,830 jobs was small, and the actual increase is just 2,080 jobs.
 

Despite the rapid job growth, both nominal and real wages decreased dramatically from 2008 to 2012. Real wages declined from $71,200 a year to just $53,447 a year, a decrease of 24.9 percent.
 

The decrease in wages might be due to the small number of jobs in 2008. Perhaps these jobs were concentrated in high wage areas, and new jobs were added in less expensive areas.
 

Another possibility is that demand for these jobs is growing so fast it outstripped supply. The Pew report has anecdotal accounts of hundreds or thousands of applications for a single job at a digital firm.  If this is typical, it would drive wages down.
 

Again, the table doesn’t offer enough information to figure out the cause.

I think this illustration shows three important results.  First, almost all of the overall decline in reporting jobs is accounted for by one category - newspapers and other publishers.[2] Second, there is downward pressure on wages even in categories with minimal or strong job growth. Third, growth in the other information category still falls far short of replacing the jobs that are being lost.
 

Meanwhile, the Bureau of Labor Statistics projects continued declines in the number of reporters and correspondents, stating there will be 14 percent fewer jobs by 2022.

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[1] I did not include one firm on the Pew list, Vice, because its staffing includes journalists and non-journalists. Vice has the largest staffing number, 1,100, which means job totals in the Pew report may have an upward bias.
[2] Two small reporter categories, each  with fewer than 700 jobs, were not included this analysis.