Pandemic Challenges Ad-based Business Models

Ideas and Issues

New Orleans    One of the stark realities undergirding a number of industries that has been vividly exposed during the current coronavirus pandemic is the fragility of advertising-based business models that actually power tech giants and publications.   We might think the news is what counts or building connections and doing good, as the Techsters have argued, but much of it is still basic mercantilism.  Too many of these industries, old and new, are the packaging and distribution system in the sell-and-buy of commerce.  When these outlets are shutdown, the chain reaction goes back upstream to the source.  If there are no sales at the source, then there is no advertising downstream.

We desperately need the news and newspapers, but this is a fraught business model.  For those of us who still subscribe to daily papers, we are paying more for less on an annual basis.  The paper size has shrunk and the number of pages has diminished, even as the price per edition has increased.  All of which makes it a little shocking to get a direct appeal for donations to these profit-making enterprises during the pandemic.  Nonetheless, I received that appeal in New Orleans from the local paper, and even from Arkansas where they send me an email on a daily basis as a radio station manager.  The New Orleans Times-Picayune and Advocate has reportedly laid off another 10% of its staff.  On-line publications are a hope for the future by some lights, but in the middle of a pandemic where there is mass unemployment and all nonprofits from membership-based community organizations, like ACORN, to food banks are stretched past the breaking point, how does anyone rank them first on the list?

On the tech-side, it’s more of whine than a roar.  Facebook claimed it was barely “keeping the doors open,” but they are sitting on billions and experiencing massive traffic and membership increases as people are using their social media outlets by default while staying at home.  Yet, advertising fuels Facebook and Google.  People are certainly shopping online, but as unemployment soars and whole cities are shutdown, ads are not going to produce more sales and businesses whether Macy’s or Gap or thousands of others are not going to be advertising without income.  They are caught in an interesting dilemma.  The internet demands to be free, as the slogan goes.   These are mass-based forums.  A paywall would be death to that dream.

In the main, newspapers seem to have long ago abandoned the real prospects of being mass-based on daily circulations and subscriptions.  There may be daily Food and Living sections in papers big and small, but the number of papers with a regular labor section, column, or even a labor reporter is miniscule, if not zero.  The mass of Americans is an afterthought.  Small wonder that regular people are getting their news, no matter how slanted, from television, radio, and social media, where we don’t pay in most cases, and can’t buy anyway.

The pandemic seems to be reminding us that none of this is sustainable.