Wed, 04/26/2017 - 16:55

Posted by H.G. Watson on February 10, 2016

Brian Gorman, Crash to Paywall: Canadian Newspapers and the Great Disruption. McGill-Queen’s University Press, 2015. Paperback, 320 pages, $32.95.

By Marc Edge

Looking for insight into the ongoing crisis in newspapering by reading news reports and commentary has been fruitless for most non-economists, as evidenced by the latest round of layoffs and consolidation, which only serve to confirm for most that a medium is dying. Yet that’s exactly what Brian Gorman attempts to do in Crash to Paywall, which is based on his 2012 dissertation at Carleton University.

Gorman explains that his method of inquiry was to sift through the “first rough draft of history” found in media accounts of newspaper industry doings from late 2008 to early 2015 in an attempt to place them into the context of 50 years of media theory and criticism. “Research has been mostly a matter of signing on, following the links and push notifications, and waiting for the stories to unfold,” he admits. This was supplemented with several dozen unstructured interviews (in which Gorman “went fishing for opinions and insights”) mostly with journalists but also some academics and a few media executives.

This approach doesn’t get him very far, as the book’s few nuggets of insight get lost amid the multitudinous myths surrounding the media business, which tend to be be repeated ad infinitum because few journalists or even academics understand the arcane economics of newspapers. Gorman’s readers would have been better served if he had consulted some media economists who could have explained why falling circulation, layoffs and even bankruptcies don’t mean newspapers are going out of business. Ironically, they instead mean newspapers are coping adroitly with a historic downturn in their advertising revenues that has seen them drop by half in Canada and by two-thirds in the U.S. Better yet, he could have consulted newspaper company financial reports, which would have shown that in North America they are all still profitable—even the baker’s dozen that went through bankruptcy.

Newspaper companies have long reported their own financial performance in such a way as to obscure their lush profits. They have instead promoted what media critic Ben Bagdikian called “the myth of newspaper poverty.”  The deception has gone on for decades, with only a small slice of insiders wise to the game. It reached heights of absurdity, however, in the recent recession with its attendant drop in ad revenues. As a result, newspaper companies quite honestly reported annual losses in the hundreds of millions of dollars due to accounting rules that require publicly traded firms to recalculate the value of their business regularly, which is based on their revenues. Any lost value has to come off the books somewhere, and it exits via the annual profit and loss statement as an extraordinary loss that is incurred only on paper. A closer look at the annual reports of these companies, however, would show that none actually lost money on an operating basis. Most are still making double-digit profits, with some approaching 20 per cent. Postmedia Network, for example, recorded profits of 16.9 percent in its most recent quarter, with operating earnings of $42.5 million on revenues of $251 million.

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But Gorman, a 30-year industry veteran who is now an assistant professor of communication studies at MacEwan University, in Edmonton, buys into the myth that the business model for newspapers is “broken,” disputing only what broke it. So do most of his interview subjects. Instead of the usual suspects of a “perfect storm” of technology (in the form of the Internet) and economics (in the form of the Great Recession), Gorman instead sees the culprit as cutbacks in journalism. If only publishers had continued to pour money into reporting, he seems to be saying, they wouldn’t be in the pickle they find themselves in today. Yet that pickle was a direct result of technology, which not only gave readers many more things to do with their time but also siphoned off most newspaper classified advertising, necessitating cost cuts. He blames newspapers for not getting into the online classified business to compete with the digital upstarts, but the economics of cheap or even free online advertising meant newspapers were going to take a bath anyway.

Like many, Gorman blames newspapers for committing the “original sin” of giving away their online content for free, but they tried more than once to charge for digital access without success until the New York Times pioneered the “metered” model that allows readers a number of free articles every month before a subscription is required. Instead of focusing on how to monetize new technology, he argues they should have used it to experiment with new storytelling techniques. Gorman’s bibliography is extensive, yet its 25 pages include fewer than a dozen academic journal articles, with only one on newspaper economics. The result is a compendium of punditry that reads less like a work of scholarship than the collected ramblings of a bewildered former journalist.

Marc Edge is a professor of media and communication at University Canada West, in Vancouver, and the author of Greatly Exaggerated: The Myth of the Death of Newspapers (Vancouver: New Star Books, 2014).

Correction: An earlier version of this review referred to the title of the book as Crash the Paywall in the headline. The book is titled Crash to Paywall. We apologize for the error.

J-Source and ProjetJ are publications of the Canadian Journalism Project, a venture among post-secondary journalism schools and programs across Canada, led by Ryerson University, Université Laval and Carleton University and supported by a group of donors.