Journalism’s Creative Destruction Opportunity

The traditional bastions of news media are facing a formidable challenge: protecting themselves from the very consumers they aim to serve. Confronted with the of loss of advertising revenue to tech giants like Alphabet and TikTok and the encroaching presence of artificial intelligence, the companies are looking to government for help. This is doomed to fail. So rather than seek protection from the forces of creative destruction that are dismantling their antiquated business models, legacy companies should become the agents of change.

The narrative of newspapers’ decline is a familiar one, marked by economic tumult and shifting consumer preferences. Over the past two decades, a significant number of US newspapers have shuttered their doors, displacing thousands of journalists. Concurrently, newspaper advertising revenues in the US have declined precipitously, plummeting by a staggering 84 percent in real terms since their peak in 2006. While it may be tempting to attribute this decline solely to the rise of Big Tech, as some media groups and their political supporters are prone to do, the reality is more nuanced. Over a decade before the emergence of Big Tech, the legacy companies operated as if they were monopolies, pursuing a strategy of escalating advertising revenues and prices even in the face of dwindling circulation. The strategy backfired because the presumptive monopolists were, in reality, facing competition.

Television broadcasters were the first to benefit from the print media companies’ misdeeds. Television advertising revenue eclipsed that of newspapers on a global scale in 2001 and continued to rise as newspaper ad revenues began to fall, signaling a consumer shift toward more visual media. Then the advent of digital media, that both fueled and was fueled by the proliferation of broadband and mobile technology, irrevocably altered the media landscape, with a majority of Americans now obtaining news via smartphones and other digital devices. Only 5 percent prefer print media.

Yet, perhaps the most formidable challenge confronting legacy news organizations is the rise of AI. In a remarkably short span of time, advanced large language models such as ChatGPT and Claud 2 have revolutionized content creation, driving costs down by a staggering 99.96 percent. See the chart below from Ark Invest 2024 Big Ideas (available on Zdnet). For over 100 years, the cost of authoring written content has stayed relatively constant: around $100 per 1000 words. In just two years the cost dropped to $0.04.

Via ARK Investment Management

The implications of these plunging costs are substantial. Acclaimed writers may weather this storm, as AI won’t bear their brand recognition, but traditional news journalists are toast, as they cannot compete with $0.04.

Newspapers must embrace this disruption. By reimagining their role from mere news reporters to comprehensive answer providers, legacy companies can leverage AI to deliver more relevant and insightful content to readers. Instead of sifting through multiple sources for information, readers could query AI-powered platforms for analyses that link events, provide context, and present competing interpretations based on readers’ questions, not the questions editors imagine readers should ask.

Newspapers possess unique advantages in the AI landscape: their vast archives and wealth of fact-gathering experience. By harnessing these resources to train AI models and integrate new information, legacy companies can develop superior content generation systems that prioritize accuracy and trustworthiness—a critical factor in the era of information overload that will emerge as the cost of content creation drops toward zero.

Moreover, the ascendance of AI in print media should serve as a clarion call to other news mediums. As AI technology advances, so too will its capacity to produce high-quality video and audio content on weather, crime, government actions, and more, as well as documentary-like narratives based on viewer questions.

America’s unique form of democracy has always relied on quality journalism. Advancing technology and declining trust have weakened what is often called a fourth estate of democracy. But these disruptions present opportunities if media companies are willing to grasp them.