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MEDIA CRISIS

Thought Daily Maverick’s shutdown was a PR stunt? This is the real state of the news media

Thought Daily Maverick’s shutdown was a PR stunt? This is the real state of the news media
Illustrative Image: Pencil (Photo: Günter / Pixabay | Scribble (Graphic: pngall.com)

A free press is essential to the healthy functioning of society and yet, the business of news has been in freefall for more than a decade.

It’s the ultimate election year, in which more than two billion people are going (or have already gone) to the polls around the world, in at least 64 countries. At a time when media houses traditionally would beef up their newsrooms, jobs are being shed at an alarming rate, threatening the business of media and ultimately, democracy. 

While press freedom is taken for granted in many of these countries – including South Africa, the United Kingdom and the European Union — it is held at gunpoint in others.

In Russia, Vladimir Putin has just been “re-elected” in a landslide election, in a vote that was neither free nor fair owing to censorship and the jailing and killing of political opponents. Pakistan, which has jailed popular opposition leader and former prime minister Imran Khan, wrapped up flawed elections in February. In Sudan, a third of the country’s 48 million face starvation due to civil war.

And in the United States, where voters will choose between Joe Biden and Donald Trump, The Economist has warned a Trump victory poses the biggest danger to the world in 2024.

The outcome of these national and regional elections will be felt for years to come.

The business of news nosedives 

The South African media industry lost almost half its staff from 2008 during the global economic downturn to 2018, with the demise of high-profile media organisations such HuffPost SA, Finweek and Afro WorldView (formerly ANN7), as well as the loss of more than 375 community print newspapers in 2008, says Associate Professor Glenda Daniels, citing the State of the Newsroom reports from 2013 to 2019.

In 2020, two magazine publishers – including Associated Media Publishing, founded by Jane Raphaely in 1982 – and about 80 community publications folded, and there were significant job losses at Media24, Independent Media, Tiso Blackstar, Primedia and e.tv/eNCA. That year, the SABC announced it would slash 400 jobs.

Read more about the state of the South African media here.

Daniels writes that these losses in the newsroom signify a diminishing diversity of voices and therefore, democracy. “A loss is also experienced when senior journalists – those older than 40 – are retrenched (a trend all over the world, not just in South Africa) in favour of content producers and those who can do video or high-techy things.”

Another casualty is beat reporting, which is disappearing worldwide, owing to corporate and commercial pressure to go digital and competition from social media, she says. 

South Africa is not unique: Before Covid, newsrooms around the world were already under strain, forcing media houses to slash costs, lay off staff, and reduce output.

An Open Society study of the impact of the global financial crisis on media and news delivery to citizens of 18 post-socialist countries (Albania, Armenia, Bosnia and Herzegovina, Bulgaria, Czech Republic, Estonia, Hungary, Kyrgyzstan, Latvia, Lithuania, Macedonia, Moldova, Montenegro, Poland, Romania, Serbia, Slovakia, and Ukraine) found that media across the region lost between 30 and 60% of their income.

News organisations were forced to adopt cost-saving measures, including reduced volume, staff layoffs, scaled-down investigative reporting and cuts in international and provincial coverage. Foreign investors took flight, causing independent outlets to fold. The constraints and ownership changes resulted in an overall drop in the quality of news delivery, resulting in content that was “shallower, more entertainment-centred, increasingly isolationist, more prone to political and business influences and lacking in investigative bite”.

In February 2024, Fast Company reported a slew of job cuts in the US media: the Los Angeles Times was laying off 20% of its newsroom; NBC News and MSNBC had laid off around 75 a year earlier; Sports Illustrated lost most of its staff (about 100); Time cut 15% of its staff (30); Business Insider reduced staff by 8%; Forbes by 3%; the Wall Street Journal let 20 staff go; CBS News cut 20 jobs at its DC bureau as part of a larger round of 800 cuts at Paramount; and Vice Media laid off hundreds.

Cashing in

A free press is essential to a healthy functioning society and yet, the business of news has been in freefall for more than a decade, causing journalists to lose jobs in record numbers, as advertising shifts online to technology giants such as Meta (Facebook, Instagram and WhatsApp), Alphabet (Google and YouTube) and TikTok – all entities that are not tax residents of South Africa, which means their income tax on their local sales is paid in their country of tax residence.

At the Media and Digital Platforms Market Inquiry in March, Media24 CEO Ishmet Davidson told the inquiry that Google, not the government, was the biggest threat to media freedom in South Africa.

News24 was unprofitable, which was an indication of the unsustainable business model of SA news media organisations, Davidson said.

Citing statistics from the Independent Advertising Bureau, he said Google and Meta were “absolutely dominant with 97% market share, leaving publishers with the crumbs”.

Google/Alphabet denied at the inquiry that it reaped substantial revenue from news.

On Monday, 15 April, the company told Daily Maverick that, like other multinational companies, it paid a “very large amount of corporation tax”.

“As an international business, we pay the majority of our taxes in our home country (US), consistent with current international rules – as well as all the taxes due in South Africa.

“Our effective tax rate over the past decade has exceeded 20% of our profits, in line with average statutory tax rates. We have long supported reform of the international corporate tax system.”

For the fourth quarter last year, Alphabet’s revenue was $86.31-billion (a 13.49% increase year-over-year), $48.735-billion of which was profit (a 19.72% YoY increase).

A Meta spokesperson said: “We follow the international tax rules, and we pay all taxes required in each of the countries where we operate.”

Meta revenue for Q4 was $40.112-billion (a 24.71% increase YoY). 

TikTok generated around $707-million in revenue from users worldwide.

‘Silicon Six’ accused of tax evasion

In 2021, the Guardian reported that the giant US tech firms known as the “Silicon Six” (Amazon, Facebook, Alphabet, Netflix, Apple and Microsoft) had been accused of inflating their stated tax payments by almost $100-billion over the previous decade.

Later that year, the US, Britain and other wealthy nations reached a landmark deal to “squeeze more money” out of these multinationals and reduce their incentive to shift profits to low-tax offshore havens, Reuters reported. The deal was described by then German finance minister Olaf Scholz as “bad news for tax havens around the world”.

But two years later, an EU Tax Observatory report found the global agreement, setting a global minimum tax of 15% and outlining ways that countries could collect that tax even from tax havens and non-cooperative companies, was already being undermined as firms were finding loopholes around the agreement to pay about half of what was originally expected

While these tech giants rake in billions of dollars, paid into tax havens such as Bermuda, the Cayman Islands and Ireland, newsrooms are suffering because of cratering advertising revenue. As newspapers thin out, there is less space for news, resulting in a decline in sales of print media as more people switch to reading their news online. DM

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Comments - Please in order to comment.

  • jcdville stormers says:

    Daily Maverick is number 1,Twitter, facebook,instagram ,X is boring.

    • Peter Holmes says:

      Try News 24. A fair amount of dross to sift through, and some really inane readers’ comments, but also some really insightful material and their Editorial Staff (unlike the DM) listen to, and are prepared to engage with, their readership.

  • J vN says:

    Reading this column, it seems that the author wants Google and Meta to divvy up and hand over some of its profits to this site and to others like News24.

    Aside from the fact that Google and Meta will resist this with all their might, it hardly seems like a sustainable business model, and more like rent-seeking.

    • Soil Merchant says:

      “Australia will force Facebook Inc and Alphabet Inc’s Google to share advertising revenue with local media firms, the country’s treasurer said on Monday, becoming one of the first countries to require digital platforms to pay for content they use.” – April 20, 2020

  • James Kruger says:

    I love the daily maverick most of the time until it comes to their bias reporting in the American elections 😂

    • Pat Collett says:

      So James you only read the news that agrees with your view? Getting a broader view maybe frightens you? Opening the mind helps to understand the rest of humanity, and who knows, you may be wrong?

      • J vN says:

        Any comments on the column written today by Cde Melanie Verwoerd?

        I mean, the quality and unbiased nature of her latest effort are truly something to behold, and truly opened my mind….to the execrable quality of many of the wannabe journos on this site, that is.

  • Rae Earl says:

    I am a retired person, bereft of the activity of my working days in running a business and interacting with colleagues and customers. Daily Maverick has become an essential part of my daily life 7 days a week. It is much more than just a news room and it absorbs many hours of my time which would otherwise be lost to boredom. DM keeps me informed with up to date world and local news and I have complete trust in the integrity of both its journalists and its content. I don’t necessarily agree with everything their journalists have to say, DM allows me to have my say in its excellent Comments section. If that comments section could be read by all SA citizens every day, our society would be a lot more balanced and well informed.

    • Mike Schroeder says:

      I agree 100% with everything you say above, and would like to stress the point about not necessarily agreeing with everything that DM (and others) write
      If you do not read what you don’t agree with, how are you ever going to know what the so-called “other side” thinks? And if you don’t know that, how will you ever think for yourself?

  • Stanislaw Hohowsky says:

    You are missing the point. The reason why media houses are suffering in general is their insistence of having reporters express their own bias and no balance. So I would rather then follow various platforms go the left, right and middle than have a one eyed corporate opinion rammed down my throat. Articles that leave the the deciding of good or bad to me are more acceptable than one sided opinionated reporting

    • Geoff Coles says:

      I would agree, DM especially has its biases, still soft on the ANC exc3pt for corruption and the like, though in the title it’s a maverick, so, up to a po8nt, OK.

    • Common Sense Is not common says:

      I think this comment says more about your own bias than that of the reporters. If you don’t agree with their take on the matter, you say they are biased. A bit like a referee during a rugby match, he can’t win.

  • stan garrun Garrun says:

    Turmoil – political, social, economic -has so muddied the waters, that people no longer can make sense of ‘news’. And are hapless reading it, so they don’t . Tech formats are not the real problem. It’s about absorption. The very concept if news need to be reinvented. Maybe intense localisation is needed. This global thing makes no sense anymore Senor.

  • stan garrun Garrun says:

    Turmoil – political, social, economic -has so muddied the waters, that people no longer can make sense of ‘news’. And are hapless reading it, so they don’t . Tech formats are not the real problem. It’s about absorption. The very concept of news needs to be reinvented. Maybe intense localisation is needed. This global thing makes no sense anymore Senor.

  • Patrice Lasserre says:

    Yes, a free press is essential for a democracy. This is probably the most valuable item in our Constitution and it has been upheld by courageous people in spite of continuous attempt by the government to erode it. To my knowledge, South Africa is one of only three countries in the word that does not censor the Internet at all; and this is how it must be. Presently, the Press enjoys exceptional freedom in our country, but few are prepared to express it.
    I do support the Daily Maverick and wish it to continue indefinitely. When I look at all the books I read that deal objectively with South African affairs it looks like investigating journalists are doing a better job than the police and other government agencies!!
    Please keep going. P.

  • johnc_wallace says:

    The death of John Pilger was the end of an era. The death of Julian Assange will be the end of the beginning of an era.

  • Lynette Morris-Hale says:

    I think the DM ideology of providing their news for free makes a very positive contribution to Truth and Society. Imagine what type of “news” these people would have access to if they could not read the DM. So I don’t mind subsidising them but in a perfect world these people should also contribute financially.

  • As a follower of DM and avid reader of investigative journalism (IJ), having read this rant all the way through, not picking up the ask though. I would deduct that publishers and newsrooms if I can call it that, are struggling to adjust with the digitalisation of content. These platforms have been used successfully top the extent that powers are shifting significantly to the that of opinionistas and influencers alike. DM’s content is top class but yet in today’s tech terms a ticket to the match. In the meantime I would suggest readers support the journalists trying to eek out a living in the face of change through the contribution channels and to purchase the material while catching up with the shifts. Thank you to all those keeping IJ alive – we applaud you for your efforts!

  • Reginald van Rossum says:

    Reporters no longer report, they have an agenda biased by either their boss or themselves. Technical reporting is so often flawed, why not get an expert on the subject to review before publishing, or wont the ego allow that? Most are driven by “We have the right to……” regardless of the impact on their targets, a small apology doesn’t cut it. The Press will devour itself eventually, maybe we’ll miss it, maybe not.

  • Marc Eyres says:

    Reader’s, like foodies, music lovers, sports fans, etc, all “ follow” what they generally enjoy. Of course you’ll have the odd off day. (Trust me I’m a Sharks / Golden Arrows fan). But you can’t seriously say I suddenly no longer enjoy this or that, and by the way, it’s their fault. I think the DM will be shocked at the value and loyalty they’ve created. Don’t be hesitant in ensuring your sustainability. Said differently, before the s/?t hits the fan, make sure you have enough tom to survive. The cream always rises to the top. Back yourself.

  • Stephen Brooks says:

    The demise of the newspaper and magazine industries is known and understood by most people who still choose to read their content rather than being brainwashed by the selective output of broadcast so-called news. The real issue here is how to persuade or coerce more of those readers into paying for DM’s output rather than the free suff that is around and is there for a reason, which is that someone is making something out of it. DM’s persuasion is the annoying banner that appears whenever a non-subscriber tries to read something and now the shutdown. So where does that get the DM? How about shutting down for more days to be more effective? Is the DM going to persist with something that punishes the existing subscribers? A dangerous game, I would have thought; broken habits take a long time to repair, as can be seen where the effects of COVID enforced lifestyle changes linger on. Maybe the subscription should be increased, but first DM should tell its subscribers how much more it needs to cure the financial ills.

  • Rob Wilson says:

    I beleive that the tech platform may be more important than we think. I am not convinced many people under 40 actually read News. When daily newspapers were the norm, one sat down to read the news daily. It was an institutionalised event in our house splitting up the paper, a happening, a break maybe and we all did it in different ways. But the process of paging through and scanning a newspaper exposed one’s senses to things other than targeted subjects-and accordingly got pulled one away from being completely blinkered. Now we open an App and see one or more things that are targeted to our own specific habits (AI). We see what they want us to see. My kids (professionals in their 30’s) look at me a bit queerly when I ask whether they ‘read the news today’. They know every free App under the sun. This trend cannot be doing much good for educating people, and most certainly isn’t good for sustaining the profession of jounalism. Keep it up guys, it’s worth it.

  • Christo Potgieter says:

    “The Daily Maverick publicly claim sixteen thousand members and, at two hundred rands a month each, they are pulling in over three million rands a month. And that’s without the massive advertising revenue, which must run into a further million rands at least, if not more. Publicly available records indicate around forty employees. At fifty thousand rands per month per employee, that would leave a cool million rands in profit each month, without factoring in the massive advertising revenue or the cash-flow from wealthy ex-pats in London and elsewhere.”

    From a piece Forensics for Justice has done. I feel it needs some explaining… no wonder we’re in this state. I dont know who to believe anymore.

  • Quidditas Amati says:

    I get most of my South African news content through DM, Moneyweb and Biznews. I subscribe to neither Moneyweb or Biznews, but as circumstances permit, I “donate” R600. at a time to DM.

    DM is without a doubt the leader of the three, with better journalistic standards. I read comments accusing DM of bias, but that is inherent of publications of this type, but DM’s articles are of a much superior standard than News24 whose reporting is full of bias mainly driven by its editorial stance.

    DM’s articles are also incredibly well researched as opposed to News24 who relies heavily on informants and does bugger all independent research and has become irrelevant.

    Kudos to DM. Long may it survive even if I can’t pay the full price.

  • Mordechai Yitzchak says:

    While there may be a plethora of rha-rha back-patting going on about the so-called “impartiality” and “maintaining a free press”, not everyone is convinced. This stunt was pulled after a weekend in which a maniacal, despotic regime launched an unprecedented drone and missile attack on a sovereign state, and still not a single article about it is to be found on this site …

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