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Financing Dies in Darkness? The Impact of Newspaper Closures on Public Finance. 

June 12, 2018

Financing Dies in Darkness? The Impact of Newspaper Closures on Public Finance.

This study, published in May, shows what happens to local politics when local newspapers close their doors.

In short, it’s not good. But that doesn’t mean we need to preserve the relics of a bygone era. When a changing market unearths negative results, that is a golden opportunity for an innovative entrepreneur to fill the void.

And actually, the story starts when online job listings and classifieds became popular. This innovation provided locals with a better alternative to the print versions. But in the process, it took a big chunk of local newspapers’ revenue.

Craigslist was the catalyst to newspapers’ decline. But I’ll explain at the end about a tool I think could help replace local newspapers.

1. Craigslist is the Harbinger of the Local News Apocalypse.

The study found that when Craiglist was introduced to a new location, local newspapers were 10% more likely to fail.

The growing popularity of Craigslist in the 2000s came at a cost to traditional newspaper outlets, which largely rely on revenue from advertisement sales. Kroft and Pope (2014), for example, show that Craigslist had a large impact on job advertising in local newspapers, as employers were increasingly using online forums like Craigslist to advertise their job openings. Gurun and Butler (2012) provide evidence that Craigslist entry in Pittsburgh and St. Louis significantly eroded advertisement sales for the Pittsburgh Post-Gazette and St. Louis-Post Dispatch, causing those papers to provide more favorably slanted coverage to local corporations that purchased advertisements in those newspapers.

2. When Newspapers Close, Local Government Efficiency Deteriorates.

After local papers shut down, town and county workers’ wages increased compared to local private sector employees. On average this led to a 1.3% increase in the government wage ratio to other county employees.

…click on the above link to read the rest of the article…

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