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Starving The Watchdogs: Who Foots The Bill When Newspapers Disappear?

A copy of the final edition of the Rocky Mountain News sits in a newspaper box on a street corner in Denver, Colorado.
John Moore
Getty Images
A copy of the final edition of the Rocky Mountain News sits in a newspaper box on a street corner in Denver, Colorado.

The value of local newspapers can hardly be overstated right now. We read our local papers to track the spread of COVID-19 in our states, and the availability of ICU beds at nearby hospitals. We read to get a sense of how nearby businesses are faring, and what nursing homes are doing to keep residents safe. More of us are reading more news all the time. But at the same time that readership is soaring, advertising revenue—which keeps newspapers financially afloat—is plummeting. As a result, a number of newspapers across the country are laying off workers, even shuttering.

For many newspapers, the economic crisis brought on by the pandemic is merely the final nail in the coffin. For decades, the financial health of many newspapers has been fragile, in good economic times and bad.

At root is a fundamental shift in the news industry: There are plenty of ways today to pay little—or nothing—to read the news. There are free blogs. There's Facebook and Twitter. Who needs a subscription to a local newspaper?

Millions of Americans have decided they don't. But new research suggests this strategy may have costs in the long run. That's because newspapers are not like most things we buy. If you decide not to buy a watch or a cappuccino, you save money. But if you decide not to pay for a police department, you might save money in the short run, but end up paying more in the long run.

Whereas most of us treat newspapers like consumer products, new research from Paul Gao, Chang Lee, and Dermot Murphy suggests that they might be more like police departments. Gao, Lee, and Murphy looked at how newspaper closures might affect the cost of borrowing in local governments. What they found is a price tag that may give many taxpayers sticker shock.

This week on Hidden Brain, we look at an unusual case of what economists refer to as a free-rider problem. And we ask, who bears the cost when nobody wants to pay?

Additional Resources

"Financing Dies in Darkness? The Impact of Newspaper Closures on Public Finance" by Paul Gao, Chang Lee, and Dermot Murphy, Journal of Financial Economics,2020.

"The Effect of Newspaper Entry and Exit on Electoral Politics" by Matthew Gentzkow, Jesse M. Shapiro, and Michael Sinkinson in American Economic Review,2011.

"The Afterlife of Electronics" series by I-News

Copyright 2020 NPR. To see more, visit https://www.npr.org.

Rhaina Cohen is a producer and editor for NPR's Enterprise Storytelling unit, working across Embedded, Invisibilia, and Rough Translation.
Shankar Vedantam is the host and creator of Hidden Brain. The Hidden Brain podcast receives more than three million downloads per week. The Hidden Brain radio show is distributed by NPR and featured on nearly 400 public radio stations around the United States.
Tara Boyle is the supervising producer of NPR's Hidden Brain. In this role, Boyle oversees the production of both the Hidden Brain radio show and podcast, providing editorial guidance and support to host Shankar Vedantam and the shows' producers. Boyle also coordinates Shankar's Hidden Brain segments on Morning Edition and other NPR shows, and oversees collaborations with partners both internal and external to NPR. Previously, Boyle spent a decade at WAMU, the NPR station in Washington, D.C. She has reported for The Boston Globe, and began her career in public radio at WBUR in Boston.