Netflix is finding out what happens when everyone is confined to their homes and chained to their TV sets. The combination of more available entertainment options and an inflation spike (including price increases from Netflix itself) that has made budget-strapped families nixing discretionary expenses for the first time in a decade for the growth of a streaming giant, sending its stock price tumbling by 35 percent .
In the aftermath, Netflix expects its prodigious spending on movies and television programs, and what’s left for “right-sized” budgets. They’re also looking into establishing ads with a lower-cost option, something that was unthinkable just months ago. Netflix’s streaming competitors, such as these, will almost certainly face the same predicament: inflated entertainment costs and reduced ability to spend. Shares just recently had a streamer with almost every company.
The implosion of CNN + shows just a month later that even well-endowed corporate parents have a losing streaming proposition. After a month into the launch and a decent-sized media campaign, CNN + was attracting just 10,000 viewers at a time, and that was good enough to keep it going. Any leader of a subscription-based video service should be frightened by the fact that CNN + only costs $ 5.99 per month, far less than other networks.
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The Peak TV of the moment has passed because it’s no longer viable to a streaming video site as a loss leader to encourage growth. That’s why writers and actors and producers, and even worse, free flow of information, which is exactly what we are learning.
But streaming video is not the only service reliant on subscriptions.
The Financial Times calls it “The Great Cancellation,” as families find their strained household budgets cut out for unnecessary expense. Meal kits, fast-fashion delivery apps like Rent the Runway, Peloton memberships, and countless other subscription-based services are diminishing their numbers.
There are obvious risks to inflation-fueled cutbacks, from large-scale collapses to subscription-dependent companies triggering consumer spending losses. Most of the nation’s newsgathering companies have shifted to the exact same model of funding or at least part of their daily output.
If people cut news out of their budget, that could kill off a stroke at the outlets. There have always been subscriptions for newspapers and magazines, but they have also joined other revenue streams, from advertising to classified sections to branded event planning (in the case of nonprofit news) philanthropic donations. But Google and Facebook’s online advertising dominance is a trickle to stream. Increasingly, online subscriptions have been found as newsgathering of the future for the savior, and the propping-up outlets that may not be viable.
That’s the Substack of Doubt, which ultimately provides independent journalists with a way to solicit contributions from readers and make a living off the basis of their talent and fan base. According to The New York TimesThere are over a million subscribers to various Substack sites. But that could see some serious erosion if the inflation remains high and consumers drop the charges for look.
The loss of trust in journalism is tied up with a loss of access.
The purchase of Twitter by Elon Musk has led to some delusions that will spark a restoration of the old blogosphere. Twitter That Killed Blogging; Most blogs are withered because there’s no way for writers to earn a living from them. The current inflationary environment is only going to make that difficult.
This leads to my larger and less idiosyncratic point of view that the greatest threat to democracy is not the media’s disinformation, but the spread of paywalls. The information is that a citizen needs to make choices about who they are and what is happening underneath the surface has been privatized, gated, and kept from those who pay for an inability. Some sites (for example, this one) offer subscriptions to monthly donors without holding back the articles for everyone else, but that’s a rarity. By and large, news companies have decided that the only way to fund their business is by blocking the information from everyone who pays for it.
Now, one can understand why this happened — these publications felt, thanks to long experience, like they had no choice. And you had to pay for a magazine or a newspaper in the days of dead-tree media. But it has led to two problematic trends.
First, a bid to increase specialty and attract eyeballs, and companies have put their best stuff even further out of reach of the ordinary reader, creating a class system of information. Those with access to a Bloomberg Terminal or Politico Pro or Special Tiers The Wall Street Journal (which can cost more or more dollars per month) and have a much more fine-grained understanding of what is really going on in the nation and the world. They can act on that information, and they do it frequently. As a 2015 Washington Monthly As reported by Paywall Journalism, the consumers’ insider outlets and tip sheets are mostly investors, lobbyists, and other government influencers. They get the “real” information and can twist it to their ends.
At the other side of the class dividend are those who can afford to surmount any paywalls. What bits they grab are available on broadcast and cable news, or more likely from social media. The Loss of Trust in Journalism If your media diet comes from McDonald’s, you’re not going to be able to work as easily as you can.
The second is what will happen to the remaining publications. With paywall subscriptions going for their best hope, economic success, a shift toward frugality can turn news and information into a luxury good, and anyone who isn’t is rich. Not only does this create an inequality of knowledge, it’s also possible for a large number of reporters and news companies to exist. Watch for discussion of layoffs and shuttered sites in the weeks and months to come. It is already a regular event in the journalism industry; I fear it will get worse.
These are the issues I am talking about in biased. I strongly believe we need a thriving fourth estate as a critical piece of democracy, but then as a journalist I would say. What I think is the biggest problem is how to subject journalists to the ebbs and flows of the macroeconomy, we’ve made it harder and harder for reporters to live out a reasonable life.
There are ways to break free of that cycle, which I’m sure you’ve heard ad nauseam: public support for news, the use of nonprofit status, break up the Google / Facebook online ad duopoly, and so on. The only thing that really worked out was that a rich dowager could carry a news outlet and acceptance losses, and even then, it would always be a few years beyond that. I don’t really have an answer to this problem. I only know that this economic environment is more likely to make the problem feel more real. I don’t think pushing people out of the free flow of information is viable as an ethical strategy or an economic strategy. I hope we can figure out what comes next.