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What you describe is a big part of it, but it's only part. The other big thing that happened is the near-total loss of ad revenue. Facebook built really good microtargeting, so that it became more cost-effective to advertise on their product to reach a local audience than to advertise on local news outlets, and Craigslist did the same for classifieds.
The result looks like this for most outlets:
Subscriptions are only a partial workaround for some news outlets; you can't actually charge a subscription for most local news — not enough people can pay it to result in a viable publication.
In any case, this loss of revenue means that the typical local outlet can't afford anything like the level of reporting they had 20 years ago.
The capitalist model is failing the journalism industry. Is there a way to build a mutual aid network for good journalism?
I'm not even sure it's the capitalist model that failed it. Whether capitalist communist or whatever, we have plenty of evidence is that this is what happens to Institutions in general.
An institute of some kind is created, let's say the New York Times, for example. Over time, the Institution grows and excels at the goals it was originally created for (quality journalism, for the NYT). Eventually, all the people who originally created it die off and they are replaced by new people with no connection to the creation or ideals of the Institution. This happens several more times, each time the group of leaders becoming more and more distanced from the original goals of the institution and becoming more or less "enablers of the status quo." When the institution no longer servers its initial purpose, it does not shut down, it simply moves into protecting itself and it's purpose becomes extending it's own existence for the sake of extending it's own existence. The people who now work there view it as a job and if the place they work shuts down they won't have a job but they're so far away from the reasons it was created to begin with, they're making all the wrong choices to try to save it because they're just trying to save it instead of finding a new reason for it to exist and throw away the original framework that is no longer working.
This is the path of institutions, no matter the political or economic style being used. They start amazing, grow large and useful, then slowly become behemoths disconnected from their original goals and ideals and start existing simply for the sake of existing because nobody would know what to do without them, even though they're currently failing their goals miserably.
Traditional news media has been this behemoth that exists simply for the sake of existing for a long, long time. They've been unwilling to adapt for decades now.
I think this is a pretty good perspective (thank you political author Snot Flickerman, god I love the internet)
I've heard very similar explanations for why communes falls apart You start with a group of adults who want to live communally, they get that rolling and sometimes it works out really well. But they almost never survive the second generation because too many of the commune kids don't really care about the group and just want to get away and build their own lives.
If anything, practices like the Amish sending their kids out into the world and letting them choose to return to the life probably work out a lot better to disperse teenage rebellion and reestablish the values and ideals of the community.
If the leadership (and there's always leadership, even if informally) is open, then the influx of new ideas can also help prevent stagnation, but for exactly the reasons outlined above (institutional capture, stagnant high-rankers more concerned with status quo and the security of their positions) leadership tends to close itself off.
I do think the capitalist mode makes this worse though. In theory, communal projects just fall apart when they fail to adapt, since they lose their purpose. Capitalist organizations can often keep going in zombie mode, because the actual function of ALL capitalist organizations is to make money. Anything else is literally idealism layered on top, the material reality is that capitalist organizations exist to make money. And when the ideals fall away, that still remains and becomes the hungry driver of all future decisions.
I'm reminded of a thing I complain about all the time: the festival cycle. Say you learn about a new festival, or outdoor concert, or similar such thing. The first year will typically be chaotic, a little disorganized, but the people tend to be enthusiastic. They want to be here, they want to have fun, but they also are motivated early-adopters and friends of the organizers, so they want to help make it a good festival.
The 2nd through 5th-ish years of the annual festival are the prime years. Success in the first (and subsequent) years attracts better talent, more talent, and more people. The festival is lively, fun, and often carries some idealism as well. Like, "this festival celebrate music in our community" or "all proceeds of the fair go to feeding the homeless!"
By the 6th year though, if it has continued to be successful, this is about the time when the amount of "party people" is severly out-weighing the commited festival goers. These are the people that dont make costumes, dont camp out, dont really engage with the festival beyond pure trasactionalism: I give you money, and you give me fun.
There's now too much money, profit, in the system and usually a big national company makes a buy-out offer now, or the festival is simply big enough that managing it necessitates building a company and the finance people just worm their way in. Ticket prices go up, tickets get partitioned into VIP tiers, local acts get replace with big corporate names, ads and merchandising begin to dominate your eye lines everywhere in the festival.
Eventually, it either outgrows its birthplace and moves somewhere bigger, or becomes so large and mismanaged that it becomes too unprofitable to run anymore and gets shut down. A few people go "man, remember how cool Blahfest was? What if we got some friends together and organized a new BlergFest?!" and the cycle begins again.
Flattering, but I want to make clear I'm just regurgitating half-understood ideas from much smarter and clever people than me. So not smart I can't even dig up the proper sources because I'm an idiot. Which is why I'm merely a Snot Flickerman.
Also the notes on festivals are spot on.