Sales of print newspapers are collapsing. The Sun has seen an 11% year-on-year fall in sales, the Daily Mirror 12%, the Daily Mail 7%, and the Guardian 3%. However, in their recent online subscription drive, The Guardian claims that: “more people than ever rely on The Guardian to keep them up-to-date, but far fewer are paying for our journalism”. The Daily Mail also has more than 200 million monthly online browsers. Yet the industry is still in trouble, with widespread losses and staff layoffs reported.

Established newspaper brands, such as the Guardian or the Daily Mail, have had massive success using Facebook, Twitter, email newsletters, YouTube, podcasts and a host of other online channels to get their content in front of people. This is not covering their costs as less revenue is made by this form of distribution.

Clearly the business model of free content supported by adverts is not working. The Economist has already predicted the end of online display advertising by 2025. Deputy editor and digital strategy head Tom Standage said to Press Gazette: “Video advertising, native advertising and other forms of advertising provide only small incremental revenue streams for publishers.”

Standage goes on to say that a different model is needed. This could be paywalls (like the Times and Financial Times use) or partial paywalls, where the user can read a few articles a week, but must pay for everything else (like the Economist). Being part of a larger conglomerate that cross-subsidises the losses of a media organisation is another option, or selling additional services to readers such as dating, consulting or premium paid-for content (Slate in the US is an example of the latter).

The online publisher Medium recently ditched its ad-based model, because, as Frederic Filloux of the Monday Note, says: “there is absolutely no correlation between editorial quality and the revenue it brings”. Despite having a premium audience - of mainly start up/tech people - and lots of high-value content, Medium was unable to make money from ads. This led Lucia Moses of Digday to say: “The ad-driven system is broken”. The question is, now that Medium have moved away from ads, can Medium or Medium’s high-value bloggers charge for the content? Is there another way to cover their costs?

The news industry lacks a business model that will make it profitable to create journalism and distribute it online. Technological change has destroyed the business models of print news and made “fake news” more profitable. By fake news, I do not mean the spuriously sourced claims about what causes cancer that you might read in the Daily Mail; I mean out right falsehoods spread by sites like Breitbart. These sites are able make a profit online as they do not have the same overheads as the Guardian or the New York Times, but they are able to capture vast amounts of traffic on social media by writing content with outrageous headlines, that is easily shared. Websites like Breitbart can turn a profit from the ad based business model that is currently failing the Guardian or the New York Times, hence the proliferation of fake news.

It is technological change that is behind the squeeze on established media brands, but behind this change is an economic process that is as old as capitalism itself. In his book Postcapitalism, Paul Mason says that: “The 250-year history of capitalism has been about extending market forces into sectors where they did not exist before.” We saw this when the railways destroyed the business model of canals; we see it now as AirBNB threatens hotels by creating a new market in sharing private property; and this what we are seeing in the news industry.

The internet has made it possible to distribute news to millions of people. Now that the news is available online the market for print has gone. New markets have been created in online ads, however, these do not produce the same amount of profit. This is a feature of this process. Despite the success of AirBNB, it produces less profit than the hotel industry whose market is disappearing (and AirBNB employees fewer people). It is the process of capitalism itself that is threatening the future of established news brands.

In the long term this means that traditional news organisations (which value things like facts and balanced reporting) will find it increasingly difficult to compete with fake news that costs less and can survive in this leaner profit environment. The solution is that we need to evaluate the worth of a news brands by more than the profit they make. We need a system that recognises the value of high quality journalism as a good in itself, not just a means to make money.

This is not just a problem in the news industry, but a problem with capitalism as a whole. Capitalism only has a use for goods and services that create profit; goods and services that do not, but may have a social value, are set aside. High quality journalism that informs the public is an example of this. In his book, Ill Fares The Land, Tony Judt identifies this problem in what neoliberal capitalism considers to be useful. He said: “If we confine ourselves to issues of economic efficiency and productivity, ignoring ethical considerations and all reference to broader social goals, we cannot hope to engage it.”

The changes going on in the news industry are not novel and are not confined to this industry. Journalism is changing because of the process in capitalism that destroy markets and replaces them with ones that make less money and employ less people. Quality, independent journalism will never be more profitable than fake news. We need to think about its real value, not just its use for making profit. This is something we need to think about across our economy from hotels to taxi firms, or else profits will be squeezed, employment will fall and socially valuable goods and services will be lost.

Newspaper image created by Yukiko Matsuoka and used under creative commons.