Anthony Frigon is a PhD Candidate in Geography at UCLA. He is interested in the relationship between industrial dynamics, labor and firm mobility, and regional economic development. His current projects focus on the role of technological proximity in agglomeration settings and spatial knowledge sourcing for multi-locational firms in Canada and the United States.
The recent announcement that one of the major news publishers in Quebec was going bankrupt has sparked wide public debates. Beyond being one of the only few players still standing in the industry, it had been one of the only companies to provide regional coverage via about half-a-dozen small/medium-sized city newspapers. The fact that the media industry is increasingly facing difficulties is certainly not new. What has been relatively under-discussed, however, is how the transformation of the industry has had variable impacts across different regions. Some cities are even confronted with the risk of losing their sole locally based news provider. Research in economic geography can contribute to enlightening this current debate, as this situation is yet another social dimension difficultly dissociable from uneven regional economic development.
Fundamentally, the economic forces behind the current patterns of regional development are increasingly well understood. Strong agglomeration forces are attracting and retaining skilled individuals and high-tech industries in a select group of metropolitan areas. In other words, better opportunities attract both companies and people to successful cities. This has resulted in observable economic and social disparities between different cities, both within and across national boundaries. One of the major challenges we are facing in this context is wealth redistribution. While workers embracing and participating in the modern global economy seem to be significantly improving their living standards, less fortunate people in less fortunate regions are still waiting for the promises of the new economy to materialize in significant ways. We are therefore in a situation where the present economic forces keep high-value activities locked in some prized locations, while the redistribution system seems to fail to adapt and spread the fruits of the global economy more evenly across space. The mismatch between the current state of economic affairs and the redistribution system has indeed been one of the major topics in the recent G7 meeting. Major digital companies have been accused of not paying their ‘fair share’ of taxes, especially in locations where they have a smaller, or no, physical presence, but nevertheless a large flow of transactions. What is more, the positive externalities generated from the activity of giant digital companies (employment, spinoffs, etc.) are mostly limited to a few, globally connected cities.
These claims have important implications for more smaller regions, nationally and globally. They do not seem, at least for now, to significantly benefit from economic externalities generated from spatially concentrated tech-intensive activities, nor do they benefit from an increase in public revenue and spending proportional to the economic importance of leading technological firms.
In Quebec, these issues have materialized in quite an unexpected way. The newspaper company that publicly announced its financial difficulties owns about half-a-dozen small to medium-city newspapers. They sometimes represent the sole professional and consistent source of information for the region. One of the major reasons the company representatives publicly presented is that while most major news companies are moving, or have moved, towards the digital, for others this move represents a prohibitive investment. More so, it requires a comfortable financial cushion that would allow to go through such structural readjustment and uncertainty. Obviously, this task is difficult for smaller companies now running on tighter and tighter margins. But where the argument ties into regional disparities is that the current context is unfavorable to companies operating or based in smaller regions.
The difficulties smaller regions face reflect a long history of consolidation. Over the 20th century, information providers have reacted to increased competition coming from radio and television through mergers and acquisitions, which allowed for economies of scale and access to larger markets. This forged a landscape with fewer companies and a smaller regional scope. Convergence touched companies, but also regions. Today, people are spending less and less to access information, and revenues for newspapers have consequently declined. This coincides with the emergence of a new form of competitors: digital platforms. These platforms channel an immense flow of information and news articles without actually paying dividends to the content creators. On top of that, they reap the larger share of profits coming from high-visibility advertisements, and these profits actually end up being concentrated where these companies are physically located. In today’s world, it looks like only a newspaper in a big city with a large readership (combining digital access and paper) can effectively compete with these new platforms. Now, the question is whether this new form of competition will reinforce the convergence in the media industry, favoring once more larger and more successful regions.
The challenge is thus multifold for information providers in smaller regions: they do not have the size to match large conglomerates in terms of readership and advertising, their material is published on social media for free, and large digital companies capture the larger share of the financial benefits while paying little dividends/taxes. These dividends could, for instance, be redistributed via subsidies or other mechanisms to smaller information providers. The concentration of high-value-added activities and the inability to channel the money out of a few wealthy centers thus have repercussions beyond employment and income; it compromises the supply of independent and professional news sources, and importantly the daily scrutiny of local politics and regional issues. Thinking about access to information is unexpectedly intimately tied to uneven regional development.