“If the problem is market failure, then only policy can restore what the market cannot provide,” argues Styli Charalambous, CEO of South Africa‘s Daily Maverick
Protesters hold placards against the Gupta family outside the Bloemfontein Regional Court in February 2018
Styli Charalambous
20 July 2026
In a free market, people act in their own self-interest. Yet this individual self-interest ends up benefiting society as a whole – as if an invisible hand were quietly steering everyone’s actions toward the common good
Smith introduced this idea in The Wealth of Nations, his landmark 1776 book. His ‘invisible hand’ theory went on to become the defining metaphor for market capitalism, shaping economic thought for centuries to come.
But the invisible hand doesn’t always work. It fares particularly poorly with public goods, those things everyone benefits from but no one can be excluded from enjoying. There’s a reason parks and highways are tax-funded, and why governments grant patent monopolies to inventors: markets systematically undersupply public goods.
Journalism is no different. Everyone benefits when corruption is exposed, but few will pay for it directly.
While many have ideas and opinions on how to solve this global crisis, most practitioners, academics and media analysts begin from the incorrect starting point.
They speak of ‘disruption’ and ‘digital transformation’ as if the crisis confronting journalism were primarily technological. They blame Big Tech for stealing advertising revenue. They exhort newsrooms to ‘innovate more’ or ‘write better marketing copy’ to save themselves. While these are all contributing factors in varying measures, these diagnoses miss that we are experiencing a market failure, and one which predated the digital disruption by decades.
Getting this framing right matters enormously. Misdiagnose the disease, and you prescribe the wrong treatment. If journalism’s crisis is really about technology and innovation, then the solution lies in better products and smarter business models. But the crisis is fundamentally about market failure and the invisible hand’s inability to sustain public goods. If that is the case, then only a policy intervention can restore what the market cannot.
1. The market was already failing
The evidence for market failure in journalism stretches back decades before Google and Facebook existed. In the United States, scholarly research from the 1980s and 1990s documented a troubling pattern: insufficient investment in newsrooms and inadequate production of public interest journalism, even during periods of media company profitability and growing GDP activity. This was recorded in The Death and Life of American Journalism, which clearly shows the decline in newsroom investment, relative to improving economics.
John McManus’s seminal 1994 work on market-based news production demonstrated how advertising’s influence on editorial decision-making was systematically leading journalism away from what society needs toward what audiences and advertisers want.
This distinction between needs and wants is crucial. A democracy needs investigative journalism that exposes corruption, even if audiences would rather consume entertainment or infotainment. A community needs coverage of local government, even if advertisers prefer to reach consumers in shopping moods. Publishers also need to make it more appealing to consume this critical information.
The invisible hand, optimising for commercial returns, consistently underinvested in the journalism that serves democratic functions. When profits were common and rising, investments in newsrooms were declining and advertiser interests were pulling publishers away from the public interest coverage society needed to function.
In short, the market failure was in full swing before Big Tech entered the fray. These platforms accelerated and deepened a pre-existing crisis but they did not create it.
Public interest journalism generates enormous benefits that flow to society at large rather than to the entity producing the journalism. When an investigation removes a corrupt politician or exposes malfeasance at a country’s tax authority, billions in value accrue to the nation through recovered assets and reduced corruption.
South Africa’s State Capture era illustrates the value gap starkly. Investigative reporting by AmaBhungane, Daily Maverick’s Scorpio unit, and News24 helped expose the Gupta network and trigger prosecutions that have recovered billions in stolen assets.
Assets totalling R11 billion ($660 million) have been recovered and another R10.6 billion ($645 million) in preservation orders have been effected. The National Prosecuting Authority’s Investigating Directorate has secured multiple convictions and is pursuing 218 criminal investigations that could lead to more. Whistleblowers and newsrooms that took the risks and the legal threats that sparked commissions of inquiry operated on shoestring budgets while generating billions in public benefit.
The problem, then, is not one of value creation but one of value transfer.
The people who benefit the most from public interest journalism (the public, businesses, governments) are not the ones funding its production. Publishers create enormous social value but cannot capture it commercially. This is the textbook definition of market failure.
2. Market context: why Africa faces steeper odds
If market failure afflicts journalism globally, it afflicts African journalism with particular severity. According to a sustainability research project conducted by FT Strategies in 2023, African news organisations face conditions 8-11 times more challenging than their counterparts in Northern European countries like Norway.
Thirteen measurable factors were compared across countries to create a market score and the results were stark, but not unexpected. This is not a failure of African journalism; it is a reflection of the market context that dictates much of our ability to sustain ourselves. It is also responsible for the “winners take most” phenomenon where each market can only sustain a few winners while society, especially local markets, lose out.
Market context is the most frequently ignored factor in sustainability discussions. Perhaps because it feels impossible to change; or maybe it simply hasn’t been considered. We celebrate the New York Times reaching 10 million digital subscribers while ignoring that it publishes in the world’s most spoken language, serves a global audience, and operates from the richest city in the wealthiest country on earth. Of course, excellence matters but replicating that model in Lusaka or Harare isn’t a matter of better execution. It’s structurally impossible.
In Southern Africa, several factors compound the market failure. High data costs limit digital audience growth. Poverty constrains discretionary spending on news subscriptions. Thin advertising markets previously controlled by a handful of large publishers are now digitally dominated by global platforms. Currency volatility and high inflation makes planning difficult. Power cuts and brain drains, the list is as long and wide as the black hole that disappears countless organisations each year.
These are not problems that better marketing copy can solve. Research documented by Harry Dugmore in ‘Paying the Piper’ found that South Africa’s news industry contracted by 50% in the decade to 2019, before COVID-19 accounted for another estimated 20% of media workers. These are not the conditions ripe for innovation and better journalism.
3. The news industry’s own reckoning
Acknowledging market failure does not absolve the industry. South African media companies failed to innovate when they had the reishers controlled most advertising and circulation profit margins were enrthought, as advertisers paid the bills. When digital disruption arrived, newsrooms had neither the culture nor the capabilities to respond
The failure to innovate is a failure of leadership, and the industry is paying for it. But even this self-criticism must be contextualised. The market was already failing to fund adequate public interest journalism during those profitable years. Leadership failures accelerated a structural decline; they did not cause it.
Yet even this self-criticism must be contextualised within market failure. Critics who argue that ‘if the quality of the work was better, more people would support it’ or ‘if you innovated more, you’d survive’ ignore the overarching influence of the failed market. The context makes the minimum production of a valuable public good like journalism structurally uneconomical. Individual excellence, with a few scattered winners, cannot overcome systemic failure.
The FT Strategies sustainability study identified four key drivers of news organisationon, and solid foundations in leadership, operations, and cost management
All of these matter, and the ones we are responsible for internally separate the few winners from the rest. But they matter within a market context that determines what is possible. You can only choose a business model suited to the market in which you operate and in most of Southern Africa, that market is structurally hostile to journalism’s survival.
4. The next disruption: AI and the traffic apocalypse
Just as newsrooms began adapting to platform dominance by building digital products, experimenting with memberships and diversifying revenue, another disruption arrived.
In May 2024, Google introduced AI Overviews: AI-generated summaries appearing atop search results that answer queries without requiring clicks to source websites. The impact has been swift. Pew Research found users who see AI Overviews are half as likely to click any link and almost never click links within the summary itself. Digital Content Next’s survey of 19 major publishers found Google referral traffic down 10% year-on-year over just eight weeks in mid-2025, with some weeks showing 16-17% declines.
Zero-click searches (where users never leave Google’s ecosystem) rose from 56% to 69% between May 2024 and May 2025 Publishers who built their survival strategies around search optimisation now find that strategy collapsing
This matters for the market failure argument because it demonstrates how structural conditions keep shifting against publishers regardless of how well they adapt. Those who successfully pivoted to digital now face those digital models being undermined.
No amount of innovation can outrun a market that keeps changing the rules. ChatGPT, Perplexity and other AI systems are training on journalism to provide answers that make visiting news sites unnecessary – and unlike some Northern Hemisphere publishers, no African newsroom has yet secured an AI licensing deal.
Like the rise of the internet and the social web, artificial intelligence represents both an incredible opportunity and threat to journalism.
The industry response, for those unable to secure deals, has been to try to limit access to AI crawlers, but this is counterintuitive to the nature of public goods. If these AI systems are the foundations of what might be our digital overlords in the near future, do we really want them trained primarily on social media content?
Why this matters for Southern Africa
For publishers who pivoted to digital-first strategies, building their business models around search engine optimisation and advertising-supported content, AI Overviews and chat responses represent another existential threat. The playbook that seemed to offer a path forward is being rendered obsolete before it could be fully implemented.
No African publisher has yet to conclude an AI licensing deal.
The implications extend beyond Google. ChatGPT, Perplexity, and other AI assistants are training on publishers’ content and providing answers that ob
While some AI platforms are beginning licensing agreements with major Global North publishers, these arrangements exclude the vast majority of news organisations, particularly those in developing markets.
This new disruption reinforces the central argument: journalism’s crisis is not primarily about individual publishers failing to adapt, but about structural conditions that make sustainable journalism increasingly impossible. The market context keeps shifting against publishers, regardless of how nimbly they respond. Clearly, only a policy intervention can address a market failure of this scale.
Philanthropy’s limits
Some argue that donor funding offers a path forward. And, indeed, philanthropy has enabled vital journalism in Southern Africa with the likes of AmaBhungane, GroundUp, Open Secrets, Health-e and The Conversation Africa demonstrating that non-profit models can produce quality public interest reporting.
But the industry’s contraction has eliminated hundreds of millions in journalism capacity. Philanthropy is filling cracks in a collapsing dam. Even worse, the global funding environment is deteriorating. International foundations are retrenching from media support. Government aid budgets are pivoting toward defence spending. The Open Society Foundation, one of the sector’s largest funders, has significantly restructured and reduced its journalism grantmaking.
Philanthropy can sustain islands of excellence- But it cannot rebuild an ecosystem. Only policy can operate at the necessary scale.
5. Policy: the only systemic answer
If the problem is market failure, then only policy can restore what the market cannot provide. This is not a radical proposition, despite the discomfort that ‘policy’ can provoke in media circles.
We accept as normal public funding for education, healthcare, transport infrastructure and countless other public goods that markets undersupply.
Industries like banks have been bailed out during the global financial crises; film productions get subsidies all over the world; and new industries often get a leg up with tax breaks or grants to kick start economic interest. So we should not hesitate to extend this logic to public interest journalism, provided we design frameworks that protect editorial independence.
Because society as a whole benefits from public interest journalism, it is not unreasonable that public funds through the tax system could be accessed to support its creation. The challenge lies in designing well-crafted policy frameworks that stimulate sustainability without enabling capture or creating perverse incentives.
Admittedly, there are about only a dozen or so countries that would be open to such a progressive policy framework. And not too many in Africa. However, one of those is South Africa, which has been working on exactly such a framework and driven by the Government Communication and Information System (GCIS) with a steering committee of media industry representatives. If adopted comprehensively, this framework would be unrivalled in breadth and conceptual design.
Principles for effective policy
Effective policy intervention requires four elements:
- We must learn from the past and avoid unintended consequences where previous interventions failed or created capture risks.
- We must understand what drives sustainability and design incentives and rebates to stimulate behaviour change across various stakeholders.
- We must identify the kind of journalism we want to support and who qualifies, preventing abuse by bad actors.
- Finally, we need systems of monitoring and evaluation to ensure public funding is well spent.
The Transformation and Revitalisation framework developed by GCIS with industry representatives proposes interventions across the full ecosystem of journalism funding. Rather than rely on direct subsidies which create dependence and capture risks, the framework emphasises indirect mechanisms where third parties (readers, advertisers, investors, donors) choose which publishers to support, with policy reducing the friction and cost of doing so. That way we introduce an element of competition and rewarding those who pursue value creation and excellence for their audiences and stakeholders.
1. For readers:Tax deductions on subscriptions and memberships to qualifying publishers; zero-rated VAT on reader revenue; zero-rated mobile data for news content across all networks.
2. For advertisers: Rebates on advertising spend with Press Council members, qualifying as corporate social investment; transparency requirements on government advertising allocation.
3. For investors and donors:Tax-exempt treatment for donations to qualifying publishers (even without PBO registration); investment rebates for equity stakes in news organisations; access to development finance at ring-fenced terms.
4. For local journalism: Levies on top-bracket municipal ratepayers to fund community news; distribution rebates for newspapers reaching underserved areas.
5. For the ecosystem:Anti-SLAPP legislation to protect against vexatious lawsuits; whistleblower and investigative media compensation tied to recovered assets or regulatory fines; a regional SADC press agency for cross-border journalism.
The qualifying criterion throughout: membership in good standing with an independent press council. This strengthens self-regulation while ensuring public support flows only to outlets meeting ethical standards.
These recommendations are broad and market leading. But the boldest amongst them is to compensate whistleblowers and investigative media houses with a percentage of the assets recovered or the fines imposed by regulators from their work. With this in place, we could change the culture of whistleblowing from one of fear and trepidation, and encourage a renewed surge in funding investigative journalism at both national and local levels.
The independence question
Here’s the obvious objection: won’t public funding compromise editorial independence? History offers legitimate warnings. State capture demonstrated how government advertising could be weaponised against critical media. The South African Broadcasting Corporation‘s capture showed how direct state control enables propaganda.
But history also offers models that work. The BBC’s licence fee, Norway’s press subsidies and Germany’s public broadcasting levy all channel public funds to journalism while maintaining editorial independence through structural safeguards.
The GCIS framework incorporates several such safeguards. First, most mechanisms are indirect: tax deductions let readers and advertisers choose which publishers benefit, not government officials. Second, qualifying criteria are based on press council membership (an industry body, not a state one) rather than political approval. Third, allocation of any direct funding (such as local journalism grants) would be administered by independent expert panels at arm’s length from the government.
No system is immune to capture attempts. But the alternative (leaving journalism entirely to a market that systematically underinvests in it) has already produced the crisis we’re now trying to solve. The question is not whether public policy should support journalism, but how to design that support to protect independence. Other democracies have answered that question successfully. South Africa can too, which will inspire others to follow suit.
6. Building regional and global momentum
The idea that policy is our primary way out of this crisis is catching on. Denmark, which already provides 0.2% of GDP in support to the media, is evaluating a new framework to update its 2013 Media Subsidies Act. While progressive, these designs are usually suited to wealthier Scandina pronounced than in the Global South
The Forum on Information & Democracy’s ‘New Deal for Journalism’, a study published in 2021, called for comprehensive policy frameworks and public funds to support journalism. Recognition is growing that markets alone cannot sustain the journalism democracy requires, and the Nigerian Editors Guild recently called for tax deductions, rebates, and favourable loans for news media.
Another kind of policy response, South Africa’s Competition Commission inquiry into digital platforms and media, illustrates both the potential and limitations of regulatory approaches. As the Daily Maverick reported, the inquiry forced Google to commit R688 million ($42 million) to South African media over five years, a meaningful if modest contribution.
But remedies were only ‘forward-looking’. Historical transgressions went unaddressed. And unlike Australia’s News Bargaining Code, which compelled both Google and Meta to negotiate with publishers, South Africa’s inquiry somehow let Meta off the hook entirely, despite the platform’s devastating algorithmic deprecation of news content, myriad abuses of privacy and competition laws, and lack of efforts to combat mis and disinformation on its platforms – all of which provide for unfair competitive practices.
This market inquiry outcome demonstrates that regulation alone cannot rectify market imbalances. Competition remedies address symptoms; policy frameworks address causes. We need both, but policy designed to change the underlying economics of journalism offers the more fundamental solution.
7. Conclusion: treating journalism as a public good
The invisible hand has left the newsroom. It was never well-suited to sustaining public goods, and its grip on journalism has been weakening for decades. Big Tech accelerated the crisis, but did not cause it. Now AI threatens to deliver another blow to publishers who invested in digital transformation.
Correctly framing the problem gives us a better shot at workable solutions. If we understand journalism’s crisis as market failure, we stop expecting innovation alone to save us. We recognise that the value journalism creates for society vastly exceeds what publishers can capture and we design policy to close that gap.
The answer lies in treating public interest journalism as the public good it is and funding it accordingly, through carefully designed policy frameworks that protect editorial independence while channeling re
South Africa has an opportunity to lead this conversation globally. The GCIS framework offers a comprehensive template that other press-freedom-respecting democracies might adapt. The Constitution and Constitutional Court rulings have singled out the special role the press plays in protecting our democracy. It is time for policy to match that recognition with material support.
If we fail, more news deserts will spread across the region. More communities will lose the reporters who once watched their councils, their courts, their clinics. More corruption will go unexposed. More citizens will navigate their democracies blind.
If South Africa adopts this framework and demonstrates that a developing democracy can sustain public interest journalism through smart policy, we offer a template for dozens of countries facing the same crisis. The invisible hand was never coming to save journalism. It’s time to build something that will.
This essay was first published as one of the chapters of‘The State of Press Freedom in Southern Africa 2026’report and is republished here with permission from his author.
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Styli Charalambous
Styli Charalambous is the co-founder and CEO of Daily Maverick, one of South Africa’s most influential and resilient newsrooms. With a B.Com Honours and qualification as a Chartered Accountant (SA) (2003), Styli has led a career defined by strategic…
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Styli Charalambous
