Message from Michael - Journalism and the Internet- December 7 2009

Message From Michael                                 

                                                                                                December 7, 2009                                                                                                                                                                                                                                                                                                                                                              

      JOURNALISM AND THE INTERNET – A SPECIAL REPORT

 

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      THE FACTOID THAT SAYS IT ALL:  In the third quarter of this year, Google had $1.65 Billion in PROFITS.  In the same quarter, Gannett, the largest news company in the U.S., and the second largest in the world, had TOTAL REVENUE of $1.3 Billion.  Let me re-state that – Google made more money in profits than Gannett made in total revenue.  Gannett’s actual profits for the third quarter amounted to a ‘measly’ (by comparison) $73 Million.  This was, in my view, the Holy Cow (or whatever term you use) factoid from the Federal Trade Commission workshop on “how will Journalism survive the Internet age.”  The figures came from a presentation by Ken Doctor of digital marketing research firm Outsell (and which I confirmed through research online).  Doctor, and several other speakers, made the point that Gannett made its money creating content while Google made its money aggregating content.  And that is the question the FTC needs to wrestle with, when four of the top five news websites are search aggregators, not content creators AND they make more money.  

      MORE NOT-SO-FUN FACTOIDS:  Further exacerbating the problem, at least for the content creators, according to a presentation by media company E.W. Scripps’ Senior Vice President for Newspapers, Mark Contreras, the print business generates $500 “per year pet set of eyeballs” while the online business generates less than one-fifth that amount -- $75 “per year per set of eyeballs.”  Contreras cited an analysis by FTI Consulting showing that not only is the Internet taking market share from traditional media, it’s actually causing the overall advertising market to shrink.  For every $1 of NEW spending on the Internet, ‘traditional’ media loses $3.  And there’s a pretty basic reason for that, according to a presentation by Dave Evans of the University of Chicago Law School.  And that is what he calls a “deluge of ad space” not only on the Internet but on Internet-connected mobile phones.  Further exacerbating the problem (if I can use that phrase again) is the fact that Online Readers spend much less time reading – 68 Seconds versus 16 Minutes, for example, reading the New York Times.

      SOME LESS DEPRESSING FACTOIDS:  So, before any of my traditional media friends curl up in the fetal position under their desk, there were some ‘good’ or at least heartening factoids to come out of the workshop.  The folks at Ball State University’s Center for Media Design presented an observational study that showed Live TV was far and away the most popular medium, with a greater daily reach than any other medium and with people spending more time with it than any other medium.  In the total scheme of the media ecosystem, newspapers and magazines scored the lowest in terms of research and time spent.  But, in what Insight and Research Director Mike Bloxham called the “news footprint (of the) media ecosystem, “any” print had the same reach as “any” Internet, although people did spend more time on the Internet.  Also somewhat heartening (and interesting) for my newspaper brethren was a study by the University of Chicago’s Booth School of Business which showed that reading a newspaper ‘causes’ 13% of non-voters to vote.

      DEVIL OR ANGEL:  If you’ll remember the next line in the old rock and roll song, singer Bobby Vee couldn’t make up his mind which one his girlfriend was.  Well, apparently, the federal government along with major search engines Google and Yahoo have the same problem with behavioral advertising.  Executives with the two companies argued the virtues of behavioral targeting, as it is often called, at the FTC Workshop.  The ‘angel’ part of such an approach is that it allows companies to collect the web-browsing behavior of their users to define what their interests are so they can target advertising specifically addressing those interests to them.  The ‘devil’ part is that it raises all kinds of questions about privacy rights.  It’s the old saying that you leave lots of little crumbs as you travel the Internet trail.   Yahoo’s VP of Channel Sales, Lem Lloyd, argued that this “customized advertising (provided) relevant ads (in an) uncluttered ad environment (which resulted in a) superb consumer experience.”  He pointed out the measures Yahoo takes to protect privacy which (commentary by me) was almost humorous because the ‘protection’ was the fine print at the bottom of the web page allowing people to opt out.  Not too coincidentally, the FTC is holding a ‘privacy roundtable’ session to discuss the “privacy challenges” posed by technology such as behavioral targeting.  Several other speakers, including Scripps Contreras, talked about the behavioral targeting-privacy issue.  So, watch for this issue to grow in importance. 

Google’s Senior Business Product Manager, Josh Cohen, went to equally great lengths to explain in minute detail how news organizations can opt out of its aggregating process, while at the same time arguing that Google “sends billions of visits to publishers around the world.”  In an obvious nod to the debate over aggregating versus creating, one of the slides in its presentation was headlined Google and Publishers: A Partnership.  Yahoo also talked about its Newspaper Consortium partnership which, they say, has created 18,000 campaigns with more than 6 Billion impressions sold. Both men clearly (more editorial commentary by me) were trying to make the point that they are helping more than hurting their friends in traditional media.

In the area of interesting factoids, Yahoo exec Lloyd says it has 581 Million users, which translates into 3 out 5 Internet users worldwide and 3 out of 4 of the Internet users in the U.S.  He put the local ad market estimate at $14 Billion in 2009.  Not to be outdone, Google exec Cohen said Google operates in 30 languages with 50 domains worldwide as well as 22 languages and 30 domains on mobile, and has “archive content from over 200 years.”

      WE’RE ON THE EVE OF:    If you said ‘destruction’ you either listen to too much old rock and roll, or you were listening to FTC Chairman Jon Leibowitz.  The chairman, who acknowledged that his wife works for one of the traditional media outlets (The Washington Post) raised the question whether the changes in the media landscape are “creative destruction” in which something new and better comes about, or just plain “destruction” period.  Energy and Commerce Committee chairman Henry Waxman argues, “we can not risk the loss of an informed public and all that means because of a… ‘market failure.’  But it’s a later point of his that I find even more interesting and which qualifies as a “thoughtoid.”  Okay, I just made that word up.  But it works… for me at least.  It’s a little dense but think about this one – “the atomization of news sources of content has resulted in the fragmentation of audiences, so that the commercial basis to support a critical mass of authoritative and informed news and information is melting away.”  Whew!  The bottomline – both men say they are open to some form of journalism support whether it comes in the form of government tax considerations, to public funding, to foundation funding or to “universities operating news organizations.”  Okay, I’ll admit it.  I had to throw that last one in, since we at the University of Georgia operate a university supported television news operation.

      YOU CAN QUOTE ME ON THAT:  And we will.  For example, Evans of Chicago’s law school argues that “journalism is the bait for securing viewers for advertisers.”  He defines traditional journalism as the hiring of reporters, photographers, editors to collect and write news, and he argues, “it is this labor intensive process for generating content that is under challenge.”  In a similar vein, Outsell’s Ken Doctor likens journalism to manufacturing which adds either much or little value.  He refers to a ‘content gap’ and the growing “chasm between market-driven ‘newsy’ content and public service content.’   And from former FCC chairman Reed Hundt and the Knight Commission on the Information Needs of Communities in a Democracy (catchy little title, huh?) comes this:  “information is as vital to the healthy function of communities as clean air, safe streets, good schools and public health.”

      THE TIMETABLE BATTLEFIELD:  Television is the overall winner when it comes to over-use by consumers, but it’s an interesting see-saw battle.  For example, television is the number one choice news viewing choice at 7 am and 6 pm, according to the observational study by Ball State University.  But between roughly 9 am and 11am, as well as from roughly 1pm to 5pm, Online wins out.  Not too surprisingly, newspapers are the number two choice at 7 am and just barely behind television at 8am.  But at 8pm and 9pm, it’s almost a dead-head as to who is most popular – television, newspapers or online.

      FOOTNOTE:  It may be an interesting or telling point that the workshop did not seem to get a lot of mainstream media coverage, at least as far as I could tell.  Aside from a little blurb or two about the conflict between Rupert Murdoch and Ariana Huffington about whether content can be paid for, or will have to be free… not much.  Actually the best coverage in this humble reporter’s opinion came from Danny Sullivan’s SearchEngineLand blog.  Also, as a further footnote, even though it’s repetitive of previous Messages, I should note that the Federal Communications Commission is also researching what can be done to “save journalism.”  

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