Message From Michael 
March 22, 2010
STATE OF THE NEWS MEDIA -- 2010
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SHOW ME THE MONEY: That seems to be the over-riding theme of this year’s annual report on the state of the news media by The Project for Excellence in Journalism. And for good reason. One of the more startling facts cited in the report is an analysis by market research and investment banking firm Veronis Suhler Stevenson that says that even after the economic recovery, by the year 2013, the three “old media” – newspapers, television and radio – will take in 41% less revenue than they did in 2006. 41% less revenue. That is not just bad news for them, it’s bad news for “new media” because they rely so heavily on ‘old media’ for actual content. With online advertising showing a decline last year for the first time since 2002, the report says the question for online journalism is the same as mainstream journalism – how to pay for it. The report notes that after 15 years of transitioning from print to digital, about 90% of newspaper revenues still come from the print side. In local television, the report notes, online only added 8% to the bottom-line.
Add to that equation the fact that of those people who have a favorite news website (most don’t have one), only 7% say they would be willing to pay for it. As to community journalism, or citizen news sites, most of their funding comes from either their own pockets or from contributions. Since 2006, Jan Schaffer of the J-Lab Institute for Interactive Journalism, told the report authors that community journalism sites received more than $141 Million in non-profit funding, which is nice, but is not a lot of money in the reality of modern day media economics. Only a third (30%) of those sites are fully funded through either contributions, donations or advertising. Even then, the report notes, that in its study of 60 such sites that were considered “exemplary”, four had already died. The fact of the matter is that while some of these sites produce impressive work, they don’t have the resources to provide the day-in, day-out news coverage, the authors say.
CHICKEN OR EGG: Both traditional or mainstream media and new media or community journalism face another similar problem – balancing expenses and revenue. By implication, the report raises the question whether the cutbacks have impacted the quality of the product, both online and offline, so that consumers are less willing to pay for it; or whether consumers have become such grazers of news, both online and offline, that the quality of the product does not make enough difference for them to pay for it. Newspapers are the prime example. The report cites an anecdote which it says is the metaphor for the state of the industry. Newspaper delivery contractors in
Bucking that downward trend is cable news, and leading the way, of course, is Fox News. The question, according to the report, is whether it’s news. By adding “ideological talk show hosts” to its prime time line-up, the network has distanced itself so far ahead of the competition that its prime time viewership is nearly bigger than CNN and MSNBC’s audience combined. While Fox’s investment in news was up 10% (compared to a drop in news investment by CNN and HLN), three quarters of the Fox investment (72%) went to its host-driven programs “including multi-million dollar salaries,” says the report. So, only a quarter (28%) of that investment by Fox (about $188 Million, according to the report) went into actual news – and that figure is less than half what CNN and HLN spend. As a matter of perspective, the report notes that, yes, Network TV audiences continue to decline while Cable TV audiences either improve or hold steady, BUT the Network Evening News with an estimated 22.3 Million viewers each weeknight at the dinner hour still has five times the number watching Cable news at any given moment in prime time. And that’s when more TV sets are in use.
SHORT ATTENTION SPAN THEATER: Remember that show parodying consumers’ ADD-like lack of focus? Well, apparently, that parody may be paradoxical. The report says that the American news consumer is becoming more and more a “grazer” not only online but with offline platforms as well. Only a fifth (21%) say they rely on one destination and only a third (35%) say they have a favorite news website. Most (57%) rely on two to five websites. Instead they rely heavily on search. Even then they only read the headline, byline and first sentence of text without even clicking on the story because, apparently, that is “valuable enough,” says the report. But even though they rely so heavily on search, they don’t range far. Of the 4,600 sites that the report and Nielsen identify as news and information sites, 7% account for 80% of the overall traffic. Of those 4,600, Pew put the number of ‘real’ news websites at 199 that were actually “originators” of news content as opposed to “aggregators” or “commentators.” As further evidence of the short attention span issue, even visitors to those sites only averaged 3 minutes and 6 seconds per visit. Contrary to what you might have thought, the report says niche sites, focused on health or science for example, have smaller audiences who don’t stay as long and don’t come back as often. Also, contrary to what you might have thought, while local sites account for more (87 sites or 44%) of the top 199 sites, they account for only a quarter (25%) of the traffic; National and International sites were slightly fewer (74 sites or 37%), but they accounted for double the audience (65%). The point, according to the authors, is that a broad range of topics can draw a broad range of traffic.
PAY UP OR SHUT UP: Back to the ‘show me the money,’ theme, the report notes that while four out of five consumers (81%) say they don’t mind ads on online websites, roughly the same number (77%) say they ignore the ads, with nearly half (42%) saying they “never” click on an ad. That obviously has implications for the online revenue model where metrics are still in flux. Do you measure by page views, unique users, page impressions, or pay-per-click? As noted above, very few (7%) are willing to pay for news content. The reason, according to the report, is pretty simple. If you have so many sources for news, would you pay extra for The New York Times version, even though it may be higher quality, when you can get it for free elsewhere?
REPORTS OF JOURNALISM’S DEATH: You know the rest of the line. Well, according to the report, it’s true. They are greatly exaggerated. But it’s all in the eye of the beholder. In its summary of major trends, the report authors contend that “the notion that the news media are shrinking is mistaken.” How so, you say? They say that while “reportorial journalism is getting smaller… the commentary and discussion aspect of media, which adds analysis, passion and agenda shaping, is growing.” As I say, it’s all in the eye of the beholder. However, what may speak more to the question of journalism’s debatable death is two other trends noted by the study. One is that because of the shrinking news staffs, the newsmakers are setting the tone of news coverage, at least initially, because the news operations in their rush to get on air or online, often ‘report’ the newsmakers’ version unedited and virtually verbatim. That version often then becomes the accepted version as it is spread through the Internet. Add to that the fact that the “ranks of self-interested information providers” are growing. These are the spin-masters, the companies with sophisticated dissemination methods that often by-pass the traditional news media.
RAISING THE LAZARUS OF JOURNALISM FROM THE DEAD: The possible solution to those last two points may be a combination of “pro-am” news and “unbundling” of news, according to the study. In the case of pro-am news, the report points to a multi-university study showing that even the “best new-media” sites have limited ability to produce content. As noted elsewhere in the report, most of the ‘new’ news on citizen media sites is commentary, more than news, and most are not updated daily. The solution may be a collaboration of old media and citizens in a pro-am – professional and amateur – model for news. The ‘unbundling’ concept is a little less clear. With consumers by-passing news organizations and instead hunting by topics or event, there is a question of which topics and events get covered. The ‘civic news’ that may be important but may not be interesting, may also not be covered under this scenario. So, the question is how do you adjust the finances and culture of newsrooms to get both important and interesting covered appropriately.
FOOTNOTE OR DISCLAIMER: As before, I have boiled down the massive report into a 30,000-word summary and then boiled that down further into this 1,800 word summary. So there is always the chance for some distortion or unintentional disinformation, although I have tried to be as balanced as possible. Plus, I have to confess, there is more commentary and analysis in this message than normal. That is why this is only “part one” of my summary. Also, as a further disclaimer, the past week has been an eventful one in terms of media news. The federal government released its plans for the future of broadband, with its call for the feds to stake a claim on the broadcast spectrum. Plus, the SXSW (South by South West) confab in
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