Message From Michael
March 15, 2011
THE STATE OF THE NEWS MEDIA – PART ONE
A MAN FALLS OUT OF A PLANE. Does anybody else remember this? It is a children's version of the good news/ bad news theme. In semi-brief form, it goes something like this: A man falls out of a plane – oh, no. But, he has a parachute -- yea; But, it won't open – oh, no; but, there's a haystack below – yea; But, it has a pitchfork in it -- oh, no. And so on and so on. The recently released State of the News Media brings back that analogy. The bad news: audiences declined in every news platform except the Web – oh, no; The good news: advertising revenue increased year to year for every sector of the news media except newspaper -- yea. The bad news: traditional news rooms continued to lose jobs, albeit at a slower pace – oh, no; The good news is that those losses in traditional media are being offset by hirings in new media enterprises -- yea. The bad news: "traditional newsrooms… are smaller, their aspirations have narrowed and their journalists are stretched thinner." The good news: "they are more adaptive, younger and more engaged in multimedia presentation, aggregation, blogging and user content." You will notice there is no "oh, no" or "yea" after either one of those. According to the report authors, "in some ways, new media and old, slowly and sometimes grudgingly, are coming to resemble each other."
MY KEY TAKEAWAY: That last statement comes about, in large part because, in my view after reading the document, the authors have adopted a very broad definition of what is 'news.' As you read the report, you walk away asking yourself that question – what is news. For example, the point is made that nearly half of all Americans (47%) now get – their wording – "some form of local news" on a mobile device. What is that 'some form'? Again, quoting them – "news that serves immediate needs." That is defined as "weather, information about restaurants and other local businesses, and traffic." I should also note that the report does point out elsewhere that mobile ad spending still accounts for only 3% of total online ad spending – not all ad spending, just all online ad spending. So, it is small, but it should also be noted that it increased an impressive 79% year to year.
Then there is that word "curation" which we discussed in a previous Message and which comes up in the report several times. Remember that point about new media hires off-setting traditional media lay-offs? And remember how AOL was on a journalistic hiring spree, capped off by the purchase of The Huffington Post? Well, after the purchase (or merger as the report calls it), 200 of those 900 new hires were laid off. Now, aside from the fact that AOL paid $350 Million for an operation that only had revenue of $31 Million, here is the other point I would raise. Of the Huffington Post's estimated editorial staff of 70 to 80, 18 produce content. The others? You guessed it. Aggregate and curate. The missing word or words, take your pick – create, generate, originate.
Let me add another factoid here that it gets to my point about what is news. The number one radio category is news/information/talk. There are more than 1,300 stations following this format, but in actuality there are only 27 truly 'all news' radio stations in the entire country. Secondly, I would note for the umpteenth time that content farms are growing in importance and further confusing the issue.
THEIR KEY TAKEAWAY: We news consultants like to use the phrase "content is king" a lot. Actually, lots of media types say that. Some even believe it. And while that may still be true to a varying degree, the report makes the point that how you connect that content to the customer is becoming even more critical. In the old days, sometimes known as the 20th Century, the news media not only created the content, they also were the means of getting that content to the consumer. No more. Now, the report notes, there are intermediaries who are taking more than just a bite out of the advertising pie. They are the software makers (like the people who create the Apps or develop the algorithms that gets the media message out), the aggregators (like Google, Yahoo and AOL who bring the audience to the media), and the device makers (like the Apple iPad and Droid developers who have created a new delivery system.) Each one adds another layer, another level of complexity, and each one wants their share of the dollars generated. The net result, argue the authors, is that "in the digital realm the news industry (may) no longer be in control of its own future."
THE FIRSTS: The re-formatted report has an excellent summary of 'key findings' and 'major trends' but as I read through the report, the word that stood out for me was – first, as in first time something happened. For example, here are some points made in the report: For the first time in at least a dozen years, the median audience declined at all three cable news channels. CNN's median prime-time viewership fell 37% to 564,000 viewers, and MSNBC beat it in total viewers during prime time for the first time. For the first time, Fox surpassed CNN in total dollars spent on the news. For the first time, too, more people said they got their news from the web than newspapers. When the final tally is in, online ad revenue in 2010 is projected to surpass print newspaper ad revenue for the first time. Online news consumption surpassed print newspapers in ad revenue and audience for the first time in 2010. Hires (in online-only news operations) come close to matching the jobs in 2010 we estimate were lost in newspapers, the first time we have seen this kind of substitution. Online news hires may have matched newspaper cuts for the first time. A good deal of radio listening occurs in cars, and we are on the brink of Internet radio being widely available there for the first time.. The first issue of the revamped Newsweek Magazine (combined with the Daily Beast) is scheduled for Spring, 2011. Also, even though it doesn't have the word 'first' in it, is a 'first' of a different sort pointed out in the report – Seven of the top 25 newspapers in America are now owned by hedge funds, which had virtually no role a few years ago.
SHOW ME THE MONEY: As part of that hedge fund involvement, the report also notes that media companies are turning to so-called "outsiders" to run their operations, and although the report doesn't say it this bluntly, the implication is that the driving force is making a profit, not making news. Nothing wrong with that, of course, but it is getting harder. For example, the report says that charging for online news can work "under certain circumstances" but it is a very cautionary 'maybe.' More likely it is restricted to specialty information like financial information from sources like The Financial Times and The Wall Street Journal. What will more likely happen, according to the report, is that the economic model for news will be "made up of many smaller and complex resources." Although the report notes the resurgence of auto advertising as a life saver for the news media during 2010.
NO BRAG, JUST FACT: Two other major trends cited in the report are concerns over online measurement and content farms. And I am proud to say, both of these issues have been raised in previous Messages. When the different rating agencies can't even decide what the definition of 'unique visitors' is, you know you have a problem, the report says. The result, online measurement is confusing and as long as it is confusing, it is hard to sell. The other point about content farms plays off the fact that the report says most traditional American media is local and most ad revenue is local. So, therefore its importance. And that is where so-called content mills are making inroads. But here is where it gets interesting. The report says "no one has yet cracked the code for how to produce local news effectively at a sustainable level… (and that) the push toward so-called 'hyper-localism' has proved ill-conceived, expensive and insufficiently supported by ads." How's that for a condemnation?
SIDE NOTE: You will notice from the heading, that it says "part one." I will have two more summaries of different aspects of the report in the next two days. Instead of trying to create one big overview, I thought it made more sense to provide three shorter summaries.
FOOT NOTE: You are receiving this week's Message through my Gmail account. I am in the process of converting the Message to a contact list serv. Also, my website, mediaconsultant.tv, is down temporarily. I shouldn't admit this, but the honest reason -- I was trying to upgrade the site and convert to a WordPress content management system, and managed to wreck it. Oh, well. It shouldn't, though, affect getting emails addressed to that account.
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