Wednesday, March 16, 2011

Tech, intermediaries leave newspapers far behind

I came away from reading the State of the News Media in 2011 with the sense that newspapers in particular are being left farther behind by all of the advances in technology and payment systems.

One example is Apple. Although it is selling subscriptions to publications on its iTunes platform, it is taking 30% of the revenue and keeping the all-important customer data and credit card information to itself.

The report, by the Pew Project for Excellence in Journalism, notes that among all the news media... 

...only newspapers suffered continued revenue declines last year—an unmistakable sign that the structural economic problems facing newspapers are more severe than those of other media....
....In the 20th century, the news media thrived by being the intermediary others needed to reach customers. In the 21st, increasingly there is a new intermediary: Software programmers [such as app makers], content aggregators [such as Google and Yahoo] and device makers [such as Apple] control access to the public. The news industry, late to adapt and culturally more tied to content creation than engineering, finds itself more a follower than leader shaping its business. [bracketed material is mine.]
To compete effectively news organizations have to create a series of products specifically designed for an increasingly diverse array of tablets, smart phones and applications or risk having their content be unavailable to important audiences. The fact is that few newspapers are big enough to do all this programming themselves. They either have to pay contractors or abandon certain audiences.

Readers, advertisers choose Internet

In 2010 for the first time, more people said they got news from the Internet than from newspapers. In that weren’t bad enough, the report notes that, also for the first time, more money was spent on online advertising than on print newspaper advertising. Newspaper ad revenue is only half what it was four years ago, which makes it hard for them to invest in new technologies.

Rick Edmonds’s full report on the status of newspaper advertising, circulation, employment and ownership is here.

The future

None of the above bodes well for newspapers long term. They will continue to get smaller until they reach the point where the market determines they can survive.

If I had to start a news operation today, I would start out small and do it online. The much ballyhooed project of launched with 50 employees, far too many to allow any room for maneuvering. But a staff of perhaps 10 people with technical and marketing professionals as part of the mix could get enough traction to become sustainable.

Michele McLellan reports that there are digital news outlets having some success by tapping into many more revenue sources than the traditional newspaper model of advertising and circulation. This means generating revenue from events, memberships, sponsorships, direct sales of products, subscriptions, professional services and others. 

In the short term, the journalism profession will continue to suffer from job losses and the increasing use of amateur or volunteer journalists. The restructuring will continue to be painful. But over the long term there will be a demand for skilled, trained professionals and, eventually, the money to compensate them appropriately. Not this year.

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