State of the News Media

I’m a bit late coming in on this one, but the US State of the News Media report is out. It woudl be easy to get depressed reading it, but there are also signs of hope, chief amongst them the assertion that there is no evidence of declining public appetite for news and information.

On the other hand there are some chilling figures. Newspaper ad revenues have fallen 23 per cent in the last two years, and it is estimated that one out of every five journalists employed by newspapers in the USA in 2001 has since lost their job, with 2009 expected to be the worst year yet.

Audiences are migrating to the internet at an increasing rate, but:

It is now all but settled that advertising revenue—the model that financed journalism for the last century—will be inadequate to do so in this one. Growing by a third annually just two years ago, online ad revenue to news websites now appears to be flattening; in newspapers it is declining.

This echoes remarks made by Rupert Murdoch in Australia recently, in which he indicated he was focussing on subscrption businesses as the engine of the future.

The report concludes that reinvention of the industry is needed – and now. Some of the comments echo the situation in Australia.

“There are growing doubts within the business, indeed, about whether the generation in charge has the vision and the boldness to reinvent the industry. It is unclear, say some, who the innovative leaders are, and a good many well-known figures have left the business. Reinvention does not usually come from managers prudently charting course. It tends to come from risk takers trying the unreasonable, seeing what others cannot, imagining what is not there and creating it. We did not see much of it when times were better. Times are harder now.

I have thought for some time that the depth of innovation and experiment needed is unlikely to be possible for stockmarket based media companies. It is hard to sell risk taking to institutional investors with legal obligations to worry only about short term returns on investment.

The report says that alternative news sites have grown, including some produced by journalists who have left mainstream newsrooms, but their scale remains small. Few are profitable.

Nevertheless the report identifies as a major trend the shift in power away from media institutions, and towards individual journalists.

” Through search, e-mail, blogs, social media and more, consumers are gravitating to the work of individual writers and voices, and away somewhat from institutional brand. Journalists who have left legacy news organizations are attracting funding to create their own websites. …It would be a mistake to overstate the movement at this point. But for a few journalists at least, there are signs of a new prospect: individual journalists, funded by a mix of sources, offering expert coverage to many places.

The report canvasses the various methods tried to get people to pay for content online, and suggests some ideas that should be tried.

“1. Adopt the cable model, in which a fee to news producers is built into monthly Internet access fees consumers already pay. News industry executives have not seriously tested this enough to know if it could work, but these fees provide half the revenue in cable. 2. Build major online retail malls within news sites. This could both create a local search network for small businesses and link them directly with consumers to complete transactions, not just offer advertising—with the news operation getting a point-of-purchase fee. 3. Develop subscription-based niche products for elite professional audiences. These are more than subject-specific micro-sites. They are deep, detailed, up-to-the-minute online resources aimed at professional interests, and they are a proven and highly profitable growth area in journalism. There are other ideas as well, including news companies collaborating to seriously challenge aggregators, especially Google, to start sharing more revenue. Several new revenue streams most likely are needed. The closest thing to a consensus right now is that no one source is a likely magic bullet.

Lots more meat here, and most of it relevant to Australia, in my opinion, despite the trend for newspaper executives to protest that the USA is not a relevant model for what is likely to happen here. While the report describes itself as “the bleakest yet” I think it also contains the seeds of hope.

First, the continued appetite for news. Second, the capacity for individual journalists to seize the initiative. We are living at a time of paradigm shift for our profession, which means great pain and confusion in the short term.

But the medium term future may be bright.