Showing posts with label internet. Show all posts
Showing posts with label internet. Show all posts

Tuesday, January 1, 2013

Will the next 10 years bring more of the same for journalists and journalism jobs?

So, where do things stand for journalists who hope to earn a decent living for the foreseeable future?

Internet-based companies have so far failed to create large numbers of journalism jobs. Newspapers, however, are still a leading employer of journalists and other people involved in the production and distribution of advertising, news and other information.

For example, newspapers remain the primary source of news about local governments.



This chart shows how newspapers were affected by competition from new media and the recession of 2007-2009. U. S. newspapers employed about 389,000 people in 2002. Ten years later, employment had decreased 62% to just 241,000 people.

Declining employment resulted in wage stagnation at newspapers. Weekly earnings averaged $337 from 2007-2011, according to the Bureau of Labor Statistics. This inflation-adjusted figure is equivalent to an average annual wage of just $17,571.

Internet companies have not created many journalism jobs

Internet-based media companies have not created enough jobs to offset losses at newspapers. Internet Publishing and Broadcasting and Web Search Portals is the employment category that includes news sites. This category includes more than 80 kinds of Internet-only companies, many producing information that is not found in a typical newspaper.

In 2011, Internet-only publishers employed about 108,000 people, or 56% fewer people than the entire newspaper industry.

A lot of people who have lost newspaper jobs are understandably angry and frustrated.  But newspapers are facing an entirely new form of competition that developed with devastating speed.



Click to open full size

Advertising revenue is the economic life-blood of newspapers and their newer media competitors. This second chart compares ad revenue for the entire U.S. newspaper industry with ad revenue for a single new media company – Google.

Google generated about $410,000 in advertising revenue in 2002.  Five years later, Google generated more than $1 billion in ad revenue. By 2010 Google generated $28.2 billion in ad revenue, or $2.3 billion more than the entire newspaper industry.

The steep decline in newspaper advertising revenue was accelerated by the recession. But the chart shows revenue at Google increased throughout the recession and recovery. Meanwhile, revenue at newspapers continues to decline.

What are the lessons from the last 10 years?

New media companies are competing in entirely new markets. These markets only superficially resemble older media markets, primarily because the newer companies compete for advertising revenue.

Companies like Google operate in global markets.  They use automation – computers and high-speed Internet connections – to sell advertising that is cheaper and potentially more effective than ads sold by newspapers and other older media companies.

Automation allows Google and other new media companies to generate profits using a system of micropayments, earning just a few pennies or dollars per year from each of their millions of customers.

Companies like Google, Facebook, Twitter and others compete to deliver unprecedented access to information and advertising around the world.  These companies are marvels of the information age.  But we are just beginning to understand the economic, social, and cultural benefits and costs generated by new media companies.

However, it is already clear that older media companies cannot compete directly with newer companies. The older companies cannot survive on micropayments because they rely on people – journalists and other employees- to produce and deliver information in smaller local, regional or national markets.

Older companies must instead stabilize declining revenue and employment as a first step toward returning to profitability. I started this series of posts because older companies are taking important steps toward stabilization.

Will those who did not learn from the past keep making the same mistakes?

I am dismayed by the failure of many commentators to understand basic economic facts about the competition between older and newer media markets.

The most recent manifestation of this failure is the Google Journalism Fellowships.  Journalism foundations are working with Google to develop new tools for computer-assisted reporting and other ventures.

But Google’s reliance on micropayments means it cannot afford to hire large numbers of journalists and pay them a living wage. Does anyone at these foundations actually understand Google's business model?

The failure to understand the information economy extends far beyond these foundations. The failure includes many journalists, many journalism educators, and many business people who run journalism businesses.

We know what the last 10 years looked like because of this failure to understand. What will the next 10 years will bring?

Thursday, March 11, 2010

Google gives newspapers some friendly advice - Why they should listen

A lot of newspaper publishers and editors are understandably angry that Google is siphoning their revenue and readers.  But they should set that emotion aside for now, and listen to what the company's chief economist is saying about their industry.


Hal Varian was already a distinguished research economist when he turned his attention to information economics.  His knowledge and authority were well-established when he joined Google, so his words reflect more than the company's self interest.

Varian's description of the problems facing newspapers in this post on Google's policy blog won't surprise  anyone who follows the business side of the industry.  What deserves consideration are his suggestions about which parts of the problem matter most.

Why newspapers are losing the race for online advertising

Varin points out that print editions of newspapers are still attractive to advertisers because people actually read them.  Online readers average less than two minutes on a day looking at newspaper web sites, which sounds to me as if they mostly skim headlines.

As a result, newspapers aren't attracting much of the rapidly expanding pool of online advertising revenue.  Varian says search engines are not the real culprit.  Search engines actually account for almost half of the revenue newspapers have managed to attract.

The real problem is readers don't find newspaper web sites engaging.  Meanwhile, lucrative advertising in categories like automobiles and real estate has migrated to independent web sites that provide information about, well, automobiles and real estate.

Varian doesn't say this, but he is clearly responding to proposals some publishers have made to block search engines like Google from indexing their stories.

Those publishers should listen.

Cutting costs vs. charging for access

Varian also reminds us of a basic economic fact, one that I've also tried to stress.  Most news is a commodity.  Readers can find the same basic headline and story on lots of different websites.  When competition is intense, prices are always low.

If newspapers want to differentiate themselves enough to persuade readers to pay for access, they must find and pay for better ways to provide unique news that readers will pay for.

Varian points out that newspapers could instead cut the costs of producing the news.  He estimates printing and distribution accounts for half the cost of producing a physical newspaper.  Covering the news accounts for just 15 percent of the cost.

Varian suggests newspapers try to cut costs by producing news only on the internet.

I think this makes sense, but only as a long-term response. Companies that produce physical newspapers cannot just abandon their financial obligations, such as loans to finance a building or a printing press.

Varian's real message is that it's late in the game for print newspapers that want to compete on the internet. Perhaps they should consider focusing on the issues he highlights if they want to start catching up.

Wednesday, February 18, 2009

Misunderstanding the market for online news

The number of monthly visitors to major newspaper web sites increased significantly during the recent election, and then appeared to decline according to this chart compiled by the Nieman Foundation, which promotes journalistic excellence.

But by concentrating on newspapers, the chart paints a misleading picture of digital competition to attract audiences interested in news.

The New York Times has the largest number of visitors in the Nieman chart, but its website ranked 5th among Internet news sites in October 2008 behind MSNBC, CNN, Yahoo News and AOL. The Times had about 20.3 million unique visitors that month, barely trailing AOL but far behind the other three sites. Yahoo News was in third place with 37.3 million unique visitors, so the Times would have needed 85 percent more visitors just to catch up.

I don't have access to data for the entire period listed in the Nieman chart, but the October 2008 figures are probably representative of the real online market for news. Large newspaper web sites compete with broadcasters such as Fox, ABC, NPR and the BBC, and with Internet only sites such as Topix, Google and Yahoo news, or the Huffington Post.

There is some evidence of how this really works in the chart, but it's not explained. In July 2007 The Times, NBC, and MSNBC announced a deal to share political coverage on the web. One goal was to increase each company's audience for news.

Apparently, it worked. The Nieman chart shows a sharp increase in visitors to the Times site over the next three months. The increase resulted in a substantial lead over its nearest newspaper rivals that persisted through December of 2008.

Meanwhile, the October 2008 data shows election coverage by two of the Times' longtime print rivals -- The Washington Post and USA Today -- produced substantial increases in visitors to their web sites. But neither came close to matching The Times and its partners on the web.

The chart posted by Nieman reflects a wider mindset in the newspaper part of the journalism industry that just won't go away. The mindset is mistaken -- this is a different market, with different rules and different competitors, and it should always be talked about that way.

Wednesday, September 24, 2008

Building A Newspaper’s Online Audience

By Stephen Lacy
Professor, Department of Communication and School of Journalism
Michigan State University


Newspapers are struggling with how to attract online visitors. This reflects the need to replace readers who are leaving the print newspaper, but more importantly, increasing online visitors will be essential for attracting advertisers to newspaper Web sites. Traditionally, advertisers follow audience and not the other way around.

As a result, how newspapers can gain online visitors remains the primary issue deciding the future of newspapers. A one-size-fits-all solution is unlikely to emerge. The key to attracting visitors will vary from market to market and from demographic group to demographic group.
However, general observations serve as a guide for managerial decisions. This commentary offers some of those general observations about how news organizations can make the transition from the current upheaval to a more stable time.
Reasons to experiment

* The high profit margins that news organizations have enjoyed during the last 40 to 50 years cannot be maintained when advertisers can go straight to consumers rather than using media, and when competition for people’s time has become so intense. Companies will have to adjust profit goals or they will cease to exist. In times of industry restructuring, potential profit margins shrink and surviving restructuring requires higher levels of investment.

* Although businesses can bypass news media to reach customers, the Internet is a medium where people must purposefully seek information, and even then, it is not always easy to search efficiently and effectively. Therefore, businesses still need to create awareness of their presence in a market and develop a brand in people’s minds. News organizations need to generate large local audiences and effectively segment them to generate advertising support. Advertisers will still need to reach buyers through media, but the need will not be as great before the Web developed.

* News organizations will need to create multiple forms of financial support. This can range from e-commercial to selling specialized information to small audience segments. The exact form of new revenue sources will vary from market to market and will need to be determined through experimentation.

* The digital media distributed through the Internet does four things well: 1. It provides depth of news and information at low cost. 2. It delivers news and information quickly. 3. It is multimedia. 4. It is interactive. Newspapers will need to use all of these Internet strengths when generating content on their sites.

* The ways news organization can best use the Web’s strengths for delivering journalism and attracting audiences remain unclear. The immediate future will require news organizations to experiment with a variety of content to discover how to best serve their audiences.

* This experimentation must be combined with formal and informal evaluation of reader feedback. Newspaper companies need to conduct periodic market research about the news and information their audiences need and want, the best ways to present that news and information, and types of interactivity their audience members want and need. But the companies also need a continuing, formal system for acquiring feedback from a wide range of audience members.
One newspaper's response
Uncertainty is the biggest problem underlying this transition from print domination to more online distribution. The appropriate response to uncertainty is experimentation with a variety of content based on research. But what does it mean to experiment with content on news Web sites?
There are more than a few sites that are trying to figure out what will and will not work, but one that is seriously experimenting with content is the Web site of the Las Vegas Sun.
The Greenspun family, which has owned the Sun since its inception in 1950, has committed itself to extensive investment in its Web site. Under the leadership of Rob Curley and Josh Williams, with whom I discussed the Sun’s online future in May, the Sun’s revitalized Web site is founded on a tradition of strong local news coverage with a commitment to developing new ways for expressing that coverage.
Experimenting with multimedia

If you visit the Lasvegassun.com, you will find news stories, blogs, photographs, and video about events and issues that concern the city of Las Vegas and surrounding areas, just as you will you will on any modern newspaper web site. The more experimental work can be found on the multimedia page.
The Sun Web team is emphasizing news video that provides background about important issues, multimedia presentations that deal with history and the nature of the community, and databases that allow visitors to customize the information they want.
Examples of the Sun’s video include interviews with families of some of the nine workers who died on Strip construction sites during a 16-month period. The video, titled “Cost of Expansion,” fits well with the Sun’s traditional investigative story about these deaths.
The Sun also includes an interview with two Iraq War veterans who have very different opinions about the war. The sharp contrast between their views seems to summarize the national debate that has occupied us for the last few years.

The Sun also emphasizes “evergreen” content about the city. This includes a video history of Las Vegas and interactive maps of downtown Las Vegas, the Strip, and the Valley. The maps allow you to see what the city was like at various times, along with important events and entertainers from that time. The map includes icons representing important buildings. If you click on an icon, a popup will reveal information about the location, size, and history of the building. In some cases, you can see video of the building’s implosion.

The interactive maps are really databases presented in a graphic form, and the Sun offers others. The site has a Flight Delay Generator , which allows a visitor to enter a flight number and find out how late it will be. An interactive map allows you to go to various airports around the nation and find out the percentage of flights from that airport that arrive late at Las Vegas McCarran Airport. The site has a variety of other data about air travel to Las Vegas.

Another interactive map was developed to go with a story about prescription drug abuse, and it allows a visitor to examine state by state use of six prescription drugs over a decade. These interactive maps are experiments in the user friendly, interactive presentation of databases.
Curley, president and executive editor of Greenspun Interactive, recently wrote about plans and some of the developments at the Sun in his blog.
Take risks, don't be defensive
This is not to say that the Lasvegassun.com has found the solutions to the problems confronting news organizations, nor that the content it produces is perfect. As with all news, errors are inevitable. The point is that the Sun is currently doing what all news organizations need to do--experimenting with ways to build its audience. Many news organizations have taken defensive approaches to the Web, but the Sun management seems to think that the best defense is a good offense.

Out of fairness, it should be mentioned that Lasvegassun.com has some advantages not enjoyed by all news organizations. In addition to the Web site, Greenspun Media includes the Las Vegas Sun, seven weekly newspapers in the Hometown Community News group, several local magazines, such as Las Vegas Magazine and In Business Las Vegas, and a low-power TV station. These media provide a wide range of community content that can be leveraged online.
Of course, having access to content does not guarantee its effective use. The long-term goal of the Lasvegassun.com management team is to take advantage of these content sources to create a Web site that will dominate the local Web market.
In addition to the commitment to experimentation, the Lasvegassun.com approach incorporates all of the Web’s strengths into the site—depth, speed, multimedia and interactivity. Many newspapers have not yet committed to exploiting all of these strengths.

Although the nature of newspaper Web sites will vary from market to market in meeting community needs, this does not mean each newspaper site will be unique. Few ideas are totally new. Newspapers’ experimentations should “borrow” ideas, content forms and presentation from any place they can find them. Lasvegassun.com is one. It would help newspapers to share as many experiments as possible.

Tuesday, August 12, 2008

Philly paper clarifies its plans for print vs. online

Executives at the Philadelphia Inquirer have issued a second memo clarifying plans to restrict online publication of some expensive or exclusive stories, apparently in response to a barrage of often ill-informed criticism.

Yesterday, I argued the paper's plan to delay online publication of some stories makes economic sense because revenue per reader is still very small online. The paper did not say it would never publish the stories on its website, just wait until the stories had a chance to circulate in print.

The new memo says these stories will instead "appear online concurrent with print publication." The memo also clarifies the kinds of stories that will be published immediately on the web, such as breaking news or time-sensitive stories that help readers plan for a night out.

The original plan made sense because it tried to separate readers into groups based on the amount of revenue the paper earns. Print readers are far more valuable than readers on the web. Publishing a story in print first might therefore limit the number of readers who abandon print to read the story on the web.

The new plan to publish stories "concurrently' may have a similar effect if some stories don't appear on the web until the paper's print deadlines. Print deadlines are often very late at night, when many readers are either watching television or getting ready for bed.

Meanwhile, columnist Will Bunch at the rival Philadelphia Daily News has a good suggestion for using web videos to promote stories the Inquirer wants to delay publishing online, building anticipation to increase readership once the article finally appears.

Bunch, unlike many others who responded to the original memo without much thought, gets this one. It's all about the revenue, ...

Monday, August 11, 2008

Information may be free, but that doesn't make it cheap

Monday's New York Times took an unjustified swipe at a sister paper for plans to delay web publication of expensive to report or popular to read stories until after those stories appear in print.

Times media columnist David Carr sought out an entirely predictable quote from a former newspaperman turned "Web evangelist" denouncing the Philadelphia Inquirer for delaying online publication.

But the Philadelphia Inquirer's new policy to publish "signature investigative reporting, enterprise, trend stories, news features, and reviews" in print first, and then online, makes good economic sense.

Many newspapers still make startlingly small amounts of revenue on the web. I suspect that is the case at the Inquirer, so delaying publication of their best material is a smart move entirely consistent with the economics of new media.

It's the revenue, ...

A bit of arithmetic using statistics from an industry survey shows some newspaper web sites were earning only $0.33 to $0.83 per visitor for the entire year in 2006.1

I presented these calculations last week at a conference, and the next day heard an executive at a major metropolitan newspaper cite figures for their current web operations. The paper earns less than $4.00 per visitor each year. Revenue per reader in print is probably much higher at all of these papers.

Publishing a story online probably increases the number of readers compared to a story published only in print. But some print readers will also move online to read the story, reducing the revenues earned in print.2

This means any online gains in readers and revenue have to be large enough to offset losses of print readers and revenue. And the very small online revenue numbers suggest this is unlikely to happen if the story is published both places at the same time.

So the Inquirer is probably doing the right thing economically. Withholding publication of expensive to produce investigative and enterprise stories will limit the immediate loss of print readership. Meanwhile, the paper plans to keep publishing breaking news on its website, which is probably what most online readers are looking for in the first place.

Several newspaper and television employees responsible for publishing online and in mobile media spoke at the conference, and all complained about having small staffs. The majority of journalists at these organizations still work in the print or broadcast part of the operation.

But this is also sensible so long as revenue per reader or viewer is much higher for distribution in print or over the airwaves. Keeping web operations small when online revenues are also small shows these companies are economically rational.

That may not satisfy the naive view that Carr promotes in his column, but it should make everyone at the Inquirer and elsewhere feel a little better about what their bosses are trying to do.

1 Newspaper Association of America: Newspapers Online Operations – Performance Report 2006.

2 Wildman, S.S. (in press). "Interactive channels and the challenge of content budgeting." The International Journal on Media Management.


Thursday, December 13, 2007

Exchanging Information in Newsgroups

The economics of information are particularly important on the web where reproduction and distribution costs are remarkably small. This guest post describes new research on information distribution in newsgroups. The post was generously provided by one of the study's authors.

Identifying Discussion Leaders and Information Sources
by Itai Himmelboim1

Here’s some old news: one of the greatest promises of the Internet is the ability for anyone with a PC and Internet connection to join forums on any topic imaginable and contribute, consume and exchange information and opinions. Information is available via a wide range of old sources (news websites) and new sources (blogs, forums, personal websites and news aggregators such as Google News).

Robert Nye said once that a richness of information leads to a poverty of attention. In a study I conducted with Marc Smith and Eric Gleave from Microsoft Research, the Netscan dataset was used to follow patterns of replies – indicators of attention – in 20 political newsgroups between July and December 2006.

It wasn’t a surprise to find that in all newsgroups, relatively few participants attracted a relatively large portion of the discussion to threads they started. After all, literature illustrates that large networks – be they of people, websites or even genes – tend to show a power-law distribution in which few participants receive a large and disproportional number of links – in our case, replies – from other participants. With that in mind, we began to explore the role that this small number of highly connected participants play in their groups.

We identified these highly replied participants using a range of statistical measures including: success in starting new threads, the percentage of all messages in a group that appeared in threads they started, as well as the percentage of individuals in the group that participated in these threads. We found only a handful of such highly connected participants in each group, making them less than one percent of the population in their newsgroups. Many of these participants attracted more than one-half of the discussion to threads they started. We decided to name them Discussion Catalysts, or DCs.

Deciding what to talk about

Discussion catalysts may not tell fellow group members what to say, but according to their attention grabbing records, they do tell groups what to talk about. Our next step was to determine what information they brought to the table.

Content analysis of messages that discussion catalysts used to start threads revealed an interesting phenomenon. If you thought, like I did, that political discussions in newsgroups start with an individual’s opinion, you may be surprised to find that this study shows otherwise. DCs play the role of content importers. They go outside their groups to the World Wide Web – news sites, blogs and other websites – search for interesting articles, and bring them to groups to discuss.

Another interesting finding was that although DCs import content from a range of sources, most of the articles came from traditional news sites such as the Washington Post and Associated Press. Less than one tenth of the entries came from blogs.

So what does all this tell us? First, although the Internet is free and open by its nature, when we interact freely, we tend to create a structure in which few of us get a lot and most of us get very little. Second, even when we use relatively new platforms for political discussions, the information comes from good (?), old news organizations. Why? Well, I’ll leave that for you to discuss.

1 Itai Himmelboim is a doctoral student at the University of Minnesota's School of Journalism and Mass Communication.