10 years

When Zach is 10, "newspapers" will be known as "news services" which still have a team of professionals dedicated to gathering and evaluating the day's intelligence and distributing it via a number of platforms. The number of people required to do this will be fewer than the number employed today. This is because revenue will be less, but there will be less duplication of effort.

Too Much, Too Fast, Too Small...

Because too much information that comes at too fast a pace through too many screens (that are too small) tires news consumers out, about half of the news organizations will no longer exist and the other half survive because they provide niche content or rely on user generated content. 

When Zach is 10

... print news from big name organizations (e.g., Dallas Morning News, NYT) will be luxury good. Print newspapers will be a symbol of social status, and Zach's generation (if not those younger than Zach) will be taught that quality news is something desirable and valuable.  It will still be an era of information surplus online, but people will have learned to "pay for quality" both off and online when Zach is 10. Hopefully.

Carrying the print edition of the NYT, you are so rich!

Print edition of newspapers will become a luxury item in 10 years.

Demise of the golden age of newspapers?

It seems to be true that there have been transition from provider business to consumer business in news industry. One of the reasons for the change is the surplus of information and technological development, which allows audiences to have an easier and complimentary access to news contents. One of the two opposite directions that the impacts of the changing media landscape on news are pulling in is the demise of the traditional news media.

I am very interested in an OECD paper - The Evolution of the News and Internet. According to it, some observers argue that “the golden age of newspapers and journalism when quality and reliability were arguably higher is now sadly gone.” That is, the growing financial pressures and the emergence of “free news” put this golden age increasingly at stake. In addition, novel forms of news creation and distribution and especially Internet-based offerings do not yet constitute a viable alternative to more traditional ones. This is because no online business model has been elaborated which would sustain expensive news coverage. The Internet may be a good platform for a cacophony of voices but the latter leaves the reader in doubt about the accuracy and the interpretation of the information. In other words, the online news ecosystem offers a profusion of opinion, but there is little reporting, and little is subject to any rigorous fact-checking or editorial scrutiny. As a result, most online news players and portals such as Google and Yahoo simply relay information from traditional news organizations: original news material without gathering independent news themselves or adding a lot of value. Is this really the alternative models in sight that will save both the news companies and journalism? In fact.., I have no idea. However, it seems to be quite plain that “the current online news ecosystem ends a period in which news monopolies controlled the news.”

Big wave is not here, yet. Do not predict online advertising revenue, yet.

Growth of newspaper industry comes with a development of postal service and infrastructure. Perhaps, it was more expensive to send letters and newspapers via postal service in 1800s and early 1900s. Reflecting from the history of growth of newspaper industry, it is more appropriate to consider a development of broadband services and diffusion of smartphones or tablets when we talk about transformation of newspapers to online edition. However, much discussion narrowly focuses on online revenue and advertising expenditure on online news without consideration of infrastructure for online editions.

Newspaper industry, specifically in the U.S., has multiple layers of market structure; from monopolistic market structure of the community newspapers in rural area to competitive market structure of metropolitan newspaper. Thus, it is hard to generalize general strategy of newspaper in new media environment. In rural area, change of media platform or pricing on online news are actually up to a supplier of news since it is a supplier market where there is no competition. Readers do not have any option, but only follow what supplier drives.

On the other hand, newspapers in a competitive market should consider many factors including readers’ response to their policy change. Individuals in this market have many alternative newspapers, so that they can easily discard their first choice upon the condition that quality of news contents is not much different.  

However, those two different markets might be merged with together at a certain level if cheap broadband services, and smartphone and tabloid are available to the public. Easy access to online editions will abolish clear boundary of readership which is defined by deliberative capacity of newspapers. Upon change of those environmental conditions, some regional newspapers, which struggle a lot, might transform themselves to the online media. The benefit of transformation is saving a lot of cost for printing and delivery system, so those papers will have capacity of reallocating their resources to penetrate into new terrestrial markets. More news coverage on new market will give the public an incentive to switch their news outlets. The public does not need to rely on print version of newspapers to get informed their local news.

In light of this, prediction of online advertising expenditure does not ensure what will come to newspaper industry in the future because the prediction is based on the fixed probabilistic model of current status. Change of newspaper industry is still at an early stage when only minor symptoms are seen at this point. Perhaps, newspaper readers will drastically change their attitude and behaviors when they see a technological revolution. The successful transformation of print editions to online editions depends on the change of infrastructure. Who would think in 1800s and 1900s that everyone could read newspapers in the future? It won’t be surprising to witness that everyone read their news on new medium in 2020.

Making Use of Secondary Data

Pew Research Center for the People and the Press -- Biennial Media Consumption 2004, 2006, 2008, 2010
http://people-press.org/dataarchive/

Pew Internet and American Life Project
http://www.pewinternet.org/datasets.asp

ABC -- Newspaper/Magazine Print Circulation Data (click on eCirc)
http://www.accessabc.com/products/freereports.htm

Newspaper Next 2.0 -- Advertising Spending Data
1. Market Selector
2. Online Spending Analysis
3. 2007 Online Spending Per DMA
4. Future Tools (one for each quintile)
5. WebAudits (one for each quintile)
(No longer online -- data are available on a CD.
Background information is here: http://www.naafoundation.org/Research/Newspaper-Next.aspx )

ABC's Audience-FAX online database (registration required):
Data on newspapers' average circulation, average print and online readership, total combined audience, and total unique Web site users as well as a variety of print demographic information for both national and local newspapers.
http://abcas3.accessabc.com/scarborough/login.aspx

ABC's Audience-FAX^* eTrends Tool (registration required):
The tool is designed to allow users to create trending reports by reporting period on newspaper's average circulation, average print and online readership, total combined audience, and total unique Web site users.
http://abcas3.accessabc.com/audience-fax/default.aspx

Newspaper Association of America -- Trends and Numbers: Newspaper Web sites (Reach by DMA)
(Click on menu items on the top and on the left for more stuff)
http://www.naa.org/Trends-and-Numbers.aspx


Scarborough -- Free Reports (Select "Newspaper" or "Internet" from the jump menu)

http://www.scarborough.com/freeStudies.php


Some example reports:

The 2008 Scarborough Newspaper Audience Ratings Report (Combined audience numbers for newspapers in DMAs)

Audience Aggregation and Audience-Based Selling: A New Approach to Growing Audience and Advertising

20 Free Social Media Monitoring Tools
http://www.socialbrite.org/2011/01/11/guide-to-free-social-media-monitoring-tools/

Quantifying Twitter activity
http://tweetstats.com

Online paid content: Back to the future

It's amazing to see just how thoroughly the newspaper industry's attitude toward charging for content online has changed since Farhi's article in 2008. In that piece, he has to preface the idea of charging for news with the description that the guy in favor of it "sounds like a man from another century." It just wasn't something that could be proposed without invoking eyerolls.

Today, just less than four years later, it's gone from almost unspeakable to the default strategy for major metro newspapers in the U.S. Reading between the lines, it seems as though newspaper publishers bought the idea that the future was online (which is true, at least in part), and responded by jumping onto the free-web philosophy full-bore, without putting much thought into how they were going to make money off of it. It took most of them a few years, but they've all realized that the business model just isn't there yet (and that's a key word), and they have to do something to make it feasible financially.

So I think what we're seeing now could be the best of both worlds -- an approach to the web that's aggressive about finding genuinely innovative ways to inform and engage audiences, along with a realism about what it takes financially to sustain that kind of quality, and an approach (charging for online news) that matches that realism -- all without walling themselves off from the web. As much as paid content's critics might call it a retrenchment, it does seem like a way forward, at least for the time being.

Pay for compelling content? Why not?

Anderson’s model for the future newspaper industry “paying people to get other people to write,” as he mentioned himself, stemmed just from his personal experience. Moreover, the model seems to be limited to the economics of media down to “hyperlocal level.” Amateurs who are organized and taught by professional journalists and write for non-monetary rewards may be good at covering their own communities. However, it’s a different matter with “news content” to my mind. Information is one thing, news is another. I am not sure, for example, how much one who works as a civil engineer by day and write about something he/she loves by night can gratify the desire for in-depth stories and differentiated content of audiences. The 'Free' information itself does not make money at all without advertising. In addition, although ‘GeekDad’ is making some money from advertising, I don’t think the model can be appropriate for the future of news media industry.

A study (Peitz and Valletti, 2008) compared the degree of market failure arising in two market structures: pay-tv and free-to-air media platforms. While pay-tv has two sources of revenues, advertising revenues and revenues from viewers, free-to-air receives all revenues from advertising. The result showed that free-to-air television tends to provide less differentiated content whereas pay-tv stations always maximally differentiate their content. The study also found that market failures are smaller under pay-tv than under free-to-air. The result may not always be true, but I believe that audiences are willing to pay for unique and compelling content they value.

  

Free vs. paid: Can't we all just get along?!?

As I mentioned in class yesterday, I fall somewhere in between Chris Anderson and Malcolm Gladwell on the debate over the primacy of free vs. paid on the Internet. I think Anderson bases his argument on a basic fact of recent technological history that is difficult to refute: The power to store and distribute information is continually getting cheaper and cheaper, and thanks to collaborative tools, more and more people are willing to produce that information for free as well.

The problem with Anderson's argument comes, as Gladwell points out, when he tries to turn this simple technological observation into some sort immutable law that's an ordering principle for the way the world should be run. In some cases and markets, economic principles based on free goods, services, or content makes the most sense. In other cases, it doesn't. Just because it works in some cases doesn't mean it's a binding (or even relevant) principle for others.

On the other hand, I do think free content/information/goods/services is a phenomenon that needs to be taken seriously by businesses, especially in the media industry. It can't just be waved off as "utopianism" or "freeloading" -- it's a real, actual phenomenon that has real, actual economic forces and explanations behind it. I think the vigorous defense of paid economies by Gladwell and many others in publishing industries is motivated in part by self-protectionism -- a desire to preserve a world in which the work that they do remains important, regardless of whether it actually is.

There's a sense on both sides of this argument that the other is living in a fantasy world: Paid says the free advocates are ignorant of the fact that someone is paying for all this "free" stuff, and free says the paid advocates are desperately trying to hang onto a model where their content/labor is worth a lot more and is a lot less replaceable than it actually is. I think both sides both have a piece of reality, and if they'd acknowledge some merit in the other's points rather clinging to their absolutism, we'd make some real progress toward a mutual understanding of how the Internet economy actually works.