State of the News Media report 2009

The annual State of the News Media report found that most media continued to see audiences shrink and only two platforms clearly grew: the Internet, where “the gains seemed more structural,” and cable, where they were “more event-specific.” For all other forms of media, the outlook is bleak.

Some of the key findings related to digital media:

• On the Web, news organizations are focusing somewhat less on bringing audiences in and more on pushing content out. The shift reflects the news industry more fully recognizing the viral nature of the Web and the rise of social media. What began as a few podcasts, RSS feeds and e-mail alerts a year or two ago has mushroomed into a more serious emphasis on developing multiple forms of distribution. One form involves helping citizens grab and share information with one another. Another involves placing content on as many platforms as possible. Most news websites now have links attached to stories so readers can more easily share that content, and many have gone further, creating their own Twitter or Facebook accounts to put more content into consumers’ hands and allow them to pass it along. News Corp. and NBC Universal jointly purchased Hulu.com—a site where users can view streaming video free of cost—giving both companies another outlet for their products. The economics of all this is unresolved and home websites still matter. The industry is also late in arriving. But the movement represents a dawning realization that the nature of the Web is something the news industry cannot fight and might even begin to employ.

• People are relying more heavily — both during peak moments and in general — on platforms that can deliver news when audiences want it rather than at appointed times, a sign of a growing “on demand” news culture. People increasingly want the news they want when they want it. Much of that traffic, moreover, went to the biggest Internet sites, many of them offering news primarily from wire services or aggregated from legacy media outlets. The top 50 news websites saw traffic for the year grow 27%, according to PEJ’s analysis of comScore data, while all news and information sites grew 7%. The top four news sites —Yahoo, MSNBC.com, CNN.com and AOL—saw unique visitors grow 22% to 23.6 million visitors a month. That was twice the rate of increase of 2007 and more than five times the rate in 2006.
• While online ad spending grew about 14% through the first three quarters of the year, most of it benefited Google and other search providers. Revenue from the sale of banners and other display ads that news websites depend on increased just 4%, and estimates are that it declined by the fourth quarter. One reason: the infinitely expanding universe of blogs and websites has forced them to cut their rates to compete for advertisers. The cost to reach 1,000 viewers fell by half in 2008 alone, to an estimated average of 26 cents.
• Citizen news sites remain relatively rare. Among those that do exist, the range of topics is narrower and the sourcing somewhat thinner than on legacy news sites, and the content is generally not updated, even on a daily basis.

Digital Trends

In addition to the broader audience and economic trends online, a number of specific Web developments emerged in 2008. For the news industry, they bring concern, glimmers of hope and new voices. But much of the expansion and innovation is now coming from those outside of traditional news industries.

And it became clearer during the year that newspapers, television and other legacy media are unlikely to ever support their worldwide news gathering with the sale of banners, pop-ups and other display advertising. The real growth online continues to be in search advertising, and no one has figured out a way yet to combine search advertising with news in sufficient volume.

• Economically, one growing cause of concern for news is that national websites and aggregators like Google are fast making inroads in attracting local advertising. That means even if online advertising returns to big growth rates of two years ago, it may not help news organizations as much as once thought. Over the past decade, the share of Internet advertising derived from local businesses has doubled, by some estimates to 40%, but most of those ads (57% in 2007) are now going to national Internet-only sites like Google and Yahoo, not to local news organizations.

• The areas of growth in news are small. Advertising in online video and rich media – those commercials that precede the video a user clicks to see — is growing swiftly, a compound rate of 33% over the last five years, although it still only represents about 10% of Internet advertising. And many users have figured out they can often view the same video without the ad on YouTube and other sites.

• Mobile technology has also taken a leap, raising the prospect of millions of Americans getting their news from their smartphones. With 40 million active users of the mobile Web, advertisers spent $1.3 billion to reach them in 2008, up 59% from a year earlier. News organizations are scrambling to establish beachheads in this new land, but old questions of revenue persist. Will the tiny banner ads pay enough to finance the effort?

In online content, citizen news sites that do original reporting gained some steam in 2008, especially in areas where traditional coverage has vanished. But, according to a study of citizen sites in 46 markets, they remain far from a substitute for legacy media. Their range of topics is narrower, the sourcing somewhat thinner and the content often not updated even once a day. They also trail legacy news sites in the various methods for distributing their content.