Rash Report: New news study shows Web's peril, promise

  • Article by: JOHN RASH , Star Tribune
  • Updated: March 23, 2011 - 1:39 PM

Many may view the shifts in the news industry as inside baseball -- but the very ability to be informed is in play.

Editorial Writer John Rash

Editorial Writer John Rash

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Bit by bit, byte by byte, Americans are increasingly turning to the Internet for information, according to the annual "State of the News Media" report released Monday by the Pew Project for Excellence in Journalism (PEJ).

In answer to where they received "most of their news about national and international issues," only online readership rose from the prior year.

It increased 17 percent, while every other platform fell: local TV (-1.5 percent), network TV (-3.4 percent), printed newspapers (-5 percent), radio (-6 percent), magazines (-8.9 percent) and cable TV (-13.7 percent).

The growth in Internet usage is making the future of journalism an increasingly dramatic story line. And it's one with considerable consequences.

For the information industry, to be sure, but also for democracy and the informed electorate it depends on.

But so far this isn't a political story. In fact, despite the drumbeat from critics on the right and left, Americans aren't rejecting the mainstream media news model.

Indeed, PEJ found that the vast majority of what's consumed online is original reporting from professional media organizations, including newspapers and TV stations.

Clearly transformational technologies have changed how news is consumed. In the process, Internet intermediaries -- social networks like Facebook, device makers such as Apple and aggregators like Google -- are complicating efforts to extract revenue from readership, listenership and viewership.

This emerging shift in the media business model means that "the news industry is becoming more of a follower and less of a leader in these new layers of relationships," said Amy Mitchell, deputy director of PEJ and one of the coauthors of the report.

As with any relationship, the one between media content and distribution is two-sided. But that doesn't mean it is equal.

"This behavior pattern, the extent to which people are getting this online content from legacy providers, is a major part of the problem," said Mitchell, speaking of the challenge of longstanding mainstream media models.

"Because as people are moving online at a more rapid pace than ever before, the news industry that they are consuming has yet to find a way to create a significant revenue stream from those consumers."

Not all media suffers similarly. The PEJ reports that in 2010, revenue actually rose 17 percent for local TV, 8.4 percent for cable TV and 6.6 percent for network TV. That's in part because of TV's law of supply and demand.

The supply of commercials is about the same (despite what it seems like from your couch), but viewers are down. So even if advertising demand is static, fewer viewers per program means advertisers have to buy more commercials just to reach the same audience.

And thanks to a surge in spending on campaign ads made possible by the U.S. Supreme Court's Citizens United case, demand wasn't static. It was high, particularly for local TV.

Newspapers get relatively little campaign spending. And they don't have chronological commercial limitations like TV.

Newspaper revenues slid 6.4 percent in a year and 48 percent in four years. Nationally, circulation eroded 5 percent daily and 4.5 percent on Sundays.

This corrosive combination of lower revenues and circulation led to staffing cuts of another 3 to 4 percent last year, which was actually an improvement over previous years.

But the news isn't all bad for newspapers. Indeed, PEJ reports that when print and online readership is combined, many newspapers have larger audiences than ever before.

That's the case with the Star Tribune, which has also managed to record some recent circulation success. The paper is expected to report a circulation increase in April, according to Michael Klingensmith, publisher and CEO of the Star Tribune.

The Audit Bureau of Circulation reported a 5.7 percent Sunday gain and a 2.3 percent daily decline for the paper in its October release. And online, StarTribune.com had nearly 6.2 million visits and more than 1.5 million unique visitors in February, according to Compete, an online analytics ratings agency.

There's no blueprint yet for making money on digital media. But multiple news organizations are drawing up plans.

Currently there are only about three major media outlets -- the Wall Street Journal, Financial Times and Bloomberg -- that ring the register online. On Thursday, the New York Times announced plans it hopes will make it the fourth.

 Its metered model for readership, which is similar to but more expensive than a Star Tribune version to be introduced later this year, will offer a number of print and online subscription options, including one that will ask online readers to sign up for a digital subscription plan at $15 a month after they've hit a 20-article monthly limit for free reading.

Times print subscribers will have full access to all the site's online content, as will print subscribers when the Star Tribune's version is released.

The Star Tribune's move to a paid online model will be preceded by a website redesign in April and the paper's first iPad app later this spring, said Klingensmith.

With so many industries in the midst of wrenching changes, many may view the seismic shifts in the news industry as inside baseball. But this game ultimately involves everyone.

"There's more opportunity to become informed and engaged, but it now requires more work," Mitchell said. Most important, the very ability to be informed is in play. "Resources to do the original reporting that Americans rely on is what's at stake in terms of the news industry," she added.

One need not be a journalism junkie to grasp the importance of reporting on recent natural and man-made disasters in Chilean mines, pan-Arabic streets and Japanese nuclear power plants.

This has largely rendered the internationalists/isolationists divide irrelevant, as globalism has interconnected us to such a degree that all news is local -- and quality reporting these stories is essential.

It's also expensive, which is why old media is looking for new ways to charge for the news we need. No matter how it turns out, 2011 will be remembered as a seminal year for the media business.

John Rash is a Star Tribune editorial writer and columnist. Rash Report can be heard at 8:20 a.m. weekdays on WCCO Radio, 830-AM. Follow John on Twitter @rashreport.

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