Three trends that have significantly changed economic models for news organizations in the digital age:
- The Pew study mentioned in the article and the lecture shows that people aged 18-29 are getting more news from the Internet than Television for the first time. At the same time, this online usage is moving away from computer screens and onto mobile platforms. While this allows for more targeted advertising and faster audience building, it does not always equal increased advertising revenue. Further, there is now such an abundance of information and options of sources for readers to choose from, information has become a commodity. This has driven down the price through competition.
- Digital journalism also fundamentally alters the way in which stories are distributed In the past, newspapers made money through aggregation – having many different targeted sections and bundling them together, such as sections on “sports,” “food,” and “entertainment.” This allowed newspapers to sell their content to a variety of advertisers who were looking to target different people, and charge them a higher rate on the assumption that every single page in the newspaper was being read. With digital journalism, it is easy to get an exact count on how many times a story is being read. The advertising value is decreased. At the same time, digital aggregation is very easy, as people can just get the information they want from targeted sources or aggregation sites like Drudge Report or Huffington Post. These sites cost less than content-creators, have huge benefits for the reader, and completely change the traditional “packaging” model for print news. Also, digital journalism eliminates the need for printing factories and delivery trucks, and can rely on their readers and viewers to distribute their content through social networking and email.
- Digital journalism also fundamentally changes the consumer’s experience. One the one hand, publishers can very quickly, easily, and cheaply gather detailed demographic information about their customers. In turn, they can sell this to advertisers at a higher rate. On the other hand, online media loses the immersive, “lean back” style that is provided by newspapers, magazines, and broadcast. They quickly jump from website to website, equaling fewer page views and less time spent on the websites, which makes the pages much less valuable to advertisers.
Three advantages that a new, digitally based news company has over a traditional print or broadcast organization:
- Through digital aggregation, news relevant to a specific audience can be assembled cheaply and easily. Rather than fight the concept, it can generate real value. It can quickly and cheaply generate a lot of readership, and loyalty within that readership.
- Digital media allows for publishers to employ readers to distribute and publicize stories. This saves a lot of expenses that were necessary for physical distribution in traditional organizations, such as delivery trucks and broadcast towers. Further, it helps to validate the journalist’s work – when their story goes viral it is quickly read by thousands of people across the globe. A journalist can create a “feedback loop” by using the comments and discussions generated by their stories as way to create new or follow-up stories.
- Digital platforms can be used to do things that are not possible with traditional models. Examples include engines about restaurants and whats going on around town (such as in New York Magazine), and blogs geared towards what very specific audiences want. The Dallas Morning News use of the web to cover high school football in an unprecedented way is another excellent example. These creative ideas also draw views to the main website and skyrocket page views, which in turn increase advertising revenue.
Three advantages that a traditional print or broadcast organization has over a new, digitally based news company:
- Traditional print and broadcast organizations are much more immersive, and digital media has been unable to recreate that. People often relax in their couch and watch a majority of a news program or read a newspaper/magazine. Websites tend to get 3-4 minutes of attention per user, per month. This greatly diminishes the value of advertisements on websites.
- Traditional organizations can always alter the amount of pages in print or broadcast time to accommodate advertising demands. With digital it is up to the readers how many pages are created, and therefore how many ads that can sell. Publishers must undersell their website. For example, when the Guardian broke the story on the phone hacking scandal, their web traffic doubled and sometimes tripled. But they had no way of knowing this would happen when selling ad space. They had to fill the pages with cheezy ads that only sell for a fraction of the price as normal ads.
- Digital Advertising is also a work in progress, and the results are not always as effective as they are in traditional media organizations. People find ads in print to be just as informative, useful, and engaging as the rest of the content, and it is well known how entertaining television ads can be. With the exception of high-volume and highly targeted sites such as facebook and google, online ads are unable to be this engaging.