The uncontrolled nature of social media is no consolation for major news media organisations. Their most immediate concern is how much revenue they will regain as the US economy pulls out of recession. Market research and investment banking firm Veronis Suhler Stevenson predicts that by 2013 newspapers, radio and magazines will take in almost half as much in ad revenues as they did in 2006.The collapse has been extraordinary. Newspapers, including online, saw ad revenue fall by a quarter during the year bringing the total loss over the last three years to 43 percent. Local television ad revenue fell 22 percent in 2009; triple the previous year’s decline. Magazine ad revenue dropped 17 percent, network TV is down by 8 percent, while online ad revenue fell by 5%. Revenue to network TV news and online news sites weren’t broken out of their overall totals but most likely fared much worse.
Newspapers are in the worst trouble. The researchers estimated the US newspaper industry has lost $1.6 billion in annual reporting and editing capacity since 2000 – roughly 30 percent. They predict further cuts in a $4.4b industry in 2010. Newspapers still provide the largest share of reportorial journalism. The report uses the metaphor of sand in an hourglass. “The shrinking money left in print, which still provides 90% of the industry’s funds, is the amount of time left to invent new revenue models online,” it said. “The industry must find a new model before that money runs out.”
Network news divisions are also on a long slow curve of decline and have halved in sized since their peak of the 1980s. Local television is also feeling the pain. One estimate puts the losses in the last two years at over 1,600 jobs, or roughly 6 percent. Magazines such as Time and Newsweek have also shed almost half their staff since 1983.
Life on the Internet paints a more complex picture. Almost three in five Internet users now use social media, including Twitter, blogging and networking sites. Citizen journalism is on the rise at local levels and rapidly filling niches vacated by undernourished news organisations. But the report says despite the energy of new media efforts their scale is dwarfed by what has been lost. The J-Lab, project estimates $140 million of non-profit money has been pumped into new media in four years but that is a tenth of newspaper losses alone. According to NYU’s Clay Shirky “the old stuff gets broken faster than the new stuff is put in its place.”
The motivation of news corporations over the last 20 years has been to cut expenses for the sake of profit eroding its sense of public good in favour of efficiency and profit. The researchers say the collapse of these ownership structures may mean a partial rebirth of community connection and public motive in news. But it warns unless someone can develop a system of financing the production of content, reportorial journalism will continue to shrink despite the new technologies.
The vexed question of a viable Internet revenue model remains. The researchers found four out of every five online news consumers say they rarely if ever click on online ads. Rupert Murdoch and News Ltd are moving to paywalls but studies show most people are “grazers” and only about one in five people would be willing to pay for online content – this number is likely to decrease with less voracious news consumers.
The upshot is a growing tendency towards niche operations. Most news organisations are becoming more specific in focus, brand and appeal and narrower in ambition. The researchers see the critical questions now as: What collaborative models might work and under what ethical basis? Will there be more sharing of content and resources and what does that mean for fairness and accuracy? “The year ahead will not settle any of these,” the researchers conclude. “But the urgency of these questions will become more pronounced.”