Publishers Need to Have Consumers Pay

Publishers Need to Have Consumers Pay
Joe Garofoli, Chronicle Staff Writer
http://www.sfgate.com/

The news business is more troubled than it was a year ago, but at least the problems it faces are different from what many observers had predicted, according to the annual State of the News Media report released today by the Project for Excellence in Journalism.

Mainstream media as a whole, the report found, isn't losing its audience. It just doesn't know how to get its new online customers - or anyone else who is reading what they're producing through online aggregators - to pay. The top 10 online news sites in 2007 were either big-media operations - such as the New York Times or ABC News - or online aggregators such as Yahoo News or Google News, whose content is largely produced by traditional media outlets.

So while there may be more readers out there for big media, there is less advertising, leading many print operations to cut staff as a way to reduce costs - the latest being 157 Media News employees in the Bay Area being let go over the past few weeks.

"The fact is that the audience still sees a lot of value in reporting about public life," said Tom Rosenstiel, director of the initiative. "What (media companies) need to do is figure out how to make money doing that.

"It would be a lot harder if the audience didn't like the product, but they do. It's much easier to fix problems on the business side," he said.

Many of those early solutions are coming from the editorial side of the newsroom, he said. Faced with the prospect of their own extinction, some journalists are doing something that their predecessors never had to: coming up with an innovative idea - and figuring out how the company can make money doing it.

"People used to think that the people on the business side would save journalism, but it's turning out to be the other way around in a lot of cases," Rosenstiel said. While mainstream print reporters are learning how to shoot video and photos, many publishers told him that they wished their advertising departments were as adept at creating online video ads.

Rosenstiel said most analysts figure it will take the media 10 years now to right its business model. And how deep into that decade of despair is the media: "Oh, it's still early," he said.

The report, which analyzes many sectors of the media - from newspapers, magazines, TV and radio news to ethnic media and online providers - said "increasingly, it appears the biggest problem facing traditional media has less to do with where people get information than how to pay for it - the emerging reality that advertising isn't migrating online with the consumer."

So while newspaper circulation dropped 2.5 percent nationally, according to the report, online viewership of newspaper Web sites increased 3.7 percent. But the online ad revenue for most newspaper Web sites is usually only about 7 percent of the news outlets total income.

Still, the news for newspaper companies stinks, as many key indicators are dropping. In addition to the circulation drop, advertising revenue dipped 7 percent and stock prices of newspaper companies have plunged 42 percent since 2005.

It has long been thought that the rise of the Internet would continue to "democratize" media, splintering the mass media audience across the vast array of information sources on the Internet. But, the report found, even with millions of new sources of information, "more people now consume what old-media newsrooms produce, particularly from print, than before."

While the number of citizen journalism Web sites may be booming, "their economic model isn't any better than mainstream media's," Rosenstiel said. Plus, many are adopting the gatekeeper role of the mainstream outlets they long disdained.

"It was thought that people could just post any story they wanted to on a citizen media site," he said. "But a lot of them are only allowing comments to be posted."

Even though ratings for local and network evening shows dropped, the TV news business largely enjoyed good financial news because, Rosenstiel said, their advertising sources have remained strong. While the audience for the three nightly network news broadcasts dropped 5 percent in 2007, the prime-time audience at the three cable news outlets grew 9 percent. Revenue is up 21 percent at Fox News, 7 percent at CNN and 10 percent at MSNBC.

Ethnic media also experienced growth, with ad revenue for Hispanic papers up 13 percent from 2005 to 2006.

And the report tossed this bone to print wretches everywhere: "Despite all this, those who remain in the newsroom, particularly in print, evince a stubborn optimism - a sense of mission to prove what they consider a calling still has resonance, and in time will find financial footing."