What We Know About the Business of Digital Journalism

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The Story So Far: What We Know About the Business of Digital Journalismmarket. The advertising business in broadcast was so strong that even televisionand radio stations with small market shares were profitable; those with a strongcommand of the audience were cash machines.The monopoly or oligopoly that most metropolitan news organizationsenjoyed by the last quarter of the 20th Century meant they could chargehigh rates to advertisers, even if their audiences had shrunk. If a local businessneeded to reach a community to promote a sale or announce a new store, thenewspaper and TV station were usually the best way to do it. Even if the stationor newspaper could deliver only 30 percent of the local market, down from50 percent a decade earlier, that was still a greater share than any other singlemedium could provide.That changed after 2001. The recession that followed the September 11 attacksforced many companies to cut spending, reducing media companies’ advertisingstream. More importantly, the digital transformation accelerated, and more usersbegan to get their news, for free, on personal computers. The link betweena consumer’s getting the news and a provider’s expensive investment in publishing,broadcast and delivery was broken; this brought a flood of new competitors.Craigslist helped devastate classified ads, newspapers’ most lucrative source of revenue,and in 2008, the deep recession fueled by the financial crisis underminedreal estate and employment advertising.As we get further into the digital age, we can more plainly see how the transformationhas affected news organizations and the citizens who depend on them.Consumers certainly have benefited—they have more choices, speedier deliveryof news and more platforms. But as legacy companies shrink, these advantageshave often been accompanied by a loss of original news coverage. New entrantshave achieved impressive editorial results, but not many of them have achievedfinancial stability without some philanthropic or other non-market support.The move to digital delivery has transformed not just the business of news, butalso the way news is reported, aggregated, distributed and shared. Each of thosechanges has an underlying economic rationale, and the media industry has sometimesbeen slow to recognize the changes or has been paralyzed by their impact.10
Columbia Journalism School | Tow Center for Digital JournalismBelow, we list some of the most consequential changes brought on by the digitalera and offer thoughts on how they will affect the way journalism is supportedin the years to come.I. A Different Business• Digital requires a new way of thinking about your audience, one thatnow feasts on an abundance of information. In the words of SyracuseUniversity Professor Vin Crosbie, “Within the span of a single human generation,people’s access to information has shifted from relative scarcity tosurplus.” 5 As Crosbie notes, it isn’t enough simply to transfer content froma legacy platform to a new one. Digital journalism requires an entirely differentmind-set, one that recognizes the plethora of new options availableto consumers. Tom Woerner, a senior vice president at freelance-generatedsite Examiner.com, notes that “the old distribution model allowed for onlyso much content. There are only so many pages you can print, only so manyminutes you can sell in a broadcast. … Now the limits are gone, for bothgood and bad.”Impact: Readers have access to far more information than they used to,almost always for free. But for publishers, the competition is nearly infinite,meaning much of the news has become a commodity, with pricing to match.• Digital is where the users are heading. In the most recent study by thePew Research Center for the People & the Press, 65 percent of people ages18 to 29 get their news from the Internet—outpacing television for the firsttime and far exceeding the 21 percent in that age group who rely primarilyon newspapers. 6 Among people ages 50 to 64, the Internet (34 percent)and newspapers (38 percent) are almost tied. The Web’s growing popularitymeans the “network effect” can kick in. That is, as more people use newssites, those sites become more valuable to their users, especially as readers andviewers comment on—and contribute to—stories. Meanwhile, more usageis gravitating from computer screens to smartphones, tablets and other mobiledevices. According to a January 2011 Pew study, 47 percent of Americanadults say they get at least some local news and information on their cellphoneor tablet computer. 7News from Everywhere: The Economics of Digital Journalism 11
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