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 Journalismare looking for online discount coupons, has become successful with wittycome-ons and obvious value. Groupon has expanded rapidly into hundredsof markets and has turned down a $6 billion offer from Google. 12Impact: Digital provides the ability to target advertisers’ messages and bettermetrics to determine impact. But users find that many digital ads on newssites convey little information and value.• Digital platforms provide another way for advertising departments toattract new clients and retain old ones. For salespeople who don’t feelthey have enough arrows in their quiver, online and mobile can be a way toget a reluctant advertiser into the fold.Impact: Media companies can bolster more profitable legacy sales in traditionalmedia by adding digital, and in the process, can move their clients tonewer platforms. But deals that combine legacy and digital ad sales make itdifficult to determine how much revenue is truly attributable to new media.At some companies, half of digital sales have been “bundled” with print orbroadcast, and the way those dollars are apportioned can be largely at thewhim of the accountants, rather than being an accurate reflection of thevalue of the ads.• Many efforts to get readers to pay for content have been fitful, poorlyexecuted and motivated more by ideology than economics. Only a fewpublications have had a successful, long-term plan to get readers to pay, andeven fewer have done it in a way that genuinely increases online revenuerather than simply protects their traditional businesses. Was free content journalism’s“original sin”? 13 Perhaps, for news organizations must now ask readersto start paying for material that has been free for 15 years. Meanwhile,pay-per-article schemes, such as the one proposed in a 2009 Time coverstory by Walter Isaacson, haven’t caught on for journalism. 14 Unlike Beatlessongs, news stories have little lasting value beyond a single use.18
Columbia Journalism School | Tow Center for Digital JournalismImpact: Users have unlimited access to most content, and publishers haveunlimited access to most users. But circulation revenue, one of the mainstaysof the traditional media business, has withered. And one of the methods thatadvertisers have used to judge audience quality—willingness to pay—hasevaporated as well.* * *As one looks at this list, it becomes clear that most of the economic disadvantageshave been fully realized at news organizations, while many of the benefits—such as a surge in mobile-phone advertising—are more potential than real. At thesame time, some new models are emerging that can replace some, if not all, of therevenue news organizations have relied upon. Journalists and publishers, new andold, are responding to this new environment in a variety of ways. We’ll examinehow they have coped, transformed and endeavored to meet the challenges of thedigital era.1Rick Edmonds, “An Online Rescue for Newspapers?”, Poynter.org, Jan. 27, 2005.http://bit.ly/gphsCR2Figures from Newspaper Association of America data. http://bit.ly/h4dxxf3“State of the News Media 2011: Network by the Numbers,” Pew Research Center’s Projectfor Excellence in Journalism. http://bit.ly/eH71Ld4Carl Sessions Stepp, “State of the American Newspaper, Then and Now,” American JournalismReview, September 1999. http://bit.ly/eDev0Y5Vin Crosbie, “The Placebo Called Convergence,” June 9, 2010. http://bit.ly/ft8f8b6“Internet Gains on Television as Public’s Main News Source,” Pew Research Center for thePeople & the Press, Jan. 4, 2011. http://bit.ly/ia45aw7“State of the News Media 2011: Mobile News and Paying Online,” Pew Research Center’sProject for Excellence in Journalism. http://bit.ly/fsVAWf8“McClatchy Reports Fourth Quarter 2010 Earnings,” Feb. 8, 2011. http://bit.ly/hsfERQ9Edwin Diamond, “Trouble in Paradise,” New York Magazine, March 3, 1986, page 52.http://bit.ly/hPZgZP10 Remarks made at Borrell Associates Local Online Advertising Conference, March 3, 2011.News from Everywhere: The Economics of Digital Journalism 19
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