What We Know About the Business of Digital Journalism

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Columbia Journalism School | Tow Center for Digital JournalismChapter 2The Trouble with Traffic: Why Big Audiences Aren’t Always ProfitableAt first glance, the numbers don’t seem to add up: The New York Timeshas more than 30 million online readers and weekday circulation of less than900,000 newspapers. Yet, the print edition still accounts for more than 80 percentof the Times’ revenue. 1 A broader recent study revealed the same phenomenon: Itshowed that the Internet occupied 28 percent of Americans’ time spent in mediain 2009 but generated only 13 percent of total advertising spending. 2To understand why, it’s important to realize that the prices advertisers paydigital news organizations depend on many factors. Some are tied to the overallmarket, especially the vast and growing amount of ad space (or inventory) that’savailable online. Other factors have to do with a site’s own dynamics, includingthe size of the audience it reaches and that nature of that audience—its demographics,how much time its users spend with the site and so on.So, the Web offers a lot of advantages to publishers and advertisers. But its audiencesare more wide than deep.Journalists constantly feel the push and pull of these numbers. “What am Itoday?” asks Jeff Cohen, editor of the Houston Chronicle. “I’m an aggregatorof eyeballs. … We’re doing around 79 million page views a month—almost abillion in a year.” Yet, for all that Web traffic, his newsroom’s 206 employees areabout half the number employed in 2006.Digital numbers are confusing when compared with traditional media metricsand are often inflated for all sorts of reasons. Users can be counted several timesif they deploy multiple devices, such as a PC, laptop and mobile phone, to accessa site. Also, many people delete their computers’ “cookies,” small text files thatallow them to be identified and tracked; because of that, they appear to be newvisitors to sites rather than returning ones. 3The Trouble with Traffic: Why Big Audiences Aren’t Always Profitable 21
The Story So Far: What We Know About the Business of Digital JournalismFor all that, digital audiences usually far outnumber those from a traditionaloutlet. As a result, the industry faces a perplexing set of questions: Why do somany digital users generate so little advertising revenue? Is it simply that digitalsystems are more efficient than the previous oligopolies of the print and broadcastworld? Or is there something more fundamentally askew about the waymedia companies make money off digital customers? And, more importantly,what should publishers be doing to make the most of the readers and viewersthey have?* * *At its most basic level, advertising is a numbers game. A news organizationneeds a certain number of readers or viewers, and the more it gets, the more adsit can sell and the more it can charge those advertisers. Users also spend varyingamounts of time with the magazine, newspaper or broadcast, and the more timethey spend, the more an advertiser values the audience.Digital platforms, thanks to their ubiquity and ease of use, are terrific at thefirst part of the numbers game. News sites have demonstrated the ability to attracthuge numbers of users. And in the first decade of the digital era, particularly assearch engines became more powerful, publishers and broadcasters focused onbuilding a mass audience. They poured resources into search engine optimization—theterm used to describe a way to improve the odds that headlines will bepicked up by Google or other search sites and that topics will be timely enoughto appear prominently on a results page. News sites initially welcomed aggregators,such as Drudge Report and Huffington Post, that linked to their materialand increased traffic.As a consequence, audience sizes swelled, and publishers have proclaimed thatto be a success. So when the Los Angeles Times in March 2011 logged a record195 million page views, clicked on by 33 million users, the site’s managing editortook a moment to proudly announce those statistics on the site. 422
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