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Weak Online Economics Threaten Quality of All Journalism, Pew Study Finds


Project for Excellence report concludes that Internet news sites are the industry's most promising segment. But lack of profits and sound business plans are forcing cutbacks in news-gathering efforts. As a result, traditional journalism sees standards and audiences eroding.

In a landmark study of American news media at the start of a new millennium, the Project for Excellence in Journalism reports that one of the few promising fields for American journalism is online. But the study notes this field's bounteous future is threatened by fallow profitability, reliance on content shoveled from other media and the news industry's uncertainty about whether citizens themselves should contribute to the field.

Using its own and others' data, the Project for Excellence, an organization affiliated with the Columbia University Graduate School of Journalism and funded by the Pew Charitable Trusts, examined the editorial content, audiences, ownerships, economics, newsroom investments and public attitudes about eight news media sectors: newspapers, magazines, online, radio, network TV, cable TV, local TV and ethnic or alternative publications.

The PEJ's 500-plus-page report, The State of the News Media 2004, is a comprehensive and timely snapshot of modern journalism in the United States.

"The answer we arrive at in 2004 is that journalism is in the middle of an epochal transformation, as momentous probably as the invention of the telegraph or television," said PEJ Director Tom Rosenstiel, a former reporter at the Los Angeles Times and Newsweek.

The PEJ report paints a worrisome panorama of dwindling audiences for news via all media except radio and online. "The Internet is the medium having the most success attracting young people to news, something that the older media were having trouble with before the Internet even existed."

The PEJ says the question of how much news organizations should invest online is "one of culture, vision and guts."

Does Online News Threaten Other News Media?

Earlier this month in Online Journalism Review, I produced a multipart series about the future of online newspapers. My series concluded that media companies might not have the intestinal fortitude to make the redoubled investments necessary to make electronic publishing a financially viable news medium

The PEJ study goes further, warning that online news' lack of profitability may be threatening American journalism.

"If people increasingly substitute the Web for their old media before a robust economic model for the Web evolves, the economic effect could be devastating for journalism. Companies might begin to cut back significantly on their newsgathering abilities, as audiences abandon profitable old platforms in favor of less profitable new ones. The Net in this case might weaken, not strengthen, the economic vitality of news organizations and the quality of American journalism."

Nevertheless, the PEJ study found that such cannibalization hadn't yet begun. Online news sites are still not the primary source of news for most people.

When given a choice of media as their main sources of news, 83 percent of Americans prefer to get their news from television, 42 percent from newspapers, 19 percent from radio and 15 percent from the Internet (percentages that include some overlap).

Those who did use online news said its attraction stems from three characteristics:

          (1) News can arrive continuously and be accessed anytime.

          (2) The choice of news providers online is much greater than in print or traditional broadcast.

          (3) Most online news is free.

The Audience Is Big

The PEJ study found that the U.S. audience for online news is big. But just how big depends upon the definition of how often.

A Pew Internet survey last year found that 69 percent of Americans had looked for news online at some time. At the same time, Jupiter Research found that 55 percent had looked for news online at least monthly. A similar study by UCLA found that 52 percent had looked for news online during a typical week. And when the Pew Internet survey asked how many people went online for news "yesterday," the result was 26 percent.

The PEJ staff concluded that while online news use for many people is not yet a daily activity, its occasional use mirrors people's general patterns of online usage.

But is the audience for online news in the U.S. growing? The PEJ found conflicting data. The Pew survey indicated that the numbers of Americans who use online news leveled off at about 62 percent in early 2001. The UCLA survey said much the same. However, Jupiter Research said the percentage continues to climb and will reach 73 percent in 2007, a gain of 14 million new online households during the next three years.

Where Americans Go Online for News

When Americans go online for news, the Pew Internet Project found, most first look at news broadcaster Web sites, followed by newspaper Web sites, then U.S. government or foreign-based news sites. Blogs were last on the list of places people said they went.

The PEJ reiterated earlier surveys' findings that a shakeout in popularity among American news sites is underway. "Pinning down where people go is complicated. But the best reckoning suggests not only that the big sites are getting bigger in terms of audience, but also that the very biggest are becoming runaway winners."

"Internet journalism on the major news sites is still largely a medium made up of secondhand material, usually from the old media"

Nielsen//NetRatings reported that Web traffic on the top 20 news sites grew by 70 percent from May 2002 to October 2003, an increase that far exceeded growths in the numbers of online users overall or the overall percentage of those users who were going to news sites. "After the four biggest sites [CNN, MSNBC, Yahoo and AOL], there is a massive drop-off," the PEJ reported. "While the audience may be growing, there seems to be a winnowing of the number of sites that dominate the Web for news."

However, when it comes to keeping people reading, that top row somewhat changes. "The New York Times, Fox News, CNN and AOL -- are consistently those that are able to keep visitors the longest, an average of over 29 minutes a month per unique visitor. The average for the rest is just under 19 minutes a month."

Among the Findings

Analyzing the field of online journalism, Rosenstiel and his team dug into the contents of eight news Web sites: CNN,,, MSNBC,,, (site of the Las Vegas Review-Journal, which PEJ chose as representative of smaller newspaper sites) and AOL's members-only news site. At four different hours around the clock on five days scattered over four months, PEJ downloaded and analyzed those sites' stories and news coverage.

Among the PEJ findings:

          ? "Internet journalism is still largely material from old media rather than something original.

          ? "There is a mixed message when it comes to immediacy. While a good many of the lead stories are new through the course of the day (roughly half), the amount of updating of running stories with substantive new information is more limited (a little more than one in 10 stories).

          ? "For now, perhaps the strongest trait each [publisher on the] Internet is taking advantage of is providing background information to its stories, such as links to archival material or other sources.

          ? "Content on the Web is still driven by text narratives. Most sites make only limited use of the multimedia potential of embedding such things as videos, audio, still photos and user feedback into news stories.

          ? "Among those studied, there are three kinds of sites -- those generating staff content, usually from their parent company, those relying almost entirely on wire services and those trying to edit and adapt wire copy and adding some original content."

Is Online Journalism Original and Reliable?

"Internet journalism on the major news sites is still largely a medium made up of secondhand material, usually from the old media," the PEJ found. "Only 32 percent of the lead articles on the eight sites studied was material produced by the organization's own staff. And much of that came from a few of the sites, particularly those from newspapers, posting articles from their print parents. Thus even most of this material was not original to the Web."

Another 42 percent of lead articles were "wire stories posted without any editing and produced by other sources, particularly the Associated Press and Reuters." A quarter (23 percent) of lead articles were "wire stories that included enough editing or additional material that they carried a combined staff/wire credit line or byline."

The online news sites' reliance on wire services for lead articles also meant "a fair amount of repetition." PEJ cited one example: A quote from a woman in Cleveland who had arrived at work in a T-shirt and shorts without having brushed her teeth was carried on five of the eight sites the project studied during the Midwest black out last August. "Web readers from 9 a.m. to 9 p.m. were well-informed of attorney Lori Zocolo's inability to brush her teeth," the study concluded.

The PEJ said that 39 percent of the online news stories it studied contained anonymous sourcing, roughly twice the percentage for printed news magazines and more than newspapers overall, but less than newspaper front pages (45 percent).

"At least in lead stories, sourcing seems pretty strong. It is important to note that much of this sourcing arrives secondhand, from wire services and, as mentioned above, much has not been verified by the Web site itself. Still, some of the wire copy seems the best sourced of all."

Online publishers may be buoyed that the PEJ found that 81.6 percent of online news users think that "the sites they regularly visit" are entirely or mostly accurate. That percentage is far higher than from users of television network news (66 percent), newspapers (59 percent) or printed news magazines (53 percent).

Nevertheless, I note the far greater choice that online users have of news providers, compared to printed publications or broadcast TV newscast, probably allows them to self-select the providers they think are most accurate, resulting in that higher percentage of perceived accuracy.

Though news stories can be constantly updated online, the PEJ found that only 14 percent of the sites' lead stories were updated.

Many sites also weren't taking advantage of the unlimited space online and the ability to use multimedia. The PEJ said that audio links were almost nonexistent and only a third of the lead stories it analyzed contained links to still photos or video or even to other stories.
Moreover, the PEJ reported that only 40 percent of the lead stories had some way for users to offer feedback or participate in online discussions about the topic.

Gatekeeping the No-Longer Fenced?

The PEJ study obliquely addressed three issues that are controversial among online news producers: citizen journalism, convergence and gatekeeping.

"Some argue that as people move online, the notion of news consumers is giving way to something called 'pro-sumers,' in which citizens simultaneously function as consumers, editors and producers of a new kind of news in which journalistic accounts are but one element.

"With audiences now fragmented across hundreds of outlets with varying standards and agendas, others say the notions of a common public understanding, a common language and a common public square are disappearing.

"For some, these are all healthy signals of the end of oligarchical control over news. For others, these are harbingers of chaos, of unchecked spin and innuendo replacing the role of journalists as gatekeepers over what is fact, what is false and what is propaganda. Whichever view one prefers, it seems everything is changing."

Last week, the American Press Institute held a conference about online news, which largely got stuck in these doctrinal and now old arguments.

For example, bloggers ask if journalists' traditional roles as gatekeepers only made sense back in an era when consumers had access to few other sources of news. Meanwhile, traditional journalists wonder if blogging is but the start of a Maoist cultural revolution that could set back journalism for at least a generation.

The PEJ study sees journalists still necessary as guides, if no longer as gatekeepers, but it wonders about the uncertainties. "We find the need for journalists to help folks sort things out is greater than ever. But doing so today is harder, and it's not clear whether journalists will be able to meet the challenge,"

Convergence in an Era of Fragmentation

The study likewise is uncertain and -- like most traditional media it studied -- might lack the vision to see through issues of convergence in this era of audience fragmentation.

"We are witnessing conflicting trends of fragmentation and convergence simultaneously, and they sometimes lead in opposite directions.

"It is possible that the public is simply of two minds. It wants a more entertainment-infused, more sensationalized, more interpretative style of news, and the media have given it to them. The public then feels repulsed and derides the messenger for delivering it.

"It is also possible that this declining trust has only a little to do with the press, that these attitudes toward the news media are only a reflection of a declining trust in all institutions.

"Brushing off these issues as a sign of public hypocrisy or general skepticism, however, seems too glib. The public attitudes aside, something is changing in the news media. Faced with declining audiences, many major news institutions have changed their product in a way that costs less to produce while still attracting an audience. The public senses this and says it doesn't like it."

No, the American public doesn?t want a choice only between sensational interpretations or unembellished facts. The public doesn't want any either-or choices at all. It instead wants access to the full spectrum about each story.

For example, when during the Iraq war the PEJ staff asked people what they liked about getting news online, two-thirds of respondents cited the ability to get news from a variety of sources. That was given more than any other reason. Indeed, more than 50% of respondents valued being able to get different points of view from those of traditional news and government sources.

While many traditional news organizations are "converging" their many media operations just to give the public a multimedia story about an event, the public nonetheless wants all angles and fragments about that event.

Financial Sustenance Versus Self-Cannibalization

Some other news organization are putting their online operations behind paid subscription barriers because they worry that offering free news to online consumers will only cannibalize printed newspaper or magazine subscriptions or broadcast listeners.

"News executives perhaps should be less worried about one medium cannibalizing another," the PEJ study said, "and more worried about making the news more engaging, relevant and interesting generally, and making their advertising and sponsorship strategies more valuable to the people paying for their products."

The study data indicated that nearly three-quarters of users (72 percent) said that they spent the same amount of time reading print newspapers now as they did before they began reading news online, and that a similar pattern holds true among readers of printed news magazines.

But the data also indicated that 36 percent of Internet users said their television viewing time has decreased since going online.

"What is most intriguing is the evidence that television rather than print is suffering most. This is surprising because, at this point, the Web is still largely a text-based medium," the PEJ reported. ?One might have thought that the print media would thus be hurt by the greater convenience that the Web offers, in much the same way that cable seems to have eroded the appeal of network television. This is not the case."

But, in the absence of large and steady online profits, self-cannibalization might be the biggest threat to online journalism, according to the PEJ study.

"The biggest question mark may not be technological but economics. ? While many Web sites are now at the point where they can claim profitability, it will still be years before the Internet becomes a major economic engine that is paying [for] the journalism it contains, rather than piggybacking on its media predecessors." The PEJ said that "since many Web sites are just beginning to make a profit, it may be difficult to siphon still more money and employees into something that is not yet a major contributor to the bottom line and may indeed weaken margins."

The study cited an example. "Many companies, such as, have not added the kind of staffing they imagined they would a few years ago. In December 2001, when the site was experiencing a huge surge in traffic following the September 11 attacks, the site actually shed 9 percent of its staff of 200. Much of this was due to the sustained advertising downturn that hit media outlets at the time. The site also had to deal with a phenomenon that television counterparts have not had to deal with: A larger audience requires more money in order to acquire the necessary bandwidth. Post-September 11 streaming video cost the site an extra million dollars.

"Cuts at did not cease, and the staff shrank to 170 in October 2002 and then to around 155 in 2003. Moreover, the site has revised its prediction of profitability in 2001 to 2005. The former head of the news site, Merrill Brown, left the company reportedly in frustration over cutbacks in June 2002."

Online holds the greatest potential for American journalism. But if the Project for Excellence in Journalism study is correct, online news needs a new culture of financial fortitude, editorial vision and innovative guts.

Related Links
American Press Institute on The State of the Media
Associated Press
Columbia University Graduate School of Journalism
Jupiter Research
OJR: The Future of News
Pew Charitable Trusts
Pew Internet
Project for Excellence in Journalism
The State of the News Media 2004
The UCLA Internet Report: Surveying the Digital Future, Year Three