USC Annenberg Online Journalism ReviewUSC





THE FUTURE OF NEWS
The Third Wave of Online Journalism


The next wave of online journalism is all about partnering with end-users -- and giving them what they want

Larry Pryor, OJR Executive Editor
posted: 2002-04-18 • modified: 2002-04-26

Big changes are under way in online journalism as the medium shifts from previous phases of hype and disappointment to a new consensus of "let's get on with it -- we know what we've got to do."

You could sense this mood of optimism and purpose at two recent online journalism conferences that dealt with the future of news, one held at the USC Annenberg School on March 14-15 and another at the University of Texas on April 5. These were typical comments:

  • "We have to engage in a conversation with our audience. … We look at what users are doing and use it to inform how our product develops."
    -- Stephen Newman, deputy general manager, nytimes.com
  • "Involve the community - make people part of the (news) organization."
    -- Jane Ellen Stevens, multimedia instructor, UC Berkeley Graduate School of Journalism
  • "Give them what they want and give them value."
    -- Julie Weber, digital media manager, Hearst Newspapers

Each of these statements deals with the tenuous relationship between journalists and their audience -- a relationship that is now being redefined online.

The history of online journalism has seen the control of the medium shift back and forth between owners and end-users over three waves of development, as defined by ubiquitous Web consultant Vin Crosbie.

vin

J.D. Lasica

Media consultant Vin Crosbie

The first wave, from 1982 to 1992, began with several publishing experiments and was later dominated by proprietary services such as AOL and CompuServe. In the second, starting in 1993, news organizations began to go online.

The third, only just now beginning, is the wireless/broadband era. This one promises to be more powerful, sustained and profitable than previous phases. It will bridge the gap between between mass information and what is specifically useful to you -- when you want it.

Predicting the future of news is, of course, risky. But we do have a 20-year history of online journalism to analyze and project from. We can look at the engineering laboratories and see what kinds of new tools are being developed. And the analytical work of communications scholars such as Francois Bar at Stanford can help us project where online technology will take journalism in the future.

Francois Bar

Francois Bar

Bar sees the development of information networks as a power struggle between media owners and end-users for control of a network and the way it will innovate and grow. As Bar's work notes, users from the beginning of the online era saw the new technology as an opportunity to control communication, rather than have it spoon-fed to them. Users demanded that companies give them interactivity, control and software that would allow them to speak to each other without editors, without censorship -- without a media intermediary. The companies that survived were the ones that gave the users the interactivity and control they demanded.

Taken together, Bar’s theories and Crosbie's wave concept shed an interesting light on where our industry might be headed. It is also helpful to look at network development, as does Bar, in terms of three factors: Application, Control and Hardware.

I. The First Wave: 1982-1986

Both Times Mirror and Knight Ridder opened ambitious, experimental videotex services in 1982, closing them in 1986. The failed service showed how not to do online journalism. Videotex made print publications and other interactive services available via TV screens. The videotex services had these characteristics:

  • Applications:
    Text in digital form, primitive graphics for news, information communication (chat and bulletin boards), home banking, shopping, games, services (e.g. movie tickets).
  • Control:
    Owned by major media companies; end-users were taken for granted; attempts by users to shape network innovation were discouraged by management, who used conventional marketing practices in an effort to build an audience. The product was available only to subscribers, at a monthly fee equivalent to a cable TV service.
  • Hardware:
    Mainframe computers accessed by phone lines via 900-baud modems attached to set-top boxes on TV sets. The service was slow and clunky and permitted almost no end-user control. The database was next made accessible to early PC owners, many with 1200-baud modems. This new group of end-users sought greater control of the network and demanded changes: better content, more uncensored chat, more games, more shopping and better services. Printing capacity was somewhat limited.

Conclusions:
The videotex services failed to meet the demands of end-users and closed down in 1986.

At the same time, CompuServe (1980), Prodigy (1984) and AOL (1989) formed proprietary services with no traditional journalism ties (CBS owned part of Prodigy but bailed out). AOL provided anonymous chat on any topic, including sex. Prodigy offered richer content and services than the videotex companies. CompuServe had forums on a wide variety of subjects and courted consumer loyalty. The new online companies were willing to share some power with end-users but still held most of the control, especially over third parties, who submitted content for a fee and had no stake on how it was published.

Most early subscribers used the services for chat with friends, family and -- the novelty that drew many in -- with strangers who were often willing to develop deep intimacies with those they met online. It was an elaborate form of CB radio.

In this medium, the consumers are the producers. That turns the world of journalism on its head.

Membership in proprietary services steadily increased in the late '80s and early '90s as PC ownership spread, software became more powerful and modems increased in speed. Each software and hardware improvement gave more leverage to end-users and allowed them to participate more actively in reshaping the networks. The architecture changed dramatically from one-to-many in 1982 to many-to-many and one-to-one as proprietary chat and bulletin boards and networks like The Well (1985) developed.

II. The Second Wave: 1993-2001

Media companies and dot com entrepreneurs watched the success of the proprietary services in the early '90s with much unease. Many publishers joined the services as content providers, but they had no control and got only a small piece of the pie. They needed control of their own networks. Mercifully, along came new technology -- HTML (1990-1992), the Web, the graphic interface browser Mosaic (1993) as well as Internet e-mail, and the second wave began to build. Netscape's first browser was commercially released in 1994; Microsoft's Internet Explorer browser was released in 1995.

  • Applications:
    Text in digital form, sophisticated graphics, video, audio, links to almost unlimited databases. Widespread use of e-mail. E-commerce.
  • Control: 
    A mix of closed networks controlled by owners like AOL, open networks controlled by media companies in partnership with end-users and of smaller sites controlled completely by end-users and third parties.

    The gatekeeper role in journalism continued to be valuable, but Yahoo and others developed software that allows readers to be their own gatekeepers. The personalization software lets readers decide which news is delivered to them, giving increasing control to the end-user and to news aggregators like Yahoo, which grew at the expense of traditional news organizations.

    In the beginning of this wave, most content was offered for free -- companies built their business models around the idea that they would take their profits from ad revenues. By the time owners realized that ads would not sell online, it was too late to begin charging for content and services. An empowered consumer force had become accustomed to getting just about everything for free online. (Heck, online users didn't even have to pay sales tax.) Economic control had shifted to end-users, who opposed subscriptions (except for the most exclusive or valuable content) and rejected intrusive ads, demanding a free product on an open architecture. Standard marketing techniques, such as focus groups and promotions, failed to control end-users.
  • Hardware:
    PCs connected to mainframe computers by increasingly faster modems, dedicated phone lines and cable systems. As the second wave built, some began distributing content over cell phones, PDAs, and by wireless and satellite delivery.

    More powerful computers and more sophisticated software allowed end-users to save and share music, video and other content through programs like Napster and Morpheus. Elaborate database, architecture and multimedia software allowed greater innovation, such as customization. This facilitated the shift of control to the end-user.

    Printers became cheaper and more powerful, allowing the end-user to have a printing press. E-mail technology became more sophisticated, also giving greater power to the end-user in terms of organizing, accepting, rejecting and forwarding e-mail and HTML content.

Conclusions: 
As the second wave broke, the grassroots end-user survived and flourished -- thanks in part to new, inexpensive content management technology that helped thousands of end-users launch their own publications. Smaller, innovative news sites became more prominent and niche sites, self-publishers and Web loggers proliferated, creating a new model for online news.

Innovation and investment by owners came to a halt by about mid-2000: End-users' refusal to pay for content -- or anything else online -- meant  most owners failed to come up with a working business model. The realization that no one was making money led to disillusionment and the market collapse of March 2000. Dot coms closed and online news operations retracted. An estimated 500,000 jobs were lost in this sector from 2000-2002.

III. The Third Wave: 2001-

This wave is characterized by more-sophisticated owners and better-trained staffs, end-users dependent on traditional news organizations for the daily global report, proliferating mobile platforms and new software that enables powerful forms of publishing, such as wireless push and immersive technologies.

Owners are developing more information that consumers are willing to pay for. Some owners are becoming better innovators, improving their products.

Owners are also developing new revenue streams in a partnership with end-users. Some managers say this cooperation has helped their news sites become more profitable.  

New industry organizations, such as the Online Publishers Association and Online News Association gained memberships and gave the industry cohesion.

Many strong online news sites remained and even flourished: nytimes.com, washingtonpost.com, latimes.com, wsj.com, CNN, CNET, MSNBC, USAToday, CBSMarketwatch, as well as many sites at the regional level, such as the startribune.com and Topeka Capital-Journal's cjonline.com. Traffic on the Web increased at news sites by about 15% in 2001 and soared by more than 70% at many of the major news sites. But the successful news sites had listened carefully to the needs of the end-users and became more profitable by allowing end-users to shape the news networks.

Other economic health indicators for online publishing turned positive this year: Ad revenue dropped 15 percent in 2001 to $2.5 billion, but was expected to grow 9
percent this year. EMarketer expects ad spending to reach $11.4 billion in 2004. PC prices continue to drop and more people signed on to the Internet, again with strong projections for 2002 and beyond.

Applications:
Text in digital form, sophisticated graphics, video, audio, unlimited databases; widespread use of e-mail, Web logs, diaries and personal sites; games; e-commerce; services; news alerts; music and software downloads; local and community news; chat and forums; classified ads; instant messaging. Also:

  • More efforts to combine print, broadcast and online into a single news organization -- in a word, convergence.
  • More emphasis on services and proprietary content as a source of revenue and less on banner and pop-up ads
  • Services are closely matched with end-user needs, such as classified ads (Morris Communications Web sites, for example, pioneered the "send flowers option," a link from an obituary to a local florist)
  • Increasing use of next-generation portable devices that, in turn, open new revenue streams
  • Better use of resources, such as turning archives into historical feature packages

Control:
The relationship between network owners and end-users is becoming more of a partnership. Networks are:

  • Partnering with Web loggers and other independent voices to make their content available to end-users
  • Developing new ways to present community news and building more interactivity into their coverage. Many are using forums and surveys tied to stories as ways for users to have a dialogue with each other or with a reporter
  • More sensitive to privacy issues when developing policies about how they'll use and share information about end-users
  • Creating more effective ad strategies, like the nytimes.com's "surround sessions" where the user is "owned" by an advertiser throughout a session
  • Using better tools, including new publishing tools that allow advertisers to write their own copy
  • Showing quicker response to user demands, especially as major news breaks
  • Creating partnerships (The New York Times and the BBC; Tribune Company and Knight Ridder) to offer news and classified advertising

Hardware:
PCs connected to other PCs and to host servers over broadband paths owned by cable, phone and satellite companies; cell phones, PDAs, electronic tablets and e-paper connected by wireless and satellite links; multifunction end-user devices, both stationary and mobile; more broadband capacity and compatible transmission standards; sophisticated compression techniques and synchronization mechanisms.

A new publishing model is evolving: Innovation is developing through a partnership between owners and end-users.

Conclusions:
In the first wave of online journalism, the owners controlled all, and end-users had little say in how the product was developed. In the second, end-users fought for control, spurning ads and declaring that content be free. In the third wave, control is being shared. Network owners see value in cooperating closely with their audience; the audience is more willing to let the owners make a buck.

"Free is Utopia, and people begin to realize that," said MSNBC senior writer Bob Sullivan at the UT conference. "They are more receptive of subsidizing what we do for them."

The second wave demonstrated that networks and end-users need each other to survive. Networks are nothing without an audience, and while end-user contributions are valuable, many self-publishing end-users would have little to talk about without the news that networks supply: Most blogs spend much of their "air time" commenting on news reported and published by major news organizations.

Gathering news is an expensive process requiring heavy capital investment and professional expertise. End-users do not and will not have the resources necessary to do this important work.

A new publishing model seems to be emerging in the third wave: Control is being shared and innovation is developing through a partnership between owners and users.

"Everything we do in product development … begins with doing user scenarios based on what we know of our audience," said Stephen Newman of nytimes.com. "Then we conduct rounds of user testing."

The growth of mobile platforms will inevitably return some control to the owners; mobile is more of a "push" technology, giving owners a stronger gatekeeper function.

The big fear is that monopolistic merger trends will bring unacceptable and socially destructive power to network owners. But that fear is based on the idea that major network owners will ignore end-users' demands.

Non-traditional owners are ready to step in and accept the refugees from Big Media. Multiple paths of information - cable TV, high-speed phone lines, satellite and wireless transmission, as well as emerging paths such as lasers - make it difficult, if not impossible, for media conglomerates to lock up online technology.

News organizations online are increasingly realizing that the key to success lies in giving readers what they want, when they want it. That means churning out news on more than a once-daily deadline, respecting privacy, creating interactivity, giving readers options and control. Many of these demands -- especially the need for more constant news updates -- mean major changes in the way newsrooms work. Many organizations are working to meet the needs of this new online audience.

"We haven't figured it out yet as to how to pull all this stuff together," Doug Feaver, executive editor of washingtonpost.com told the UT audience. "But we're in better shape now than three years ago and we're getting better at it every day."

Links from this article:

AdWeek Online Ad Revenue Story: http://www.adweek.com/adweek/members/article_display.jsp?vnu_content_id=1381958
AOL: http://www.aol.com
AOL Timeline: http://www.aoltimewarner.com/corporate_information/timeline.adp
BBC: http://news.bbc.co.uk/
CBSMarket watch.com: http://www.cbsmarketwatch.com
CNET: http://www.cnet.com
CNN.com: http://www.cnn.com
CompuServe: http://www.compuserve.com/corporate/cs_info.html
Consultant Vin Crosbie: http://www.digitaldeliverance.com/staff/staff.htm
eMarketer Ad Revenue Projections: http://www.internetnews.com/IAR/print/0,,12_995841,00.html
Francois Bar: http://www.stanford.edu/~fbar/CV/cv.html
Francois Bar's Presentation Slides: http://www.stanford.edu/~fbar/Presentations/OpenNetworks-apr02.pps
Hearst Newspapers: http://www.hearstcorp.com/newspapers/
History of HTML: http://www.w3.org/People/Raggett/book4/ch02.html
Immersive Technologies: http://imsc.usc.edu/
Knight Ridder: http://www.kri.com/
Kuro5hin: http://www.kuro5hin.org/
Kuro5hin: http://www.kuro5hin.org
LATimes.com: http://www.latimes.com
Morpheus: http://www.cnet.com/software/0-3227898-8-8678296-1.html?tag=st.cn.sr1.ssr.
Morris Communications: http://www.morris.com/
Morris Communications: http://www.morris.com/
MSNBC.COM: http://www.msnbc.com
Napster: http://www.napster.com/
New York Times Web Traffic Story: http://query.nytimes.com/search/abstract?res=F40915FA35550C748EDDA10894D9404482
NYTimes.com: http://www.nytimes.com
Obituary Ad: http://www.hannibal.net/cgi-bin/ez-referrer.pl?http://hannibal.net/obits/flowers.html
OJR Digital News Networks Story: http://www.ojr.org/ojr/lasica/1018588363.php
OJR News Relationship Story: http://www.ojr.org/ojr/business/1017964221.php
OJR Self-publishing Technology Story: http://www.ojr.org/ojr/technology/1015018005.php
Online News Association: http://www.journalist.org
Online Publishers Association: http://www.online-publishers.org/
Prodigy: http://myhome.prodigy.net/about/
San Francisco Chronicle Online at SFGate: http://www.sfgate.com/
SFGate's Make-Your-Own Ads Promo: http://mm2.advariant.com/mm/index.jsp?affiliate=sfgate
Slashdot: http://slashdot.org/
StarTribune.com: http://www.startribune.com
The Sad Story of Videotex: http://www.well.com/user/mmcadams/videotex.html
The Well: http://www.well.com/aboutwell.html
ThemePark Insider.com: http://www.themeparkinsider.com
Topeka Capital-Journal Online: http://www.cjonline.com
Tribune Company: http://www.tribune.com/
UC Berkeley Graduate School of Journalism: http://journalism.berkeley.edu/program/
University of Texas Conference: http://www.utexas.edu/coc/journalism/onlinejou/symposium/index.html
USA Today Online: http://www.usatoday.com
USC's Third Wave Online Journalism Conference: http://annenberg.usc.edu/online2002/
Wall Street Journal Online: http://www.wsj.com
WashintonPost.com: http://www.washingtonpost.com
Yahoo: http://www.yahoo.com