Turn news industry disruptions to your advantage

March 20, 2012 by

The 2012 State of the News Media report by Pew Research Center’s Project for Excellence in Journalism is out, and it includes some eye-opening numbers on who’s making money from news these days.

Here’s a hint. It’s not newspaper companies. From the report:

In the last year a small number of technology giants began rapidly moving to consolidate their power by becoming makers of “everything” in our digital lives. Google, Amazon, Facebook, Apple and a few others are maneuvering to make the hardware people use, the operating systems that run those devices, the browsers on which people navigate, the e-mail services on which they communicate, the social networks on which they share and the web platforms on which they shop and play. And all of this will provide these companies with detailed personal data about each consumer.

Already in 2011, five technology companies [Google, Yahoo, Facebook, Microsoft and AOL] accounted for 68% of all online ad revenue, and that list does not include Amazon and Apple, which get most of their dollars from transactions, downloads and devices. By 2015, Facebook is expected to account for one out of every five digital display ads sold.

A year ago, we wrote here: “The news industry, late to adapt and culturally more tied to content creation than engineering, finds itself more a follower than leader shaping its business.” In 2012, that phenomenon has grown.

“Our analysis suggests that news is becoming a more important and pervasive part of people’s lives,” PEJ Director Tom Rosenstiel said in a press release. “But it remains unclear who will benefit economically from this growing appetite for news.”

Well, a first read of the Pew report suggests that it’s Google, Yahoo, Facebook, Microsoft and AOL who are benefitting economically from the public’s appetite for news online. :^) But let’s not forget that quite a bit of that 68% market share that Pew reports for these five businesses is passing through to uncounted numbers of affiliates and partners, too. For example, a large chunk of Google’s market-leading advertising income flows to its AdSense partners. (Full disclosure: I’m one of them.)

In my reading of the Pew report, I found an implicit concern that more and more online ad revenue was flowing to these tech company intermediaries, rather than directly to news companies as they presumably had done in the past. But I don’t have a problem with that. Why? I don’t believe in equating newspaper, broadcast and cable companies with the “news” industry.

I’ve never believed that newspaper companies are the originators of journalism. To me, the true originators of journalism are reporters and sources. Newspapers were yesterday’s middlemen, bringing together reporters, an audience, and the advertisers who were willing to pay to reach the audience that journalists’ reports would attract. Sure, newspaper companies played a vital role, but calling them the originators of content is akin to giving credit to an talent agent for an actor’s performance.

Today, tech companies have disrupted these arrangements. As a journalist, I can use Google’s Blogger to create my own publication and Google’s AdSense will pay me for the advertising revenue that my work attracts. And let’s not forget those downloads from Amazon and Apple, either, which provide an even more direct route for today’s writers to earn income from an audience. I don’t need a job with a newspaper a make living as a journalist now. Tech companies have become the new middlemen, through which sources and writers can reach an audience and customers, instead of having to rely on newspaper and broadcast companies to make that match, as they did so often in the past.

In this view, Pew’s report is not a depiction of a news industry losing control of its revenue future to the tech industry. It is instead a map of how tech companies are disrupting publishing monopolies, creating new avenues for journalists to travel in their careers.

Some of these new avenues are yet uncharted. Others won’t lead to any reasonable income. Others still will turn out to offer immense profit. All my work writing over the past few years on OJR about entrepreneurial journalism has been to help you find the best new avenue for you. But just because newspaper companies are getting squeezed doesn’t mean that you have to lose your future in the journalism business.

Unfortunately, you also can’t make the assumption that any profitable new avenue you find will be around permanently, either. Remember when Netscape dominated the browser market, when everyone was rushing to make deals with AltaVista, or when it seemed that Microsoft had a monopoly over computer software? It’s quite possible that 15 years from now, future writers will make the same types of cracks about Google’s advertising market share or the amount of time everyone spent on Facebook.

This is where you won’t find answers from Pew, or from me, or from any other pundit out there. You’ll find them only from yourself. This is why I stress the importance of living in the community you cover, or being a fan of the niche you cover. This is why you need to build and maintain relationships with your audience and with your customers. “Objective” separation is career suicide.

Because you need these relationships so that you can function fully as a consumer within the space you cover. That’s vital because it is as a consumer that you’ll get your first signs of any disruptions coming ahead. I remember people I had contact with in the music industry 10-plus years ago who’d spend their workdays developing market campaigns for CD sales, then go home and listen to music they’d download from the Internet to their MP3 players. They never allowed their experience as consumers to inform their work in the publishing industry, and many of them lost their jobs in the disruption that followed.

You’ve got to be an engaged consumer in your market, and you’ve got to apply that experience to your work as a journalist. Use it to anticipate disruptions, so that you can be ready to take advantage when they happen. Fifteen years ago journalists who were getting their news from websites instead of printed papers should have realized where their future was heading and moved before they were pushed. Today, writers who are reading eBooks ought to be making the jump to writing and publishing eBooks.

I don’t know yet where tomorrow’s disruption will come. But here’s a hint: Anywhere high barriers to entry – cost, equipment, etc. – are keeping people from producing and selling content, that’s an industry ready for disruption. Anywhere people are making money solely by controlling access to information is a place where people are going to be losing their jobs in the future.

Tech companies are taking money from old-school news companies, sure. But don’t look at that as a problem. Look at it is the opportunity it provides you.

Filed Under: Frontpage Tagged With:

The fastest-dying industry in America

March 13, 2012 by

Is any university in America still admitting students as print journalism majors?

That question popped into my mind last week when I read a LinkedIn research post that claimed that newspapers have shed a larger percentage of jobs that any other industry in America over the past five years, losing more than 28 percent of its jobs during that time.

I mean, wow, everyone in the business knew that newspapers were shrinking, but dead last? And dead last in a down economy?

When you consider that many newspaper companies have been trying to add or at least redeploy positions to their online operations, the jobs picture becomes even more grim for the print side of journalism. As far as jobs go, this is – literally – the worst part of the worst industry in the worst economy since the Great Depression.

Given that job market, why would any students want to major in print journalism? More importantly – why would any ethical college or university allow those students to do so?

College today costs an obscene amount of money, an outrageous expense that’s often justified by the extra earning potential that college graduates enjoy over those who do not earn a college degree. But median wages for college graduates (adjusted for inflation) are shrinking, not growing. And given the collapsing job prospects in print journalism, it seems to me mad to invest tens of thousands of dollars in training to work for newspapers.

And, yes, I wrote “training.” Journalism schools long have considered themselves professional schools, with a focus on training over scholarship, and if you doubt that, consider the relative dearth of PhDs on university journalism faculties, compared with the large number of adjunct faculty and instructors. But it’s going to be increasingly difficult for journalism schools to retain support within their universities if employment prospects in the profession for which they are training their students continue to collapse at the rate that newspapers’ are.

Students are wise to all this, of course. I’m hearing plenty of anecdotal accounts that students are abandoning print journalism, choosing instead to apply or transfer to programs in online journalism, public relations and communications. Add that newspaper companies are no longer enjoying the massive double-digit annual profit margins that led them to fund million- and billion-dollar foundations to support journalism education, and journalism schools are facing a one-two punch to their revenue with many feeling declining enrollment and donation support.

Fortunately, there’s some very good news in the LinkedIn analysis. Take a look at the top three growing industries over the past five years. There’s the Internet at number two and Online Publishing at number three. That’s the future of journalism education right there – fulfilling the growing need for instruction and guidance in profitable and community-building communication in the growing online publishing media.

Unfortunately, too many journalism faculties aren’t well staffed for this shift. While the core principles of sound reporting, clear writing and honest imagery remain for online journalism, today’s journalism students also need instruction in entrepreneurship, as well as building and leading communities in a dynamic, real-time, interactive publishing environment – skills where print veterans too often lack needed years of real-world experience. Worse, too many print-focused instructors advocate journalists maintaining distance from the communities they cover in the name of objectivity – advice that I believe harms 21st century journalism students.

The situation reminds me of the dilemma that newspapers have faced over the past generation, as they tried to diversify the ethnicity of their newsrooms, while at first holding their size steady, then laying off workers. It’s next to impossible to make the numbers work for adding new people from different backgrounds into a work environment that you’re trying to shrink. It’s far easier to diversify a growing industry, where employment opportunities abound.

So, too, will it be difficult for journalism schools to find the empty positions to recruit and hire community-minded entrepreneurial online journalists – who often have plenty of competing career opportunities – while those schools feel funding pressure due to the newspaper industry’s collapse. Journalism schools shouldn’t abandon instruction in print journalism, for jobs and opportunities remain the field. And the history of print journalism needs to remain a part of any journalism or communication school’s curriculum, for the lessons learned (and ignored) by that industry remain instructive to publishers and journalists in any medium.

But with the newspaper industry collapsing faster than any other segment of the American economy, it’s time to quit actively directing students into print. FWIW, I could make the same argument about many professional schools in which colleges and universities recruit and admit far more students that their fields need, including law schools and some departments of business schools. Over-recruitment of students for shrinking fields is an emerging national scandal in higher education. Or, at least, it ought to be.

Students considering professional programs deserve hard facts about job market in those fields, not to discourage them from learning, but to help them be fully informed about their prospects in the future. The primary responsibility for journalists is to tell the truth. So journalism educators should lead the way.

Filed Under: Frontpage Tagged With: ,

The advertising industry Rorschach test

February 24, 2012 by

If you’re working at a print newspaper (or magazine), here’s a link to the scariest chart you’ll see this year. (And here’s the original source.)

If you thought print was dying, well, according to that chart, it’s not even started to get really sick yet. Life is going to get much, much, much worse for the print industry.

The Flurry study cited above showed that while the percentage of all money spent on advertising that went to television and radio ads roughly matched the percentage of time people spent watching TV and listening to radio, the percentage of money spent on print advertising was nearly five times larger than the percentage of time people spent reading print, versus consuming other media.

In short, even with all the recent cuts in print advertising revenue, the ad industry is still way overspending on print versus the amount of time consumers are paying attention to it.

So if advertisers are overspending on print, they must be underspending on some other medium, right? While the Flurry study found significant underspending on Web advertising, the real opportunities were in mobile – where the study found consumers were spending 23 percent of their time but industry was spending just one percent of its ad dollars.

From my reading of the Flurry report, it appears that they attributed time on iOS and Android devices as time spent on mobile. But a lot of the time that I spent on my iPhone I spend looking at the Web, and it’s unclear to me whether the ads I see on my mobile Web browser would be attributed to the Web category or the mobile one. If I’m at all representative of the rest of the population, there’s a blurred line between the Web and mobile for this sort of analysis.

Regardless, the Flurry study suggests that there’s much more growth to come in ad spending on Web and mobile as the ad industry lags changes in consumer behavior. Whether than becomes Web ad spending, Web spending targeted at mobile, or some new, emerging format for mobile advertising, people are spending too much time on these media, relative to what business is spending to reach them, for advertisers not to make the switch and chase them. At some point, the market will balance and more of that print ad market share will flow to online.

Let’s not forget that advertising is just one part of the revenue picture, either. What do I do when I’m not reading Websites on my tablet? I’m reading eBooks. Frequent OJR readers should be well familiar by now with my evangelism for eBooks. I hope that the Flurry study will further encourage you to get into that marketplace, as well. As people spend more time online and with mobile, there are direct sales opportunities there for content publishers, whether that be through eBooks, apps, movies or something else we’ve yet to envision, in addition to ad sales opportunities.

What you see in this chart probably reflects your perspective on the changes disrupting the news industry – as evidence of continuing doom in the print publishing industry, or as a road map to the ongoing gold rush in online media. Just because newspaper executives who drove all the disruptive challengers and potential innovators from their industry can’t figure out how to make money online doesn’t prove in any way that money isn’t there to be made. The Flurry chart should make the opportunities clear.

More layoffs are coming to print newsrooms. Companies that entrust their future to managers who’ve spent their entire careers in print will continue to lose market share, and fail. But there’s plenty of money there for people who can build the expertise to use Web and mobile media to solve problems for advertisers and consumers more effectively than a declining print medium can.

The picture’s clear. Are you willing to look at it?

Filed Under: Frontpage Tagged With:
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