Article Summaries: The apocolypse of the Media

*Note to Bro. Rob: I wrote this as a whole, big long editorial-type thing, but I summarized a lot of articles in it. I don't know if this really fits into the "article summaries" assignment, but it was more useful to me in the writing of it than a normal summary. Does it work for you?*

The landscape of media is shifting. And it’s not just a tremor; these shifts are seismic.

That the news and entertainment worlds are being changed by the internet is surely not taking anyone by surprise. But the changes that are occurring — and maybe more importantly, the speed at which they are being changed — are unprecedented and are, in most cases, bowling the media over.

These seems to be the case particularly in print media. Newspaper circulation in the U.S. has dropped 20 percent in the past two decades, according to adage.com, even with 23 percent growth in population. According to the “State of the News Media: 2009" report, ad sales are dropping at a rate of 45 percent, while online listings sites such as Craigslist suck classified revenues away from newspapers to the tune of $7 billion. Print newspapers across the country are failing, from the Seattle Post-Intelligencer to the Minneapolis Star Tribune. Even Warren Buffett declared that the newspaper business is one he would never invest in.

Magazines are scarcely faring better. Magazine groups are eliminating titles, decreasing publication frequency and shrinking their content to match dropping ad sales — which have fallen 22 percent in 2009 alone, according to Media Industry Newsletter.

A frightening time for print media professionals? You bet your britches.

Most newspapers have made the transition to online and have seen readership soar. But the potential for making money online is continually being called into question. Readers have shown they are unwilling to pay subscription fees for online content — charge a fee and they’ll just find their news elsewhere. So 99 percent of news Web sites are giving away their content for free — but where is their revenue coming from, if not from subscriptions and classifieds? Advertising?

Traditionally, advertising has represented about 80 percent of revenue for newspapers, according to Time magazine. And that’s precisely the problem: nobody has come up with an adequate business model that will make advertising work for online newspapers. Ads on the web just don’t work, or at least not effectively enough to generate a serious cash flow. Click-through rates are low, screen space is small, reader patience for traditional disruptive marketing methods is essentially nil. For newspapers, this represents a huge problem: advertisers are not willing to pay much for online ad space. In fact, a report by CNN shows that few newspapers are generating even 10 percent of their revenue on the Internet. So readership of online newspapers may be sky-high, but it’s not paying for the news that’s being provided. Rupert Murdoch, chief executive of News Corp. even denounced online newspapers as a “malfunctioning” business.

Print media are not the only ones who are suffering, nor are they the only ones looking to the Web to save them. Bernstein Research predicts that there will be a 20 to 30 percent drop in 2009 TV station ad revenue. Network audiences are dropping: 2.9 percent for CBS, 9.7 percent for ABC, 17.5 percent for Fox and 14.3 percent for NBC in the last reporting period, according to Nielson Media Research.

Fox and NBC have jumped online with the creation of Hulu, which streams TV shows and movies online for free, with about one 30-second ad spot per 22 minutes of viewing. Hulu is far from the only Internet TV provider: there are a total of 238, according to Mitch Berman, CEO of on-demand video service ZillionTV.

In the past year, researchers at comScore have tracked online video viewing in the U.S. and found that it is up 66 percent. Americans watched 10 billion videos online in the month of February alone.

At the same time, cable companies are providing on-demand television to customers, packaged with telephone and Internet services. And devices like AppleTV and Boxee allow users to download content from the Internet to watch directly on their television screens, through a technology known as Internet Protocol TV, or IPTV.
The problem with all this Internet content comes up in the bottom line: how will media organizations produce enough revenue to continue providing quality content?

So far, online newspapers haven’t shown that they can do it with advertising. Networks haven’t shown that they can increase revenue by moving online. Cable companies are having their own technology used against them, as households are increasingly using broadband to bypass cable altogether.

On top of revenue challenges, traditional media sources, even in their online forms are being challenged by the nature of the Web. News and entertainment are no longer the realm of the professionals. This is a world where a 13-year-old with a singing voice and a webcam can become an Internet sensation almost overnight, where a video of fat man dancing in a leotard can go viral and get millions of hits in a matter of weeks.

Not only are people getting entertainment from other, nonprofessional sources more and more often, they are getting their news that way too. Blogs are skyrocketing in popularity, as bloggers focus on stories and analysis for niche audiences. The very practice of journalism is changing, as readers seek out more and more news sources that talk about the news on their level, whatever that may be.

The point is, readers are now finding content that very specifically addresses their needs, something huge media outlets have always been unable to do because of sheer space limitations. But with the Internet allowing an unlimited amount of space, and with people beginning to expect their media tailored to them, what will be the future of the media?

First, we’ll deal with print media: does the Web represent the end of the newspaper as we know it? Not necessarily. The news is a $78 billion industry, with $7 billion of that invested just in the news product, according to President of the American Press Institute, Andrew Davis. Said Davis, “It’s my firm belief that everything else out there — network TV, local TV, the blogosphere, Rush Limbaugh, Sean Hannity, Jon Steward — they are all derivative of those daily newspaper reporters and editors. They start their day reading newspapers. The challenge in a free and democratic republic is to have an informed citizenry. Without that $7 billion investment, what will support that informed citizenry?”

Davis asks an important question. Without those original sources, even Google will have nothing to pull its news from. However, the market may be looking at few news corporations, since now, as Bob Mong, editor of the Dallas Morning News puts it, “Everybody’s an editor now, a distiller of information.”

John Kimball, Chief Marketing Officer for the Newspaper Association of America, suggests that the distribution of newspapers is what will change. He said, “There will be advances in newspaper delivery: not just Web sites, but a printed product on a notebook of some kind that you could access electronically. I assure you that [newspapers] will still be around. It’s all about the audience, and that’s what newspapers are selling.”

As for TV, Mitch Berman suggests that the right mix of strategies, though elusive, will prove to be the television solution. “I believe the company that understands the balance between consumers, advertisers, content providers and ISPs will win, if they create the right balance and business model.”

The future of the journalism profession, from my point of view, is in niching. In his book The Long Tail, Chris Anderson discusses a phenomena of economics. Traditionally, economics has dictated that supply should be determined by demand: whatever the audiences want is what the producers will give them. This is the idea behind “hits”: finding those books, CDs, DVDs, radio songs, etc. that will sell the most and cover the cost of keeping them in a bookstore, or a record store, or on the radio. This means that there are millions of songs played, movies produced, and books written that will never see representation in national bookstores or record stores, meaning they will largely go without audiences.

But with the Internet came an interesting departure from this idea: when production and storage costs are close to zero, what happens to these “nonhits”?

Data from distributors like iTunes, Napster and Netflix shows that while the “hits” are still accounting for high numbers of sales, the “nonhits” are representing a surprising share of downloads or orders. At Rhapsody, 45 percent of total downloads are of songs not even available in the largest offline retail store. For Netflix and Amazon, those numbers are 25 percent and 30 percent, respectively.

What is so surprising about this trend is that demand is now following supply. Every song that Rhapsody has in its online database (an inventory of over 4 million) is finding some kind of audience, even if it is only a few people a month, somewhere in the world. Even the 100,000th ranked track is being downloaded an average of 250 times a month.

So what does this mean for the media world?

It is sort of the principle of “If you build it, they will come,” only this time, we’re referring to Web content. It’s an uncomfortable prospect for huge media corporations, because it means that mass markets are going to be increasingly hard to find. Audiences don’t want to be “mass”; they want content that is tailored to them and they will find that in niching.

For journalists who love journalism — uncovering stories, investigating, researching, writing, reporting — the new landscape of media is a wonderful place to be. It is not a hospitable world, to be sure. But media professionals who love what they do, who are willing to do it even if a paycheck is not a definite and who can provide quality, relevant content, even if it’s just to a niche market, will thrive online.

The reason is this: the unlimited capabilities of the Web are such that an amateur with a keyboard, or a video camera, and an internet connection has access to the very same audience that powerhouse news distributors like CNN and the New York Times have. The differences, of course, lie in audience numbers and credibility. Still, niche audiences are turning more and more toward blogs, podcasts and similar nonprofessional news outlets to get niche news and news analysis. I think the future of the media will be less about corporations and conglomerations and much more about niching and specialization.

As for advertising, I think we are going to see that huge ad revenues will be less and less necessary for smaller niche markets. Online advertising has proven to be successful, just not successful enough to keep a huge company on its feet.

Along with click-through advertising, I think it’s going to be increasingly important for companies to produce their own media. In his book The New Rules of Marketing and PR, David Meerman Scott discusses the necessity of companies generating meaningful content for audiences. Marketing is no longer disruptive; the most effective marketing campaigns now come in the form of search engine optimization, which is so successful because it means consumers are actually searching out the product. Consumers don’t have to bombard people with advertising — consumers actually want to find their products! Isn’t that something? It turns the whole world of marketing on its head!

For PR, the goal is no longer to get press releases picked up by major media outlets. The goal now is to provide meaningful content that consumers will actually want to find and to distribute content online through blogs and Web sites.

Advertising of all kinds is all about relational capital, companies building meaningful relationships with consumers.

For TV producers, the key is to be ahead of the technology curve, and that’s tough to do. But according to industry insides, like USA Today’s CyberSpeak editor Andrew Kantor, the future lies in “true on-demand television.” This means that IPTV will become the TV industry standard, where people can download any content they want and view it at any time they want.

I think this service will be revenue-producing if it is provided as a part of a package with music downloads, advertising, broadband subscriptions and the like. One thing is certain: online services cannot be provided free forever and for everyone. Even Eric E. Schmidt, the chief executive of Google, admits that the Internet wouldn’t be much without quality content for his company’s search engine to look through. But with packaging, people might be willing to paying for the services that are important to them, including social networking, movies, music, games, news and TV.