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News media loses its audience in more ways than one

March 25, 2011

It is no secret that the digital revolution has dismantled the business model newspapers have used for more than a century to pay for the journalism they produce.

What is less known, however, is that newspapers are not only experiencing sharp declines in print circulation, they may soon be in the dark about just who their audience is.

According to a new report released last week, digital device makers like Apple and software developers like Google — which news organizations are increasingly reliant on to connect them to readers and viewers — are demanding more control over the audience data media companies have traditionally used to sell advertising.

What this means, the report’s authors say, is that journalism no longer controls “its own future.” Unless a newspaper or any media company knows who is reading or viewing its content, it cannot in the long run remain an independent purveyor of information because it will have less control over its revenue stream.

The report, the eighth annual State of the Media released by the Pew Research Center’s Project for Excellence in Journalism, put it this way:

In the digital space, the organizations that produce the news increasingly rely on independent networks to sell their ads. They depend on aggregators (such as Google) and social networks (such as Facebook) to bring them a substantial portion of their audience. And now, as news consumption becomes more mobile, news companies must follow the rules of device makers (such as Apple) and software developers (Google again) to deliver their content. Each new platform often requires a new software program. And the new players take a share of the revenue and in many cases also control the audience data.

That data may be the most important commodity of all. In a media world where consumers decide what news they want to get and how they want to get it, the future will belong to those who understand the public’s changing behavior and can target content and advertising to snugly fit the interests of each user. That knowledge — and the expertise in gathering it — increasingly resides with technology companies outside journalism.

This is important for several reasons.

Because the bulk of a newspaper’s revenue comes from advertising, the economic transaction a publisher cares most about is NOT the one that occurs when the reader hands over 75 cents to purchase a copy of the Washington Post or The New York Times.

No, the transaction that matters the most to publishers is the one that occurs when the newspaper sells its audience (you and me) to the advertiser.

To do this effectively, two factors must come into play. First, advertisers need to know how many people are reading the newspaper. A publication with a daily circulation of 600,000 can obviously charge a higher ad rate than one that sells 50,000.

The second factor has always been who is buying the newspaper. In other words, advertisers want to make sure that they are reaching an audience with the interest and financial means to purchase their products. (Incidentally, the same model has been used by all traditional media, not just newspapers.)

As this demographic information slips away from news organizations, they become even more dependent on outside forces for the steady revenue stream they need to produce the journalism we require.

This does not bode well for the future. 

After all, the news has suffered enough in the hands of General Electric, Disney, Gannett and other giant corporations that care more about the bottom line than the free flow of ideas. Just imagine what will happen when yet another layer of profit seekers gets between consumers and the news.

From → Analysis

One Comment
  1. Lawrence permalink

    So we can perhaps expect one of two outcomes:

    1. News publishers create and employ their own in-house research firms, or create business partnerships with exisiting firms, in ordert o perfomr these functions regularly, reliably, at reduced cost, and as a means of protecting — as you very ably point oput — their “futures.”

    2. Wealthy Republican-owned corporations buy controlling interests in companies like Google, Facebook or similar, jack up the price of this information for liberal or moderate news gtroupos, cut the price for right-wing news organizations like Fox, thereby ensuring the death of objective and accurate media while furthering the vitality of slanted news coverage.

    I think we as news consumers can help postpone the second option in two ways:

    1. buy as many print subscriptions as possible to your favories newspapers.

    2. refuse to fill oput the personal information forms when engaging in online registration. If it results in you not getting Googe news alerts or not commenting via your Facebook account on some storyu or another, so be it.

    Oh, and always vote Democrat. Because Republcians hate all of humanity.

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