The trend of increasing consolidation in a growing advertising market helped to compensate for declining readership. By the early 1980s, most U.S. cities had just one daily newspaper. Or, in markets with two papers, one was clearly dominant and the other was kept afloat by favorable terms negotiated in joint operating agreements that Congress had created to preserve local journalistic competition. Radio and television newsrooms enjoyed similar access to a lucrative market. The advertising business in broadcast was so strong that even television and radio stations with small market shares were profitable; those with a strong command of the audience were cash machines.
The monopoly or oligopoly that most metropolitan news organizations enjoyed by the last quarter of the twentieth century meant they could charge high rates to advertisers, even if their audiences had shrunk. If a local business needed to reach a community to promote a sale or announce a new store, the newspaper and TV station were usually the best way to do it. Even if the station or newspaper could deliver only 30 percent of the local market, down from 50 percent a decade earlier, that was still a greater share than any other single medium could provide.
That changed after 2001. The recession that followed the September 11 attacks forced many companies to cut spending, reducing media companies’ advertising stream. More importantly, the digital transformation accelerated, and more users began to get their news, for free, on personal computers. The link between a consumer’s getting the news and a provider’s expensive investment in publishing, broadcast, and delivery was broken; this brought a flood of new competitors. Craigslist helped devastate classified ads, newspapers’ most lucrative source of revenue, and in 2008, the deep recession fueled by the financial crisis undermined real estate and employment advertising.
As we get further into the digital age, we can more plainly see how the transformation has affected news organizations and the citizens who depend on them. Consumers certainly have benefited—they have more choices, speedier delivery of news, and more platforms. But as legacy companies shrink, these advantages have often been accompanied by a loss of original news coverage. New entrants have achieved impressive editorial results, but not many of them have achieved financial stability without some philanthropic or other non-market support.
The move to digital delivery has transformed not just the business of news, but also the way news is reported, aggregated, distributed, and shared. Each of those changes has an underlying economic rationale, and the media industry has sometimes been slow to recognize the changes or has been paralyzed by their impact.
Below, we list some of the most consequential changes brought on by the digital era and offer thoughts on how they will affect the way journalism is supported in the years to come.
I. A Different Business
• Digital requires a new way of thinking about your audience, one that now feasts on an abundance of information. In the words of Syracuse University professor Vin Crosbie, “Within the span of a single human generation, people’s access to information has shifted from relative scarcity to surplus.” As Crosbie notes, it isn’t enough simply to transfer content from a legacy platform to a new one. Digital journalism requires an entirely different mindset, one that recognizes the plethora of new options available to consumers. Tom Woerner, a senior vice president at freelance-generated site Examiner.com, notes that “the old distribution model allowed for only so much content. There are only so many pages you can print, only so many minutes you can sell in a broadcast. Now the limits are gone, for both good and bad.”
Impact: Readers have access to far more information than they used to, almost always for free. But for publishers, the competition is nearly infinite, meaning much of the news has become a commodity, with pricing to match.
• Digital is where the users are heading. In the most recent study by the Pew Research Center for the People & the Press, 65 percent of people ages eighteen to twenty-nine get their news from the Internet—outpacing television for the first time and far exceeding the 21 percent in that age group who rely primarily on newspapers. Among people ages fifty to sixty-four, the Internet (34 percent) and newspapers (38 percent) are almost tied. The web’s growing popularity means the “network effect” can kick in. That is, as more people use news sites, those sites become more valuable to their users, especially as readers and viewers comment on—and contribute to—stories. Meanwhile, more usage is gravitating from computer screens to smartphones, tablets and other mobile devices. According to a January 2011 Pew study, 47 percent of American adults say they get at least some local news and information on their cellphone or tablet computer.