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The Business Of the News Business

It’s Changing RightBefore Your Eyes

James K. Gentry, Ph.D.ProfessorSchool of JournalismUniversity of Kansasjgentry@ku.edu

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A Presentation For KU Communicators

Original presentation developed

for SPJ national convention

and regional meetings

Developed by:

James K. Gentry

Lisa Loewen

Oct. 24, 2006

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Impetus for Change Internet is redistributing power from

news producers to consumers Old model: Big media companies

delivered a “lecture” New model: New technology lets

anyone become a “journalist” or “communicator” at little cost

Fragmenting audiences

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Impetus for Change Traditional differences between local

and long-distance phone services, cable TV, satellite TV, radio and television are being wiped away.

Present economic models in question Audiences want “experiences” Rate of change is escalating

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Business Reality In 2005, traditional TV, newspaper,

radio, magazine and cable revenue rose 4.2% over 2004

In 2005, Internet revenue was around $10 billion, up 13% to 23% over 2004

Advertisers shifting more ad dollars to the web and at a faster rate

Nielsen Monitor-Plus, TNS Media Intelligence

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Media Trends More outlets covering fewer stories Big-city metro papers threatened Battle of idealists and accountants is over Technological innovation Challengers to old media, the aggregators,

are also playing with limited time Old media challenge Internet providers and

aggregators to compensate them for content The State of the News Media Annual Report

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Newspapers: The Details Newspaper revenue rose 1%-2% in ’05 Online revenues rose 30% + in ‘05;

exceeded $3 billion in 3rd quarter ‘05 Circulation declined Advertising revenue up, linage down Stock prices fell by an average of 20%

The State of the News Media Annual Report

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Daily Newspaper Reading

18-24 years 25-34 years 35-44 years 45-54 years 55-64 years 65+ years

1967 200371% 40%73% 41%

81% 50%79% 59%78% 64%72% 70%

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Circulation and Population In 1980, daily newspaper circulation

was 62.2 million. In 1980, U.S. population was 237 million

In 2005, daily newspaper circulation was 54.6 In 2005, U.S. population was 296 million

Newspaper Association of America

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Newspapers Losing Jobs Business has lost 3,500 - 3,800

newsroom professionals since high of 2000 (not counting 2006 losses)

Estimated loss of 1,250-1,500 in ’05 Estimated loss of 500 in ’04

The State of the News Media Annual Report

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Broadcast: The Details Network morning news revenues up

15% in 2004; projected up 6% in ’05 Network evening news projected a 10%

increase for ’05; in ’04, only ABC had revenue growth.

Biggest change in ’05 was the shift from showing a profit to breaking even at many stations.

The State of the News Media Annual Report

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NBC Universal Reality Check NBCU to reduce spending on traditional TV

by up to $750 million as viewers and advertisers move to new media

Planning layoffs across news departments, including CNBC, MSNBC

Replacing dramas, comedies with low-cost programming in 7 p.m. time slot

Creating regional “hub” in L.A. to serve NBC, MSNBC, CNBC and three area stations

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Strategies Clustering Outsourcing: Sweetheart, get me India Consolidation Brand extension “Convergence” Develop new revenue streams

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Clustering Buy properties in the same region to

gain operating efficiencies MediaNews: Has 33 California papers.

Adds Contra Costa and San Jose McClatchy: Had 1 N. Carolina paper, 3

S. Carolina papers. Adds 1 N. Carolina paper, 2 S. Carolina papers from KR

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Outsourcing Reuters: 1,000 journalists in India in ‘05 Has 15,000 employees in 91 countries Mid-late 2006, Reuters hoped to have

half of its staff located in India Business 2.0 outsourced entire section

of magazine to India in 2004 “Creeping outsourcing”

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Consolidation Rupert Murdoch and News Corp.

Television Satellite Newspaper Technology, multimedia: MySpace ‘05

Disney, Viacom, GE McClatchy & Knight Ridder, MediaNews

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Brand Extension ESPN ESPN2 ESPNews ESPNClassic ESPN.com ESPNRadio ESPNU ESPNZone ESPN the Magazine ESPYs

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“Convergence” Tampa Lawrence Tribune Company Naples, Bonita

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New Revenue Streams Build website for other companies

Lawrence Journal-World Find sponsors for specific sites

MySpace Package sales with other media Charge for niche advertising

Google

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New Revenue Streams News Corp has developed a national

classified database Consumers can customize ads in

Newspaper Website Cell phones Podcasts Or any combination of the above

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What’s Enough Profit? Knight Ridder and Gannett 16% McClatchy 14% Disney 8% Wal-Mart 4% Exxon Mobil 10% Anheuser Busch 12% Yahoo 38%

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KR Cost Cutting Eliminate duplication of key national

beats and art criticism Cut home delivery discounts and NIE Replace defined benefit plans with

defined contribution plans Consolidate national and retail

advertising accounts

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More Cost Cutting Regional news center

Consolidate all copy editing, wire editing, page design and layout into three regional centers serving 31 K-R daily papers using common front-end technology

Centrally manage technology, finance Centralize classified calls

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Blogs Instant interactivity, fastest growing segment

of the web. A new blog is created almost every second

Perhaps 30 million blogs Search engines track information found only

in blogs Technorati Ice Rocket Google Blog Search

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Blog Searching Search engines that track information

found only in blogs. Technorati

Tracks over 31.2 million blogs Returns more total results

Ice Rocket Search by keyword and author

Google Blog Search The fastest search engine

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Best Blogging Newspapers Houston Chronicle Washington Post USA Today St. Petersburg Times Atlanta-Journal Constitution San Antonio Express-News New Orleans Times-Picayune The Oklahoman

NYU School of Journalism

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What Makes a Good Blog? Ease-of-use Clear navigation Currency Quality of writing, thinking and linking Voice Comments and reader participation Range and originality Explain what blogging is on the blogs page Show commitment

NYU School of Journalism

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iPod Explosion iPod sales increased by 909% from 2nd Q ‘03

to 2nd Q ‘04 807,000 iPods sold in 2nd Q ‘04 100 iPods sold per minute in 4th Q ‘05 31 million iPod units in use in 2005 43 million iPods units predicted in 2006 Now video What I want, when I want, where I want

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News Media Podcasting NPR

More than 6 million downloads monthly Sponsored by Acura, HBO, Intel and

Vanguard New York Times Naples Radio stations purchase newspaper

podcasts for their “news” shows

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News Drives Web Traffic When a major news event occurs,

number of people visiting sites soars BBC News accounted for 27% of news

impressions on day of London bombings Websites had a 30% increase in activity

on the day of the London bombing More than 60% of users go online to get

news and information

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Change Leaders New Orleans Times-Picayune

Hurricane Katrina www.nola.com Nola changes culture of Times-Picayune

Greensboro News & Record Virtual town square where every reader is a reporter New value: collaboration with citizens

Bakersfield Free classified Website called Bakotopia Northwest Voice, a free paper Mas, weekly targeting English-speaking Hispanics

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Citizen Journalists Ordinary members of the public turn into

photographers and reporters People getting used to creating pictures

and videos on their phones, and increasingly think of sharing them

People want to share their stories

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Techniques They Use Camera phones Personal dispatches Blogs Podcasts Wikis Instant messaging, chat, etc. RSS (really simple syndication)

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Citizen Involvement: Opportunity or Threat? “Best opportunity in decades to do even

better journalism” by enthusiastically embracing connectivity – Dan Gillmor

Traditionalists concerned with accuracy and credibility: hoaxes, fakery and downright errors or deceit.

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Citizen Journalism Norfolk

HamptonRoads.tv Video-only Website

Wisconsin State Journal Readers pick one story to appear on front page Inciteful: editor’s blog that explains news decisions

Nashville Local ABC affiliate WKRN

Entire staff can shoot stories More naturalistic programming

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Citizen Journalism: Al Gore Current TV: Do it yourself TV

Al Gore’s start-up Goes beyond news and into lifestyle Uses website to gather feedback on what

should air Pays for videos it chooses to run

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Forums, Forums, Forums News Sports Survivor stories Mayoral issues Pet rescue

“This forum is provided for users to share news and information about animal and pet issues that may help other animal and pet lovers in the Metro New Orleans area.”

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Readership Institute www.readership.org/ Users have “experiences” with your media

offering, no matter what you do Experiences are linked to audience’s

behavior using your media Experiences can be changed, enhanced Improve the “experience”

Break formula, take risks, be notably innovative

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What is “Experience”? How your offering makes consumer feel How it interacts with consumer needs,

interests and desires Thoughts and feelings consumers have with

your publication or broadcast or site and with its relevance to their lives

Breakthrough: When experiences correlate by target group to

motivating or inhibiting media usage

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Learning from Star-Tribune Tested Readership Institute findings Over-arching readership goals and strategy

Everyone measured against them From RI “experiences” research:

Something to talk about Looks out for my civic and personal interests Surprise and humor Ad usefulness

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OriginalOriginalPaperPaper

• Feb. 22Feb. 22

• Typical Typical news daynews day

• Front and Front and inside inside pagepage

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ImprovedImprovedPaperPaper• Same day, same Same day, same

news choicesnews choices

• Trying for Trying for experiencesexperiences

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ExperiencExperienceePaperPaper•Same day, Same day, but news but news chosen from chosen from any part of any part of paper or paper or news budgetnews budget

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Experience PaperStrongly Preferred

0

10

20

30

40

50

60

70

80

90

100

Overallpreference

Best storyselection

Get you to readmore

Looks out foryour interests

Easier to getinformation

Origina l I m prov e d Ex pe r ie nce

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Side by side comparisonSide by side comparison

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What is Rob Curley Up To? Just who is Rob Curley?

Vice President, product development, Washingtonpost.Newsweek Interactive

His team developed the national or international newspaper Web site of the year (named by either the Newspaper Association of America or Editor & Publisher magazine) every year 1998-2004.

In 2001, NAA named him the newspaper Internet Pioneer of the Year, the youngest person to ever win the award.

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Rob’s Advice: October ‘06 Own local breaking news Hyper-local content Database-driven coverage Multimedia overkill, video mania Evergreen content Embrace platform-independent delivery Dialog, not monolog

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Naples & Bonita News Relentlessly interactive Lots of community contributions Reporter and reader photos, videos Reporter and reader blogs Lots of audio Reader forums

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And More Newsroom Podcast Email news, sports, weather to your phone Access police scanners Listen to audio traffic from Naples Municipal

Airport Email newsletters Stories downloaded to PSP Started videocast from newsroom that runs

online and on local cable

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Hyper-local in Marco Sun Mega-calendar including:

Rotary meetings and Bible studies Church guide Restaurant guide Beach guide Schools guide Marco Island history Fishing blogs

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Challengers Craigslist OhmyNews Skype and eBay

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Others Backfence.com, in suburban Virginia.

Citizens are the only contributors and the “newspaper” is an unedited Web site.

Blufftontoday.com, Bluffton, S.C. Made up largely of reader contributions. Also free tabloid.

Loudon Forward, Loudon County, VA

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And More Generation @ Vlogging Videocasts Video on handhelds On-demand media

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Social Networks Participants act as producers, distributors and

marketers of content through reviews, voting and blogs

Today’s audience wants more interaction Today’s audience wants the ability to create

and distribute its own content Today’s audience wants a personalized

media experience Yes, experience

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Social Networks MySpace.com (Murdoch) Facebook.com (Yahoo?) YouTube.com (Google) Buzz-Oven.com Vidilife.com

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MySpace 79.6 million unique visitors in August More than 40 million registered users Received 21% of visits to U.S. online video

sites in September Users may post messages, update blogs,

send photos via mobile phones Google paid $900 million to provide search

services and advertising on it News Corp. purchased it for $580 million

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Facebook 15.5 million unique visitors in August Connects college students with similar

interests and activities Includes 1500 college campuses Launched a high-school version Ads may be targeted to students at a specific

college Talking with Yahoo about $1 billion purchase

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YouTube Purchased by Google for $1.65 billion Received 46% of visits to U.S. online video

sites in September Users watch short videos more than 70

million times a day Users post 60 million videos daily, for free

Mainstream shows from current season, clips from TV’s earliest days, and homemade movies from around the world

Can submit video from mobile phones

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Buzz-Oven Social Network for teens in Dallas Started as a way to market local

concerts Evolved into a full social network Sponsored by Coca Cola Operates independently and as a

subsite on MySpace.com Links to the Dallas Observer

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Vidilife A Social Network that uses online

videos to attract net surfers New technology allows anyone with a

computer to put video online Launched in September, attracted

220,000 unique users in October

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Google: 800-Pound Gorilla Google will be first search company to

gain one-quarter of the total money spent on online advertising ($4 billion) in 2006

YouTube purchase means more ad dollars

GoogleMail growing in popularity Leaving Yahoo in its dust

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Gaming Industry More than 300 million people play

worldwide Handheld gaming hardware sales grew

96% from 2003-04 $34 billion in revenues in ‘05

Compared with $21.4 billion movie box office receipts

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Gaming and News? PSPcasting

RSS and PSP Video 9 software Convert regular PC video files into PSP files

ABC News signed as PSP’s first news provider

News Corp. paid $650 million for game-site operator IGN Entertainment

Viacom to acquire Xfire Inc. for $102 million Adding 300,000 gamers per month

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Professional Electronic Gaming

Global Gaming League

World Cyber Games

Cyberathlete Professional League First tournament held in 1997 TSN will webcast 25 tournaments in 2006 CPL finalists will compete for $500,000

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Gaming and Advertising Microsoft to acquire Massive Inc., a

start-up company that places ads in videogames Clients include Coca-Cola Co., and Honda Video games could become new medium

for advertising Companies pay to insert brands on

billboards, posters, soda cans and other on-screen elements within video games.

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Key Factors: New World What I want; when I want; where I want Today’s economic models in question Big media will remain but portfolios will be

different Citizen produced/open-source content Video conferencing ubiquitous Help people make the most of their time:

TIVO, PDAs, cell phones

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By 2010

e-ink Consumer control: Podcasting, RSS, eBay,

consumer created media Digital across platforms, almost ubiquitous Talk free with paid services Video conferencing changes communications Media moving to other news & information

channels: Super search, hyper-local, B2B Other?

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Challenges for Media Offer decent pay Opportunity to be creative Appreciate staff ideas Ramp up the pace of change Engage young audience: as workers

and media consumers!!!

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And in the Workplace What young workers want

Ability to make a difference Meaningful work Opportunity to learn new skills Mentoring Flexibility Decent paycheck

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What’s It Mean? To “win,” traditional media can’t nibble at

innovation Recent changes and those to come are

potentially lethal for legacy media Some will embrace new ideas and use media to

their advantage Many will talk change but stay unchanged Can the business change?

To be a strategic winner, you can’t stand still Readership Institute

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Sources www.stateofthemedia.org www.readership.org www.people-press.org www.pewcenter.org www.mediacenter.org www.poynter.org www.morningstar.com Newspaper Association of America Radio Advertising Bureau Magazine Publishers of America Television Bureau of Advertising Cable Television Advertising Bureau Business Week The Wall Street Journal The New York Times Fortune