Business of Journalism Assignment


a) Name three trends that have significantly changed economic models for news organizations in the digital age. (no more than 500 words total)

“The times, they are a changing,” sang Bob Dylan almost five decades ago. Today, those words ironically ring true not just for “The Times” – as the New York Times is often referred to – but for every news organization, new research by Columbia University’s Tow Center for Digital Journalism suggests.

The changes have largely been triggered by trends brought on by the digital age that have forced traditional news organizations to review financial models they followed for years.

A dramatic shift in users from print and broadcast to online platforms, the collapse of the aggregation model milked by traditional media organizations for years, and ever-increasing digital competition are three trends that stand out.

A recent study by the Pew Center for the People and the Press showed that 65 percent of people in the 18-29 age group use the Internet to access their news, leaving television and newspapers far behind. The Internet is also competing with newspapers for older eyeballs – 34 percent of people between the ages of 50 and 64 access their news online as compared to 38 percent newspaper readers, the Pew study found. An increasing number of users – as many as 47 percent American adults, according to a separate Pew study — are today accessing at least some news on smart phones, tablets and other mobile devices.

This shift in user choice of media platform has thrust new challenges upon news organizations. Print and broadcast organizations need to focus on their digital platforms. But online platforms can’t just transfer traditional revenue models on to the Internet, the Tow Center researchers found. Mc Clatchy Co., the third-largest newspaper organization in the US, witnessed a 17.3 percent increase in unique online viewers in 2010, but only a 2.4 percent increase in digital revenue for the year.

Traditional news organizations successfully used aggregation as a revenue generator for decades. By offering different readers the content they were interested in, on a single broadcast or newspaper platform, these organizations could pitch a massive market to potential advertisers.

In the digital age, however, users can access the specific content they are interested in, at the click of a mouse, without needing to purchase an entire newspaper or watch a news program. Online, advertisers pay for the number of eyeballs a particular page attracts – instead of the aggregated readership or viewership of newspapers and broadcasters.

The low investment and marketing costs involved with starting and running online media platforms has also led to an exponential increase in digital content providers, ending decades of monopoly or oligopoly enjoyed by traditional broadcast and newspaper groups. The increased competition lowers advertising rates. Advertisers also no longer depend solely on traditional news organizations to get their message across to consumers. Online platforms like Google and Facebook, with large user bases, have taken away some of the advertising budget of firms that newspapers and broadcasters traditionally benefited from. Craiglist, a centralized network of online communities, has irreparably damaged classified advertisements as the biggest source of revenue for newspapers.


b) List up to three advantages that a new, digitally based news company has over a traditional print or broadcast organization. (no more than 250 words)

Lower investment and marketing costs, freedom from the constraints of space and time for content delivery, and the relative ease of creating focused audiences and tracking viewership are key advantages new, digital organizations have over traditional news firms.

The capital expenditures required to launch broadcast and print companies do not shackle new digital media companies, which don’t need tall antennae over hills or large printing presses. Digital news platforms can effectively use aggregation – including packaging content drawn from multiple other news sources — to increase their revenue, as the Huffington Post or the Drudge Report have shown, a new report by Columbia University’s Tow Centre for Digital Journalism argues. Digital media firms need a smaller staff than print or broadcast companies to put out the same volume of content. Online platforms also save on marketing costs since their content is publicized for free by users who share links with others through email or networking sites like Twitter or Facebook.

A newspaper can offer only a certain number of pages, on which advertisements and news content must be shared. Television programs similarly have only limited time within which they must squeeze in both news and advertisements. Digital platforms face no such restrictions.

Using sophisticated usage-tracking services like Omniture or Chartbeat, digital firms can track usage patterns much more accurately than traditional platforms, and in real time. This allows online media firms to create focused audiences by providing targeted content, far more easily than traditional media organizations can.


c) List up to three advantages that a traditional print or broadcast organization has over a new, digitally based news company. (no more than 250 words)

Despite the assault on their bastions by new, digital news firms, traditional print or broadcast organizations retain some key advantages over their online rivals.

The relatively greater time and attention readers and viewers devote to print and broadcast news sources, the challenge of matching advertising supply and demand online, and the failure of most digital platforms to provide users meaningful advertisements are among these advantages.

People typically spend over 30 minutes reading their daily newspaper, while they spend less than 4 minutes on a particular internet page, two independent studies have indicated.

Digital media firms face a tougher challenge than print or broadcasting counterparts, in trying to predict the demand for advertising they are likely to attract, since the traffic they draw varies dramatically based on the content they put out. This difficulty often forces digital platforms to undersell advertisement space. The Guardian witnessed a spike in online viewership during the days it was breaking stories on the phone-hacking controversy at the News of the World. But it had already sold its advertisement space for rates lower than what it could have commanded given the traffic its website attracted. This mismatch in demand and supply makes online platforms depend on cheap, “remnant” advertisements when the demand outstrips supply.

Barring non-news online groups like Google or Facebook, few digital platforms have succeeded in tailoring advertising to what the user is interested in – leaving them at a disadvantage compared to traditional print and broadcasting organizations.



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