Newspaper industry shrinks 43% since 2000 due to digital invasion

MUMBAI: Newspapers need to develop revenue models for the digital era as they face massive erosion in ad revenues due to migration of advertisers to new media as they target youth audiences. However, they can learn from an encouraging trend: traditional news brands are finding outlets in mobile technology.

A mounting body of evidence finds that the spread of mobile technology is adding to news consumption, strengthening the appeal of traditional news brands and even boosting reading of long-form journalism.

But the evidence also shows that technology companies are strengthening their grip on who profits, according to the 2012 State of the News Media report by Pew Research Center‘s Project for Excellence in Journalism.

The study finds that rather than replacing media consumption on digital devices, people who go mobile are getting news on all their devices. They also appear to be getting it more often, and reading for longer periods of time.

For example, about a third (34 per cent) of desktop/laptop news consumers now also get news on a smartphone. About a quarter (27 per cent) of smartphone news consumers also get news on a tablet.

These digital news consumers are also a large percentage of the smart phone/tablet population and most of those individuals (78%) still get news on the desktop or laptop as well.

A PEJ survey of more than 3,000 adults also finds that the reputation or brand of a news organisation, a very traditional idea, is the most important factor in determining where consumers go for news, and that is even truer on mobile devices than on laptops or desktops.

Despite the explosion in social media use through the likes of Facebook and Twitter, recommendations from friends are not a major factor yet in steering news consumption, the report says.

The report also notes that there are already signs of closer financial ties between technology giants and news. A case in point is YouTube’s plans to become a producer of original television content by funding Reuters to produce original news shows.

Yahoo recently signed a content partnership with ABC News for the network to be its near sole provider of news video. AOL, after seeing less than stellar success with its attempts to produce its own original content.

With the launch of its Social Reader, Facebook has created partnerships with The Washington Post, The Wall Street Journal, The Guardian and others. In March 2012 Facebook co-founder Chris Hughes purchased the 98-year-old New Republic magazine.

In 2011, traditional news operations also took new steps to monetise the web in their own right. The Associated Press launched a partnership with more than two dozen news companies to license news content and collect royalties from aggregators.

About a tenth of surviving U.S. dailies have launched some sort of digital subscription plan or pay wall. However, the research finds that these efforts are still limited and that few news companies have made much progress in some key new digital areas.

The problems of newspapers also became more acute in 2011 as losses in print advertising dollars outpaced gains in digital revenue by a factor of roughly 10 to 1, a ratio even worse than in 2010. When circulation and advertising revenue are combined, the newspaper industry has shrunk 43 per cent since 2000.

In sum, the news industry is not much closer to a new revenue model than a year earlier and has lost more ground to rivals in the technology industry. But growing evidence also suggests that news is becoming a more important and pervasive part of people’s lives. That, in the end, could prove a saving factor for the future of journalism, the study concluded.

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