Pew study: Media facing continued ad crisis

WASHINGTON: This year might be the worst yet for media outlets, according to the Pew Research Center's Project for Excellence in Journalism, which expects several newspapers to fail and numerous others to cease seven-day home delivery in 2009.

WASHINGTON: This year might be the worst yet for media outlets, according to the Pew Research Center's Project for Excellence in Journalism, which expects several newspapers to fail and numerous others to cease seven-day home delivery in 2009.

The organization revealed in data released today, March 16, that while the newspapers average an 11% profit margin and collectively take in about $38 billion in revenue, those revenues have dropped 23% in the past two years, while staffing at newspapers has dipped by one-fifth since 2001. The report also revealed that classified advertising at newspapers could be nonexistent within five years.

The State of the News Media Report” also predicted that conventional advertising will not be enough to support online journalism, revealing that the average rate charge for 1,000 views of an online ad decreased by half last year, down to just 26 cents. And the Web provided less than 10% of newspaper ad revenue last year.

Revenue for local TV outlets fell by 7%, an unprecedented amount during an election year. Cable news was the only media bright spot, with audience numbers rising 38% during 2008 and profits jumping 33% last year, mostly due to the presidential election.

Tom Rosenstiel, the project's director, said on a conference call that the recession was adding significantly to the media's financial woes and also stymieing innovation.

“This is an industry in dramatic transition, transitioning from print to the Internet, and the Internet isn't producing very much revenue – it's now very clear that pop-up ads and banner ads may never create the kind of revenue necessary,” he said. “[Newspapers] will need to innovate themselves out of this, and the risk right now is that the recession will swamp any efforts at innovation.”

Consumers are rapidly headed online. In fact, no other medium is growing as quickly, the report found. Nearly four in 10 Americans go online regularly for news, up 19% from two years ago. But those readers are remaining loyal to the online destinations of traditional print brands like The New York Times, which is the fifth most popular news site, according Nielsen Online data included in the Pew study. Tribune papers were sixth, and Gannett seventh. MSNBC, Yahoo News, and CNN, were the top three news sites.

Niche sites like HuffingtonPost and Politico don't register close to the top 10, but their popularity grew rapidly in the election year. Politico's traffic increased fivefold between September 2007 and September 2008, while HuffingtonPost's monthly September traffic grew nearly 500% from the year before, according to ComScore. The sites' post-election viewership dropped off somewhat: HuffingtonPost retained 81% of its viewers, while Politico lost about half of them.

The report also found that industry-wide the news agenda narrowed dramatically last year – focusing mostly on the election and the economy. As far as innovation, there has been a significant uptick in the number of citizen journalism Web sites, as well as those produced by former journalists.

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