Revenue strategies and the rise of digital and mobile are heavy on the minds of media players, investors and consumers, perhaps more than ever before. That’s according to this year’s State of the News Media report from the Pew Research Center’s Journalism Project.
The report — in its 11th year — analyzes where the media business (from production and presentation to consumption and monetization) has been in the last year and where it may go from here. 2013 and the early part of 2014 have seen some interesting developments in the journalism world, like the rise of video and changes in digital ad spending. Here are some of the main takeaways from Pew’s research.
MEDIA COMPANIES SEEKING OTHER REVENUE TACTICS
The American news industry is now worth about $63 billion to $65 billion, Pew reports. (To put that in perspective, the research organization added that the worldwide videogame industry makes about $93 billion annually and Google earned $58 billion in 2013.) The report found that advertising, despite its shortcomings, still makes up nearly 70 percent of the industry. Of advertising totals, daily print and digital newspaper ads comprise 58 percent of the advertising share, with one-third coming from TV.
Next comes audience funding, by way of subscriptions, various iterations of paywalls, cable fees, individual gifts and crowdsourcing, all of which make up 24 percent of all financial support for news. Pew notes that using readers/viewers as a funding source is a growing piece of the pie, but that doesn’t mean more people are contributing.
“Rather, the data suggest that, in aggregate, more revenue is being squeezed out of a shrinking — or at least flat — base of paying consumers,” Pew reports.
From 2012 to 2013, at least 500 daily outlets launched digital subscription solutions, but Pew reports that “these new digital dollars fall short of making up for the loss in print subscription revenues, leading many newspapers to also increase their subscription and single-copy prices.”
We’ve heard a lot about outfits like the Texas Tribune and the Atlantic trying live event production to generate engagement around their editorial content and bring in cash. But Pew reports that events, combined with marketing services and web consulting, only accounted for 7 percent of overall media revenue last year.
Meanwhile, a few tech billionaires branched out in 2013 to create or sustain news organizations. Pierre Omidyar built up First Look Media to the tune of $250 million, giving a home to Glenn Greenwald and his new Intercept “digital magazine.” While only 1 percent of revenue was drawn from VC or phianthropy last year, we’re seeing wealthy tech honchos such as Amazon’s Jeff Bezos shifting the old paradigm of news company owner.
Meanwhile, display ad spending (banners, video, rich media and sponsorships) ticked up 15.7 percent to make up 42 percent of the $42.3 billion digital ad industry last year. Research firm eMarketer reports that display ads will surpass search advertising numbers by 2015. But Pew notes that even with display ads, digital media companies will still be left competing against tech giants such as Google and Facebook, which have stayed in the top five display advertising companies for the last two years.
Native advertising, though still a point of contention both in and outside of the journalism world, proved successful for outlets such as BuzzFeed and the Atlantic. Digital revenue went from less than 10 percent to 60 percent in 2013 at the Atlantic’s properties including Quartz and the Atlantic Cities, which Pew said was “in part” because of sponsored content.
The real winner in terms of digital ad growth was mobile — doubling from $4.4 billion to $9.6 billion just between 2012 and 2013.
“A next part of the equation to explore is how revenues are being spent today as technology needs within an organization butt up against the costs of journalists on staff,” Pew reports.
DIGITAL NATIVE OUTFITS EXPAND
In a world where social sharing is key and clicks equal dollars, for-profit publishers found themselves with lots of content to produce and filled the need with a boost in editorial staff in 2013. Pew recorded big growth at BuzzFeed (170 new editorial gigs) and Gawker (total brought to 132, doubling its staff figures from two years prior). And then there were big hires, like that of the New York Times’ Jim Roberts, who jumped to Mashable’s news desk. Business Insider and Vice Media added several new writing positions, as Vox Media and newbie First Look Media built staffs around personal brands such as Ezra Klein and Glenn Greenwald, respectively.
Pew reports nearly 2,000 full-time editorial positions have become available from just 438 relatively small news outlets (including ProPublica and 73 non-profit entities in the Investigative News Network) that set up shop in the last 10 years, although that doesn’t make up for significant cutbacks in legacy newsrooms. Then, there are the “Big 30″ digital news outlets including HuffPo, Bleacher Report, FiveThirtyEight, TechCrunch, Grantland and more, which account for about 3,000 jobs, according to Pew. One theme to watch? Just because the news is transitioning to all-digital doesn’t mean quality is valued any less. Online publishers are still seeking the best talent, or what NYU journalism professor Jay Rosen calls “the personal franchise model.”
In the print realm, however, newspapers saw drops in staffing, and the Chicago Sun-Times caught worthy backlash for letting go its entire 28-person photojournalism department, before hiring back only four in December. In the last year, there were 500 layoffs at Time Inc. and several hundred at Gannett and Tribune Co.
The State of the News Media Report acknowledges that many of the newest digital news operations sought to fill a void seen in legacy reporting. Hyper-local and investigative new coverage were popular topics pursued by independent news startups in 2013, and some of the editorial leaders looked to hire young people with a vast skill set particularly conducive to the visual web, Pew learned. Digitally native news publishers expanded their footprint globally, with Quartz counting 19 languages among its reporters and Vice Media totaling 35 overseas bureaus, making up for losses in legacy international coverage.
Even with fresh energy and faces filling in roles at digital news ventures, the report’s authors note that we can’t tell whether they can keep up with consumers, who are always a step ahead of publishers.
“New players are boosting reporting power, technological talent and financial resources going into news, creating a level of energy not felt for a long time,” Amy Mitchell, Pew Research Center’s director of journalism research, said in a press release. “The momentum is real, but it remains to be seen whether these new ventures will flourish and extend to the variety of ways in which the public consumes news and information.”
FACEBOOK THE DOMINANT NEWS SOURCE ON SOCIAL
Adding in data from a study released March 13 on social media and the news, Pew reports news has prominence on six main social media platforms, but Facebook is the big winner here. Three in ten adults get at least some news while on Facebook, Pew reports — and that’s of the 64 percent of U.S. adults who use Facebook. One-fifth of adults get news from YouTube, and half of Twitter users discover news on the site. One surprise was Reddit — while only 3 percent of Americans use it, 62 percent find news there. Despite much talk about news organizations using Instagram to break news over the last couple of years, only one-twelfth of users find news on the app.
However, just 22 percent of Facebookers view the social network as a “useful way to get news.” Most of the time, they find news on Facebook while doing other things, and if it catches their eye — as does so much of viral content from places such as Upworthy and BuzzFeed — they will share, and share again. Topical news like entertainment, community news and sports are the most-viewed, with national government and politics making up 55 percent of the news seen on Facebook.
An interesting takeaway from the report is that social remains one of the easiest methods for audience engagement with the news. Half of Facebook users have shared or reposted news stories, photos or video, and 14 percent said they’ve posted photos they personally took of a news event. Twelve percent have posted videos they personally took of a news event, signaling social’s enabling of reader involvement in the news gathering process and reminding publishers to comb social networks for reporting help from their socially active consumers. Pew found that Twitter users are a 50/50 balance of male and female but are generally much younger than typical Facebook, Google Plus and LinkedIn users, and 58 percent of Facebook users are women.
Yes, Facebook shares are very important to digital publishers, but Pew still found that visitors who arrive through Facebook or a search engine “have far lower engagement than those who come to that news website directly.” Even for the “most socially oriented news sites” like BuzzFeed, only the most loyal readers — in terms of time spent and pages clicked per visitor — come directly to the website. Perhaps this finding may shift the focus slightly away from social sharing at large publishers, but there’s no doubt that Facebook is still a hugely valuable asset to digital news producers.
NEWS VIDEO GROWING FOR PUBS AND CONSUMERS
Just about the same number of U.S. adults who find news on Facebook — 36 percent — watch news video. According to Pew, it’s clear that online video matters for journalists and consumers, but it’s not yet clear how much it matters, or how it will become profitable. Young people, aged 18 to 29, though, are the biggest consumers of digital news videos. There are also demographic trends associated with online news video, like that “more highly educated Americans (Bachelor’s or higher) are more likely to watch news video.” Additionally, higher income households watch more digital news online.
With one-third of American adults choosing online video as their medium for consuming news, it certainly can’t be ignored. As mobile and social media use rise, citizen participation in the news is increasing. While the number of all Americans posting news videos to social media is only 7 percent now, this number will likely grow. Journalists and publishers are turning to citizen reporters on YouTube, Instagram and Twitter during breaking news events for photos and information, and in areas of conflict where press access is restricted.
Pew also noted the industry’s response to citizen journalism — in Stringwire, Storyhunter, Storyful, CNN’s iReport and more — that has popped up to accommodate the growing relationship between citizens with smartphones and newsroom reporters. Live-streaming is also being embraced by publishers. Non-profit political outlet Texas Tribune took to Kickstarter last year to raise $60,000 toward live-streaming equipment, which they will use during the 2014 election cycle. For local TV stations, live video streams online or on mobile can be good for engagement but bad for TV advertisers.
And big publishers such as NBC and HuffPost Live are also starting to invest in video. The main setback, according to Pew, is figuring out how to monetize costly video production, especially for legacy publishers still directing dollars to printing. From 2012 to 2013, digital video ad revs grew 44 percent, but that only makes up one-tenth of all digital ad revenue in the U.S., Pew reports. But Facebook, while a help to news media organizations, is also a competitor, claiming the top spot among display video ad publishers in 2013. The final verdict from Pew? Digital news video “brings both promise and challenge.”
Angela Washeck is a freelance writer and editor based in Dallas. She is a proud graduate of Texas A&M University, where she earned a Bachelor of Arts in Communication with a journalism minor. Angela also writes for MediaBistro’s 10,000 Words blog and TexasMonthly.com, and she once interned with TV newsmagazine “Dan Rather Reports.” Her work has been republished on Editor and Publisher, the American Press Institute and more. When Angela is not busy with PBS MediaShift work, you can find her watching “How I Met Your Mother” reruns, watching Aggie football and attending indie/folk concerts in Dallas. Follow her @angelawasheck.