Intro

By the Project for Excellence in Journalism

As more eyeballs and ad dollars migrate to the Web, there is anecdotal evidence that both traditional and non-traditional news organizations are finally beginning to invest more heavily in their online news platforms. And certainly their rhetoric is designed to show Wall Street that they understand this is where their future lies.

A closer look, however, suggests it is wise to continue to raise questions. Are the investments being channeled toward improving news content? Is the innovation in journalism or mainly in technology? Do the journalism companies have it in their DNA to make the kind of innovations that will keep them as journalism’s leaders in the new century? And will mature journalism businesses be given the leeway by Wall Street shareholders to make the kinds of investments and gambles that their high-technology rivals — who are stealing their audience and their advertising but do not produce the content — are being capitalized to make?

One issue we addressed in last year’s report was the nature of this investment. Looking at the major players it seems to be taking two forms.

One is investments in personnel — people power, to gather more information, do more original reporting, synthesize material already in the public domain.

The other is investment in technology to improve the gathering, sorting and disseminating of news and information to the consumer.

For many news sites, a combination of the two could be best. Sites from traditional news outlets like the New York Times or CNN.com offer a good deal of original reporting, which requires a significant, continuing investment in news staff. But those sites are also working to offer the reporting in the most usable form, particularly for the Web, and that demands an investment in non-news staff and technology of the sort that new-technology companies are making.

So far — and there are some exceptions— it may be that investments in personnel are not keeping up with expenditures in technological and software capital, which do not necessarily improve the quality of reporting. The challenge may be even harder in years to come, because news organizations that employ those who produce the content for news sites have made major cuts in their editorial staffs over the last few years.

Meanwhile, other sites like Google and Yahoo do either no original reporting whatsoever or have just begun to publish original content in a very limited form. Their service is generally to help the user sort through what is already out there and ultimately find that relevant piece of information.

To get a fuller sense of the major players’ commitment to quality information, let’s look at two major types of online news providers: the traditional news producers and non-traditional news aggregators.

Traditional news producers

Unlike local television and newspapers, which collect industry-wide statistics on staffing levels, there are few data available for how many journalists work in online news. Many sites with original news content mainly carry stories from their sister platforms. Washingtonpost.com, for instance, can post stories directly pulled from the newspaper, thus using the same print reporter for both platforms.

For television outlets, the translation is slightly more involved, at least for now. The stories produced for CNN, for example, are normally put in written form for the Web site. Even here, though, the additional work is minimal and the story is usually posted under the same correspondent’s name.

Clearly, many news organizations still see the online operation as a spin-off of their “primary” platform. That makes some sense, since most of the online ventures could not yet stand alone financially (though that may change). It also suggests that any staff cuts in the main reporting arm greatly affect the online reporting capacity as well.

Many traditional news sites have begun experimenting by offering more citizen-based content. The level of experimentation has varied. The News & Record, the daily newspaper in Greensboro, N.C., was encouraged by its owner, Landmark Communications, to “break free” of the conventional method of newsgathering. The News & Record site showcases a virtual town square complete with blogs on news, sports, religion, food, cooking, and music. The site also offers an opportunity for citizens to submit their own news stories, which are only lightly edited for grammar and spelling.¹

As a way of testing new waters at a more comfortable remove, other traditional news organizations have experimented by partnering with technology-based sites that themselves are doing more experimental reporting. Knight Ridder, for instance, launched SiliconValley.com in early 2001. The site offers a range of interactive tools for readers, including blogs and a number of virtual round tables.

In 2005, one site that took steps to make its content more of a public square yet reinforced its commitment and priority to the classic tenets of journalism was CBSNews.com.

CBS News

For now, it appears CBS News has invested more in its Web operation than most traditional news organizations.

In the summer of 2005, at a time when network television news broadcasts continued to experience shrinking audience ratings, CBSNews.com announced it was going to rethink its role as a traditional television and radio news provider and begin shifting much of its content to the Internet. CBS Digital’s president, Larry Kramer, who founded MarketWatch.com, even audaciously predicted that the move would undermine the existing cable television news model because it would cater to the online news consumer’s growing habit of seeking news during the day, and from a computer.

The move has happened. CBSNews.com’s revamped Web site is built around three core principles that enthusiasts have championed as the promise of the Internet: transparency, interactivity, and multimedia capability.

One major component of the new look at CBS News.com is a Web log hosted by Vaughn Ververs named the “ Public Eye.” Ververs’s blog is intended to illuminate the newsgathering process at CBS News, and the site has offered Webcasts of editorial meetings. NBC and ABC are also offering online sites that pull back the curtain on how the news is made at the major networks.

In an interview with CJR Daily, an online media-criticism arm of the Columbia Journalism Review, Kramer provided an example of what is meant by more transparency:

“The other thing [Ververs] will do is he’ll be proactive in explaining how CBS does its business. And by that I mean he’ll go in, and he might decide one day to videotape the story conference for the evening news — at 10:00 in the morning they get together and talk about what’s likely to be on the evening news tonight — and give people a glimpse of how those decisions are made. And show the editors pitching stories, and saying, ’No we have that, we should put this here, and let’s spend our time on this.’ ”

“Public Eye” is also striving to make the online news experience more interactive by serving as a “liaison” between readers and reporters at CBS. Andrew Heyward, then president of CBS News, even created a new title for Ververs: “nonbudsman.” Ververs was supposed to survey what the online community was saying about CBS News, then deliver that criticism to management and news correspondents, who in turn would offer Ververs their explanations for posting publicly on the “Public Eye” blog.²

Some critics saw CBS’s move as designed more to restore the news organization’s credibility, which was tarnished during the “Memogate” incident of September 2004 — particularly among bloggers — than to innovate newsgathering.

CBS, however, also sought to deliver on the Web’s promise of multimedia capability. Kramer argued that in the new 24-hour digital universe, online users will want their news all the time, and especially at work, where the growth of broadband has created more opportunities for video news consumption. Through a video player named “The EyeBox,” users were supposed to be able to stream over 25,000 new and archived videos. Users were also allowed to build their own newscast, and CBS plans to offer daily and weekly video programming from Bob Schieffer, John Roberts, Hannah Storm, and others. There was also talk of sending crews into the field to shoot video footage of bloggers who have particularly valuable commentary on the organization’s news products.

Investment has not been exclusively limited to technology. In July, Heyward and Larry Kramer of CBS Digital said they planned on expanding editorial staffing at CBS News.com as well as the total resources of CBS News.³

Reactions from the blogosphere to the launch of “Public Eye” were generally positive (source: “Eye on CBS,” American Journalism Review, October/November 2005). But some bloggers criticized the decision to edit readers’ comments and posts — which
violates orthodox blogging protocol. Jay Rosen, a journalism professor at New York University who blogs on the news media industry, said he hoped that the move toward more transparency would ultimately improve the quality of the network news programming, but he remained rather skeptical.⁴

One important question lingers for other news organizations that consider CBS’s strategy a harbinger of things to come. As Kramer told CJR Daily, the Web site was largely funded by existing television revenue, though it hoped to cash in on the lucrative online advertising market. Is this a viable long-term strategy, if the television audience ratings continue to decline and revenue from TV ads dries up? Again, the question of a stable online business model continues to loom for the online news universe.

Non-Traditional News Aggregators

Google News and Yahoo News are currently two of the most popular online news sites, according to data from Nielsen//Net Ratings. While both are often lumped together as the two most successful online only ventures, they have taken different approaches to their news operations. Perhaps the differing strategies reflect how each company sees itself: one a technology company and the other a media company. We decided to examine each company’s approach to newsroom investment.

Google News

Before September 11, Google did not see itself as anything more than the world’s dominant search engine. In the immediate aftermath of the attacks, however, millions of Americans went online for more information but were unable to access traditional news sites like cnn.com and abcnews.com because of the overwhelming surge in traffic.⁵ Many turned to Google as an alternative. While at the time it did not have a “Google News” page, it did offer links to major online news sites such as the Washington Post and BBC. It also linked to cached versions of earlier reports done by major online news organizations — its first attempt at producing an editorial product.⁶ Shortly after seeing the value in those links during the 9/11 news frenzy, Google added a separate “News and Resources” link to its homepage. And by 2002, Google News became part of the online news experience for an increasing number of Americans and others around the globe.⁷

Google News does not use human editors but rather an algorithm that crawls over 4,500 news sources from around the world and then ranks them based on many factors, including how often they appear in other places on the Internet. And although Google News promotes itself as a non-subjective news aggregator, it is still relying on the editorial judgment of other online news organizations to rank the world’s most popular pages.⁸

To succeed as online news aggregator, Google relies on its enormous bandwidth, which of course was a vital asset after 9/11. According to John Battelle, author of “The Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture,” Google’s search engine is powered by over 175,000 computers — more than all that existed on the entire planet in the 1970s.⁹

In its drive to continuously add news sites to its crawl, Google must expand its bandwidth. Expanding and maintaining such enormous bandwidth requires an army of engineers — engineering being the academic background of the company’s two founders — and technology consultants, and the most sophisticated software to keep the engine humming rather than reporters to produce original news. And this lies at the heart of Google’s news investment: software, hardware and engineering personnel to keep driving the search engine that publishes other news’ organizations stories rather than an investment in reporters and editors to produce the news.¹⁰

Yahoo News

Like Google News, Yahoo News largely aggregates material from other news organizations, such as the Associated Press, Reuters and the Los Angeles Times. And while Yahoo News relies on a small number of human editors — rather than a computer algorithm like Google — to publish the news on the site, it has not traditionally published its own unique news content. But that began to change in 2005.

As a whole, Yahoo does not see itself exclusively as a technology company, which Google is often considered. According to some analysts, Yahoo wants to become the first and last stop for the online visitor. As reported in the New York Times in September 2005, Yahoo’s new strategy is to see itself as an online version of Time Warner that mixes both original content and distribution. This strategy, the Times reported, is built around four “pillars”:

• Improving its search engine capabilities.
• Creating a community of bloggers and civic reporters who can post their own musing and photographs.
• Producing its own original content, including news coverage.
• Developing personalization technology that allows users to sift through the seemingly endless number of choices available in the online universe, including video, where Yahoo is trying to compete with Google and Microsoft.¹¹

Many in the industry are watching to see whether Lloyd Braun can get Yahoo to where it wants to be. In November 2004, Yahoo hired Braun to head its Media Group. Braun had previously served as the chairman of ABC’s Entertainment Television Group. During his tenure at ABC, Braun initiated and oversaw the development of such hit television series as “Alias,” “Lost,” and “Desperate Housewives.” His role at Yahoo has been to oversee all business and creative aspects of Yahoo’s content properties, including news.¹²

Braun’s first original news project was to hire Kevin Sites, a veteran television reporter, to report on different wars spanning the globe. Sites’s blog embraces the multimedia quality of the Web: blogging, video, audio commentary, online chats, and photo essays. Sites, moreover, said he saw the site as an opportunity to embrace transparency, long championed as an asset for online journalism. Sites’s program was launched in September, 2005.¹³

Yahoo also added exclusive sports commentary and in September, it began offering original columns to its financial news page, including one from the popular financial author Suze Orman, who regularly appears on CNBC. And in late October, Yahoo announced it had signed an original content deal with The Week, a weekly news magazine, and would begin publishing a daily digest of print and online business news on Yahoo’s Finance page.

Though Yahoo has taken only the first steps toward publishing its own original news content, it will be interesting to see how this mixed identity plays out in 2006 and beyond. Will consumers turn to Yahoo for original reporting in place of more longstanding providers? Will Yahoo succeed in a mixed brand or will it, in the end, fail to reach expertise on either front? Will it inspire others to do the same, hiring real reporters who can publish their own unique, tech-savvy journalism? Those areas are worth watching in 2006.

Web Video

There were signs in 2005 of bigger investment in online video.

For now, advertising on online video — though growing — remains a minor factor. A market research firm, Broadband Enterprises, estimates about $200 million will be spent on Internet video ads in 2005, up from $75 million in 2004. pales in comparison to the $65 billion spent on broadcast and cable television ads, but it is growing faster.²⁰ It may be that news sites are in an experimental phase , waiting to see whether audiences will become increasingly comfortable with watching video news reports over the Internet .

In 2005, CBS News was not the only news organization to begin offering more news video on its web site . After its subscription-only strategy was implemented in 2003, CNN announced in the spring of 2005 that it would begin offering some of its video online free.²¹ It will continue to also charge for most of it, through an online news channel known as Pipeline, where users can sign up for an annual, monthly or even daily subscription for 99 cents a day.²²

In July, the Associated Press announced it would launch an online video news network for its newspaper, television, and radio Web sites in the United States.²³ And then in November, Microsoft announced it would develop the AP’s online video network and share in any ad revenue generated by the newspaper and television news sites that distribute the video. Specifically, MSN’s role would be to provide the software to play the video and technical support. Moreover, it would sell the advertising.²⁴

And CBS’s rivals got more serious about online video in 2005. MSNBC.com announced it would start posting the entire video newscast of “NBC Nightly News,” though ads on the television newscast would not transfer to the online version. A spokeswoman for the Web site discussed, however, the possibility of selling ads that would appear on both the television broadcast and the Webcast.²⁵ Later in the year, MSNBC.com announced it would also make “Meet the Press” available as an on-demand video; the ad sales model had not been completed as of December, 2005.

And in January 2006, ABC News also announced a similar project to showcase its new co-anchors, Elizabeth Vargas and Bob Woodruff.²⁶

There are plenty of hurdles ahead. Growth in video is linked with growth in broadband. Another obstacle to more frequent use, according to the research, is exposure: more than half of Americans (52%) have said they are not watching more video because they were not aware of its availability.²⁷ The biggest question, however, is probably whether consumers like watching video online, not just on computers but on iPods, phones, and PDAs. Or will video, for better or worse, just be better on television?

Other Technology Investment

Perhaps the most significant investment that media companies have made over the last year or so is in the distribution and marketing of news (both as text and video) over wireless technology. Increasingly, news, especially breaking news, is becoming available on cell phones and personal digital assistants (PDAs), such as a BlackBerry, which can access the Internet through a WiFi, cellular, or Bluetooth technology connection.²⁸

One example of how wireless technology has allowed news to become more portable and on-demand can be seen in Verizon’s V Cast multimedia partnership with CBS News. Subscribers can view breaking news stories and segments from the CBS Evening News on their cell phones. “At the intersection of the mobile phone and the television lies programming promotion and brand extension potential. This deal with Verizon Wireless represents a major step for us into mobile entertainment and another point of contact with the consumer to promote out great content brands,” Cyriac Roeding, vice president of w ireless for CBS Digital Media , told EcommerceTimes.com.²⁹

Several online news sites have also continued to make investments in software in an attempt to make their news products more appealing to the on-demand news consumer and allow more opportunities for citizen journalism.³⁰ In 2005, two news features that furthered the discussion of citizen journalism and on-demand were wikitorials and podcasting.

Wikitorials are “online communities that encourage users to collectively write and edit articles.” “ Wikitorial ” comes from the Hawaii an “wiki wiki , ” which means “quick” in English. The Los Angeles Times was one news organization that experimented with wikitorials last year , and the result can be seen either as one step in an experimental process or somewhat embarrassing. After allowing readers to respond to , and even rewrite , the newspaper’s editorials, the site was soon overrun with profanity and pornographic photos and then suspended.³¹

Podcasting is a way to distribute audio and video programming over the Web that differs from earlier online audio and video publishing because the material is automatically transferred to the user’s computer and can be consumed at any time, usually on an Apple iPod or another kind of portable digital music player commonly known as an MP3 player.³²

News sites that began offering podcasts in 2005 included the Denver Post, the Seattle Post-Intelligencer, Forbes and the Washington Post. One survey estimated that 4.8 million people had downloaded a podcast from either a radio station or an other source in 2005 — up 485% from 2004. The study also found that 20% of “podcasters” download them on a weekly basis.³³

Investments in wikitorials and podcasts are relatively inexpensive . For example, the Wall Street Journal reported that the Philadelphia Daily News spent “just a few hundred dollars” on microphones, an audio mixer, and recording software when launching its podcast. There is also very little evidence that news organizations have added any editorial staff. Rather, it seems that existing news staff have been used or the work has been outsourced, as when the Denver Post hired college students to record and edit its site’s podcasts. One pressing question for 2006, of course, is whether any revenue can be generated from these new online news features.³⁴

Broadband Technology

For years, experts have argued that the future of online news audience and economics will hinge on the development of broadband technology. With broadband will come speed, video, more interactivity, better graphics, and more.

What is broadband? A simple answer is that it means higher-speed Internet :^{35 36}

Broadband connections generally use either a cable modem or DSL (digital subscriber line) which together make up an estimated 95% of the residential and small - business broadband market.³⁷

But it should noted that what is of ten meant as broadband in the United States is almost a generic term for any connection faster than dial - up. In many other developed countries, by contrast, broadband refers to much faster connections with more capability. The frankly vague way that broadband is defined in most discussions in the U .S , some critics argue, clouds both the demand and the po tential.

How many Americans are accessing the Internet through a broadband connection? The data vary on the exact figure, but it is clearly growing and is more prevalent in the workplace than at home. For residential use, the figure ranges from 33% to 48% of the population, depending on the survey. (The Pew Internet project reported that as of December 2005, 72 million Americans, or 61% of those who go online from home, had high-speed connections at home. This is up from 5 million in June 2000.)³⁸

In the workplace, broadband access appears to be even higher. Pew Internet reports that 70% of employed Internet users use a high-speed connection at work compared to just 10% who use dial - up. The rest say they do not know what type of connection their employer has.³⁹

While U.S. broadband use is growing, it still lags behind other parts of the world, particularly Asia and Western Europe, and there are signs that growth in other regions is outpacing growth here at home. According to December 2004 data published by the Organization for Economic Cooperation and Development, the U . S . has dropped two slots since 2003 and now ranks 12th overall in the number of broadband subscribers.

What’s more, there is reason to believe that growth may slow in coming years. Kagan Research has projected 9.3 million new broadband subscribers in 2005 , down from growth of 9.5 million in 2004.⁴⁰

Slower growth is significant because of the economic ramifications for the online industry. Various surveys suggest broadband users are more likely than dial-up users to perform these online activities:

• Go to more news pages
• Download more video
• Spend more money
• Spend more time online
• Play games
• Do banking
• Use search engines
• Access product info
• Access financial info
• Perform work-related research
• Browse for fun
• Access weather info
• Access sports info
• Get skills or training to help in their jobs ⁴¹

Online video use is expected to grow as broadband penetration increases. So far it appears that regular online video use is limited to a very small percentage of the overall population, and while spending on it continues to grow, it is still a nascent media platform for Madison Avenue ( click here for more on online video usage and economics).

In addition to investment in online video, there are even larger economic implications for increased broadband penetration. One estimate is that “widespread” adoption of broadband access would create 1.2 million new jobs and add as much as $500 billion to the national economy. ⁴²

Click here to view footnotes for this section.