Online – Summary Essay
The state of online news heading into 2010 may best be described as a moving target.
Digital delivery is now well established as a part of most Americans daily news consumption. Six in ten Americans get some news online in a typical day—and most of these also get news from other media platforms as well.
Yet it remains unclear how best to count the audience online. Should those with an interest in knowing the count care more about total unique visitors, number of page views, or time per visit? And are some users more valuable than others? Do news organizations want to amass the largest possible audience, including those who will return often but usually for quickly read stories across a wide range of topics? Or will a small, loyal audience that digs deeper, returns more often in the end prove more valuable? Overall, the data suggest users do not stay anywhere for long—with search clearly taking an increasing role in news consumption.
It remains as unclear in 2010 as ever how to monetize the growing audience. The year past was a time of experimentation for all kinds of entities, — but many have yet to materialize and others have little yet to show in terms of real dollars. The most established revenue source, online advertising, saw declines for the first time since 2002. The declines were partly due to recession, but it is not clear to what extent the declines may also be structural and permanent. And the most talked about new revenue stream – getting users to pay for content – will depend, economists argue, on news organizations offering content that is unique, and this may require specialization and investment by news organizations.
The year past proved important for social media establishing themselves as a part of the media ecosystem. The power here had less to do with reporting than serving as a place for people to quickly come together around an issue that they feel passionately about to share concerns, pass along information, offer financial contributions and in several cases bring about change.
Citizen news sites continued to evolve as well, in part because, still financed with start up funds or contributions from nonprofits, they were less affected in some cases by the recession’s downturn in advertising. New research released as part of this report, however, provides more evidence that even the most established citizen sites are not in a position to take on the job of traditional news outlets. Instead, what has begun to emerge is more of a coming together of the two, particularly at the local level.
Consumers meanwhile, are quickly moving on to even newer forms of communication. Blogging is declining in frequency while 26% of Americans now get news on their cell phones, and half of online news consumers with social networking sites use those pages for news.
What all this amounts to is an intensely active media sector— with more players than ever. But as those players try to figure out whether they are competitors or partners, as well as where their future dollars will come from, the public moves right on ahead.
One thing that is becoming clearer is the way people use digital technology to acquire news. The American news consumer is increasingly becoming a grazer, across both online and offline platforms. On a typical day, nearly half of Americans now get news from four to six different platforms—from online to TV to print and more, according to new research from PEJ and the Pew Internet and American Life Project.
Within the online universe the same pattern holds true. People graze across multiple websites for their news. Only 21% say they tend to rely primarily on one destination; only a third even say they have a favorite news website (35%) among those they use. But these online news grazers do not range far. Most (57%) usually rely on two to five websites.
And most of that grazing is still done through the big familiar sites. Among news sites that attract 500,000 monthly visitors or more, the top 10% attract half the traffic. When asked to name their favorite news site, survey respondents named sites of major news organizations such as CNN and Fox as well as aggregators like Google.
For now, an analysis of Nielsen Net Ratings data we have done this year finds that websites tied to legacy news outlets like newspapers or cable stations now attract the bulk of the news traffic, but there are signs that this dominance could change. Younger generations especially begin their news consumption through search. There are signs that more and more people are ending it there as well, deciding that all they need is the headline, byline and first sentence of text. In short, news consumers young and old get a good deal of news without ever actually clicking on the story. If this cursory read is deemed valuable – or valuable enough – it could send content producers back to the drawing board for both their content and financial strategies.
The new data suggest there is also a question for news organizations about how to brand for the future. A successful audience may be about much more than grabbing unique visitors day and after day. Instead, loyalty and engagement are gaining importance. Among the biggest sites, there has already been some differentiation depending on the mission of the site. The top four aggregators have built their strategies around attracting audiences that stay for less time but come back more often. That strategy comes through in our Nielsen analysis: users spend less time at aggregator sites per visit than at other top sites. The top news originators like the New York Times and CNN.com, on the other hand, try to have people stay longer and go deeper into their sites. Indeed, visitors stay more than a minute longer there than on Google or Yahoo.
Still, the differences diminish greatly as we go further down the list (as the total audiences get smaller). Even many of the specialty sites, such as those that focus on science or health, are not attracting an especially dedicated – if smaller – audience. For the most part, visitors to these sites stay no longer, go no deeper and return no more often than visitors to general news sites — there are just fewer of them. The one exception seems to be political sites.
As online news is increasingly being pressured to replace revenue lost from other sectors, the outlook for success remains as unclear in 2010 as ever.
Overall, U.S. online advertising in 2009 saw its first decline since 2002, according to the online research firm eMarketer, which began tracking in 1996. The firm, whose updated August projections were the most recent, expected revenues to fall 4.6% to $22.4 billion, down from $23.4 billion in 2008.1
Some types of revenue though did better than others. Search, by far currently the largest piece of online ad revenue, was projected to increase 3% to $10.8 billion in 2009. Very little, if any, of this though goes to directly to news producers.2
Display ad revenue, which is where the majority of news sites get most of their advertising revenue, is still the second largest part of the online pie, but it was projected to fall 2%.3
Survey data may suggest a further devaluing of most online ads. While 81% say they do not mind them if it means they can get the content free, much of that is because they find them easy to ignore. Fully 79% say they never or hardly ever click on advertisements.
Talk about finding alternatives to advertising intensified, from cordoning off aggregators to charging users to creating networks of bundled ads. Ideas and planned experiments filled conferences and media reports. But for all the talk, there is little real evidence of potential models. No sites have yet to close their content walls to aggregators or service providers. Networked news sites are still in their infancy in terms of amassing audiences or advertising dollars. And the few news outlets planning to install payment structures from users seem to have a tough battle ahead.
The reality strongly suggests, though, that people do not want to pay and that the flow of information is just too open to try to control content in that manner – like trying to force butterflies back into their cocoons.
In a new survey released as part of this report, just 7% of Americans express any willingness to pay for news content. Instead, large majorities said they would look for content elsewhere if their favorite site put up a pay wall.
Another kind of experimentation has been partnerships. Among the biggest so far is the Yahoo consortium launched in 2006. By 2009, about 800 newspapers had joined and, while Yahoo does not release hard financial figures reports early in the year indicated that the experiment had generated $50 million in ad revenue. One company, E.W. Scripps, attributed a 30% growth in its online ad revenue to this arrangement with Yahoo—albeit those total dollars are still very small. How Yahoo’s new partnership with Bing will affect this consortium remains unclear.
As legacy media work to adapt to the future, new media without ties to the old continues to develop and play an increasing role in the news ecology.
In 2009, PEJ launched a new weekly analysis of the top news stories discussed and linked to on blogs and social media. The New Media Index revealed over the course of the year that these media play a unique role, both in the topics addressed and in how they are treated.
The stories and issues that draw the most attention in blogs and on Twitter differ substantially from the mainstream press. In the 47 weeks studied during 2009, blogs and the mainstream press shared the top story just 13 times. And in Twitter there was even less overlap.
Among the two social media platforms, Twitter users strayed the farthest from the mainstream press. Blogs were a bit more traditional, at least in the sources they drew on. On both platforms, though, one clear characteristic was the ability of new media to quickly trigger and concentrate passionate debate and activity around a specific issue.
Citizen journalism continued to play a role as well. Here, new research added to the sense that citizen media at this point still are not in a position to replace or provide the same type of coverage as traditional outlets. They just don’t have the resources to do so. New research conducted by a team of academics finds that some top citizen news sites average less than one new story a day.
Instead, many in that field see a different kind of role – partnering with news, helping to fill in gaps where news outlets no longer go and even joining forces with one another to increase their offerings. One such local example is the Kansas-based World Company. It planned to launch in early 2010 a local/regional health site, called WellCommons.com, which would integrate community information, advertising information and journalism. According to Jane Stevens, director for media strategies, community members will provide most of the information on the site, teamed with journalists from several local news outlets as well as local health companies.
Some specialty outlets fared well in 2009. Politico, the Washington-based political newspaper and website, for example, had net revenue of $18.6 million in 2009 and a profit of $901,000, according to SEC filings compiled by Paidcontent.org. That is up from about $11.3 million in revenue in 2008 and a loss of $2.8 million. Still, more than 60% of Politico’s revenue comes from its print edition.
When in comes to investments in news online, it is becoming clearer that there are several different types of organizations and different services involved.
Of the top roughly 200 news sites analyzed by PEJ, the majority (67%) are tied to a legacy media outlet that produces at least some original reporting. Most of those reporting resources, though, come largely through revenue earned from other platforms, revenue that is on a sharp downward decline. The newspaper industry for example, still draws roughly 90% of its total advertising revenues from its print versions. The declines in those ad dollars have meant massive cutbacks in newsroom staff and other resources, cutbacks that affect both the legacy and the online product.
The remaining third of these roughly 200 top sites are online only entities. The biggest of these, accounting for the bulk of both audience and revenue, are Google News, Yahoo News, AOL News, and Bing News, which is owned by Microsoft. Aside from AOL, their greatest service is to help people find content rather than produce it themselves, a critical task today and one that can be daunting. Dylan Casey, a product manager at Google, says his company spends a great deal of “time and energy and intellectual power on trying to differentiate the significance and importance between popularity and social importance.”4 It is a task he adds, that is very complicated and that “and we aren’t even close to solving it yet.”
1. eMarketer, “U.S. Online Ad Spending Turns a Corner,” December 11, 2009. http://www.emarketer.com/Article.aspx?R=1007415
2. eMarketer, “U.S. Online Ad Spending Turns a Corner,” December 11, 2009. http://www.emarketer.com/Article.aspx?R=1007415
3. eMarketer, “U.S. Online Ad Spending Turns a Corner,” December 11, 2009. http://www.emarketer.com/Article.aspx?R=1007415
4. Casey made his remarks at the Pew Research Center’s conference on Millennials in Washington, D.C., February 24, 2010.