Tuesday, 20 March 2012

Online ad revenue not making up for losses from print advertising

No dispute that more and more people are obtaining their news online or on handheld devices but neither does this AFP Relaxnews article on the Malaysian Insider nor the Overview of PEW's The State of the News Media 2012 report at the link below explicitly answer whether the the the online portals of traditional print newspapers and magazines will be able to remain viable on online advertising revenue.
Link to Malaysian Insider article:-

http://www.themalaysianinsider.com/tech/article/news-outlets-losing-ground-to-tech-rivals-says-report/

Now, let's look at some excerpts from the Overview of PEW's latest report.

"New research released in this report finds that mobile devices are adding to people’s news consumption, strengthening the lure of traditional news brands and providing a boost to long-form journalism. Eight in ten who get news on smartphones or tablets, for instance, get news on conventional computers as well. People are taking advantage, in other words, of having easier access to news throughout the day – in their pocket, on their desks and in their laps."

Yee-ha! Hooray for mobile.

"Second, in the last year a small number of technology giants began rapidly moving to consolidate their power by becoming makers of “everything” in our digital lives. Google, Amazon, Facebook, Apple and a few others are maneuvering to make the hardware people use, the operating systems that run those devices, the browsers on which people navigate, the e-mail services on which they communicate, the social networks on which they share and the web platforms on which they shop and play. And all of this will provide these companies with detailed personal data about each consumer."

Google, Amazon, Facebook, etc aren't newspapers of magazines but are making or planning to make handheld devices used for news consumption .. but!


"Already in 2011, five technology companies accounted for 68% of all online ad revenue, and that list does not include Amazon and Apple, which get most of their dollars from transactions, downloads and devices.  By 2015, Facebook is expected to account for one out of every five digital display ads sold.1"

Does not include Amazon or Apple, so the technology companies referred to are globally accessible news portals mostly based in the United States.

"There are already signs of closer financial ties between technology giants and news. As a part of YouTube’s plans to become a producer of original television content, a direction it took strongly last year, it is 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, purchased The Huffington Post. 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 magazin"

So the future of traditional media organisations is to sell their news content to these portals, rather than to try and earn revenue through online advertising on their own portals. So while big international news organisations can benefit from this trend, to the extent that they do, to what extent will Malaysian online news portals benefit, considering that they too carry much syndicated news reports from these glopbal media players?

"But our research over the last year finds that these efforts are still limited and that few news companies have made much progress in some key new digital areas. Among the top news websites, there is little use of the digital advertising that is expected to grow most rapidly, so-called “smart,” or targeted, advertising. So far, news organizations are mainly using the popular networking platform, Twitter, to push out their own content rather than to engage with audiences, solicit information or share information they themselves did not produce."

So much for those who thought that the use of Twitter and Facebook to engage their audiences would help to significantly increase their revenues.

And now for the kicker.

"The problems of newspapers also became more acute in 2011. Even as online audiences grew, print circulation continued to decline. Even more critically, so did ad revenues. In 2011, 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."

This is what I've long contended - I.E. that with the inexorable move from print to online, traditional news media will not earn as much ad revenue online as they used to make from print ads.

" When circulation and advertising revenue are combined, the newspaper industry has shrunk 43% since 2000"

Basically, the newspaper industry is dying, for now in the United States at least and will follow suit later elsewhere, including in Malaysia.

"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."

So news is becoming more important to people and indeed so. I for one obtain most of my news online and very rarely buy a newspaper but since the locus is shifting tp the "rivals in the technology industry," this will create some opportunities for journalists to write news articles for these technology companies - i.e. the big online portals - either directly or through media organisations but will these opportunities be evenly distributed to journalists worldwide or to a relatively fortunate minority of journalists in the developed world.

As it has been with national, provincial and city newspapers, the opportunities for journalists are geographically distributed among the respective areas where they live and work and this translates into widely dispersed, decentralised and independent media organisations which employ them but with a handful of large, globaly accessible nes portals, while it may create opportunities for some journalists in far-flung places, overall the sum total of opportunities will be very much greatly reduced, thus relegaing many journalists to the fate of unpaid bloggers like myself.

The Internet has certainly turned the world into a global village. In a traditional village - say a traditional Malay kampung, there are opportunities a handful of busnesses, such as a sundry shop and food & drinks shop, a motorcycle repair shop and perhaps some others within the village, and you'll find similar sets of opportunities in the next village 10km away and the next, and the next and the next and so on.

Likewise, the one global village offers opportunities for a handful of businesses but with its borderless reach, you'll have to find further opportunities in a global village on another planet, since those on planet Earth are already saturated.

Now I wonder what a certain self-styled new media "consultant" - who tells media organisations to embrace digital media while he himself clings on for employment in print media - has to about sustainable advertising revenue potential from going online, when studies by credible organisations such as PEW and the findings and experience of others point to the demise of journalism as a viable paying career despite the move online by major newspapers on five continents since the late 1990s.

I call people like these the liars and charlatans of the dis-information technology industry.

You can read the full Overview of the report here:-

http://stateofthemedia.org/2012/overview-4/

The details of the key findings for yourself here:-

http://stateofthemedia.org/2012/overview-4/key-findings/

And, the major trends here:-

http://stateofthemedia.org/2012/overview-4/major-trends/

Basically, it's not a pretty sight for newspapers, magazines, local TV and network TV.

Yours most trully.

IT.Sheiss



Heaven is sitting on one of these while gazing out at the beautiful river flowing by and savouring the fresh, unspoilt country air and natural scenery of northern Haida Gwaii island, British Columbia, Canada.

It's then that you'll gain that flash of insight and realise that the Internet culture is full of sheiss.