NEW YORK, NY - FEBRUARY 02: The new online new...
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One of the big headlines of the past week was, “Online News Consumption, Revenue Overtake Print for the First Time,” as PC Magazine put it.

It felt like a watershed moment.

But what lies beneath isn’t an online advertising economy that will save journalism but an insufficient online advertising economy coupled with a structurally crippled print advertising marketplace, one that is shrinking rapidly (down 6.3% in 2009-2010 alone).

This means headlines like that from PC Magazine are serving a double-dose of bad news for journalism funding, not a mix of good (online up) and bad (print down). Print and online news are both heading for the Shoals of Unsustainability.

As the Pew “State of the Media” report states it:

. . . look more closely inside the data and the road to economic sustainability for news online remains difficult. . . . Advertising in online spaces will probably never generate the sums – or at least the profits – that advertising generated in traditional platforms like printed newspapers. To survive financially. . . news sites not only need to make their advertising smarter, but they also need to find some way to charge for content and to invent new revenue streams. . . . And for now these alternative revenue streams remain small in scale. And even shifting to a culture that requires experimentation is for some news companies a challenge.

How dependent will news become to the online outlet? Given what Pew found, it’s clear that online news is in fact the only sector of news consumption that’s growing its audience, and at a very high rate:

One of the biggest challenges facing online news sources is that the number of intermediaries between them and their customers continues to grow — from Facebook and Twitter to email and Flipboard. This means that monetizing their own content requires reaching the customer through these aggregators — an unpredictable path — or striking syndication deals of some sort, which seems unlikely given the low value of commodity news. Also, as another Pew report last year showed, editors and executives at newspapers are tone-deaf to these realities, focusing on packaged news at the expense of distributed news. For them, printed bundles and cohesive Web sites were thought of as the the best ways to distribute news — not email, Facebook, or Twitter, despite the fact that users prefer to get a growing proportion of their news through those channels.

But what about a pure-play digital news source, like Rupert Murdoch’s recently launched iPad newspaper, The Daily? Surely it will avoid the same traps while delivering content in a digitally aware manner.

Don’t forget that quote from the Pew report buried in their summary:

. . . shifting to a culture that requires experimentation is for some news companies a challenge.

I know, for all the fans of Rupert Murdoch, this will come as a shock, but apparently the great Murdoch has launched a journalistic enterprise short on content, long on innuendo, politically biased, and slightly misogynistic. Shocking.

And according to Simon Dumenco, who spent a month with The Daily, the platform doesn’t redeem the journalism:

Right now, the paper is just so erratic and unfocused that reading it is like witnessing a new identity crisis every day. . . . [It’s] the perfect newspaper for Tea Party socialists and enlightened pigs.

While the editorial content of The Daily may be less than stellar, the packaging model is certainly more comfortable for the journalists involved. This is why iPads make publishers comfortable — for now. Remember, iPads are great Web browsers, and Apple hasn’t closed down Safari as a paid service on the iPad yet.

But let’s assume there are two ways to ruin a news package — get scooped and/or be obviously incomplete. If you accept that premise, The Daily seems to be doubling down on mistakes. As the manager of his local McDonald’s told Dumenco:

A lot of times I’ll read something in The Daily that I already read about the day before, but The Daily version I’ll read and go, ‘Hey, they’re missing a lot of the story here.’

Online news is popular, useful, and interesting. Users are more and more drawn to it. Advertising revenues will not fund it sufficiently in the long-term. Social media is a growing source of news awareness, but it won’t provide funding. And paywalls, while unpopular, seem to work for the news. The audience is smaller, but the revenue model works far better. And NPR and the BBC prove that government subsidies, trusts, and donations can work alongside an advertising model.

This latest report from Pew suggests that viable funding sources — paywalls, trusts, endowments, government funding — have to come soon, or news and journalism as we know it will degrade even from what is clearly the diminished state it’s in today.

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Kent Anderson

Kent Anderson

Kent Anderson is the CEO of RedLink and RedLink Network, a past-President of SSP, and the founder of the Scholarly Kitchen. He has worked as Publisher at AAAS/Science, CEO/Publisher of JBJS, Inc., a publishing executive at the Massachusetts Medical Society, Publishing Director of the New England Journal of Medicine, and Director of Medical Journals at the American Academy of Pediatrics. Opinions on social media or blogs are his own.

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