The Business
Of the News Business
It’s Changing Right
Before Your Eyes
James K. Gentry, Ph.D.
Professor
School of Journalism
University of Kansas
jgentry@ku.edu
KU Communicators
1
A Presentation
For KU Communicators
Original presentation developed
for SPJ national convention
and regional meetings
Developed by:
James K. Gentry
Lisa Loewen
Oct. 24, 2006
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Impetus for Change
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Internet is redistributing power from
news producers to consumers
Old model: Big media companies
delivered a “lecture”
New model: New technology lets
anyone become a “journalist” or
“communicator” at little cost
Fragmenting audiences
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Impetus for Change
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Traditional differences between local
and long-distance phone services, cable
TV, satellite TV, radio and television are
being wiped away.
Present economic models in question
Audiences want “experiences”
Rate of change is escalating
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Business Reality
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In 2005, traditional TV, newspaper,
radio, magazine and cable revenue rose
4.2% over 2004
In 2005, Internet revenue was around
$10 billion, up 13% to 23% over 2004
Advertisers shifting more ad dollars to
the web and at a faster rate
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Nielsen Monitor-Plus, TNS Media Intelligence
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Media Trends
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More outlets covering fewer stories
Big-city metro papers threatened
Battle of idealists and accountants is over
Technological innovation
Challengers to old media, the aggregators,
are also playing with limited time
Old media challenge Internet providers and
aggregators to compensate them for content
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The State of the News Media Annual Report
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Newspapers: The Details
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Newspaper revenue rose 1%-2% in ’05
Online revenues rose 30% + in ‘05;
exceeded $3 billion in 3rd quarter ‘05
Circulation declined
Advertising revenue up, linage down
Stock prices fell by an average of 20%
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The State of the News Media Annual Report
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Daily Newspaper Reading
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18-24 years
25-34 years
35-44 years
45-54 years
55-64 years
65+ years
1967
71%
73%
81%
79%
78%
72%
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2003
40%
41%
50%
59%
64%
70%
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Circulation and Population
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In 1980, daily newspaper circulation
was 62.2 million.
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In 1980, U.S. population was 237 million
In 2005, daily newspaper circulation
was 54.6
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In 2005, U.S. population was 296 million
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Newspaper Association of America
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Newspapers Losing Jobs
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Business has lost 3,500 - 3,800
newsroom professionals since high of
2000 (not counting 2006 losses)
Estimated loss of 1,250-1,500 in ’05
Estimated loss of 500 in ’04
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The State of the News Media Annual Report
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Broadcast: The Details
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Network morning news revenues up
15% in 2004; projected up 6% in ’05
Network evening news projected a 10%
increase for ’05; in ’04, only ABC had
revenue growth.
Biggest change in ’05 was the shift from
showing a profit to breaking even at
many stations.
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The State of the News Media Annual Report
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NBC Universal Reality Check
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NBCU to reduce spending on traditional TV
by up to $750 million as viewers and
advertisers move to new media
Planning layoffs across news departments,
including CNBC, MSNBC
Replacing dramas, comedies with low-cost
programming in 7 p.m. time slot
Creating regional “hub” in L.A. to serve NBC,
MSNBC, CNBC and three area stations
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Strategies
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Clustering
Outsourcing: Sweetheart, get me India
Consolidation
Brand extension
“Convergence”
Develop new revenue streams
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Clustering
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Buy properties in the same region to
gain operating efficiencies
MediaNews: Has 33 California papers.
Adds Contra Costa and San Jose
McClatchy: Had 1 N. Carolina paper, 3
S. Carolina papers. Adds 1 N. Carolina
paper, 2 S. Carolina papers from KR
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Outsourcing
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Reuters: 1,000 journalists in India in ‘05
Has 15,000 employees in 91 countries
Mid-late 2006, Reuters hoped to have
half of its staff located in India
Business 2.0 outsourced entire section
of magazine to India in 2004
“Creeping outsourcing”
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Consolidation
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Rupert Murdoch and News Corp.
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Television
Satellite
Newspaper
Technology, multimedia: MySpace ‘05
Disney, Viacom, GE
McClatchy & Knight Ridder, MediaNews
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Brand Extension
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ESPN
ESPN2
ESPNews
ESPNClassic
ESPN.com
ESPNRadio
ESPNU
ESPNZone
ESPN the Magazine
ESPYs
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“Convergence”
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Tampa
Lawrence
Tribune Company
Naples, Bonita
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New Revenue Streams
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Build website for other companies
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Find sponsors for specific sites
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Lawrence Journal-World
MySpace
Package sales with other media
Charge for niche advertising
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Google
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New Revenue Streams
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News Corp has developed a national
classified database
Consumers can customize ads in
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Newspaper
Website
Cell phones
Podcasts
Or any combination of the above
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What’s Enough Profit?
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Knight Ridder and Gannett 16%
McClatchy 14%
Disney 8%
Wal-Mart 4%
Exxon Mobil 10%
Anheuser Busch 12%
Yahoo 38%
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KR Cost Cutting
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Eliminate duplication of key national
beats and art criticism
Cut home delivery discounts and NIE
Replace defined benefit plans with
defined contribution plans
Consolidate national and retail
advertising accounts
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More Cost Cutting
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Regional news center
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Consolidate all copy editing, wire editing,
page design and layout into three regional
centers serving 31 K-R daily papers using
common front-end technology
Centrally manage technology, finance
Centralize classified calls
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Blogs
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Instant interactivity, fastest growing segment
of the web. A new blog is created almost
every second
Perhaps 30 million blogs
Search engines track information found only
in blogs
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Technorati
Ice Rocket
Google Blog Search
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Blog Searching
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Search engines that track information
found only in blogs.
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Technorati
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Ice Rocket
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Tracks over 31.2 million blogs
Returns more total results
Search by keyword and author
Google Blog Search
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The fastest search engine
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Best Blogging Newspapers
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Houston Chronicle
Washington Post
USA Today
St. Petersburg Times
Atlanta-Journal Constitution
San Antonio Express-News
New Orleans Times-Picayune
The Oklahoman
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NYU School of Journalism
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What Makes a Good Blog?
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Ease-of-use
Clear navigation
Currency
Quality of writing, thinking and linking
Voice
Comments and reader participation
Range and originality
Explain what blogging is on the blogs page
Show commitment
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NYU School of Journalism
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iPod Explosion
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iPod sales increased by 909% from 2nd Q ‘03
to 2nd Q ‘04
807,000 iPods sold in 2nd Q ‘04
100 iPods sold per minute in 4th Q ‘05
31 million iPod units in use in 2005
43 million iPods units predicted in 2006
Now video
What I want, when I want, where I want
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News Media Podcasting
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NPR
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More than 6 million downloads monthly
Sponsored by Acura, HBO, Intel and
Vanguard
New York Times
Naples
Radio stations purchase newspaper
podcasts for their “news” shows
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News Drives Web Traffic
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When a major news event occurs,
number of people visiting sites soars
BBC News accounted for 27% of news
impressions on day of London
bombings
Websites had a 30% increase in activity
on the day of the London bombing
More than 60% of users go online to get
news and information
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Change Leaders
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New Orleans Times-Picayune
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Greensboro News & Record
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Hurricane Katrina
www.nola.com
Nola changes culture of Times-Picayune
Virtual town square where every reader is a reporter
New value: collaboration with citizens
Bakersfield
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Free classified Website called Bakotopia
Northwest Voice, a free paper
Mas, weekly targeting English-speaking Hispanics
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Citizen Journalists
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Ordinary members of the public turn into
photographers and reporters
People getting used to creating pictures
and videos on their phones, and
increasingly think of sharing them
People want to share their stories
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Techniques They Use
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Camera phones
Personal dispatches
Blogs
Podcasts
Wikis
Instant messaging, chat, etc.
RSS (really simple syndication)
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Citizen Involvement:
Opportunity or Threat?
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“Best opportunity in decades to do even
better journalism” by enthusiastically
embracing connectivity – Dan Gillmor
Traditionalists concerned with accuracy
and credibility: hoaxes, fakery and
downright errors or deceit.
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Citizen Journalism
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Norfolk
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HamptonRoads.tv
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Wisconsin State Journal
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Video-only Website
Readers pick one story to appear on front page
Inciteful: editor’s blog that explains news decisions
Nashville
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Local ABC affiliate WKRN
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Entire staff can shoot stories
More naturalistic programming
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Citizen Journalism: Al Gore
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Current TV: Do it yourself TV
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Al Gore’s start-up
Goes beyond news and into lifestyle
Uses website to gather feedback on what
should air
Pays for videos it chooses to run
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Forums, Forums, Forums
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News
Sports
Survivor stories
Mayoral issues
Pet rescue
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“This forum is provided for users to share news
and information about animal and pet issues that
may help other animal and pet lovers in the Metro
New Orleans area.”
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Readership Institute
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www.readership.org/
Users have “experiences” with your media
offering, no matter what you do
Experiences are linked to audience’s
behavior using your media
Experiences can be changed, enhanced
Improve the “experience”
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Break formula, take risks, be notably innovative
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What is “Experience”?
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How your offering makes consumer feel
How it interacts with consumer needs,
interests and desires
Thoughts and feelings consumers have with
your publication or broadcast or site and with
its relevance to their lives
Breakthrough:
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When experiences correlate by target group to
motivating or inhibiting media usage
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Learning from Star-Tribune
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Tested Readership Institute findings
Over-arching readership goals and strategy
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Everyone measured against them
From RI “experiences” research:
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Something to talk about
Looks out for my civic and personal interests
Surprise and humor
Ad usefulness
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Original
Paper
• Feb. 22
• Typical
news day
• Front and
inside
page
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Improved
Paper
• Same day, same
news choices
• Trying for
experiences
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Experience
Paper
• Same day,
but news
chosen from
any part of
paper or
news budget
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Experience Paper
Strongly Preferred
Percent who prefer
100
90
80
70
60
50
40
30
20
10
0
Overall
preference
Best story
selection
Original
Side by side comparison
Get you to read Looks out for
more
your interests
Improved
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Easier to get
information
Experience
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What is Rob Curley Up To?
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Just who is Rob Curley?
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Vice President, product development,
Washingtonpost.Newsweek Interactive
His team developed the national or
international newspaper Web site of the
year (named by either the Newspaper
Association of America or Editor & Publisher
magazine) every year 1998-2004.
In 2001, NAA named him the newspaper
Internet Pioneer of the Year, the youngest
person to ever win the award.
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Rob’s Advice: October ‘06
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Own local breaking news
Hyper-local content
Database-driven coverage
Multimedia overkill, video mania
Evergreen content
Embrace platform-independent delivery
Dialog, not monolog
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Naples & Bonita News
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Relentlessly interactive
Lots of community contributions
Reporter and reader photos, videos
Reporter and reader blogs
Lots of audio
Reader forums
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And More
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Newsroom Podcast
Email news, sports, weather to your phone
Access police scanners
Listen to audio traffic from Naples Municipal
Airport
Email newsletters
Stories downloaded to PSP
Started videocast from newsroom that runs
online and on local cable
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Hyper-local in Marco Sun
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Mega-calendar including:
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Rotary meetings and Bible studies
Church guide
Restaurant guide
Beach guide
Schools guide
Marco Island history
Fishing blogs
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Challengers
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Craigslist
OhmyNews
Skype and eBay
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Others
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Backfence.com, in suburban Virginia.
Citizens are the only contributors and
the “newspaper” is an unedited Web
site.
Blufftontoday.com, Bluffton, S.C. Made
up largely of reader contributions. Also
free tabloid.
Loudon Forward, Loudon County, VA
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And More
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Generation @
Vlogging
Videocasts
Video on handhelds
On-demand media
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Social Networks
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Participants act as producers, distributors and
marketers of content through reviews, voting
and blogs
Today’s audience wants more interaction
Today’s audience wants the ability to create
and distribute its own content
Today’s audience wants a personalized
media experience
Yes, experience
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Social Networks
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MySpace.com (Murdoch)
Facebook.com (Yahoo?)
YouTube.com (Google)
Buzz-Oven.com
Vidilife.com
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MySpace
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79.6 million unique visitors in August
More than 40 million registered users
Received 21% of visits to U.S. online video
sites in September
Users may post messages, update blogs,
send photos via mobile phones
Google paid $900 million to provide search
services and advertising on it
News Corp. purchased it for $580 million
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Facebook
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15.5 million unique visitors in August
Connects college students with similar
interests and activities
Includes 1500 college campuses
Launched a high-school version
Ads may be targeted to students at a specific
college
Talking with Yahoo about $1 billion purchase
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YouTube
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Purchased by Google for $1.65 billion
Received 46% of visits to U.S. online video
sites in September
Users watch short videos more than 70
million times a day
Users post 60 million videos daily, for free
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Mainstream shows from current season, clips from
TV’s earliest days, and homemade movies from
around the world
Can submit video from mobile phones
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Buzz-Oven
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Social Network for teens in Dallas
Started as a way to market local
concerts
Evolved into a full social network
Sponsored by Coca Cola
Operates independently and as a
subsite on MySpace.com
Links to the Dallas Observer
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Vidilife
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A Social Network that uses online
videos to attract net surfers
New technology allows anyone with a
computer to put video online
Launched in September, attracted
220,000 unique users in October
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Google: 800-Pound Gorilla
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Google will be first search company to
gain one-quarter of the total money
spent on online advertising ($4 billion) in
2006
YouTube purchase means more ad
dollars
GoogleMail growing in popularity
Leaving Yahoo in its dust
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Gaming Industry
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More than 300 million people play
worldwide
Handheld gaming hardware sales grew
96% from 2003-04
$34 billion in revenues in ‘05
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Compared with $21.4 billion movie box
office receipts
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Gaming and News?
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PSPcasting
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RSS and PSP Video 9 software
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Convert regular PC video files into PSP files
ABC News signed as PSP’s first news
provider
News Corp. paid $650 million for game-site
operator IGN Entertainment
Viacom to acquire Xfire Inc. for $102 million
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Adding 300,000 gamers per month
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Professional Electronic Gaming
Global Gaming League
World Cyber Games
Cyberathlete Professional League
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First tournament held in 1997
TSN will webcast 25 tournaments in 2006
CPL finalists will compete for $500,000
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Gaming and Advertising
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Microsoft to acquire Massive Inc., a
start-up company that places ads in
videogames
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Clients include Coca-Cola Co., and Honda
Video games could become new medium
for advertising
Companies pay to insert brands on
billboards, posters, soda cans and other
on-screen elements within video games.
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Key Factors: New World
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What I want; when I want; where I want
Today’s economic models in question
Big media will remain but portfolios will be
different
Citizen produced/open-source content
Video conferencing ubiquitous
Help people make the most of their time:
TIVO, PDAs, cell phones
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By 2010
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e-ink
Consumer control: Podcasting, RSS, eBay,
consumer created media
Digital across platforms, almost ubiquitous
Talk free with paid services
Video conferencing changes communications
Media moving to other news & information
channels: Super search, hyper-local, B2B
Other?
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Challenges for Media
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Offer decent pay
Opportunity to be creative
Appreciate staff ideas
Ramp up the pace of change
Engage young audience: as workers
and media consumers!!!
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And in the Workplace
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What young workers want
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Ability to make a difference
Meaningful work
Opportunity to learn new skills
Mentoring
Flexibility
Decent paycheck
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What’s It Mean?
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To “win,” traditional media can’t nibble at
innovation
Recent changes and those to come are
potentially lethal for legacy media
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Some will embrace new ideas and use media to
their advantage
Many will talk change but stay unchanged
Can the business change?
To be a strategic winner, you can’t stand still

Readership Institute
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Sources
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www.stateofthemedia.org
www.readership.org
www.people-press.org
www.pewcenter.org
www.mediacenter.org
www.poynter.org
www.morningstar.com
Newspaper Association of America
Radio Advertising Bureau
Magazine Publishers of America
Television Bureau of Advertising
Cable Television Advertising Bureau
Business Week
The Wall Street Journal
The New York Times
Fortune
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