Pew Updates Us on State of the News

On March 26, the Pew Research Center released State of the News Media 2014, the eleventh annual report by the Pew Research Center examining the landscape of American journalism. The study includes special reports about the revenue picture for news, the growth in digital reporting, the role of acquisitions and content sharing in local news and how digital video affects the news landscape. In addition, it provides the latest data on audience, economic, news investment and ownership trends for key sectors of news media.

In an overview of the report Amy Mitchell, Pew’s Director of Journalism Research, writes “the level of new activity this past year is creating a perception that something important, perhaps even game-changing, is going on. If the developments in 2013 are at this point only a drop in the bucket, it feels like a heavier drop than most. The momentum behind them is real, if the full impact on citizens and our news system remains unclear.”

Mitchell highlights six major trends in the industry:

I. Employment
Thirty of the largest digital-only news organizations account for about 3,000 jobs and one area of investment is global coverage. The explosive growth over the last year at digital native sites includes a wealth of top-name journalists, but the biggest group of journalists -- some 38,000 -- are still employed by the newspaper industry, and their ranks have decreased dramatically in the last several years.

  • 5,000: Number of full-time editorial jobs at nearly 500 digital news outlets.
  • 16,200: Number of full-time editorial newspaper jobs lost from 2003-2012.

II. Revenue/Investment
So far, the impact of new money flowing into the industry may be more about fostering new ways of reporting and reaching audience than about building a new, sustainable revenue structure. More than two-thirds of total news industry revenue comes from advertising, the vast majority of which is tied to traditional print and broadcast forms. While TV ads are stable, newspaper print advertising has fallen 52% since 2003.

As an industry, news in the U.S. generates roughly $63 billion to $65 billion in annual revenue. Eight percent of that total comes from new kinds of revenue and investment streams like venture capital, philanthropy, conferences and digital marketing services. Much of the momentum is around high-profile interest from the technology world, in the form of venture capital and individual and corporate investments, which bring with them different skill sets and approaches to journalism. Philanthropy is growing, too, particularly as a source of capital for regional and investigative journalism. These newer investments do not yet represent a sea change in the business model.

After advertising, audience revenue is the next largest source of income for the industry, accounting for about a quarter of the total news pie through subscriptions, cable subscriptions and individual giving. It is growing -- both as a dollar figure and as a share of the whole. But audience-driven revenue growth does not necessarily signify that more people are paying for news. Rather, the data suggest that, in aggregate, more revenue is being squeezed out of a shrinking -- or at least flat -- base of paying consumers.

Digital video advertising may not be a sure win for news. Dollars are growing, but still only account for about 10% of total digital advertising. And big, non-news players are quickly moving in, making it harder for news organizations to find a piece of the pie.

  • $4.15 billion: Estimated 2013 revenue from digital video advertising, up 44% from 2012.
  • 20.5%: Share of digital video ad revenue already captured by Google (through YouTube).

III. Social Media and the News

  • News has a place in social media -- but on some sites more than others. Half of Facebook and Twitter users get news on those sites as do 62% of reddit users. But only a minority of those on Instagram or Pinterest finds news there. At this point, Facebook reaches far more Americans than any other social media site -- and therefore allows for the most in-depth study. Overall, three in ten adults get at least some news while on Facebook.
  • Getting “news” on Facebook is an incidental experience. 78% of Facebook news users mostly see news when on Facebook for other reasons. Just 34% of Facebook news consumers “like” a news organization or individual journalist, which suggests that the news they see there is coming from friends.
  • The range of news topics on Facebook is broad. Entertainment news tops the list of topics Facebook news consumers report seeing. This is followed by ‘people and events in my community’, sports, national government and politics, crime, health and medicine, and local government and politics. Even international news reaches roughly one in four Facebook news consumers.
  • Engagement with the news plays a key role in the social media news experience. Not only are social network users sharing news stories, but, particularly with the growth in mobile devices, a certain portion is contributing to the reporting by taking photos or videos.
  • On Twitter, groups of people come together around news events they feel passionately about. But opinions expressed on Twitter often differ from broad public opinion.
  • In the dynamic nature of conversations on Twitter, the sentiment expressed around an issue or event can change over time.
  • Audiences for news on each social platform differ. LinkedIn news consumers stand out as being high earners and college educated while Twitter news consumers are significantly younger than news consumers on Facebook, Google Plus and LinkedIn. Facebook news consumers are more likely to be female than news consumers on YouTube, Twitter and LinkedIn.
  • Visitors who come to a news site through Facebook or search display have far lower engagement with that outlet than those who come to that news website directly. Facebook and search are critical for bringing added eyeballs to individual stories, but people who come to a site directly show far higher levels of engagement and loyalty. This remains true for even the most socially oriented news sites.

IV News Video on the Web
New ways of storytelling bring both promise and challenge.

More than six in ten U.S. adults now watch videos online, and roughly half of those -- 36% of all U.S. adults -- watch news videos. This is roughly the same percentage of Americans who now get news from Facebook or watch cable news channels regularly. Technological improvements lowering the barrier to entry, both for the audience and those in the news business, have spurred a wave of new entrants into the digital news video space. With 36% of U.S. adults recording videos on their cellphones, citizens are playing a valuable role in the news process, sharing videos of eyewitness moments around news events small and large. But a closer look suggests that digital news video does not necessarily have a clear or simple path to becoming a major form of news in the future. Producing high-quality video -- or even streaming it live -- can be costly, and the payoff is not clear. Video advertising, while on the rise, amounts to just 10% of all digital ad revenue and just 2% of total ad revenue. Large distributors of video content like YouTube already account for a large portion of video watching on the web, and a hefty share of the revenue. And for traditional legacy providers -- local TV stations and national networks -- most of their audience and revenue are still in the legacy platforms, which may reduce these companies’ desire to invest in digital video in a big way. Non-digital news revenue on local and national broadcasts, as well as cable, now amounts to $16 billion a year.

On the consumer side, while television viewing has been the most popular form of news consumption for decades, it is still not clear how much that will translate to high levels of video-based news online.

  • The young are the heaviest consumers of online videos and are also strong consumers of digital news videos.
  • User-generated video content can play a critical role around breaking news, although a fairly small segment of Americans produce and share those videos.
  • For now, the digital video market is small -- about $4 billion, a tiny fraction of the broader digital ad market.
  • The last year saw some major investments in online news production.
  • Local TV news outlets are moving into online video, but at varying rates.

V. Television Ownership Consolidation
Local television, which reaches about nine in ten U.S. adults, experienced massive change in 2013, change that stayed under the radar of most. Nearly 300 full-power local TV stations changed hands in 2013 at a price of roughly $8 billion. Many of the deals resulted in stations in the same market being separately owned on paper but operated jointly, a practice that has grown exponentially in just the past two years. Joint service agreements of one kind or another now exist in at least 94 markets, almost half of the 210 local TV markets nationwide, and up from 55 in 2011.

  • 290: Number of full-power local TV stations that changed hands in 2013, up from 95 in 2012.
  • 25%: Share of the 952 local news stations that do not produce their newscasts themselves.

The impetus for most of these acquisitions and operating arrangements is economic but it also has an effect on the local news that audiences receive. One measurable impact has been fewer stations originating local news content. That number has dropped by 8% since 2005. Fully a quarter of the 952 U.S. television stations that currently air local newscasts do not produce the programs themselves. Other types of news sharing partnerships are also on the rise. Stations owned by the same company now routinely share news content regionally or groupwide. In some of the largest markets, local news services produce coverage for two or more competing stations. And more than three-quarters of local TV stations say they share news content with other media, including radio stations and newspapers.

The economic benefits of station consolidation are indisputable and include the increase in retransmission fees paid to station owners and the boost in stock prices of companies on buying sprees. But the effect on the quality of news coverage consumers receive is far more complicated to assess.

Early this year, the Justice Department warned that the practice could allow station owners to “influence or control” competitors and should be more tightly regulated. On March 31, the Federal Communications Commission will consider changes to media ownership rules including joint service agreements.

Television remains a critical news source, as a recent survey by InkHouse and Global Market Insite demonstrates. 73% of adults surveyed prefer to get their news from television, which also ranks first among the most trusted news outlets, followed by news websites (52%), print magazines and newspapers (36%), radio (25%) and social media (23%).

VI. Changing Demographics
Dramatic changes under way in the makeup of the American population will undoubtedly have an impact on news in the US, and in one of the fastest growing demographic groups -- Hispanics -- we are already seeing shifts. Since 2000, 20 media outlets geared toward the U.S. Hispanic population have launched -- seven that are national and 13 that serve the 10 largest metro-areas by Hispanic population. General market companies, those that also own outlets geared to the overall U.S. population have jumped into the Hispanic news industry in recent years. Six of the seven national outlets were started by these general market companies, including a handful that are partnerships. General market companies have also moved aggressively into local media markets: 11 of the 13 local outlets launched since 2000, were started in part by these companies.

…And What About Local News?
After looking at State of the Media 2014, the Washington Post’s Paul Farhi noted that local news is suffering -- especially online. “It’s not that people aren’t interested in their communities,” Farhi writes, “local news usually ranks as the top priority in surveys -- it’s that the economics of the digital age work strongly against reporting about schools, cops and the folks down the street.” But local news outlets struggle to attract enough traffic to generate ad dollars sufficient to support the cost of gathering the news in the first place. In contrast, sites that report and comment on national and international events draw from a worldwide audience, making it relatively easier to aggregate a large audience and the ad dollars that come with it. 30 national and international news sites -- Vice, Huffington Post, Politico, Buzzfeed, Mashable, among others -- accounted for about 60 percent of all the new digital journalism jobs created over the past five or so years.

Farhi highlights two consequences:

  1. A steady, years-long decline in local-news reporting, as newspapers -- the largest source of local news -- have gradually cut back their reporting staffs.
  2. The biggest investments in digital news have gone toward start-up ventures that target broad and borderless audiences, bypassing community news altogether.

Pew’s Mitchell noted the sense of optimism for the future of American journalism in her overview of the research. But there’s lots to be concerned about, too. In 2009, the Knight Commission on the Information Needs of Communities in a Democracy, co-chaired by Marissa Mayer and Theodore B. Olson, warned of a “crisis” among “local journalistic institutions that have traditionally served democracy.” In a 2011 report on the information needs of communities, the Federal Communications Commission concluded, “The independent watchdog function that the Founding Fathers envisioned for journalism . . . is in some cases at risk at the local level.”

We’ll continue to keep an eye on journalism -- especially how it evolves in the Digital Age. And we’ll see you in the Headlines.

By Kevin Taglang.