Mike Zammuto, president of Brand.com, raised some eyebrows recently when he fired a warning shot in the general direction of the news business.
“News is dead, your industry is failing, you are refusing to adapt and you will die out,” said Zammuto.
Zammuto is correct in stating that the news industry is failing, as traditional print media revenue has been steadily declining since the early 2000s. He is also correct in noting that many publications have been relying on standard subscription-based/advertising-supported platforms that simply are not working, leading to the closure or buying-out of many established newspapers.
The Tribune Company, for instance, filed for bankruptcy in 2008. Detroit, a symbol of American economic decline in other industries, saw both The Detroit Free Press and The Detroit News reduce home delivery to three days a week in recent years. Numerous other small-scale publications have folded or been acquired by larger companies as traditional print media continues to decline. One of the most high profile acquisitions -founder of Internet behemoth Amazon Jeff Bezos’s 2013 purchase of The Washington Post for $250 million - only further emphasized the web’s dominance over modern news media.
News itself, however, is far from dead. It is still consumed on a massive scale, perhaps now more than ever. Any individual with an Internet connection can write a blog and potentially reach a nearly limitless audience. Social media platforms offer an unprecedented opportunity for citizens to communicate the news to each other without traditional news outlets serving as the middleman. Entire revolutions have been started based on the rapid spreading of news through Twitter.
The problem, however, is that obtaining access to the news and spreading that news costs both time and money. Many news companies who have long been most well-prepared to deliver high-quality journalism to consumers have struggled to find a way to monetize their efforts in recent years, especially as individuals increasingly desire to consume the news for free.
For consumers, most elements of digital journalism are viewed in an overwhelmingly positive light. Individuals have constant access to a wide variety of free sources, often from firsthand accounts. For reporters, the ability to reach a widespread audience without traditional publishing constraints could also be viewed in a positive manner.
Zammuto understands that the potential for journalistic excellence remains high, despite the uncertain role revenue will play in the future of the industry.
"By all standards, we should be entering a golden age of reporting! The technology exists for us to determine and share the truth better than ever before,” said Zammuto. “But 20th and 19th century business models are standing in the way.”
Major media companies of earlier centuries, such as The New York Times and The Wall Street Journal, have been notoriously slow to adapt to new journalism business practices. Both companies initially approached online efforts in a manner similar to print media, forcing readers to subscribe to their services. While the former publication now allows consumers to read a certain number of free articles each month, the latter remains entirely behind a paywall.
The advertising model transitioned online more successfully than the subscription model — primarily because consumers can still access ad-supported content for free — but this still represents a severe reduction of one of journalism’s highest revenue generators. Without subscribers, newspapers have a less reliable source of income.
Despite its prominent role in shaping online journalism, advertising has also struggled to support the industry. The decrease in print advertising revenue has significantly outpaced the increase in online advertising revenue. According to the Pew Research Center’s State of the News Media 2013, print advertising revenue dropped from $44,939 million in 2003 to $18,931 million in 2012. Those numbers contrast with the $1,216 million in online ad revenue in 2003, which rose only to $3,370 million in 2012.
As early as 2005, before the phone hacking scandal that forced his resignation from News International, media mogul Rupert Murdoch explained that “Sometimes rivers dry up,” a reference to his earlier declaration that newspaper classified ad revenue provided “rivers of gold.”
Ad sales are obviously not the answer for struggling media companies, and Zammuto suggests that the industry needs to rethink its monetization efforts entirely.
“The news industry keeps trying to make money off of subscriptions and advertising, but in the end, publishers need to realize that only a different model will bring them the financial results they need without comprising their editorial standards,” said Zammuto. “The goal is to free up funds for the creation of original, insightful and exclusive content.”
The rise of digital journalism has demonstrated that an increased availability of content does not necessarily represent the end of an industry. Even Twitter, regarded by some as the ultimate tool for democratizing journalism, is a publicly traded company. Although the consumer demand for news content has not subsided, technological advances have eliminated previously-established revenue models.
“Subscriptions are barely even relevant anymore — limiting access to information in the Information Age of the Internet is basically ludicrous," Zammuto pointed out. "At Brand.com we recognize that Craigslist destroyed classified advertising, Google destroyed business advertising, and Google News destroyed subscription revenue. It’s time for a new model that balances editorial goals with the revenue required to keep a quality publication from going under."
Another beneficial aspect of the Internet is that innovative news organizations can test new strategies with limited start-up costs. Zammuto’s own Brand.com is attempting to eliminate the PR middlemen that stand between newsmakers and reporters, and sites like Ghost provide a community-supported open source platform for bloggers. There are a great deal of exciting startups with VC funding and prominent journalistic names attached launching in the near future. News is alive and well, but it needs a new type of revenue to survive.