a. Supply of news content and access to it has increased exponentially. However, lots of this content is available for free, and the increased competition among vendors means that news organizations cannot demand the same prices that they used to.
Case in point: The McClatchy Magazine reported a 17% increase in unique visitors to their website, but only a 2% increase in digital revenue.
b. Aggregation: In the past, aggregation was a major source of revenue for news organizations. They were able to bundle consumers together and present them to advertisers as one lucrative bundle. However, in the digital world, everything is separated. Users cannot be bundled as they make seamless transitions between different sources of news content (e.g. ESPN for sport, WSJ for financial news). This trend results in a large loss of advertising revenue for news organizations.
Another development in aggregation is the rise of alternate aggregators such as Google News, The Huffington Post, etc. These new media entities are skilled at engaging readers and are much more agile than traditional news companies. Since they don’t charge for content, they take away a lot of the audience and subsequent revenue from news companies.
c. The trend towards digital has meant that advertising revenues are much more unpredictable than with traditional news sources. A newspaper or magazine can increase the total number of pages they print in order to accommodate an extra advertising spread. Similarly for broadcast, the organization has full knowledge and control over the airtime they give out to advertisers (e.g. 8minutes in a 30minute news segment). However, with digital, the readers determine how many pages get turned (based on clicks) and hence how many ads will be viewed. As a result, digital news organizations generally have to undersell the amount of proper advertisements on their site and sell many cheap last-minute ads called remnants.
2) List up to three advantages that a new, digitally based news company has over a traditional print or broadcast organization.
a. Digital news companies have a rich bank of information on their readers. They can analyze content preferences and tweak their offering accordingly. They can also collect demographic and financial information on their readers with more precision than traditional news organizations.
b. The ability to create and engage readers with alternate content: For example NYMag.com receives only 14% of its traffic from magazine-related articles, the rest of its traffic is due to original website content, which helps NYMag build both its online brand and increase interest in its magazine.
c. The ability to create rich multimedia experiences and crowdsource content: Digital news companies can engage readers in innovative ways including comments, reaction videos and crowdsourcing. Readers can provide dynamic feedback and in many cases contribute valuable content to the news organization. Tools like Storify etc help readers become publishers of newsworthy and original content.
3. List up to three advantages that a traditional print or broadcast organization has over a new, digitally based news company.
a. Traditional news organizations can provide more immersive experiences: The average time that people spend reading a newspaper is 30minutes, as compared to 3-4 minutes ib a news website. People have a shorter and more fickle attention span online.
b. The ability to control the product that they sell to advertisers: As mentioned above, traditional news organizations can determine how much advertising they will sell in advance, and can alter their product to allow for increased advertising. Digital organizations are unable to do this in advance.
c. Since traditional news organizations charge for content, they are able to offer advertisers filtered readers; i.e. the advertiser knows that the readers are serious about the content since they are paying for it. This makes them more attractive to advertisers and thus more lucrative to news organizations as compared to digital readers, who often read content that is not behind a paywall and are more likely to jump.