News and the web

[Steve]

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Trouble Deepens for Traditional Media. 
And it's Only Going to Get Worse.

Annette Hamilton
Executive Producer, ZDNet AnchorDesk 11/25/98


Forty years ago, newspapers were confronted with a massive strategic
challenge that forced a powerful and entrenched industry to transform
itself. I'm talking, of course, about the rise of television -- an
exciting visual medium that siphoned off attention. Audience.
Advertising dollars. Employees. And, eventually, influence. 

Newspapers were forced to adapt or die. They changed their content.
They added color photos. They cut costs. Still, many papers merged or
went under anyway. Many that survived took refuge in the "credibility
factor," the idea that television could never match newspapers for
depth, analysis and accuracy. 

With the rise of the Web, newspapers are face-to-face with another
challenge from a previously non-existent medium. One that is putting
the squeeze on television and cable news operations, too. And one that
removes the shelter of "credibility." 

Take a look at the latest research. Jupiter Communications reports
more than 80% of U.S. online consumers now trust online news as much
as they trust newspapers, broadcast television and cable news outlets.
An additional 7% view online news as more reliable than other media.
Moreover, most consumers (70%) say they do not question the editorial
integrity of online news services that also sell goods online. 

So much for online gossip-monger Matt Drudge being perceived as the
Web news standard. 

These new findings heap pressure on traditional news outlets to
compete with the Web's 24-hour instant newsstand. And that pressure
will increase substantially in the months to come as the following
five factors take their toll: 

1. Online audiences will continue to grow. ZDNet InternetTrak
research finds the number of Americans using the Web is increasing at
double-digit rates. For instance, between August and October 1998,
researchers say 68 million Americans visited Web sites -- up 17% from
the previous three-month period. 

2. Online news sites will continue to benefit from high-profile news
events. As the Lewinsky scandal illustrates, people have a strong
desire for real-time news delivery. And there will always be another
big news story that comes along to lure more information junkies to
the Web. 

3. Online will siphon off the most attractive audiences. Local news
Web sites in the United States have a predominantly male, high-income
and loyal audience who purchase online, according to Internet
advertising research firm the Laredo Group's study of nearly 10,000
newspaper Web site users. In addition, 72% of those who access local
news sites purchase online -- and the higher the income the higher the
rate of online purchasing. 

4. Online will siphon off revenues. Advertisers are in the business of
selling stuff. So why wouldn't they want to advertise where the
spenders are? (See #3). And that's precisely what they plan to do.
According to Veronis, Suhler & Associates, a media industry investment
bank, online advertising spending is expected to surge to $6.5 billion
by 2002, up from $906 million last year. 

5. Online will siphon off best and brightest employees. In the past,
journalists joked about having to take a "vow of poverty" to work in
their desired field. But increasingly, non-media organizations are
luring away writers and editors -- even as newspapers and magazines
continue to low-ball salaries and cut positions. Even a paper's own
Web site presents competition for talent: Web editorial workers now
pull down $12,000 more on average per year than entry-level reporters
-- who earn an average salary of $22,609. 

Overall, there appears to be little upside for traditional news
media. To stem the coming losses, analysts are encouraging news
outlets to step up their online efforts -- with an eye toward
leveraging the trend toward online news as much as possible. For
instance, developing online commerce that links to corresponding
editorial content. 

The rise of television did not kill newspapers. And the rise of the
Internet will not kill traditional news outlets such as television,
cable and print. But it will definitely redistribute the power base,
perhaps faster than traditional media realize. And transform them in
the process. 

Copyright (c) 1998 ZDNet




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