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Overview

What now?

Inside news companies, the most immediate concern is how much revenue lost in recession the industry will regain as the economy improves.

Whatever the answers, the future of news ultimately rests on more long-term concerns: What are the prospects for alternative journalism organizations that are forming around the country? Will traditional media adapt and innovate amid continuing pressures to thin their ranks?

And with growing evidence that conventional advertising online will never sustain the industry, what progress is being made to find new revenue for financing the gathering and reporting of news?

The numbers for 2009 reveal just how urgent these questions are becoming. Newspapers, including online, saw ad revenue fall 26% during the year, which brings the total loss over the last three years to 41%.

Local television ad revenue fell 24% in 2009, triple the decline the year before. Radio was off 18%. Magazine ad pages dropped 19%, network TV 7% (and news alone probably more). Online ad revenue over all fell about 5%, and revenue to news sites most likely also fared much worse.

Only cable news among the commercial news sectors did not suffer declining revenue last year.

The estimates for what happens after the economy rebounds vary and even then are only guesses. The market research and investment banking firm Veronis Suhler Stevenson projects that by 2013, after the economic recovery, three elements of old media — newspapers, radio and magazines — will take in 41% less in ad revenues than they did in 2006.

For newspapers, which still provide the largest share of reportorial journalism in the United States, the metaphor that comes to mind is sand in an hourglass. The shrinking money left in print, which still provides 90% of the industry’s funds, is the amount of time left to invent new revenue models online. The industry must find a new model before that money runs out.

The losses are already enormous. To quantify the impact, with colleague Rick Edmonds of the Poynter Institute we estimate that the newspaper industry has lost $1.6 billion in annual reporting and editing capacity since 2000, or roughly 30%. That leaves an estimated $4.4 billion remaining. Even if the economy improves we predict more cuts in 2010.

Network news division resources are likely down from their peak in the late 1980s by more than half — which amounts to hundreds of millions of dollars — and new rounds of cuts came in the last 12 months. Local television is harder to gauge, but one estimate puts the losses in the last two years at over 1,600 jobs, or roughly 6%. Staffing at the Time and Newsweek since 1983 is down by 47%.1

So what about the new-media experiments growing around the country? There are certainly exciting things happening, from former journalists creating specialty news sites and community sites, to citizens covering neighborhoods, to local blogs and social media.

In 2009 Twitter and other social media emerged as powerful tools for disseminating information and mobilizing citizens such as evading the censors in Iran and communicating from the earthquake disaster zone in Haiti. The majority of Internet users (59%) now use some kind of social media, including Twitter, blogging and networking sites, according to a new PEJ/Pew Internet & American Life survey.

Citizen journalism at the local level is expanding rapidly and brimming with innovation. This year’s report includes a new study of 60 of the most highly regarded sites. The prospects for assembling sufficient economies of scale, audience and authority may be most promising at specialized national and international sites — efforts like ProPublica, Kaiser Health News and Global Post.

For all the invention and energy, however, the scale of these new efforts still amounts to a small fraction of what has been lost. While not all of the blogs and citizen efforts can be quantified, J-Lab, a project led by Jan Schaffer that studies new media, estimates that roughly $141 million of nonprofit money has flowed into new-media efforts over the last four years (not including public broadcasting). That is less than one-tenth of the losses in newspaper resources alone.

Michael Schudson, the sociologist of journalism at Columbia University, sees the promise of “a better array of public informational resources emerging. ” This new ecosystem will include different “styles” of journalism, a mix of professional and amateur approaches and different economic models — commercial, nonprofit, public and “university-fueled.”

Clay Shirky of New York University has suggested that the loss of news people is a predictable and perhaps temporary gap in the process of creative destruction. “The old stuff gets broken faster than the new stuff is put in its place,” he has written.

There is something important in these notions. As Schudson notes, the news industry became more professional, skeptical and ethical beginning in the 1960s. Many journalists think that sense of public good has been overtaken by a focus on efficiency and profit since the 1990s. In the collapse of those ownership structures, there is some rebirth of community connection and public motive in news.

Yet the energy and promise here cannot escape the question of resources. Unless some system of financing the production of content is developed, it is difficult to see how reportorial journalism will not continue to shrink, regardless of the potential tools offered by technology.

And as we enter 2010 there is little evidence that journalism online has found a sustaining revenue model. A new survey on online economics, released in this report for the first time, finds that 79% of online news consumers say they rarely if ever have clicked on an online ad.

There was certainly more talk of alternative approaches to advertising in the last year. Entrepreneur Steve Brill and others launched JournalismOnline.com, which offers news sites a mechanism for charging, but at this point it is more a possibility than a business reality. Rupert Murdoch announced discussions with Microsoft about higher payments for searching his content and insisted that everything his company produces would go behind pay walls. Columbia University produced a report that explored nonprofit and public funding sourcing and assessed the state of startup new media. The New York Times announced it was giving itself a year to figure out a way to charge for content to “get it really really right.” And more new-media startups were planned, a growing sign that as old media continues to shrink, the ecosystem is changing and some things are growing.

But if a new model is to be found it is hardly clear what it will be. Our survey, produced with the Pew Internet & American Life Project, finds that only about a third of Americans (35%) have a news destination online they would call a “favorite,” and even among these users only 19%2 said they would continue to visit if that site put up a pay wall.

In the meantime, perhaps one concept identifies most clearly what is going on in journalism: Most news organizations — new or old — are becoming niche operations, more specific in focus, brand and appeal and narrower, necessarily, in ambition.

Old media are trying to imagine the new smaller newsroom of the future in the relic of their old ones. New media are imagining the new newsroom from a blank slate.

Among the critical questions all this will pose: Is there some collaborative model that would allow citizens and journalists to have the best of both worlds and add more capacity here? What ethical values about news will settle in at these sites? Will legacy and new media continue to cooperate more, sharing stories and pooling resources, and if they do, how can one operation vouch for the fairness and accuracy of something they did not produce?

The year ahead will not settle any of these. But the urgency of these questions will become more pronounced. And ultimately the players may be quite different.

“I think the answer may come from places staffed by young people who understand the new technology and its potential and who have a passion for journalism,” said Larry Jinks, the highly regarded former editor and publisher who transformed the San Jose Mercury News a generation ago and who still sits on the board of the McClatchy Company.