Web News Aggregation Conjuring Trick or Brave News World?

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“Real” Journalism, Real Profitable?
In the long term, media watchers worried about information quality and diversity believe the industry must invest in more original reporting as an alternative to the few genuinely international news organizations now on offer, and give more prominence to buying and properly translating original non-English language reporting from around the world. But news websites struggling to break even will look askance at such demands. Most view fast-breaking hard news (and lots of it), or personality-based soft news as the keys to attracting users, and as such, advertising dollars.

But has that business model been proven yet? Job outplacement firm Challenger, Gray, and Christmas reported that last year the U.S. media sector planned 17,809 job losses, with many of those in newsrooms. However, a recent study challenged publishers’ widely held belief that newsrooms are a publisher’s biggest cost center rather than its prime profit center. The study looked at 10 years’ worth of financial data from more than 900 newspapers, analyzed the revenues and expenditures from news, advertising, and circulation departments and predicted profitability.

Esther Thorson, director of research for the Reynolds Institute at the University of Missouri-Columbia School of Journalism, and co-author of the research, asks, “If you invest more in the newsroom, do you make more money?” Thorson found that “the answer is yes. If you invest less, then pretty soon the news product becomes so bad that you begin to lose money…investing in news quality improves circulation and advertising revenues, which are the bulk of a newspaper’s revenues.” But for most publishers, the jury on these issues has still to reach a verdict, as State of the Media 2007 (an annual report on online journalism) states, “The economics of the internet remain journalism’s billion-dollar mystery. And in 2006, that mystery only seemed to deepen.”

Paterson’s study concentrates more on measurement than the causes of these trends, but he points out that “it makes economic sense that the two leading news agencies should dominate international news delivery in cyberspace, for as in any open and unregulated market, the strongest producers with the lowest unit costs thrive.”

“However,” says Blossom, “the AP and Reuters find themselves increasingly challenged by niche news wire providers such as AFX, Al Jazeera, Xinhua, and other news agencies that are eager to provide English-language international services, albeit with fewer multimedia capabilities but with increasing respect and broader coverage.”

To date, the track record of new media startups in this area has been disappointing. TVNewsWeb, an innovative potential third television wire-service agency, collapsed in 2001. In the same year, OutThereNews was bringing unique inside coverage of Afghanistan to a global audience when financial backers pulled the plug. Today, the Globalvision News Network is surviving but is hardly a household word.

However, there are areas of weakness that new web-savvy companies could attack. State of the News Media 2007 found that “news sites seem to have done the least to tap the web’s potential for depth—to enrich coverage by offering links to original documents, background material, additional coverage, and more.” That kind of added value is difficult to automate, of course, and once human beings get involved, up go your costs.

Brave News World
At the end of the day, does the news customer really care about where news originates, as long as it is timely, accurate, and independent? Surely the rise of blogs, citizen journalism, and personalized newsbots make the broadcasting model of news an increasingly irrelevant dinosaur anyway? Some media watchers positively welcome this “cultural chaos.” Brian McNair, professor of journalism and communication at the U.K.’s Strathclyde University sees communication chaos “as a democratizing force, demystifying established power and laying bare its excesses, including those associated with the rise of spin and promotional culture.”

This may be fanciful, as Blossom predicts that “major wire services will continue to thrive as the thirst for news in a multitude of contexts grows via online channels. And there are more who want in on this game. Thomson is focusing on developing its own global news brand, as is Bloomberg in financial news circles. As news gatherers adapt to the web and begin to become more adept at getting their content monetized globally, I think we can expect the market share of news wires to remain fairly stable in a rapidly expanding overall news market.”

Paterson, however, is pessimistic. “It seems unlikely that either technological convergence or innovative journalism will dislodge the AP/Reuters duopoly in multimedia international news provision. Online news is becoming a substantially tailored mass-media product through the personalization of information delivery, but these phenomena make it no less a form of mass media than would the insertion of targeted advertising into a magazine delivered to someone’s home.” For journalists this means “resources are being devoted to endless distribution and redistribution, (so) internet journalism will continue to grow thinner.”

But Scott Moore, head of news and information for Yahoo! Media Group, arguably the current online news-market leader, is upbeat about the future.

“Of the total amount of time that people spend with different media—the internet today is about twelve percent...close to what radio is now. So it’s beyond magazines; it’s not quite to newspapers or to television. The amount of advertising that’s spent online today is only four percent, and that’s been growing too. But that gap will absolutely close over time.” According to Moore, Yahoo!’s news business is “growing at a rate of forty to fifty percent a year, off of a not-insignificant base. And we don’t have all of the fixed costs, all of the overhead that these dead-tree businesses have. So we’ll be able to invest more in investigative reporting and other innovative forms of journalism as we go forward. I mean, that just is the natural order of how it’s going to develop.”

It is in the nature of the web that no one can predict what the next global online phenomenon may be. If An Inconvenient Truth can be the biggest-selling documentary of all time, what’s to stop a sassy startup turning online news business models on their head? Consider the approach of Florida-based Informed Ape, which describes itself as “an upstart newswire service that exclusively features content for the 25- to 34-year-old newspaper non-reader.” News for newspaper non-readers? It might just catch on.

Companies Featured in this Article

ABC News
Agence France-Presse
Al Jazeera
AOL News
Arizona Republic
Associated Press
CBS News
CNN Interactive
Fox News
Globalvision News Network
Informed Ape
KRQE Television (New Mexico)
O’Reilly Radar
Pew Internet &
American Life Project
Shore Communications Inc.
The Calgary Sun
The Guardian
The New York Times
The Washington Post
USA Today

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