Digital Journalism

The Economics
of Digital Journalism:
What Happens When
Traditional Newspapers
Go Out of Business in 2039?
W. R. Neuman
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The Digital Dozen

Twelve issues we had better get right if
independent, high-quality, professional
journalism is to thrive in digital era.
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1) A clear-eyed assessment of
the history of journalism
Were it left to me to decide whether we
should have a government without
newspapers or newspapers without a
government, I should not hesitate a
moment to prefer the latter
Never pick a fight with people who
buy ink by the barrel
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The Romanticized History

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The Romanticized History

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The Romanticized History

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The Romanticized History

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2) A shift from a posture of

defense to reinvention
Worth defending?
 Sure
Likely to be a successful strategy?
 Not in the long run
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David Lazarus
San Francisco Chornicle 3/14/07
I'll come right out and say it: It's time
for newspapers to stop giving away the
store. We as an industry need to start
charging for -- or at the very least
controlling -- use of our products
online.
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David Lazarus
San Francisco Chornicle 3/14/07
 My thinking is that this is approaching a
life-or-death struggle for newspapers, and
an antitrust exemption may be the only way
that the industry can smoothly make the
transition to a digital future.
 Put simply, we need to charge a fair price
for our products, and we need to do so
together.
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3)The happy accident of

newspaper economics

Production Technica Audience

l
Medium

$ Advertising $
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3)The happy accident of

newspaper economics
Percent Advertising Economics
Books 0%
Movies 0%
Magazines 50%
Newspapers 70%
Radio and TV 100%
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3)The happy accident of

newspaper economics
Newspaper Industry Profits 25.2%
Magazines 4.5%
Books 5.5%
Agriculture, Mining, Mfg ~5.0%
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3)The less happy accident of

newspaper economics
45

40

35

30

25

20

15

10

0 1

S1
3

1935 1945 1955 1965 1975 1985 1995 2005

7

8
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3)The happy accident of

newspaper economics
McClatchy Co. CEO Gary Pruitt April 2006
 All those skittish investors who think
newspapers are a dying industry are, in fact,
dead wrong.
 Far from shrinking, our audiences are
growing steadily. Simply put, more people
want our products today than wanted them
yesterday.
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4) The ideal of media diversity

Based on concept of local media
market
Rethinking diversity – the paradox of
critical media scholarship
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5)The Sunstein thesis

The ‘Daily Me’ Icon
Behavioral studies contradict the
Sunstein thesis
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6) The long tail thesis

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7) Ogilvy’s dirty little secret

The relationship between investment in
advertising and increased sales is
stunningly weak, and conditioned on a
complex of environmental factors
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8) Amateur hour: blogs and wikis

Don’t vilify the amateurs
Learn from them
Take a lesson from Jimmy Wales
And from Google
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9) Meyer’s thesis
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10) The false hope of the

‘online newspaper’
The economics just don’t work
Shoveling newspaper content over to a
web site and charging admission is a
non-starter
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11) Transcending the trinity

Norms of professional journalism
Wall Street’s ROI
Academic research on media effects
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11) Transcending the trinity

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12) A viable economic model for

sustained high-quality journalism
The new model?
“ ‘Sup?” query
Personalized
Reliable
Branded
Google model
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The Magic, All-Knowing

Answer Machine
 Commercial 31%
 Reference 26%
 Popular Culture, Sports 11%
 Social 10%
 Sexual, Erotic 9%
 Health 7%
 Government and politics 3%
 News and current events 2%
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You Need To Know What

This Man Knows

Amit Singhal
Google Ranking Algorithm Czar
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Transaction-Based
Business Model
 User-Created Content
 Pull Rather Than Push
 Context Sensitive Search
 Personalized Search
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The Bottom Line

The future of news is the search engine
 Not the newspaper
And not the evening network newscast