The new Pew report called "Project For Excellence In Journalism" found that Americans are abandoning newspapers and magazines as sources of information at an extraordinary rate and turning to cable and the Internet. Between 2008 and 2009, the cable and online audiences grew nearly 10%, but newspapers dropped over 10% and magazines nearly as much.The Internet is not the "wild, wild West" of news and information that many people believe it is. Pew looked at 4,600 news and information sites and found "the top 7% collect 80% of the traffic." And online visitors are picky about where they get their news. "Most people, 57%, range from using two to five websites, and only 12% use more than six," the report notes.
Oddly enough, many people do not know what their favorite news site is, and many would switch if they had to pay for access to news. "Only about a third (35%) can even identify a favorite news website. And of those that do, only 19% said they would continue to visit if that site put up a pay wall," says the report.
How Valuable Is This Info?
Old media has one advantage according to the research: Most of the successful new media online sites are owned by old media companies that use their online presence as a hedge against their traditional bases. Notes the Pew survey: "The vast majority of the top news sites (67%), moreover, are still tied to legacy media financed largely by the shrinking end of their business."
The survey's methodology is complex and draws on data from different sources, which may cause some analysts to question its accuracy. But assuming the Pew analysis is largely correct, what does it mean?
The information confirms some old assumptions, and to that extent it is not terribly valuable. Newspaper, magazine and local-TV audiences are dropping. This would cause most people who look at the report to agree with the old media strategy of getting as much of their traditional material online as possible. The survey's one conclusion that should encourage old media is that they own most of the successful new media news and information sites, which get much of their content from the old media operations.
Still Dependent on Advertising
The other side of the coin isn't as good for online news. People are not terribly loyal to their sources of Internet information. If one of the sites that they visit erects a pay wall, many people are likely to move to another of their "favorites." This might cause analysts to believe that as long as some large news sites are free, setting up successful pay walls around others will be fruitless.
Pew's data show that pay walls face difficult odds as a way to make money on the Internet. That means advertising remains the key to revenue and profits. Online ad sales are probably not robust enough yet for that to work. What the survey doesn't show is that online sales are doing just fine -- if you're Google (GOOG).
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