Pew Study: Rising Mobile Usage Challenges News Orgs

Online and digital media consumption of news jumps but digital revenues aren't keeping pace as the news business enters the "era of mobile pennies"

George Winslow -- Broadcasting & Cable, 3/18/2013 12:01:00 AM

Viewed simply from the angle of consumer adoption, online and digital media remain one of the few bright spots in news business, with 39% of respondents getting news online or from a mobile device the day before they participated in the Pew Research Center's 2012 News Media Consumption survey.

That is up from 34% in 2011, making digital media the only category to show growth in 2012, according to Pew's Project for Excellence in Journalism (PEJ), "2013 State of the Media" report released on March 18.

When all digital media news sources are included the share of people who got news from one or more digital sources hit 50% for the first time ever in 2012. All other categories, including radio, newspapers and TV, which remains the most popular source of news, saw declining usage.

The report also cited evidence that the shift to digital media may actually be encouraging people to consume more news. Among tablet owners, for example, 31% reported that they were spending more time with news and 43% were adding to the news they consume, according to a Pew Research Center Project for Excellence in Journalism survey in collaboration with The Economist Group.

But the growth in digital media continues to create serious economic challenges for many news organizations which generally make little money from digital platforms.

"As readers and advertisers dive headline into the mobile era, the outlook for news companies remains difficult," the report explains. "For much of the past 15 years, news organizations have been forced to trade print dollars for digital dimes, as revenues from print and television evaporated far faster than digital revenues have grown. Now things may have gotten even worse: News may be entering the era of mobile pennies."

Newspapers have been hardest hit by the trend, but it also impacts TV stations, network TV news and cable news because digital revenue for online and mobile video remains miniscule.

Overall, online video advertising was just $2.9 billion in 2012, despite a 47% jump from 2011.

Mobile advertising meanwhile was just $2.6 billion despite 80% growth, according to stats from eMarketer cited in the report. And mobile video was only $152 million in 2012.

Another major financial problem in the ongoing shift to digital consumption of news is the dominant role played by the major online and tech players in the digital ad world. Digital advertising grew at healthy rates in 2012 to $37.3 billion and "now make up 23% of overall U.S. advertising, up from 20% in 2011," the report noted. "They are second only to television ads in terms of overall dollars and are growing three times faster."

But most of this goes to a handful of major companies. "Together the five largest companies -- Google, Yahoo, Facebook, Microsoft and AOL -- pocketed 64% of all digital ad spending in the U.S. in 2012," the report noted. "eMarketer projects the five companies will retain roughly the same market share in 2013."

Worse, the costs of delivering content to many different consumer smartphones and tablets continue to rise while online ad pricing continues to drop, the report notes. "The intensifying competition from automated advertising networks...together with the low quality of many mobile ads...are driving digital ad rates lower," the report argues. "Rates for Web ads are sinking and those for mobile were miniscule to start with....Even as their revenue picture darkens, news organizations have little choice but to invest time, personnel and resources in the proliferating spate of digital and mobile platforms."