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PEJ: Google, Facebook Are Future of News Delivery

New report says traditional media have become dependent on digital players 3/14/2011 12:01:00 AM Eastern

Move over CNN, ABC and New
York Times
, Google and Facebook could be calling more of the shots in news
delivery if a new study is any indication.

The fundamental challenge to journalism may be that it is no
longer in charge of its own destiny in a digital world that has introduced a
new layer of complexity and new players on whom traditional media have become
dependent.

That is according to a copy of an overview for the annual
Project for Excellence In Journalism
State of the News Media Report, which was released Monday morning. The eighth
annual report includes an analysis of eight main media sectors and is based on
both data collected from various sources and original work including content
analysis in-house and by outside experts.

That new layer of players includes ad networks, device
makers, content aggregators and software engineers, the majority of whom will
know more about their audience than the news organizations. "That is a
major structural problem," PEJ says.

Which means that the Googles and Facebooks are going to have
a growing role in how news is disseminated.

"In the digital space," says the report, "the
organizations that produce the news increasingly rely on independent networks
to sell their ads. They depend on aggregators (such as Google) and social
networks (such as Facebook) to bring them a substantial portion of their
audience. And now, as news consumption becomes more mobile, news companies must
follow the rules of device makers (such as Apple) and software developers
(Google again) to deliver their content. Each new platform often requires a new
software program. And the new players take a share of the revenue and in many
cases also control the audience data."

That is because in a world of exploding content choices, the
future belongs to those who can gauge interest and behavior and target content
and ads. "That knowledge - and the expertise in gathering it -
increasingly resides with technology companies outside journalism," which
suggests traditional media should try to bring that expertise in-house if they
want to continue to control their output. NBC, CBS and Forbes are among those
who have launched their own ad exchanges, for example, "tired of sharing
revenue and having third parties take their audience data."

Among the report's major takeaways include that, for the
first time in a decade, all three cable nets lost median audience in 2010, with
only the Web growing as a news platform.

Among the other key trends the report identifies are:

1) "The news industry is turning to executives from
outside," in part as a response to that new layer of expertise outside the
traditional newsroom management and partly because increasingly owners are from
the outside as well in the form of private equity investors.

2) "Less progress has been made charging for news than
predicted, but there are some signs of willingness to pay."

3) "If anything, the metrics of online news have become
more confused, not less." Both news and entertainment content face the
same challenge of coming up with new ways to measure new media audience and ad
effectiveness as they try to connect the dots (or dotcoms) between content
delivery and dollars. The study points out that comScore numbers are sometimes
double or triple those of Nielsen.

4) "Local news remains the vast untapped
territory." The report suggests that, at least in the nonprofit sector
online, "no one has yet cracked the code for how to produce local news
effectively at a sustainable level." [B&C
editor's note: it remains one of the economic drivers for local TV
broadcasters, however].

5) "The new conventional wisdom is that the economic
model for online news will be made up of many smaller and more complex revenue
sources than before."

6) "The bailout of the car industry helped with the
media's modest recovery in 2010," as did the Supreme Court. Auto
advertising jumped 77% in local television, for example, and the High Court's
decision to allow direct corporate and union funding of campaign ads (the
Citizens United case) helped boost ad spend on local TV to $2.2 billion in the
midterm elections, a new high.

March