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"
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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."

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