Against the background of one of the worst economic meltdowns in modern history, the move from analog to digital technology continues to race ahead on many fronts. One of the biggest trends involves news, which is transitioning to the 24/7 rapid-fire world of the Internet’s Web.
With its rich multimedia capability, the Web is challenging traditional media outlets on multiple fronts. The once well-defined products of traditional media businesses are becoming increasing blurred on the Web.
While seeking to remain economically viable in tough times, these companies are forced to redefine and create new kinds of content for their online brands. Because many serve local markets, most desire to extend beyond those markets to tap larger audiences and new income sources.
Newspapers, while fighting a decline in print formats, are adapting a multimedia approach online —combining text, video, audio, still photography and advanced graphics to tell stories in a new way. Television news outlets, faced with a steep decline in local advertising, are attempting to compete with similar online techniques.
The news stories themselves are also pushing the media companies into new kinds of coverage. Take the recent death of Michael Jackson. Breaking news came fast, and the Web was the go-to place for those following the evolving Jackson story, especially for younger people who have grown up using the Internet for information.
“We saw a major step forward toward our shared goal of bringing the news to people when they want it and how they want to get it,” ABC News president David Westin wrote of the Jackson coverage in an internal memo. “We truly came to the audience, rather than expecting them to come to us.”
Another breaking story this summer — the violence after the Iranian election — brought another new twist to Web-based news. It was unique because the Iranian protesters used Twitter, the micro-blogging service, to organize their protests. ABC responded with a unique Web-based program — Iran in Crisis—that didn’t appear on television. It also embraced Twitter to get information to the audience.
News on the Web may eventually become a field-leveler for all media outlets — especially those without cable television channels. Right now, NBC has an advantage over CBS and ABC with MSNBC on cable. That advantage may disappear as the Internet replaces cable as the most important news platform.
Local stations are also competing on the Web, but — so far — not as aggressively as the networks or their newspaper competitors. Faced with the worst local television advertising market in decades, most stations are cutting back on their news staffs and coverage.
Double-digit declines in the sales of leading U.S. automobile manufacturers have devastated the local ad market, which depends on the car commercials for 25 percent of its revenue. Also, a dramatically increasing unemployment rate is not helping local ad sales.
Many local television broadcasters, no matter what they do, cannot reposition themselves fast enough to generate income from digital media. Still suffering are even those doing the right things by extending themselves to the Web, offering multiplatform buys to advertisers and making digital carriage deals with cable operators. These include TV station owners like Hearst, Belo, Gannett and Scripps.
Recognizing that most local broadcast stations don’t have the skill, money or infrastructure to launch a global online operation, third parties are trying to help. A leading player is WorldNow, a New York City-based company with a suite of online products, consulting services and revenue programs that enable local media outlets to build new businesses on the Internet.
So far, WorldNow has signed nearly 500 media clients including ABC, Cox Enterprises, Raycom Media, Fisher Communications, Young Broadcasting, Barrington Broadcast Group, Drewry Broadcasting Group, CBS Radio, Dispatch, Griffin Broadcasting, Journal Broadcasting, Local TV, Media General, News Press & Gazette, Quincy Newspapers, Tribune and Schurz Broadcasting.
The company provides its client stations with a range of services, including a Web site publishing platform, broadband video services, advertising and sales programs, and a local auto classifieds site called WorldNow Cars.
New competition to local media is also contributing to the pressure for all media outlets to expand to the Web. One example is ESPN, who is challenging both local TV stations and newspapers with Web sites for local sports. The first sites are in New York, Los Angeles, Chicago and Dallas.
After a test in Chicago in April, the ESPN local site became Chicago’s top sports Web site. ESPN said it plans to expand such hyperlocal sports coverage in cities across the country and will compete for local ad dollars. The network will also leverage its local radio stations to promote the sites.
Of course, for all the media transitioning to the Internet, a huge question remains: How can broadcasters make money online? Unfortunately, there are plenty of opinions, but no clear answers.
The good news, however, is that most Web programming is cheap to produce, allowing the use of existing staff and low-cost equipment. With a few paying sponsors, Web programming can by made to at least break even in cost. Web revenue, however, is not enough to support and sustain the high quality of programming one expects from a top television or newspaper outlet.
Finding a sustainable online financial model for Internet media is the industry’s Holy Grail. Yet, with no hard blueprint for Web news growth, most outlets see a need to expand their existing branded content online while creating something totally new. The “new” part is still elusive.
One hard economic fact: Internet advertising is growing while television is declining. Internet revenue will grow 10.1 percent in 2009, according to a report issued in July by ZenithOptimedia, the media services company. By comparison, television ad spending is estimated to drop 7.1 percent.
One of the reasons advertisers like the Internet is the preroll commercial. Video is one of the few formats online where the broadcaster can guarantee an advertiser that eyes have actually watched an ad. That has proven highly effective in selling Internet media.
The chaos of the moment provides the opportunity for broadcasters to move beyond their on-air TV signals to a new distribution medium that both expands their audience and gives the potential for higher ad revenues when the economy bounces back. It’s a huge new opportunity for growth.
When larger audiences get their news online, the advantage of the 24/7 cable networks decline. There’s the opportunity for savvy broadcasters who chose to expand online to take back much of their lost audience.
But, in these difficult economic times, taking advantage of the opportunity is much easier said than done.