Monday, March 14, 2005

Investment Cuts to Internet Hurt Media Companies

Cuts to 'Net Investment Hurt Media

New York Newsday

BY JAMES T. MADORE. STAFF WRITER

March 14, 2005

Faced with declining audiences for their traditional products, daily newspapers, television stations and other mainstream media aren't spending enough money on what could be their salvation: their Web sites, according to a new study.

The Project for Excellence in Journalism found there have been significant cuts in Web news operations since 2001 compared with traditional newsrooms. The reductions occurred even as Internet traffic soared and some experts predicted the future of traditional news organizations, in particular newspapers, could be in cyberspace.

The Washington-based think tank blamed the Web cutbacks in part on pressure from Wall Street for higher profits from media companies, many of which are struggling to maintain their audience share. Most sites continue to lose money while advertising revenues are tiny compared with those generated by papers and television, the study found.

"If online news increasingly appears central to journalism's future, the question of newsroom investment becomes critical in looking ahead," said Tom Rosenstiel, the project's director and principal author of the State of the News Media 2005, due out this morning.

"Indicators in 2004 suggested that if organizations are investing at all, they are doing so cautiously ... The risk is we will cede the audience that's growing online to competitors who aren't journalists," he said.

Rosenstiel and others said cuts in Web newsrooms have meant less original content and fewer updates, along with a reluctance to embrace new technologies that allow for video reports, blogs and greater interactivity. MSNBC.com, for example, has reduced the number of stories compiled by staff from wire reports and other sources. And some papers' sites consist of little more than what has been in the print editions, Rosenstiel said.

He cited a poll, conducted last spring by the Pew Center for the People and the Press, that found 62 percent of Internet journalists had seen a reduction in their newsroom staff compared with 37 percent of traditional journalists.

"The investment in online news was never huge and it hasn't maintained itself. If money is being spent, it is for machines, not people," Rosenstiel said.

The top five news sites during the first 10 months of last year were CNN, Yahoo, MSNBC, America Online and newspaper publisher Gannett Co., according to the 617-page study. Two of the sites aren't from journalism organizations, and together with Google News, account for much of the growth in online traffic.

Traditional media's reluctance to spend large sums on their Web newsrooms will result in mediocre coverage that drives audiences elsewhere, said Rosenstiel, causing the companies to eventually become irrelevant.

Such conclusions received a mixed reaction from news organizations and trade groups.

Tom Regan, executive director of the Online News Association, acknowledged that Web newsrooms are smaller today than during the boom years of the late 1990s. But he said the reductions are due primarily to improved technology that has eliminated the need for journalists to write computer code to post their stories on the Internet.

"Young people look at the computer the way you and I look at TV," Regan said. "They see the content, not the technology ... Online is where the audience is going, so it's important for traditional media to invest in online media."

Regan, who is associate editor of the Christian Science Monitor's site, identified as examples of increased investment: ny times.com, washingtonpost. com, The San Diego Union-Tribune's signonsandiego.com and various sites from California-based McClatchy newspapers. Others praised ABC News for creating a virtual newscast.

At The New York Times, spokesman Toby Usnik said the company has increased the number of journalists and business people working on its site. He also said 73,000 online users had purchased subscriptions to the paper last year.

Newsday Interactive general manager Tony Wills said the number of journalists working on newsday.com and nynews day.com had increased by 30 percent in the past three years. He added, "The Internet bubble may have burst, but you don't pull back on resources."

1 comment:

NMThoughtLeader said...

And you thought cable operators were an antiquated bunch...newspaper operators are probably tied with them for leveraging new business models. From their perspective I guess there is some logic to not attempting to fix something that is not very broken, but the net has always been an opportunity to extend what is already working and to build a whole new channel. I think this article reflects that those who get this are moving accordingly. Those who do not get it, will scramble in a reactionary fashion.