Let’s pause and look at trends that have emerged over the last few years: How will they affect the digital newsmedia industry? First, we’ll try and list a few undisputed facts. Then we’ll drift towards conclusions bordering the uncharted territory of predictions. It’s worth the risk.
The web fuel problem. The internet economic engine isn’t firing on all cylinders. For online news, that’s an understatement. The primary source of income, advertising, has proven itself unable to sustain ambitious journalism. There might be exceptions here and there, a few news organizations have found their way to profitability, but they flourish in niche beats. For example, Politico, which covers Washington DC’s arcana — but it relies on hybrid model (web and print).
Others benefits from a powerful mothership such as New York Times Digital’s DealBook on finance: with a 2.5 to 3m unique visitors a month, this eight journalists operation could break even if it were granted a separate P&L. (DealBook also brings intangible but highly valuable status to the NYT in its fight against the Wall Street Journal.) But these are specialized products.
Observers mention the Huffington Post, with its presumed 10m UV/month, as the prototype for a popular internet news success. To me, the HuffPo is not a journalistic product per se. Taking third party content, the HuffPo builds a clever participatory mash-up, with a focus on juicy stuff. The whole thing is staged it in such a way (splashy editing, pictures, headlines) that it triggers loads of prattling — and page views. Fine. But this is not hardcore journalism.
As we speak, a 50-100 people newsroom stands no chance of living by advertising alone.
This state of affairs won’t change anytime soon. Last year, US ad spending fell by 9% and we know the recovery will take a while. As the CEO of Zenith Optimedia (Publicis Group) said last week in Paris: “In terms of revenue, 2012 will be like 2006″. This even though he predicts the money invested on the internet will keep progressing and will end up coinciding with the time people spend online.
That’s fact #1: don’t count on advertising. At least not in full ad-supported mode, not for a while.
Audience concentration. Worldwide traffic on social networks has doubled in one year. If we go back to December 2007, it grew threefold since then.
On major markets, there is no sign of saturation. Actually, quite the contrary: in the US, the growth is 43% in just two years. This growth partly organic, with Facebook now beyond the 400m members mark. But time spent is increasing as well. On Facebook, it now reaches almost 6 hours a month, six times more than its nearest competitor MySpace, and two more hours than just a year ago.
In the meantime, the time spent on clever utilitarian sites such as free classifieds is still growing in less-mature markets. In France, Le Bon Coin (see our story Learning from free Classifieds) is still growing at a triple digit rate and serving about 4.5 billion page views a month, with users viewing 30 or 40 pages for each visit. Worldwide, an increasing number of people rely on LinkedIn for job-hunting, as scores of large companies use it for recruitment (read this piece in Fortune).
Each time I travel to the United States, I see thirty-somethings glued to an increasingly dominant triple-windows setup: Facebook for social interaction, Craigslist for daily dealings, and Hulu for catch-up TV viewing. (Add a couple of news aggregators from Google and others and you get the whole picture). That was in case you still wondered why time spent on newspapers has gone down, from 42 minutes a month in 2006 to 32 minutes now (these are US figures, to large extent applicable elsewhere).
That’s Fact #2: the audience is flocking to social nets, and to a narrow group of useful/entertaining sites, at the expense of newsmedia. More