During the twentieth century news products were widely used, fast-moving consumer goods. Because media operated in relatively inefficient markets, news organizations were cash-producing investments with high cash flows that yielded high profits. Newspapers had asset-heavy balance sheets and excellent equity positions.
The business drivers of the legacy news industry in the latter half of the twentieth century were growing consumption in absolute audience sizes (but declining penetration that most executives ignored). Companies changed high prices for advertising and set low prices (or no price) for consumers. They had the ability to self-finance operations and growth, carried relatively low debt loads (with the exception of a few firms during acquisition binges in the late 1990s and first decade of the millennium), and their shares were highly desired by investors.Those conditions have changed markedly. The emergent business characteristics are that news is a low-demand consumer good with niche audiences, producing low cash flow, requiring asset-light balance sheets, and producing normal rather than excess profits.
Today there is diminishing consumption of news in traditional forms by audiences and advertisers, increasing prices for audience consumption and decreasing prices for advertising in many media. Low debt loads have become a necessity and most news organizations are no longer attractive investments. These changing characteristics and business factors are not a short-term problem, but represent a comprehensive transformation of the industry.
Compounding these business challenges is the reduced value of news and information content provided by most news organizations. Fifty years ago, you had to read a newspaper if you wanted to know what the weather was going to be, whether your favorite team won the match last night, whether share prices of your investments were up or down, what was happening in the school your children attended, whether the government was planning to increase taxes, whether the conflicts in other parts of the world were going to affect you, and what commentators were saying about public affairs.Today, we have enormously increased amounts of news and information available from a wide variety of paid and free sources. At the better end of the spectrum is expert journalism in which economists, scientists, bankers, and other cover many topics of interest and specialized independent journalists and news organizations that are covering military affairs, social benefits, and corruption. Unfortunately, the overall trend is toward a narrower form of news and information, with reduced focus on issues, oversight, and analysis, and an inordinant supply of celebrity, sports, and entertainment news.
If legacy news providers are to overcome the content challenges, they will need to rethink and improve the value of content on all their platforms and strive to make their news and information unique. The content of news organizations will need to be reconceptualized and can’t just be moved across platforms because each is a different product, used in different ways by consumers, and needs different types of news and information to be prominent and presented in different forms.
Of equal importance, news organizations and journalists will need to interact with audiences in new ways that are outside their comfort zones. This is problematic because journalism has traditionally had highly paternalistic role definitions, seeing its functions as educating the rabble, guiding thought and opinion, protecting social order, and comforting the people. These definitions combine with professional values promoting wariness of social alliances and distrust of sources of information to make most journalists stand separate from the society and people they cover.Those attitudes create significance relevance problems in the digital world because it is networked and collective, based on relationships and collaboration, and relies on connections built on shared values and interests, acceptance, transactions, reciprocity, acceptance, and trust. The public is increasingly adopting values and norms of the digital world and this is creating many conflicts with journalism.
Journalism remains firmly rooted in the material world which is based on structured relationships, privacy and concealment, property, hierarchy, control, and formality. But the digital world is based on more amorphous relationships, revelation and transparency, sharing, collaboration, empowerment, and informality. Consequently many news organizations have difficulties relating to the public in the digital world and are struggling to adapt.
For news organizations, adjusting to the new world is not simply a matter of finding new revenue, moving content to new platforms, and maintaining existing relationships with the public. It will require a complete rethinking of the roles and functions of news media, how they fit into peoples’ lives, and where they are positioned in the new information environment. These are enormous challenges and need to receive increased attention.