ONLINE VS OFFLINE

[I wrote this in the Calcutta Telegraph of 13 January 2009. I came in touch with American media when I spent a year in Stanford in 1999-2000, and was impressed by its vigour and variety. Developments in the US are a pointer to what will happen elsewhere.] THE US NEWS MARKET

Indians still read newspapers. Some get their news from television; fewer from the internet. The variety of sources is greater in the United States of America. Television and internet are more widely available. Within television there is a distinction between networks, which are available free to anyone with an antenna, and cable TV, which offers many more channels on payment. Radio, which has almost died out in India, is an important medium in the US because many Americans listen to it while driving. Magazines such as Time and Newsweek sell in millions. All these media industries are themselves full of competitors. So there is lively competition in the US news market. Pew Research traces it every year. Its findings are an interesting indicator of what might happen here too as the market develops. America had 1,437 newspapers in 2007, 15 less than in 2006. They are the medium of the aged; the young read them less. And young and old, fewer are reading newspapers every year. The proportion of people aged 65 and over that read newspapers in 1999 was 72 per cent; as against this, only 42 per cent of young people aged 18-24 read them. These ratios had fallen by 2007 to 67 and 34 per cent respectively. That means that newspapers were losing circulation, not that they were losing readership. All newspapers had started online editions, whose readership was not doing badly at all. If the 59 million people who visited those websites in the third quarter of 2007 are counted in, newspaper readership was rising. The only problem is that online readers cannot be made to pay. Online news sites carry advertisements, but it is difficult to estimate their impact on advertisers’ markets. It depends on how long readers stay on a website, how much attention they give to advertisements, and how seriously they take them. The result is that newspapers find it difficult to convince advertisers that advertising on news websites is remunerative, and to make the advertisers pay much. Total online advertising revenue was $15.2 billion in the first nine months of 2007 — hence close to $20 billion for the year. But online revenue on news sites was $767 million in 2006 — perhaps $1 billion in 2007. It is better economics to advertise on porn and celebrity sites than on news sites. Online videos attracted advertising revenue of $775 billion in 2007. As a result, despite online editions, newspapers have lost revenue and have had to cut costs. They have cut staff; speciality reporters — on education, religion, and sciences — are the ones most often dismissed. Loss of readership is greater amongst the US’s many local newspapers, presumably because cable TV and local radio cover local news more quickly; as a result, local newspapers have reduced local coverage and fired local staff. The newspapers’ biggest competitor was television, but is now internet, whose daily readership matches TV viewership. More internet users have their own access, as against at office or in cybershops; 54 per cent of adults had their own broadband connection at the end of 2007. As a result, they are going online more often; 72 per cent of internet users said that they had been online the previous day, and the proportion of people who said they had gone online for news increased from 26 per cent in 2002 to 37 per cent in 2007. They spent more time online, increasing their average hours per week from eight hours in 2005 to 11 hours in 2007. The internet news market is concentrated; the top 10 sites account for 29 per cent of the traffic, while the top 10 newspapers command only 19 per cent of the market. Web news is also more concentrated; a typical website gives much fewer news items than a typical newspaper. The most popular news websites belong to TV channels; in 2007, Yahoo News attracted 32.6 million unique visitors per month, MSNBC 29.2 million, CNN.com 29.1 million and AOL 20 million. But they are not the ones that made most money from their websites; Google made the most money. Newspapers have realized that they are not very good at making a success of the online business, and they have flocked to professional internet operators; 600 joined an alliance led by Google, 415 Yahoo and 160 an alliance formed by Monster.com, the job site owner. Even the TV news channels are facing the heat from Google and Yahoo. CNN, MSNBC and AOL lost 1.2 million viewers in 2007; their average nightly viewership fell to 23.1 million. As a result, they reduced their staff by seven per cent in 2007. The cut amongst producers — who produce programmes — was 24 per cent. Surprisingly, the channels increased the number of overseas bureaus; they had 46 between the three of them in 2007. But for Americans, overseas bureaus are probably cheap; most of them are one-man operations. The internet was expected at one time to democratize news. Anyone can collect news and put it on the internet; so in theory, costly, commercial news-sellers should die out. There are estimated to be 70 million blogs in the world. American bloggers have been found to be better educated — a higher proportion of them have post-graduate degrees than topline columnists. Still, amongst news sources Americans regarded as important, blogs came pretty low; 30 per cent mentioned them, as against websites (81 per cent), TV (78 per cent), radio (73 per cent), newspapers (69 per cent) and magazines (38 per cent). Even gossip with friends and neighbours ranked higher (39 per cent). News magazines suffered from competition just like newspapers. In 2007, the circulation of Time fell from four million to 3.4 million, and of Newsweek from 3.1 million to 2.6 million. Time Warner lost its perch as the largest revenue earner from magazines; Condé Nast, which publishes glossies, earned more. In terms of customers, radio leaves newspapers and TV far behind; 233 million, or 93 per cent of Americans over 12, listened to traditional (analogue) radio at least once a week, and 16 per cent listened to news. One reason is the entry of new technology; in early 2007, 30 per cent of Americans owned an iPod or an MP3 player. Listening to news was a byproduct of listening to music. Internet radio is still in its infancy; 29 million people listened to it in April 2007 — 52 per cent of them at work. Radio earned $21.3 billion in revenue in 2007. All this refers to the mainstream, Anglophone market. Apart from it, the US now has a significant Hispanic niche market amongst migrant Mexicans, who bought 17.8 million newspapers on an average day. They are also avid readers of magazines, of which they bought 11.4 million a week. I am sure Indians are not absent in this picture. When I went to Washington on behalf of the government in 1992, I was met by a representative of an Indian weekly. It was pretty lousy; but in line with the technical march of the rest of the US media, I am sure Indo-American media have progressed too. I have no idea where to, but I would be surprised if some Indo-American is not publishing a matrimonial magazine.