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Report: The Rise of Tech Is a ‘Mixed Blessing’ for News Organizations

With PCs, tablets, and smartphones, access to news is better than ever, but the news industry is slow to shape technology to its needs


Even for newspapers, it’s a mobile world.

Mobile devices have increased consumers’ appetite for news and increased the appeal of traditional news brands, according to the ninth annual State of the News Media report, produced by the Pew Research Center’s Project for Excellence in Journalism.

The backdrop for that bit of encouraging news, though, also highlights a growing divide between rapidly advancing technological developments in mobile communications and the news organizations that produce content. Technology companies such as Google (NASDAQ:GOOG), Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), and Facebook, the report notes, are focused on improving their data-gathering and advertising strategies. The news industry, which is still focused mainly on creating content, has had trouble keeping up with tech developments and adopting them to its advantage.

Not that journalism doesn’t have a future. But it could be one in which big technology companies acquire major news brands, or at least forge partnerships that expand their menu of content offerings.

Some major new organizations, such as the Washington Post and News Corp.’s (NYSE:NWS) Wall Street Journal, for example, have partnered with Facebook to take advantage of its Social Reader utility, which allows Facebook users to personalize the selection of news stories they see on Facebook’s Social Reader pages for each paper.

Looking for ways to reverse a revenue slide

Meanwhile, some newspapers are creating their own digital ad sales networks, offering digital marketing and consulting. The Pew report also points out that a few organizations, such as The Financial Times and The Boston Globe, are saying no to mobile apps from Apple and Google and instead are creating their own mobile pages using HTML 5.

Still, the news industry has a long way to go to reverse current trends toward revenue losses. Eight in 10 people who get their news on smartphones or tablets also read news on PCs. The Pew study found, though, that newspapers lost $10 in print advertising for every $1 gained in online ad sales in 2011, while in 2010 they lost $7 in print advertising for every $1 gained online. Combined, circulation and advertising revenue have fallen 43% since 2000, the study showed.

Why? Newspapers are not delivering to advertisers the consumer-specific data that they want. Five technology companies accounted for 68% of all online ad revenue generated last year, and that list does not include online retailer Amazon and Apple, whose revenue comes largely from online retail sales and sales of electronic devices. By 2015, Facebook is expected to account for 20% of all digital display ads sold, the study said.

A positive aspect of all this is that newspapers in print and digital forums still remain a vital and primary source for news about government and civic affairs — and that, Pew notes, could be what drives the industry to finally catch up to the technology and develop ways to exploit it for revenue.

Article printed from InvestorPlace Media,

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