Media organizations are rapidly seeing a change in the way people consume content. It’s no surprise to anyone – readers and viewers are increasingly using mobile devices and social networks to discover media outlets from a variety of angles.
The proliferation of devices and content delivery methods has left an impression on journalism in another way, too – it’s changing the way media companies generate revenue.
The Pew Research Journalism Project reported recently on the impact of the changing media technology climate. Pew Research findings indicate that news in the U.S. is still clearly profitable – the industry made roughly between $63 billion to $65 billion in revenue last year – but the specific ways that journalism makes money are still evolving.
Below are three of Pew’s key findings about the present and future of American journalism:
Advertising still dominates
Advertising has long been the predominant way that media companies generate revenue, and that hasn’t changed. Pew found that in 2013, ad sales still accounted for 69 percent of all revenues. But in the midst of that constant, companies are changing how they sell and bundle the ads that they’re selling. For example, print advertising revenues are declining sharply as advertisers increasingly rely on online and mobile channels. The market for television commercials, however, remains fairly stable, but Pew anticipates that may change as audiences continue to migrate online.
Digital advertising is growing, but there’s concern that the increase isn’t fast enough to keep pace with declining legacy formats of ads. And, Pew cautions, that means that overall ad revenues are at risk for a drop-off in the years ahead.
Audience revenue also a factor
The second-largest source of revenue for media companies is circulation or subscription payments from readers and viewers, which total about 29 percent of revenues. But this, too, is an area where a seismic shift is taking place. Fewer people are paying for magazine and newspaper subscriptions today than in previous generations, forcing news organizations to squeeze more revenue out of a shrinking base of consumers. As often reported, an increasing number of newspapers and broadcasters are turning to subscriptions for broadcast media channels and pay walls for online news sites, in hopes of finding new revenue sources.
Other sources lag far behind
Additional miscellaneous sources of media income lag far behind the two primary categories, comprising about 7 percent of the market in total. Venture capital investments, such as from angel investor groups, pumped about $300 million into digital operations last year, according to Pew, while support from nonprofits, including foundations that support public radio, accounted for roughly $150 million. Other streams of earned revenue, such as hosting events hosting, marketing services and web consulting, could impact revenues in a somewhat significant way in the future, but they remain only a fringe factor thus far.