There have been numerous and diverse attempts over the past 15 years to create new Internet services aimed at complementing or replacing established media’s functional role in democracy.
Yahoo News is in a class of its own when it comes to attracting visitors. At the same time, Yahoo News is all about communicating the news. Yahoo doesn’t employ news journalists. Instead, it’s all about using its specialist competenceat gleaning news from the Internet and compiling the result into a news site. Yahoo News,with its 40 million unique visitors per month, is twice the size of CNN.com. Google’s news service, Google News is, like Yahoo, purely a communication service.
America Online was the big Internet portal on which high hopes were hung back in the 1990s. AOL was expected – especially by USA – to replace traditional media. In 2000, AOL bought Time Warner for 165 billion dollars (approximately 1000 billion Swedish crowns). After eight years as the joint AOL Time Warner, AOL.com is now an independent company, worth much less than it was 10 years ago. The business idea today is to offer niche services.
Although AOL has gone from being mainly a portal service to becoming much more of a supplier of content, its editorial ambitions have been greatly downsized. Its journalistic investment today is, in part, focused on narrow niches with the aim of attracting advertising revenue in strongly specialized segments, and, partly, to build a network of local news services, also with the aim of exploiting local advertising markets where local newspapers are lacking.
If America Online was the early Internet era’s model for how new technology would complement the old media structure, then Huffington Post has become the mature Internet era’s corresponding “role model”. The name doesn’t imply any virtual publication location within cyberspace but is simply owner Arianna Huffington's surname. Huffington Post is an Internet newspaper in which a number of blogs are integrated.
Perhaps the most interesting part of the concept is that “HuffPo” has succeeded in attracting volunteer labor, both the news staff as well as prominent bloggers. The list of persons who have, in some way or another, contributed to HuffPo is impressive.
Less impressive are the advertising revenues. Their stated goal is 100 million dollars but revenues leveled off at about 10 million dollars in 2009.
HuffPo is basically a commercial project. Hence, the organizational support for the project’s journalism is huge (and described in another chapter). HuffPo employs around one hundred workers, of which only four are professional journalists. According to internal data, HuffPo claims their site receives 40 million unique visitors each month.
Independent sources report monthly visits at just over 20 million. This is impressive compared to some traditional newspapers, but not very impressive compared to Google.
Journalistically, HuffPo has a liberal identity. In an attempt to seriously establish itself as an attractive advertising platform, HuffPo is now broadening its content, not the least to include entertainment and sports.
The newspaper Politico is distributed free of charge. It is substantially financed by advertising, and aimed primarily at the political and bureaucratic establishment in Washington DC. It has, through its owner Allbritton Communications, connections to Disney-owned ABC. Politico is distributed five days a week in printed form in Washington when Congress is in session, otherwise only on Tuesdays. The paper is printed in just over 30 thousand copies and also has a well visited website with almost seven million monthly visitors.
Politico interacts with a number of large media companies, not just ABC, whereby its content reaches many different platforms. Its other publishing formats are just as important as the free paper edition. Their reporters always carry a video camera with them when out on assignments. In this regard, they are multimedia reporters even if Politico is most known for the substantial media and political prestige of its editorial content and staff.
Advertising revenues reach about 15 million dollars annually which, together with other revenues, well covers the cost of about 100 staff, 75 of which are editorial.
Pro Publica is a high quality American news site, privately financed (10 million dollars yearly from a private donor). Pro Publica employs 32 investigative journalists, and describes its editorial resources in this area of reporting as the strongest in the entire USA. Pro Publica is itself a news site but also a quality editorial newsroom that works, on a project basis, with several of the most prestigious American media. Pro Publica’s financial base is money donated by an extremely successful American banker, but other donors also contribute financially (pdf).
One of the bigger investigative projects that Pro Publica has accomplished was rewarded with the 2010 Pulitzer Prize for investigative journalism. Through its donor-financed resources, Pro Publica represents a common working model in USA. It really hasn’t got much to do with new technology, but such a model hardly exists in Western Europe.
Pro Publica illustrates a feature of donor financing specific to Internet services: The return on the investment is huge. Pro Publica has, as mentioned, 32 editorial staff members. In an ordinary newspaper company, a number of these staff would be responsible for text and layout editing. On the Internet, news journalism demands less editing. The text and photo scan, in principle, be posted directly on the site, in the original format they’ve been given by the writer and photographer.
An ordinary newspaper company demands editorial management, printing, distribution, administration and sales of both the newspaper and advertisements, before the editorial material ever reaches its customers. The superstructure of newspaper companies is at risk for significantly outweighing its core function. To some degree, this applies to all commercial media companies. For someone walking into a modern commercial radio company today, it isn’t always easy to locate the editorial office. The editorial production employs very few people. Radio programs can air 18 hours a day, seven days a week with only a couple of editorial positions. Advertisement sales, however, demand a lot of resources.
The idea behind Pro Publica is very simple and its operation is transparent. It cannot be ruled out that privately donated contributions will play a big part for the future of Internet journalism.
Slate Magazine is probably the closest one comes to a regular daily news magazine on the Internet. Owned by Microsoft, it was already operating by1996 but, in 2004, the Washington Post purchased it. After a failed attempt at the end of 1990s to charge for its services, it is now financed by advertising. Slate reaches about six million unique visitors a month, significantly less than Huffington Post. But Slate also has a more narrow and exclusive profile. Slate has about 50 editorial staff.
Washington Post does not divulge the revenue generated by Slate. However, combined with the revenues from Washington Post’s own Internet site, the ad revenues from Slate amounted to almost 24 million dollars during the first quarter of this year, which corresponds to more than a third of ad revenues from Washington Post’s printed newspaper.
Interestingly, The New York Times also has a special Internet site, About.com, which provides significant ad revenues—33.7 million dollars during the first half of 2010. But About.com bears little resemblance to Slate. About.com is a type of question and answer, problem-solving Internet site. About.com has experts in a large number of areas who comment and answer questions via the Internet. When New York Times purchased About.com in 2005, they paid 410 million dollars and, supposedly, competed with Yahoo, Ask.com and America Online.
Obviously, it can’t be ruled out that About.com could turn out to be an important and lucrative business over time. But the service isn’t strongly connected with the core role of traditional media companies. Above all, the difference between Washington Post’s and New York Times’ Internet investments illustrates the uncertainty that exists regardingthe actual viability over time of various Internet business opportunities. To be sure, New York Times’ investment in About.com might appear amusing at times. One can read there that Scandinavian gravlax (raw spiced salmon) must be frozen for seven days, before or after the preparation. From there onecan move on to the ad for ”hot Russian girls” that promises ”a perfect life with the perfect wife”, if one doesn’t instead prefer to read the recipe about ”Rutabaga Ham”, that is, breaded rutabaga, something one must simply experience to understand the Scandinavian kitchen.
The sites previously mentioned, with exception of Yahoo’s and Google’s news sites,could be considered new traditional media. What’s the outlook, then, for the new players: Facebook, Twitter, Wikileaks, etc. What future role will they play in the transmission of news?
In the discussion regarding social media, some assert that these will provide a news forum function that will replace traditional media. When something happens, the news normally get out much quicker via Facebookand Twitter than via radio or television, not to mention the newspapers. Young people, consequently, often get their news information through social networks. And in closed societies, where censorship curtails the freemovement and reporting of traditional media, information finds its way out through social Internet services.
None of this is necessarily wrong but it doesn’t mean that social media can replace traditional media. In some cases, not least when it comes to knowing what’s really happening in places like Iran, social media can play an important role. It’s likely to become increasingly difficult for authoritarian regimes to keep societies closed off from the rest of the world.
What was described at the beginning of this chapter – that social media played a decisive role in Barack Obama’s campaign organization – will apply to journalism in the future. Specialized blogs, and communication via Twitter among professional journalist networks already exert a significant influence. But it’s important to separate the professional, and thus indirect, use of social media, and the general, direct use of it.
Unconventional reporting at random occasions, as in the case of Iran, nevertheless doesn’t replace established media’s daily function in a democracy. Candidates for political positions communicate their politics via media and then the voters make their choices based on this media image. Media then follows up with reports on what the politicians are doing, and from this the voters make their choices regarding reelection. The interaction with social media makes it possible for political news to travel fast among users who don’t follow traditional media on a daily basis. Of course, social media can include entirely different newsfeeds than those found in traditional media. This is probably much more about complementing traditional media than replacing it.
Perhaps the most interesting question is whether the big Internet players will, indirectly, create or force entirely new media patterns? The question is well illustrated by the fact that Google is expanding over very large parts of the world. In 2010, Google has become the second largest advertising space in Sweden after TV4, with between one to one and a half billion Swedish crowns in advertising revenue. This development has occurred extremely fast, which is hardly a coincidence. Google invests the equivalent of about one million Swedish crowns per employee per year on innovation. Traditionally, media companies invest only a very small fraction of their turnover on research and development.
Google is taking over significant sections of the advertising market that previously supported traditional media. But Google, through various services, is also taking over functions previously filled by traditional media. As discussed below, the relationship between Google and Facebook isn’t uncomplicated. For this reason, Google is now attempting to meet up with Facebook and Twitter on their own turf.
During recent years, Google has launched a range of new products in addition to its basic search functions. Everything from GoogleDocs, aimed at a very traditional corporate market, to GoogleEarth, providing images from the entire universe! Other more conventional services make it possible for users to exchange messages, web links and photos using Gmail. Furthermore, these products are compatible – that is, they use the same format for transfer of information – with cell phones using Google’s operative system, Android. This is important in that it allows Google to retain customers in a Google environment – an environment additionally threatened by other operative system manufacturers (mainly Microsoft), cell phone manufacturers, and others who offer different functions similar to those of Google.
Maybe the most interesting element in Google’s development strategy from a media perspective is the very strong focus on cooperation with traditional news producers. The starting point is obvious. Google’s core function is to communicate content created elsewhere. Without these groups producing content, Google’s business idea falls flat. Google is currently experimenting with different ideas and working on a broad front with several of the largest and most established media companies.
Their collaboration includes everything from a collective presentation of news that’s been published over time (LivingStories) to new ways of charging for content and advertising.
Facebook is rapidly evolving and intersects our daily lives more and more. “Society has moved in with Facebook” as one commentator put it. As each month goes by, we are presented with new data on record high user counts, new services, odd happenings, Facebook “storms” carrying political significance, etc.
Facebook serves as a social group media, an arena for opinion building, a news channel, a marketplace for games and entertainment, and much more. Everything with Facebook has gone full tilt. With Facebook’s current commitment to further development, there’s no telling the limits of its reach.
The big breakthrough and the big money also represent a significant media power. Facebook is no longer a place reserved exclusively for the young of our network society. More and more users have passed both their 50th and 60thbirthdays.
Everything started with a Harvard student, Mark Zuckerberg, who in 2004 opened a page on the Internet to share with his buddies from school. Within two years, the page had expanded to include students from other universities within USA and abroad, the domain Facebook.com was acquired, and the number of users exceeded 10 million. When, on September 26, 2006, the page was opened to everyone—that is everyonein the world aged 13 years and older—the expansion continued.
By May 2010, the number of users reached an unbelievable 500 million. According to the Financial Times, Facebook has surpassed Google as the most visited Internet site in USA. Other data suggest that Facebook is now the site with the most visitors in the world. The traffic on Facebook in April 2010 accounted for 35 percent of all unique Internet visits.
Facebook seems to function a bit like a “black hole”: everything and everyone gets sucked in. Newspapers with worldwide influence include the banner “Find us on Facebook”. One also finds television channels, exclusively Internet-based journals, and music services. The music service Pandora is accessed via Facebook. Pandora is a customized radio station that gives its users the opportunity to listen to “only music that you like”. The service is currently not available outside USA due to unresolved copyright issues.
The California-based company Zyngas provides a game called Farmville, which is played by millions of people every day on Facebook. They play at farming: sowing and harvesting, selling animals, buying more land and so on. The game has quickly become ten times more popular than the much talked about World of Warcraft, a non-Facebook game.
Zyngas’ turnover last year on their games was far more than a billion Swedish crowns, which yielded a very tidy profit. Contributing to its success is the fact that the games are spread via Facebook without the company engaging in traditional and expensive marketing. Facebook itself doesn’t view these profits with a blind eye. By making it more difficult to use Farmville, Facebook wants to force Zynga to share their profits. It makes it more difficult for Zynga and other game companies by removing the notification function through which the games are spread on the platform.
There are Facebook groups for everything on the Internet: adoptions, recruitment of personnel, hobbies. Anyone can start a new group and there are countless numbers of various interest groups. Once on Facebook, users meet thousands of applications not created by Facebook itself. Or, to express it in terms of business logic: on Facebook, the applications find their users and this is what makes it so commercially interesting.
When it comes to placement of advertising, Facebook offers their advertisers a sophisticated service. An advertiser can, via Facebook, aim a message directly to each individual user that matches the description of a selected target group for a certain service. Of course, the transaction can later be completed on the Internet.
Today Facebook earns money even on the site traffic and advertisements. The company, which is privately owned, shares very few details about its finances. Independent analysts estimate that the company’s revenues are increasing very rapidly, and that it, in 2009, could have reached 800 million dollars—about6 billion Swedish crowns—and that, in 2010, its revenues would increase by 50 percent to reach about 9 billion Swedish crowns. Profit figures haven’t been released but last year’s profits were estimated to have been in the tens of millions of dollars.
Given the rapid progress of lucrative services on Facebook, and the rapid increase in the number of users, we’ve probably just seen a modest beginning of what could turn out to be a colossal financial success. The world’s largest social network will grow by being seen on all websites and by becoming the hubin everyone’s personal web. An indication of the expectations that the players have regarding such a strategy is to compare with the current leader, Google, whose advertising sales last year amounted to 187 billion dollars. Thisis the money Mark Zuckerberg and Facebook are aiming at.
When Microsoft bought into Facebook a few years ago, 240 million dollars bought only a lousy 1.6 percent of the company. The extremely high expectations of Facebook clearly show the huge interest users have for online social forums.
Despite this, the continued success of Facebook isn’t a given. There is extensive criticism directed at Facebook’s lack of online security. Authorities in both Europe and USA have complained about the service’s shortcomings in protecting user privacy. Additionally, new social forums are starting up all the time and the giant, Google, will not leave Facebook undisturbed. The success of a social forum can suddenly vanish when competitors with greater attraction value enter the scene.
The Swedish youth site Lunarstorm quickly gained immense popularity and had at its peak 1.6 million unique visitors weekly. During 2010, the number of visitors dropped to under 100 thousand and the site shut down.
In 1999, Twitter started as an idea spawned by a 23-year old, computer-savvy student in California, Jack Dorsey. He wanted to develop an Internet communication system for delivery vans, taxis and emergency vehicles. It took a number of years before he could carry the idea through but, in 2006, he and a partner wrote the code for Twitter.
The applications for the service have grown since then, in ways that its authors couldn’t have foreseen. Today,tens of millions of people twitter daily. Young people who, on an ongoing basis, want to tell their friends where they are and what they are doing use the service. But Twitter is also becoming a form of communication for people in professional international networks working on mutual projects. It’s easy to perceive Twitter simply as an exchange of trivial everyday messages but, as shown a year ago during the protests against the reelection of Mahmoud Ahmadinejad as President of Iran, Twitter has political and democratic potential as well.
In one way, Twitter is a very well defined service—it’s been called “the text message of the Internet”—and thus should not have at all the same potential as Google and Facebook. At the same time, it can be said that Twitter and other similar social services, right from the start, have direct and obvious media functions. Twitter’s importance in closed societies, and as an information channel from these societies out to the rest of the world, has been mentioned. But the short, rapid messages between individuals also have obvious complementary functions in open societies.
In one sense, there is a clear conflict between new and old media. New media take advertising revenue from old media. But in another sense, new media enable a more efficient distribution of old media’s content.
To illustrate, here’s an everyday example from Swedish Radio: we produce more than 200 thousand hours of radio every year—about 625 hours of radio per day. It takes, to put it mildly, a very special capacity for simultaneous listening for someone to listen to everything. But with the fine media capillary system that Twitter and other corresponding services represent, the probability that someone interested in, or affected by, something aired on a broadcast by Swedish Radio, also will be reached by it, increases dramatically.
Public discourse is often about “either or”. Either traditional media keep their position. Or social media take over. But this is not what happens. Instead, a new “media ecology” will develop. The challenge for those working within established media companies is to understand how the relationships will develop in the new media society. This topic is discussed in our final chapter: