The Media Industry's Year of Eclipse
Gannett, the largest U.S. newspaper chain, laid off thousands of employees, the Tribune Company sought bankruptcy protection, The New York Times put its headquarters building and other assets up for sale, in Detroit the papers cut back home delivery to three days a week. From Seattle to Miami, newspaper after newspaper announced layoffs, as many of their stocks fell to penny-stock range or were delisted.
An unprecedented loss in advertising revenue, as well as the sped up 7/24 news cycle, the rising costs of newsprint and transportation, and competition from Cable TV and the Internet seemingly doomed this once ubiquitous American institution â€" the local newspaper. Even the venerable Associated Press faltered, and had to freeze salaries and roll back the fees it charges clients when several large newspapers threatened to quit the cooperative rather than pay the higher fees.
Online news sites fared better than print versions, but by the end of the year, online ad revenues were falling, too, signaling a very dark 2009, indeed, probably with a number of high-profile newspaper bankruptcies and closures.
For a while, magazines seemed to be escaping the fate of newspapers, but as the economy weakened, magazine ad revenue fell steeply, especially for the "newsweeklies" such Time, Newsweek and U.S. News & World Report, all of which were in financial trouble by the end of 2008. Book publishers may be the next large segment of print to die; at least one large house actually stopped accepting new submissions late in the year, sending the book industry into a collective state of shock for the holidays.
As of 2008, there were still only a handful of Internet companies with the scale to compete with Google for online ad revenue and search market share. When one of them, Microsoft, tried to buy another, Yahoo, Google tried to undermine the deal with a search partnership, Yahoo CEO Jerry Yang rejected the offer, Yahoo's stock collapsed, investor Carl Icahn forced his way onto the Yahoo board, Microsoft pressured the Justice Department to charge Google with antitrust violations, Jerry Yang resigned as CEO, Google ended its partnership with Yahoo hours before the Justice Department was to file its antitrust lawsuit, and by year's end, all three companies' stocks had taken a battering.
An even larger problem was the fate of everyone else trying to build businesses online. The entire wave of Web 2.0 players â€" YouTube, MySpace, Facebook, Digg, Twitter, Flickr, etc. â€" started losing their luster as it became clear they had not developed a sustainable business model. Although venture capital continued to fuel a vibrant sector of startups, the major question looming over these emerging companies was how they would attain the necessary scale to become profitable.
The TV and radio industries also seem poised for a major shakeout. Finally, in a year-end poll conducted by the Pew Center, the Internet passed newspapers for the first time (40-35%) as the second most popular source where most Americans get their national international news. Television remained the top news source (at 70%) but its lead over the Internet has been steadily declining since 2002, when it was 68% (82-14), down toa 30% lead at the end of 2008.
Now that digital video content is commonplace via the Internet, the trendlines indicate online news sources will overtake TV as the number one news source of choice in about one and a half years, or the middle of 2010.