The Fate of Canadian News Media

Oh, what will become of Canadian news media?

CanWest announced Wednesday it will be pulling out of its association with Canadian Press. Various articles on Google News indicate that this will take a large chunk out of CP’s budget, but won’t be nearly crippling as the pulling out of Southam Inc. (CanWest’s predecessor) would have at one time been. From the Globe and Mail, June 28, 2006:

In an era when content has become an increasingly valuable media commodity, feeding websites and print, CanWest is concerned it may be giving material to CP that it could otherwise be selling. The company started its own news service a few years ago and sells the material to outside subscribers.

This report follows on release of The Final Report of the Canadian News Media (Volume 1 (main report) and Volume 2 (appendices)) by the Standing Senate Committee on Transport and Communications last week. With CanWest’s move, according to the same Globe article, the Senate is concerned they are weakening CP as a competitor, especially if other companies supporting Canadian Press also pull out.

I am still reading and absorbing the wide-ranging Report from the Senate Committee; it is well worth a look. Setting the tone, a very interesting introduction examines the relationship between technology (including internet, cell phones and blogs) and traditional news media (this is from Part I, A):

Innovations in communication technologies – in particular the widespread availability and use of the Internet – have changed this picture beyond recognition. Most major newspapers now offer electronic editions; 24-hour television news services cover breaking news as it happens; Internet search tools allow users to seek out news from a near limitless number of sources; personal web logs (or blogs) offer a range of perspectives on news and current events; and cell phones and other portable digital devices provide news and information tailored to personal interests. Taken together, these relatively recent innovations have made it possible for citizens to be more active participants in what is sometimes referred to as a “news on demand” culture.

In light of these developments, consumer markets for all forms of news media have fragmented dramatically in recent years, triggering a widespread struggle for economic viability among Canada’s major media firms. Media mergers, sales, re-mergers, and divestitures of broadcast and print media holdings have been the most striking coping strategies. In the print sector, certain major dailies have introduced free daily “metro” papers to counteract falling circulation and (re)attract readers.

The argument is sometimes made that the “news on demand” culture will, in the near future, render the “news as supplied” model obsolete. This outcome, however, is far from certain for a number of reasons:

1. The traditional media still generate the majority of news reporting. Much of the news on the Internet is supplied by traditional media sources, notably newspapers and broadcasters. Few online services provide the quantity and quality of original reporting that is generated by the traditional news media. [2] At present, there are few successful business models for stand-alone Internet news gathering organizations.

2. If the price of online news and information goes up, consumption may decline. Although the Internet and other technologies offer efficiencies in the cost of physically producing and distributing information, there are still costs associated with covering the news and producing news reports. In cases where advertising revenue does not cover costs, the online news and information provider may have no choice but to introduce subscription fees to stay in business.

3. The credibility of online news and information is sometimes uncertain. It will take time for online media sources to establish levels of credibility similar to traditional media sources. This may lead Internet users to question the accuracy of an online news source, particularly if it is less well known.

From the perspective of the producers of print and broadcast news, one of the most disruptive effects of online news sources has been the diversion of advertising revenues. Classified ad revenues make up a large proportion of the total revenue of most newspapers; a variety of Internet sites, such as e-Bay and Craigslist, now compete for these listings. Online sites offer the competitive advantages of a larger market and more informative and interactive listings. This phenomenon has notable but as yet unclear implications for journalists employed by the print and broadcast media.

Consider, for example, the consolidation of news gathering organizations, the fragmentation of audiences and the associated impact on revenues. It is often the case that structural changes in the industry and shareholder pressures lead to cost-cutting measures, including reductions in the number of journalists. Taken one step further, fewer journalists could mean less or no coverage of a particular topic.

The Committee believes that, while online news and information is of growing importance, its presence may not be the solution for many of the issues raised in this report. The proliferation and popularity of blogs is a case in point. While it is true that they are a stimulating element of today’s news and information environment and that they sometimes have a near instantaneous impact on public debate, they do not generate the volume or type of news generated by traditional news providers. On the contrary, most blogs supplement news and current events with additional facts and a wide range of opinions.

For these reasons, the Committee believes that over the medium term – possibly the next fifteen or twenty years – there will be a mix of news gathering organizations: some Internet-based, others distributing traditional print or broadcast news and yet others using a mix of distribution mechanisms. Indeed, despite the proliferation of the electronic media, newspapers and broadcasters will continue to generate much of the news and information that citizens obtain.

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