July 1997

Root Page of Article: Not-so-strange Alliances and Their Impact on Online News Media, by Ann Auman

New Media is Paradoxically Both the Demise of News and the Impetus for its Renaissance

Articles in news media trade journals decry the growing corporate concentration of power in the news media. In "The Real Dangers of Conglomerate Control" (Columbia Journalism Review, 1997), Alex Jones of National Public Radio worries that "the people who control the most important news outlets in this country have no understanding of journalism values." In another CJR article, Carl Sessions Stepp of the University of Maryland and senior editor of the American Journalism Review, laments the business-oriented culture that is increasingly dominating newsrooms:

"Maintaining profit margins has had at least two profound consequences on the newspaper village: Marketers have seized the chance to run roughshod over editors, and a venerable way of thinking about newspapers has been debased" (Stepp, 1995, p. 15).

The pressures facing newspapers have been magnified in online media, particularly because most are not making money. Presstime reported in March 1997 that only 36 percent of online newspaper web sites have turned a profit or will show a profit by the end of 1997. New media owners are intensely experimenting with money-making strategies to gain advertising and subscription fees, such as employing "push" technology to reach readers, offering subscriptions for expanded access to information, Web-TV, personal newspapers, and fees for archival and classified advertising search services.

In the hunt for profits, control of the marketplace is the name of the game in the current environment. Companies with diversified holdings can afford to let their new media publications lose money for a while to gain a foothold against weaker competition. Deregulation as a result of the new Telecommunications Act has allowed more cross-industry integration, such as joint ownership of TV stations and networks, local and national cable franchises, regional newspapers and other telecommunication services. That could make it easier for companies to form alliances or buy out competitors in an effort to gain control of content and delivery systems--"the last mile to the home" (Miller 1996, p. 173). It's no surprise that Microsoft purchased Web-TV, which fits nicely with Microsoft Network--20 percent owned by TCI cable company (Miller, p. 173). Increasing market penetration is the only way to ensure a steady source of advertising dollars, and Web-TV may turn out to be a better way to get the Internet into a lot of households than through computer use. According to Editor & Publisher Interactive editor Hoag Levins, 14 percent of American households were accessing the Internet earlier in 1997, and trends suggest this number will continue to rise because of several factors:

"These include the growing attraction to the Web as a source of breaking national news, an effort to whip up national support for linking all schools to the Internet as fast as possible, the emergence of new technology that cheaply converts any home TV into an Internet-accessing computer screen, and the cyber-public's response to new digital news delivery methods, such as 'personal' online newspapers." (Levins, 1997, p. 58).

Executives of media companies have diversified from newspapers and into radio, cable, television and electronic media in an effort to satisfy investors. Newspapers have become a less important part in their stable of companies because their profits are lagging. Last year newspaper profits averaged a respectable 14 percent, but this was down from 20 percent the previous decade and much less than the higher margins enjoyed by broadcast stations (Lallande, 1997, p. 31). This doesn't mean that these media owners aren't interested in news. In fact, they are interested in anything--news, entertainment, and classified advertising--anyting that brings in revenue. Web-TV, push technology, and online service providers are attracting attention because they promise to be revenue-earners. How will this new revenue-oriented technology affect the culture of newsrooms and the content of news? Newspaper editors and reporters have already been struggling to cope with an increasingly business-oriented newsroom culture that can conflict with the mission of a traditional newsroom. But perhaps if controlled by traditional media companies, news could actually experience a renaissance with this new technology. --

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