CONCLUSION

The Internet has brought growth and dynamism to the news industry. There are new products and new markets. The rate of consumption of news and the size of the news market are increasing.

The online environment has created unique opportunities for both established and new enterprises to gather and distribute news, as well as an unprecedented flow of news to all types of audiences on all types of platforms. But despite these positive developments, a business model that will provide solid revenues necessary for sustaining these businesses in the online world has thus far proved elusive. Both legacy and born-digital news organi­zations are struggling to find value configurations that will bring not only survival but also perhaps even financial success, and news journalism is under threat as a result.

Online operations allow cost savings, and create economies of scale and scope as well as the potential for synergies and integration. Taken together, these change the tradi­tional economics of news production and distribution and allow costs to be significantly reduced. These changes lower barriers to entry for news providers from afar and com­pletely new competitors. As online news operations shift the economic base of news provision from variable to fixed costs, the economic focus shifts also from achieving economies of scale with large audiences toward niche news provision. Issues of quality, service, and brand strength come to the fore as a result.

The fundamental challenge that has been created by the advent of online news is that the supply of news is dramatically increased because economic, geographic, and regula­tory limits have been removed or reduced.

NOTES

1. For an overview see the 2010 OECD report The Evolution of News and the Internet, accessed 23 August 2015 at http://www.oecd.org/sti/ieconomy/45559596.pdf.

2. Video exceeded half of global consumer Internet traffic by year-end 2011. The sum of all forms of video (TV, video on demand [VoD], Internet, and P2P) will be approximately 86 percent of global consumer traffic by 2016 (Cisco.com, 2014).

3. See the World Advertising Research Center’s Ad Spend Database, accessed 23 August 2015 at http://www. warc.com/Topics/ForecastsandData.topic.

4. Part of the reason for the growth of the digital share is the continuing decline in print advertising, sale of access through apps, and increasing use of paywalls on websites (Hagey, 2012; Lee, 2012; Reynolds, 2012).

5. Google closed Google Reader in July 2013, citing declining usage (Ha, 2013).

6. The State of the Blogosphere report (Technorati.com, 2010).

7. A number of news brands (e.g., The Guardian, BBC, and The New York Times) had a higher market share on smartphones and tablets than on computers.

8. Clayton Christensen’s theories of incumbent failure in the face of what he terms ‘disruptive innovation’ (see Christensen and Bower, 1996; Christensen, 1997; Christensen and Overdorf, 2000) have found great resonance since their first publication. His thesis is that leading companies’ search for profitability and growth, reinforced by adherence to best practice, causes them to miss out on new markets that result from disruptive technologies.

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