Forecast 2017: The Ever-Evolving Media Business Model

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Professor S. Sriram explains why pooling news personnel might be the way of the future.

The 2016 election underscored the pressure on today’s news media. High demand for news from a public with a lower propensity to pay for it — at least with traditional subscriptions.

Michigan Ross Professor S. Sriram takes a look at three stories to watch for in 2017:

  • TV news outlets could buy up newspapers.
  • Newspapers will find better ways to monetize print and digital bundles.
  • News organizations could pool reporting resources.
Sriram

Q: During and after the election there was, and continues to be, a lot of pressure on news outlets for constant, accurate coverage. Yet business conditions remain challenging and many are cutting resources. How can news outlets improve the business model or uphold quality with fewer resources?

Sriram: It appears that there are two trends happening in the news media. On the newspaper front, revenues have been declining. As a result, newspapers have been forced to cut reporting staff. Unfortunately, this trend is bound to continue unless newspapers find a way to stabilize revenues. But television news — especially cable television outlets such as CNN, Fox News, and MSNBC — have experienced some growth in the recent years. This has enabled them to hire additional reporting staff. I can see several possible scenarios developing. One possibility is that newspapers get absorbed by television outlets, which will enable them to share reporting staff. An alternative possibility is that even if newspapers remain independent in terms of ownership, they may still share reporting staff resources with cable networks. If this happens, many news outlets will end up sharing a common pool of reporters. Any differentiation will be in terms of local news coverage and editorials.

Q: There was a call after the election for people to support their local papers, and national papers, with subscriptions. Do you see any long-term benefit from this?

Sriram: I doubt it. I imagine there’s a segment of the population that cares about this. But they are probably already supporting their local newspapers. I do not see a compelling reason why people should change their behavior of increasing reliance on online news sources — the main reason behind the decline in the fortunes of newspapers. On the positive side, many newspapers are attempting to monetize online content by offering digital and print bundles. These will help in stabilizing overall revenues. But the stabilization is unlikely to be a consequence of the call after the recent elections.

Q: There's a lot of talk about how we're in the post-truth era. Do you think advertisers might start to take a harder look at what kind of media outlets they are advertising on? For example, if a story gets eight million clicks but it was false and inflammatory, would advertisers put their ads elsewhere?

Sriram: I think this goes both ways. There is also a market for fake native advertising that looks like news. Would media outlets refrain from accepting such fake news ads? Given the polarized environment, I guess there will be some principled stance on both fronts: advertisers rejecting news media that present views that they do not subscribe to, and media outlets rejecting inflammatory ads. My guess is that the latter is more likely to happen than the former.

More 2017 Forecasts:

The Future of Trade Policy

Business Steps Up on Climate Change

Auto Sales Stay Solid but Industry Frets Over Efficiency Standards

The Future of Business Education

Cybersecurity and Privacy

 

Media Contact: michiganrosspr@umich.edu