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'Massive Power Shift' Seen as Intermediaries Control Online News Flow

By Adam Dickter
March 19, 2012 4:40PM

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"The big hidden problem is the selective control of information," said analyst Rob Enderle. "While we have been concerned in the past about [monopolies by] massive news organizations like Rupert Murdoch's News Corp....increasingly tech companies like Google and Facebook are gaining this control."
 

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The New York Times, Time Magazine and Fox News are still important -- but not as important as Google, Facebook and Twitter.

Those "technology intermediaries" are gaining unprecedented control of how the public consumes news, according to this year's State of New Media Report from the Pew Research Center for Excellence in Journalism.

More News On-the-Go

The study found that more people than ever picked up mobile devices in 2011. Four in 10 now own a smartphone and 1 in 5 own a tablet.

That new ability to consume news on-the-go has led to greater engagement with traditional media agencies like newspapers and TV networks, "strengthening the lure of traditional news brands and providing a boost to long-form journalism. Eight in 10 who get news on smartphones or tablets, for instance, get news on conventional computers as well," said report authors Amy Mitchell and Tom Rosenstiel.

But in order to maintain their connection with users of major technology platforms like Facebook, Apple's iPhone and iPad or Android phones, media companies must continually invest in optimizing their content. The biggest challenge, though, is monetizing their digital content.

Last year five technology companies grabbed up 68 percent of all online advertising and about half of all display ad revenue, and Facebook in particular is believed to be on the verge of controlling 20 percent of online advertising by 2015.

Technology analyst Rob Enderle sees a dark side in this online growth.

"The big hidden problem is the selective control of information," he said. "While we have been concerned in the past about [monopolies by] massive news organizations like Rupert Murdoch's News Corp. that could become the power behind the governments, increasingly tech companies like Google and Facebook are gaining this control."

Selective information or focus, he said, "could lead to media-controlled governments....Too much power can lead to serious abuses, and we certainly saw Murdoch's organization cross that line a number of times during the last decade."

The "passing of the baton" among media companies is a "massive power shift" that someday could affect the lives of ordinary people more than who the president is, Enderle said.

Print Revenue Dropping

The increasing shift to online news consumption has had potentially disastrous repercussions for traditional print media as they try to keep print advertising alive as cheaper Web advertising proliferates.

Online ads grew 23 percent from 2010 last year, while cable ads also saw a boost, 9 percent. But newspapers and magazines saw a 5.6 percent and 7.3 percent drop, respectively, according to industry figures collected by the Pew center. Local TV stations also saw hard times, with revenue down 6.7 percent.

The report estimates that newspapers, which suffered the most last year, saw a 4 percent drop in circulation for weekdays and a 1 percent drop for their Sunday editions in the six-month period ending Sept. 30. The study did find, however, that digital audiences are gaining.
 

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