CNN.com is dependent mostly on ad revenue that is sold directly by a CNN sales force. But the digital business also gets some direct corporate support. Estenson says a “select portion” of the subscription money that cable and satellite companies pay to carry CNN’s programming is used for research and development activities related to new technologies, such as smartphones, tablets, and televisions connected to the web. Thus, benefits from CNN’s digital investments flow both ways, from the traditional to the digital and back.
Estenson believes the site feeds viewers and value back to the legacy network. “Digital platforms are the entry point for the brand. More and more people will discover the brand through them,” he says. And he envisions some of the distinctions between the two platforms becoming less relevant, especially as the Internet gets a bigger foothold in living rooms.
CNN.com is something of an exception in its success with online video. Most local TV stations’ websites have far less traffic and revenue. In interviews with executives at a station based in one of the top five metropolitan areas of the country, a more difficult picture emerges. (The station was willing to share metrics on the condition it not be identified.) In October 2010, the station’s website attracted about 7 million page views. But it delivered only 622,000 video streams that month. The station’s general manager said that when video became feasible on the web several years ago, executives believed they would have a natural competitive advantage. “We thought having video was the key to becoming a popular website. But only 10 percent of the visitors look at video.” And partly as a result of the low video usage online, only 1 percent of the station’s total advertising revenue comes from its website.
The general manager has seen statistics that show similarly paltry results at other local television stations’ sites. One problem, he says, is that other sites are also producing video, so broadcast stations face more competition for views. Sports fans appear to be particularly interested in newspaper sites’ video. He has thought about doing more consumer research but can’t justify the expense. “No one is buying the site, really,” he says, “so it’s not worth spending more money to figure it out.”
Somewhere between this station’s frustration and CNN.com’s success is LIN Media, a company that owns thirty-two local television stations in markets ranging from Springfield, Mass., to Albuquerque, N.M. LIN’s sites delivered 116 million video streams in 2010, and has built its business on shared operations and costs, as well as long-term investment in branding and marketing.
LIN is in seventeen markets, and the company has multiple stations in several cities. It is in small- or medium-sized “DMAs”—that is,“designated market areas” that are defined and ranked by Nielsen, the audience-rating company. The markets range from Indianapolis (twenty-fifth largest in the country) to Providence, R.I. (fifty-third) to Lafayette, Ind. (191st). LIN controls costs by having one building, one staff, and one newsroom per market, with costs shared by all its stations in that market. For non-local topics such as health, LIN produces stories that serve all of its markets. Companywide, LIN has about 200 digital employees in a workforce of 2,000. (Four years ago, it had nine digital employees in a workforce of 2,300.) Robb Richter, LIN’s senior vice president for new media, says the video the company produces for broadcast is its competitive advantage. “We have mounds of video we can use”—something most other sites lack.
Print-based media are still building video resources and expertise. Even those with successful sites have had a hard time winning a video audience. Michael Silberman, general manager of New York’s popular site, says nymag.com has tried to integrate video into its editorial content but that the pace of video and the commitment to watch it still aren’t working for most visitors. The site features videos it produces in-house as well as material from around the web that is “curated” by online editors, based on subject matter, relevance, and news value. So, for example, nymag.com has a food video page with categories beyond news, such as restaurants, chefs and recipes. But it’s hard to build an audience, Silberman says, adding, “If your site isn’t about video, people don’t click on it.” For nymag.com, less than 10 percent of unique users go to video. At The Huffington Post, no more than 5 percent of unique visitors clicked on a video throughout most of 2010.