To download the complete version of "The Story So Far: What We Know About the Business of Digital Journalism," a new report on digital news economics from the Columbia University Graduate School of Journalism, click here.

With audiences and ad revenue growing even as competitors disappeared, newsrooms and newspapers swelled in size. An analysis of major metropolitan dailies by the American Journalism Review found that between 1965 and 1999, eight of the ten newspapers studied saw at least one competitor disappear. During the same period, on average, each of the surviving newspapers doubled the amount of news it produced. Even as new or expanded sections—sports, business, lifestyle—claimed a larger share of each edition, the total coverage of local, national, and international news continued to increase.

The trend of increasing consolidation in a growing advertising market helped to compensate for declining readership. By the early 1980s, most U.S. cities had just one daily newspaper. Or, in markets with two papers, one was clearly dominant and the other was kept afloat by favorable terms negotiated in joint operating agreements that Congress had created to preserve local journalistic competition. Radio and television newsrooms enjoyed similar access to a lucrative market. The advertising business in broadcast was so strong that even television and radio stations with small market shares were profitable; those with a strong command of the audience were cash machines.

The monopoly or oligopoly that most metropolitan news organizations enjoyed by the last quarter of the twentieth century meant they could charge high rates to advertisers, even if their audiences had shrunk. If a local business needed to reach a community to promote a sale or announce a new store, the newspaper and TV station were usually the best way to do it. Even if the station or newspaper could deliver only 30 percent of the local market, down from 50 percent a decade earlier, that was still a greater share than any other single medium could provide.

That changed after 2001. The recession that followed the September 11 attacks forced many companies to cut spending, reducing media companies’ advertising stream. More importantly, the digital transformation accelerated, and more users began to get their news, for free, on personal computers. The link between a consumer’s getting the news and a provider’s expensive investment in publishing, broadcast, and delivery was broken; this brought a flood of new competitors. Craigslist helped devastate classified ads, newspapers’ most lucrative source of revenue, and in 2008, the deep recession fueled by the financial crisis undermined real estate and employment advertising.

As we get further into the digital age, we can more plainly see how the transformation has affected news organizations and the citizens who depend on them. Consumers certainly have benefited—they have more choices, speedier delivery of news, and more platforms. But as legacy companies shrink, these advantages have often been accompanied by a loss of original news coverage. New entrants have achieved impressive editorial results, but not many of them have achieved financial stability without some philanthropic or other non-market support.

The move to digital delivery has transformed not just the business of news, but also the way news is reported, aggregated, distributed, and shared. Each of those changes has an underlying economic rationale, and the media industry has sometimes been slow to recognize the changes or has been paralyzed by their impact.

Below, we list some of the most consequential changes brought on by the digital era and offer thoughts on how they will affect the way journalism is supported in the years to come.

I. A Different Business

• Digital requires a new way of thinking about your audience, one that now feasts on an abundance of information. In the words of Syracuse University professor Vin Crosbie, “Within the span of a single human generation, people’s access to information has shifted from relative scarcity to surplus.” As Crosbie notes, it isn’t enough simply to transfer content from a legacy platform to a new one. Digital journalism requires an entirely different mindset, one that recognizes the plethora of new options available to consumers. Tom Woerner, a senior vice president at freelance-generated site, notes that “the old distribution model allowed for only so much content. There are only so many pages you can print, only so many minutes you can sell in a broadcast.… Now the limits are gone, for both good and bad.”

Bill Grueskin, Ava Seave, and Lucas Graves are the co-authors of "The Story so Far: What We Know About the Business of Digital Journalism." Grueskin is dean of academic affairs at the Columbia University Graduate School of Journalism. Seave is a principal of Quantum Media, a NYC-based consulting firm. Graves is a PhD candidate in communications at Columbia University. For further biographical details, click here.