Impact: Digital platforms provide ways for audiences to build quickly with lower marketing costs than in traditional media. And the shift to mobile provides news organizations with more opportunities for targeted content and advertising. But increased audiences don’t always lead to proportional gains; in other words, more people may be viewing a site, but that doesn’t mean revenue increases to the same or greater degree. Witness a recent report by McClatchy Co., the third-largest newspaper firm in the U.S. The company said the number of local daily unique visitors to its websites grew by 17.3 percent in 2010, yet digital revenue rose only 2.4 percent for the year. And mobile ad sales have so far been less lucrative than those on Internet platforms. Chris Hendricks, vice president of interactive media for McClatchy, says that “seven percent of our traffic comes from mobile. The traffic is significant, the revenue is not.”

• Digital provides a means to innovate rapidly, determine audience size quickly, and wind down unsuccessful businesses with minimal expense. The substantial capital expenditures that used to be involved in starting a new media company are largely gone. A video service need not build tall antennae atop the highest hills in town, and print publishers can avoid capital-intensive investments in printing presses. The large staffs associated with getting information to readers—whether they’re camera crews or printing staffs—aren’t as necessary. It took Sports Illustrated at least ten years to get its formula right and become profitable; it took Huffington Post less than six years to go from an idea to a valuation of $315 million in its 2011 sale to AOL.

Impact: The development time from idea to market is shortened, greatly increasing efficient use of a firm’s resources. But because competitors can imitate or adapt more quickly, it is difficult to cash in on innovations. The shorter cycles can lessen the length of time that innovations remain unique, relevant, and valuable.

• Digital platforms extend the lifespan of journalism. In the analog era, news stories were as ephemeral as fruit flies. An article was prominent for a day, then available only on a library’s microfiche; a video would be broadcast to millions on the nightly news, then it would be sent to a network’s vault. Journalism now can be freely accessible for as long as a publisher wills it to be. In the words of one programmer, “There is no such thing as ‘yesterday’s news.’”

Impact: News organizations can make money from their archives as part of a subscription or pay-per-view service, or as part of a scheme to provide more content and build traffic and ad revenue. But as increasing amounts of content stream into archives, consumers may have greater difficulty finding what they want.

II. Content and Distribution: A Fundamental Change

• Digital disrupts the aggregation model that was so profitable for so long. Almost no one used to read the entire newspaper every morning, and audiences frequently tuned in and out of the network news at night. Yet news organizations sold their advertising as if every page was turned and every moment was viewed. Indeed, print publications applied a multiplier—often up to 2.5 readers—to account for the audience for each edition they sold. And advertisers bought it, because, well, those were the rules. But in the online world, content has become atomized, with each article existing independently of the next. It is as seamless for a reader to go from a tallahasseedemocrat.com story to a video on msnbc.com as it is to read back-to-back stories in Esquire magazine. The economic consequences of this fickle information-gathering are devastating for legacy news organizations, especially because they have ceded many of the benefits of aggregation to sources like Drudge Report, Huffington Post, and Google News. Says Michael Golden, vice chairman and president of The New York Times Co.: “We’ve lost the power of the package.”

Impact: News relevant to a particular audience can be assembled cheaply and easily, with significant benefit for readers seeking divergent and even competing points of view. But low-cost aggregators compete with content creators for page views, and often win. In the words of Aaron Kushner, an investor trying to buy the Boston Globe, “The definition of a competitor now is someone who gives away your story for free.”

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.