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Digital media is more cannibalistic than complementary and is seriously eating into the demand for traditional news sources such as newspapers, TV and news magazines, according to the third annual survey of news users done by Outsell Inc.

The survey findings are based on almost 3,000 consumers and are fully detailed in Outsell’s “News Users 2009” report, written by former Knight Ridder executive Ken Doctor. It essentially pours water on hopes that online traffic from Google and other news aggregators represents new growth opportunities for traditional publishers that ultimately outweigh any cannibalism. In fact, 44 percent said news headlines on aggregator products such as Google News suffice in themselves.

Indeed, such aggregator products are increasingly competing with traditional news products as primary “morning” news sources. They’re tied with newspapers and catching up with TV, which leads with a 30 percent share, a drop-off from 36 percent three years ago.

Long-term trends may be worse than the broad numbers suggest, as a segmentation analysis by Outsell found that “Power Users,” who represent slightly less than half of the market, are increasingly relying more on digital products. These users have “omnivorous” appetites for news, simultaneously serving as core newspaper subscribers while relying more heavily on news aggregator products.

Outsell, however, found they are spending less time with print publications. Moreover, they are increasingly inclined to drop their newspaper subscriptions.

“It’s worth watching the trends set by power news users — they tend to foreshadow where all news usage is moving,” notes Outsell. “The daily newspaper and news magazine habit is quickly ebbing.”

The survey also suggests that paid content may not be a panacea — something that The New York Times is betting on, as it implements plans to move to paid online models in early 2011.  Analysts (like me) would argue that The Times exists in a class of its own as a news source and may prove the exception. Another industry hope –shared by Apple, Amazon, HP and others — is that large computer tablets might entice people to pay for a la carte or subscription content.

Without thinking about the exceptionalism of The Times, or the future of tablets, 75 percent of news users told Outsell that they would get their local news from a different source if a pay wall was put up. Only a small minority said they would be willing to pay for some type of paid content (i.e., online access included with print subscription, online-only access or some other type of “press pass.”).

When the time comes, however, many users will surely reconsider. Just look at the evolution of pay per call, and more recently, paid iPhone apps. None of this, however, undermines the challenges that traditional media face with/and against Google and other digital sources.

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