By Erika Fry, reporter
FORTUNE -- In a year with a highly contentious presidential election, the Olympics, and tragedy, after tragedy, after tragedy, you'd think 2012 would have been a banner year for American media. Not so. The media world is on no firmer ground than it was a year ago as it continues its quest for a sustainable business model. But that doesn't mean the industry lacked for signs of life or teachable moments in the past year. What have we learned in 2012?
Provocative covers and paywalls are not enough
Among the carnage this year: Newsweek ended its print operations. The Times-Picayune in New Orleans stopped daily delivery, and even Warren Buffett, patron saint of newspapers, shuttered one of his holdings.
Even the media's most venerable institutions didn't get a pass this year. The New York Times (NYT) announced newsroom reductions in December. TV news network viewership continued its downward trend. And The Wall Street Journal effectively had the rug pulled out from under it when parent company News Corp. (NWS) announced it was restructuring itself into two operations: one with entertainment properties (Fox News included) and the other with its print publication properties (WSJ included).
Meanwhile, the big publishing houses continued their march towards consolidation -- most recently, Random House and Penguin announced a merger in October, and rumors have circulated over a potential HarperCollins-Simon & Schuster pairing -- all in an effort to give Amazon (AMZN) a run for its money.
As advertisers continue to chase splintering audiences to online, social, and video platforms, it's clear that traditional media is in need of change, but it's also becoming obvious that putting up a paywall and calling it a day isn't enough.
Tech dips another toe into the media pool
The likes of YouTube, Twitter, and Tumblr all grew and gained popularity in part because they were open to content from anyone. That's not going to change, but citizen journalism is no longer the starring act it once was at these sites. In an experiment of reverse engineering, tech companies are now hiring professional journalists to edit, curate, and create content for their massive user bases. Tumblr took a step in this direction in February when it hired its own editors, while LinkedIn (LNKD) continued to aggregate and build out original content as part of an effort it launched in 2011. Amazon is already in the publishing and movie production business. Twitter is flirting with media-like products, like "destination pages" with curated content. And in an effort to become tomorrow's TV, YouTube announced in October that it's doubling down on professionally produced channels: among the expanded offerings, an ESPN channel and a comedy channel with Michael Cera and Sarah Silverman.
Enter the second screen
This may not come as a shocker, but Americans are multi-tasking with their technology, mainly to use social media, while watching TVs or movies. According to Nielsen, more than 85% of both tablet and smartphone owners use their devices while watching TV. Never was this clearer than during the presidential debates, when record numbers took to Twitter (screen No. 2, if you will) to react to what they were watching on screen No. 1. This was also clear during the Super Bowl, the Olympics, and during Superstorm Sandy. While it may not be a surprising development, it's a meaningful one to advertisers desperate for consumers' attention.
Beware: TVs are getting smarter
While no company has nailed it quite yet, seamless integration of television and the Internet is on its way. Samsung's most sophisticated TV model released this year featured voice, face, and motion recognition technology to boot. And there are plenty of rumors that an Apple (AAPL) smart TV is coming soon.
Your journalism, branded?
While the concept makes most old-school journalists shudder, sponsored content (i.e. articles that essentially function as advertisements) has become increasingly prevalent, particularly amongst digital media brands like Gawker, BuzzFeed, Quartz, and the reinvented Forbes. Advertisers have been pleased with the results, as have online publishers looking to supplement revenue generated from online advertising. According to Custom Content Council, spending on branded content has increased 13% over the past two years.
A very BuzzFeed 2012
Aside from Twitter, which proved itself indispensible for both breaking news and armchair punditry this year, 2012's big winner was BuzzFeed, the brainchild of Huffington Post co-founder Jonah Peretti. The website is conducting its own reverse engineering experiment. The site, which is best known for its power (and proprietary software) to render viral content like cute animal pictures and lists for the bored office worker, added some gravitas to the mix this year. Under the editorship of Ben Smith, formerly of Politico, the site has bulked up its reporting staff and has become a legitimate destination for political news. Need proof? This summer, the New York Times teamed up with BuzzFeed on election coverage.
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