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| Stop press: world still hungry for news |
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http://www.sbdailynews.com
2011-05-24 |
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Newspapers are not dead, writes Tim Dick, but they're battling like never before to make money.
Two years ago, the Hindi newspaper NaiDunia was selling half a million copies a day. Now it sells 800,000. The leap is not due to the talents of a determined editor or an increase in news, but to it being on the right side of the Indian trend: literacy is rising, but technology remains out of reach.
Indian newspaper sales rose by 45 per cent between 2000 and 2008. For many new readers, computers and televisions are expensive and paper is cheap. The same trend applies in South Africa (up 34 per cent) and China (29 per cent). In the emerging economies, newspapers are booming.
In rich countries, they are not. In the same eight years, sales of newspapers in OECD countries dropped by 2.7 per cent, an average that masks massive falls in the US and Britain.
Advertisement: Story continues below Australia is not as bad as those two countries, but sales of major newspapers in Sydney and Melbourne dropped by 7 per cent between the March quarter in 2007 and this year.
Newspapers still win about $4 billion in advertising, but their share of the Australian advertising market is down from 35 per cent in 2007 to 30 per cent last year, according to PricewaterhouseCoopers.
Those figures might suggest the number of people reading articles written by newspaper journalists has fallen precipitously. In Australia, it has never been higher.
The Sydney Morning Herald, for instance, has shed 1.4 per cent of its weekday sales in the past five years and 8 per cent on Saturdays. But in the same period, smh.com.au recorded an explosion in readers.
Its average number of daily unique browsers more than doubled, from 299,221 to 621,656. Yet they read it free; online advertising makes little compared to print.
Outside benevolence afforded by taxpayers or moguls, there remains a lack of a proven, sustainable way to pay for its reporting in the digital age.
The dominance of newspapers as a place to get news has ebbed for the best part of a century. Competition first came from radio, then from television and now from the internet.
The digital revolution has fundamentally changed how news is gathered, reported and distributed. TV, radio and newspapers all compete in the same medium for the first time.
Trusted news organisations remain attractive; there's a reason people still go to Fairfax, News Ltd, the ABC and the commercial broadcasters for their news. And for all the doom, therein lies the hope for newspapers.
Fairfax's head of metropolitan media, Jack Matthews, says traditional media companies need to recreate the "scarcity" of publication with another scarce resource - quality journalism people want to read.
"In the end, that is what people are willing to pay for, either with their eyeballs or with a dollar bill when they buy a product. That's the biggest challenge for media companies now, to create a product that stands out in this field of everybody creating content."
The issue affects all media, but newspapers are at the centre of the revolution. Their crisis is not just one for the companies that own them, but for the wider citizenry.
In rich democracies, most independent journalism critical to their functioning is still produced by newspaper journalists, alongside the public broadcasters in Australia, Canada and Britain. Commercial television and radio news may reach phenomenal numbers, but they contribute relatively little original reporting.
Aside from financial reporting, journalism has never paid for itself. Newspapers paid for it through almost monopolistic classified advertising for decades. But, in the words of the chief executive of Fairfax, Greg Hywood, the classifieds have "gone" and online revenue has not made up the difference. As the saying goes, print dollars became digital cents.
The recent downturn hit publishers hard, but while advertising revenue returned quickly to television, the weak retail market continues to hurt newspapers and magazines.
News Corp reported a drop in newspaper revenue in Australia and Britain earlier this month, while Fairfax says its annual revenue would be down by about 4.5 per cent. Still, it will record group revenue in the order of $2.4 billion - an enormous sum - a fifth of which comes from its big newspapers.
The problem is the enormous cost of production. Fairfax lists the revenue of its major newspapers separately from their websites, allowing a comparison with television. Contrasting its financials with Network Ten's shows newspapers have to spend vastly more to turn their profits than TV.
The ratio of Fairfax newspaper earnings - revenue gained, less the costs of making it - to that revenue is 11 per cent. Ten's television figure is 23 per cent.
People help the profitability of free TV by meeting much of the cost of distribution by buying a television, whereas newspaper publishers have to recover much more of the cost of getting news to people. The cover price barely meets the cost of newsprint and ink, let alone the salaries of journalists or the costs of trucking newspapers to readers.
This month, Fairfax said it would trim the cost of subeditors, who prepare stories for publication. It will make 82 of them redundant in Sydney and Melbourne, and have Pagemasters, a subsidiary of the newsagency Australian Associated Press, do much of their work.
All major publishers have sought subediting savings - News Ltd by creating "sub hubs" across the country - but the Fairfax move is controversial now.
It says the move will help secure the future of its newspapers by allowing it to spend $3 million on hiring more reporters and training existing ones, shifting money from production of news to its creation. The journalists' union, the Media, Entertainment and Arts Alliance, has serious reservations about both its members' jobs, but also the quality of journalism.
In any event, Hywood is looking for savings beyond the newsroom. He is in talks with News Ltd about a joint venture to print papers and News is receptive.
Where the two companies differ markedly is on their plans to raise online revenue.
News says it will begin charging people to read its websites this year. The Australian is likely to be first, and, as with its US stablemate, The Wall Street Journal, readers will read some articles free.
The fortunes of its other stablemate, The Times in Britain, has proved instructive. When it went behind a solid pay wall it lost most of its web traffic and disappeared from Google searches and social media. Counter-intuitively, print sales declined too.
Fairfax is more cautious. It makes money by attracting online readers to its other sites - such as Stayz for holiday accommodation, the TradeMe auction site in New Zealand and RSVP for dating - and needs to protect the numbers flowing to its news sites.
All publishers hope to make some money from the emerging tablet computer market. (The new Herald app is released later this month.) But Matthews sees another effect from tablets, of which Australians are expected to buy about 1 million this year, mostly iPads. He says they will quickly change the economics of news, given some people will replace print, online, or both, with reading news on a tablet.
"It's hard to imagine how you can charge for something in print and give away the same thing on a tablet, or charge for it on the tablet and give it away on the desktop," he says. "The tablet is a catalyst for change as much as it's a product."
People have so far baulked at paying for news online, but with emerging easier payment systems and more publishers heading that way, that could be shifting.
Matthews says readers of the Herald website may have to pay to read parts of it, or give Fairfax information in exchange for access, but for "a big part of it, you won't have to do anything apart from what you do now".
He says the coming change does not mean the end of print, but an evolution. By the time newspapers are published, most people already know the what, who, where and when. Print will concentrate on explaining the why, and the what next.
Still, for all the ink spilled about the salvation of journalism, no one has yet found it. The competition for the reader's dollar and their attention is only getting tougher. As a News Corp executive said of its tablet-only US paper, The Daily, its competition comes not just from other news providers, but also from Angry Birds - the smartphone game in which you catapult angry birds to destroy round pigs. Including Angry Birds in a digital newspaper is not so far-fetched; crosswords have boosted sales for decades. |
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