Newspapers lose readers and revenue

New Zealand Centre for Political Research

The New Zealand Centre for Political Research is a web-based think tank that takes a research-based approach to public policy matters and encourages the free and open debate of political issues. www.nzcpr.com

Some time back in the 1990s, I wrote an article that began: “The newspaper you are holding in your hands is an endangered species.”

The risk to newspapers that worried me then had to do with media freedom. That remains a matter of concern to journalists – probably always will be – but it has been replaced by a far more urgent threat.

Scrumpled Paper

Dismal financial results reportedly recently by the two big newspaper groups, APN News and Media and Fairfax Media, confirmed what had long been obvious: that the newspaper industry is reeling from the impact of the internet.

Unlike APN, which announced a whopping loss, Fairfax at least managed to declare a profit. But it looked anaemic once the one-off proceeds from the company’s sale of its remaining 51 per cent in Trade Me were excluded.

Both companies are struggling with high debt and declining revenue. Like newspaper publishers worldwide, they are dealing with a crisis of a magnitude never before encountered and sometimes give the impression of having no clue what to do next.

To compound its misfortunes, APN has experienced a schism in the boardroom, resulting in the abrupt departure of several directors.

So it’s not a good time to be in the newspaper business. The industry is bleeding and morale could hardly be described as buoyant.

I have spent my working life in the print media and it saddens me to see the industry in disarray, but I console myself that I was privileged to experience what was, in hindsight, the golden era of New Zealand newspapers.

From the 1970s till the early 2000s, the industry was mostly prosperous. It suffered the inevitable cyclical ups and downs of a capitalist economy, and several afternoon dailies died as television ate into evening reading habits. But overall, newspaper readership was steady and revenue from advertising was such that the Australians coined a term for it: rivers of gold.

Papers were comparatively well-resourced, although of course we employees never thought so, and they were generally well-managed – the more so after the many small family-owned provincial titles were acquired by the two companies that then dominated the industry, INL and Wilson and Horton.

It was also a period of robust journalism, when editors and reporters were prepared to take risks and to hold the powerful accountable – something that couldn’t be said of the generally timid New Zealand press of the 1950s and 60s.

So what went wrong? By my reckoning, several things.

Crucially, the classified advertising that once provided newspapers with much of their income migrated to the internet, which is why Fairfax made the smart decision in 2006 to acquire Trade Me. That at least meant the company regained part of the revenue stream it had lost, but as of last December that river of gold is no longer flowing. Fairfax sold its Trade Me holding because it needed the money to reduce its debt burden.

Another profoundly significant change was that INL and Wilson and Horton both fell into Australian hands. Fairfax took over INL – owner of the Dominion Post, The Press, the Sunday Star-Times and a stable of provincial papers – and APN acquired the old Auckland family firm of Wilson and Horton, which had the formidable New Zealand Herald as the jewel in its crown. These ownership changes had consequences.

If there’s one word that characterises Australian attitudes to New Zealand, it’s indifference, and I suspect that apart from wanting to run their businesses at a profit, the Sydney-based boards of directors that control the New Zealand newspaper industry are largely indifferent to what happens here.

In an industry that so closely reflects a country’s ethos and culture, that’s a problem.

I believe they also made the mistake of assuming New Zealand to be just a smaller version of Australia, a sort of more distant Tasmania, which it isn’t. They not only lack an emotional investment in New Zealand; they don’t understand the New Zealand market.

Perhaps they should have taken a lesson from another Australian. Rupert Murdoch controlled INL for decades but was content to leave the running of the company to trusted New Zealanders. The corporate culture was unmistakeably that of a New Zealand company.

One sad result of the Australian takeover was the demise of the New Zealand Press Association, the long-established national news agency. Since the advent of the telegraph in the late 1800s, the NZPA had enabled daily newspapers throughout the country to exchange news. But because it was foreign to the Australian way of doing things, the NZPA was placed on a commercial footing – which meant the abandonment of the traditional co-operative news-sharing arrangement – and ultimately disestablished altogether.

I predicted at the time that New Zealanders would know less about themselves as a result, and so it has turned out. A reader of the Timaru Herald is likely to search the paper in vain for information about something that has happened in Rotorua or Whangarei. Newspapers within the two big groups share stories on a limited basis, but it’s no substitute for the comprehensive coverage previously provided by the NZPA.

What else has changed? Well, journalism has been feminised.

Before the feminist lynch mobs assemble, I should explain that I’ve worked with outstanding women journalists and editors who could match any of their male colleagues. Of all the editors I’ve worked for, there was none I respected more than Sue Carty at Wellington’s Evening Post. It’s not female journalists I’m concerned about – far from it – but the creeping feminisation of newspaper content.

By this I mean the increasing proportion of newspaper space devoted to “soft” topics – fluffy human interest stories, gossipy items and lifestyle-oriented content better suited to women’s magazines. Some call it latté journalism. It appears to target a young female demographic group not noted for its attachment to newspapers.

In metropolitan papers especially, café reviews and profiles of celebrity chefs, fashion designers, baristas and TV personalities have displaced investigative reporting and traditional “hard” news about events and issues of importance.

Increasingly, newspapers look for exclusive news to differentiate themselves from the competition. What were once considered essential stories of national interest, which readers could expect to be published in virtually every daily paper in the country, are now commonly disregarded in favour of customised content. A ground-breaking Supreme Court case or significant parliamentary debate, for example, may be ignored in favour of a compelling story about a Marmite hoarder from Dannevirke.

The ultimate consequence, again, is a society that knows less about itself. If you accept that an effective participatory democracy requires an informed society, this has serious implications.

The feminisation of newspaper content runs parallel to another peculiar trend, the cult of youth. It seems some editors have been instructed to woo younger readers, even to the extent of publishing articles written in Generation Y jargon incomprehensible to anyone over 40.

The problem with this approach is that the most loyal consumers of newspapers are older readers, and it seems perverse to risk alienating them in pursuit of an elusive, capricious and quite possibly mythical youth market.

A further negative change is that editorial production has been centralised in offices known as hubs, often geographically remote from the papers they serve. Financially this makes perfect sense, but it means that sub-editors often have little empathy with the papers they are working for, still less for their readers. They may no longer process editorial copy for an individual title that they identify with and take pride in. Accountability is diffused and quality, I believe, suffers.

But the newspaper industry’s most destructive mistake of all, I believe, has been its response to the digital revolution.

Unnerved by predictions of the print media’s imminent demise, newspapers were panicked into placing their content online, where it can be viewed at no charge. In doing so, they painted themselves into a corner from which there is no easy escape.

The theory was that advertisers would flock to newspaper websites, but it hasn’t happened. I know of no newspaper offering free online content that makes money from its website. All that’s happened is that consumers have abandoned the medium that generates revenue in favour of one where they can read the news for nothing, as was entirely predictable.

The latest example of what seems wilfully self-destructive behaviour is the publication of birth and death notices online on Fairfax papers’ websites – yet another disincentive to buy the printed product.

What’s most damaging of all is that journalistic resources have been ploughed into online content to the detriment of the traditional print product. In other words, the industry is effectively cannibalising itself. It’s like the trapped animal that tries to free itself by gnawing off its own leg.

Even more bizarrely, newspaper bosses seem to regard increased website traffic as a cause for celebration. In effect, they are applauding their own impending extinction.

Cheerleaders for the digital revolution tend to take the line that resistance is futile. “Get over it,” they urge. “These are exciting times.” But they are mostly of a generation so caught up in the exhilarating possibilities of the internet that they see only its opportunities. They don’t realise what is being lost.

The papers that seem to be holding up best in the face of these trends are provincial dailies, which still make a determined effort to do their traditional job of informing people about what’s happening in their own communities. That’s not surprising, because most provincial papers have a monopoly on local news-gathering. Free community papers, similarly, are relatively unaffected by the industry turmoil. 

As for the bigger, metropolitan titles, I feel sorry for their editors. I was an editor more than 20 years ago and I thought it was a tough job then. It’s immeasurably harder now.

In summary, here’s how I see it. Consumers realise they can read content online, often long before it’s printed, and not unreasonably deduce that there’s no point in continuing to buy the paper.

Sales consequently decline and advertisers respond by pulling out of the paper. But crucially, those advertisers don’t seem to be shifting to newspaper websites, so there isn’t enough revenue from the brave new digital world to offset the slump in print advertising.  Result: a vicious cycle of steady decline.

Am I the only person who sees this as a fatally flawed model?

 
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