Tom Smith

State of the Press

Fewer people buy newspapers now. The word buy is important because it is possible that as many or even more read newspapers than ten years ago but with the proliferation of free newspapers, such as Metro, with several regional versions, people are not necessarily buying them. This essay is specifically about the threats and opportunities presented by the Internet and there is an argument for saying that the British press have undermined the viability of newspapers. A recent analysis piece in the American Time magazine predicts catastrophe for the established press. It is an analysis that holds this side of the Atlantic, the problem being that newspapers have provided online content, but the readers they attract are not then buying the newspaper, instead getting their content online for free. It may be that we are witnessing a general revolution in social behaviour in Britain. It is important to bear in mind that the British press has constantly been subject to change. In the 1980s technological innovations, in terms of printing, led to wholesale organisational change. It is also true that some publications have been undermined by the availability of free information. For example, the sales of TV listings magazines were heavily hit when local newspapers were allowed to reproduce television schedules. It is widely asserted, however, that these changes pale into insignificance in comparison with that presented by the Internet and its accompanying revolution in social and individual behaviour and attitudes. It is likely that these will be intensified over time, for example, as older readers, less comfortable with the Internet, give way to generations who are completely comfortable with new media.

According to research from the Pew Research Center, 2008 was a tipping point, when more people got their news online for free rather than paying for it in newspapers and magazines. 39% said they read a newspaper yesterday — either print or online — down from 43% in 2006. The proportion reporting that they read just the print version of a newspaper fell by roughly a quarter, from 34% to 25% over the two-year period. Newspapers are threatened by three broad developments related to the Internet: (i) free to access non-newspaper sites, such as the BBC; (ii) opinion from individuals who blog and (iii) the free on-line content that is provided by newspapers. Journalists are understandably spooked by the presence of online bloggers and alternative sources of opinion. The smell of fear (and perhaps defensive professionalism) exists in the following quote from Michael Kinsey writing about what he calls, ‘the blog terror’. In his view, those who turn away from newspapers towards the internet, ‘are getting their understanding of the world from random lunatics riffing in their underwear, rather than professional journalists with standards and passports’. Despite professional fears, there is a view that the internet is liberating, allowing people to hear from a wider range of people, rather than the typically white middle-class opinionistas of the press. This view is captured in George Bernard Shaw’s famous words – ‘all professions are a conspiracy against the laity”. Talk about the future of the newspaper and the implications of the Internet has become a major debate, particularly in the pages of the newspaper and the browsers of the Internet. Amid widespread conjecture, what are the facts? What are the trends in newspaper sales and is anyone bucking them? Interestingly both the Guardian and the Financial Times have seen their daily sales figures rise. Even more interesting, these sites have amongst the most developed online content. Both newspapers offer free summaries of their content. The Guardian sends out dedicated electronic content in the form of ‘The Spin’ and ‘The Fiver’ (both humorous analyses of the week in sport). The Guardian’s podcast, Guardian Football Weekly, is the top sport download in Britain according to Apple’s iTunes statistics. This is free to download and expensive to make. Since 2000, all the major British newspapers have developed a significant on-line presence despite most of them not receiving any remuneration for this content. Development has been funded by a faith that the media content will pay for itself in time, that a viable business model will be found – a faith that has been undermined during the current economic downturn. It is interesting how quickly our economic frameworks have changed in the last year. The former managing editor of Time magazine points out that ‘newspapers and magazines traditionally have had three revenue sources: newsstand sales, subscriptions and advertising.’ The ‘new’ business model of online publishing relied only on the last of these. ‘That makes for a wobbly stool even when the one leg is strong. When it weakens — as countless publishers have seen happen as a result of the recession — the stool can’t possibly stand.’

The economic crisis has intensified an already existing trend, a decline in advertising revenue. The cheaper classified advertisements that newspaper used to attract are increasingly migrating to specialist websites – for holidays, restaurants, personal services. The larger advertising support that funded web development is also failing and newspapers face a dilemma – do they continue to support loss-making online content or do they withdraw their online presence, possibly diminishing their influence and losing out to other competitors? The elusive third way between these options is to get consumers to pay for web content. Reductions in revenue are leading newspaper editors to try to lower costs. Over the last year in particular, the media sections of daily newspapers contain complaints that staff are being cut and reporters having to file extra copy and cover more stories. One line of argument from the journalist community is that newspapers have been too quick to wade into the blogosphere, offering their own competing columns. It is too quick because journalistic standards are ignored. Countering this, is a view that newspaper reporters are being forced to leave their comfortable conceit and engage with people in a new way. It is argued, however, that relying on advertising turns newspapers toward advertisers and away from readers, making it harder to engage readers. Walter Isaacson believes that ‘in an advertising-only revenue model, the incentive is perverse. It is also self-defeating, because eventually you will weaken your bond with your readers if you do not feel directly dependent on them’. The notion of charging for content is an old idea simply because newspapers and magazines have been doing it for more than a hundred years. Yet the current culture appears to be that online content is free. As one journalist puts it, ‘we have a world in which phone companies have accustomed kids to paying up to 20 pence every time they send a text message but it seems technologically and psychologically impossible to get people to pay 10 pence for a magazine, newspaper’. But with the exception of the Financial Times, none of the newspapers is receiving significant income from its online content. FT.com bucks this trend, most likely, because of the specialist financial analysis it provides and that this content is vocational; as a tool in a job the expense can either be reclaimed or justified on the basis that it gives an individual an edge over work rivals. In America, the Wall Street Journal is the only newspaper to have a significant revenue from the Internet and like the FT this may be because of the specialist content provided. According to American media analysts, Wired, the Wall Street Journal has 600,000 subscribers at an annual fee of either $59 or $29 (depending on whether they had a subscription to the Journal’s print edition). Some specialist newspapers, such as the Health Service Journal have had some success in restricting web content only to subscribers. This seems to reflect a philosophy that the Internet and paper based publications may have some complementarity: a reader may wish to have electronic access to a feature that appears in the magazine or the newspaper may have more detail that it only accessible online. The issue of complementarity is an interesting one and will be returned to in the second part of this essay, on the opportunities the Internet presents to the British Press.

Could consumers turn away from newspapers and instead gather their facts from non-newspaper media sites like ITN or the BBC and opinion from the vast array of blogs covering everything from politics and fashion to film review and celebrity sites? Views on paying for on-line content have been consistent and if anything are hardening. In 2002, seventy percent of online adults surveyed by Jupiter said they can’t understand why anyone would pay for any online content. This was up 10% on a similar survey in 2000. It is difficult to interpret the impact of the economic crisis, but it is likely that people will be now even less likely to pay when money is tighter for many people. The analysis above suggests that the press in Britain are doomed by the presence of free content and yet there are a number of reasons why the Internet may present opportunities for newspapers to expand. Newspapers are changing from paper based dailies to media brands. Their output is changing too. The Guardian newspaper, for one, has blurred the boundaries of what it means to be a newspaper. In producing a daily news service (based on the newspaper content) it has become a media company in the widest sense, offering portable radio. The Economist – a British newspaper with a global reach – has begun using media and online content as a taster for the main magazine. Each Friday they issue a download on iTunes in which a presenter reads an abridged version of the main three editorials. It is designed to entice readers to the full magazine. One way in which the press seeks to capitalise on the opportunities presented by the Internet is to offer complementary content. This could work by offering in-depth material behind the shorter story summaries that appear in print. Examples include political and celebrity interviews that are highlighted in print and fully available on-line. It is argued that the biggest opportunity presented by the Internet is that newspapers will better engage with their readers. A small but important example is the capacity for readers to be able to post comments at the end of news stories. The extent to which newspapers are able to engage with their readers may be an indication of which are likely to be most successful in the future. Responding to ‘the newspaper is dead’ view, Jeremy Caplan points out that newspapers still bring in many more pounds in advertising that do oniline news sites, three times the amount, but there are several reasons why this may not continue. At the time of writing, both the American Time and the British Economist carry editorials warning that free content is threatening businesses. The Economist piece concludes, ‘every business needs revenues – and advertising it transpires, is not going to provide enough. Free content and services were a beguiling idea. But the lesson of two internet bubbles is that somebody somewhere is going to have to pick up the tab’.

Pay per view has been touted as a way that press companies might generate income, but this appears to be counter culture to the way people read news on the Internet. Unlike a newspaper, where they read the books section, the money guide and news all from the same stable, on the Internet people might look at the Sun for gossip, the Telegraph for sport and the Guardian for headlines. To incorporate people’s apparent preference to read different sections from different paper an alternative could be for newspapers to encourage people to pay for different sections of their newspaper. The cost need not be prohibitive. Just as iTunes and electronic downloads have reduced the cost of CDs, so might online access mean that the overall costs of newspapers fall. At present, newspapers are increasing the costs of their paper version in order to increase their revenue. An alternative strategy which has been suggested is the introduction of a digital currency. It may sound far-fetched at first hearing, but it is starting to be used in relation to other Internet activities, such as SecondLife, where real money is used to purchase credits which can be used to buy products and services within the site. In the world of gaming, a younger generation playing the XBox buy points that can be used to download films, games or music. A digital currency might be the most flexible way of people buying either time on, pages from or access to online newspapers. The main impact of the economic climate is that the British press is going to have to deal more quickly with long-standing trends: competition from the blogosphere and alternative providers, and whether it can continue to provide its content for free. The press will have to find a way of charging for online content or linking online access with purchase of the newspaper. Already newspapers like the News of the World, Guardian and the FT are supplying in-depth content on line to back up what appears in their print versions. The Guardian and FT require subscriptions. The FT allows so many articles to be accessed each month before asking for a £6.50 electronic subscription fee. The circulation figures for online media that were released in January 2009 showed the extent to which British users are embracing on-line media. The Guardian now has almost 30 million unique registered on-line users, the largest in the UK. The crisis in gaza, the economic downturn and Barack Obama’s inauguration all helped draw in users. The Guardian’s figures reflected a 51% increase in users in a single year, since January 2008. The Guardian’s website recorded 11 million users in one month for the first time. The Times’ also grew by a similar amount over same period. In the current financial climate it seems inevitable that some press organisations will close or be taken over and merged with other titles. However, the figures above show that where newspapers are adapting to demand they can do well. The Guardian saw record traffic to its jobs site, for example, a service that it is paid for. It is important to distinguish between the closure of a business, with jobs going and a voice disappearing, and a change in form, where writing that once appeared in print now is available online. It depends upon how “newspaper” or “press” is defined, either as a news gathering organisation or a paper based product. It is like the difference a “church” (a congregation of worshippers) and a “church” (the physical building that houses them). In conclusion, the Internet has forced the British press to change in form and challenged the industry to engage with its readers. For all the difficulties associated with paying for media content we must remember that newspapers now have more readers than ever. More people are looking for news than ever before.

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