Surviving in the 21st century – the outlook for newspaper publishing in the digital age

May 5, 2009 — The global newspaper publishing industry is in a state of turmoil as advertising revenues plummet, broadband penetration increases and a plethora of new devices for delivering digital content hit the marketplace. However, through this period of uncertainty those in the industry who embrace the challenges of a changing marketplace will survive. In doing so, they will gain market share from those who continue to rely on traditional business models which no longer serve the demands of today’s consumers. This is according to a new report, “Moving into multiple business models: outlook for newspaper publishing in the digital age ” launched today, by PricewaterhouseCoopers (PwC) in cooperation with the World Association of Newspapers (WAN).

Marieke van der Donk, author, PwC’s Global Publishing Centre of Excellence said:

“Newspapers will continue to have a long-term future and will co-exist with other media but this is unlikely to be in the format or volume seen today. Consumers still value the deep insight and analysis provided by journalists, but it will be the ‘super brands’ who have built up trust and loyalty with their readers who will continue to hold onto their market share and thrive.”

Surviving the fight for survival

The issues being faced by local/regional newspapers is a mixed picture internationally. In the UK, closures have been widely reported with regional newspaper groups lobbying for a relaxation to the current competition law relating to mergers which they feel is no longer relevant. Radical changes have taken place in the US with some established brands, like the Seattle Post-Intelligencer, switching their entire output to internet-only news sources while many other publishers have embarked on major cost-cutting exercises on the back of the declining advertising and subscription markets. European publishers have followed suit but to a less degree than their US colleagues.

To stimulate growth in their marketplace some bolder newspaper publishers are working with other industries such as telecom providers, to leverage their advantage of being a trusted source of information and offering their content to these new news aggregators.

However, it is not all doom and some newspaper markets are still growing. In India both traditional print circulation and advertising revenue is contributing to steady growth and the Arab newspaper market is also showing steady growth figures.

The digital dilema

The shift to receiving digital content driven by the rapid adoption of the Internet and mobile technology has created a market for mobile devices — particularly for the ‘net generation’. However, the continuing difficulty in reading content on the devices has meant that they are often used to access breaking news and information but are fairly low on the list of preferences for accessing in-depth data. Because of this, consumers are still only prepared to pay a fraction of the cost for online content compared to what they will pay for a printed version. Very few newspapers have addressed this issue and developed appropriate strategies to monetise their content and intellectual capital effectively.

Those who have adapted their business models and use multiple platforms and new technologies to distribute their content (thereby maximising their brand, content and intellectual capital) have secured online audiences beyond their traditional print readership. However, as the economic downturn has shown, many had not changed their current business models and with the need to cut costs, the merger or acquisition route may now be the only option open to them.

The use of new technology has also offered advertisers an opportunity to reach niche audiences. This has proved particularly successful in the USA where newspapers have developed “hyper-local” or “local-loop” sites addressing content at the neighbourhood and suburban level. It has also helped advertisers target particular interest groups. However, advertisers still want and need to reach mass audiences and in order to do this, still rely on television, the number one identified vehicle to reach their markets. The challenge going forward for newspapers is to find a balance where they can offer advertisers an integrated approach to reaching both mass and niche audiences through both print and online media.

Going green

Sustainability has increased in importance for both the newspaper publishers and also for their readers. The readers are now attaching high values to a publishing company using sustainable production methods. Some newspaper groups have addressed this by using recycled paper or introducing new recycling processes (as in Germany), but many have not.

The 21^st century newspaper

So what will success look like for the newspaper industry in the years ahead? The successful operations will have challenged their existing business models, viewed all available options, and emerged as ‘super brands’ who will:

• Meet the increased demands from customers for specialised, targeted and relevant information while not losing sight of the need to continue to provide general news for the wider audience.
• Leverage their content on line by creating compelling content for specific niche markets and distributing it across multiple platforms.
• Have strategic partnerships in place with other content providers to enable targeting of specific audiences. However to achieve this, investment in CRM and content management systems must be a priority.
• Have a flexible and innovative approach with their product offerings and be prepared to negotiate alternative, contingency fees with advertisers.
• Have rethought their marketing sales efforts to capture the opportunities delivered by multiple channels to market.
• Have a team of journalists who work within a multiplatform environment (which has already happened in some broadcasting companies) where they have total editorial control for creation and delivery of content ranging from photographs and video through to editorial copy.
• Accept that ‘generic’ editorial will probably be off-shored/syndicated and that centralised newsrooms will exist to create content which can be “tailored” at a local level.

“Despite the current doom and gloom this is an exciting time to be part of the newspaper industry as it continues to evolve to meet the requirements of its readers and their demands for an ‘old’ world content delivered to them via ‘new’ world technology.”

Notes to Editor:

1. For additional information, please contact Anna Kogosova, PR Assistant Manager.
   
2. PwC conducted an online survey of 4,900 respondents on the change in consumer behaviour in respect to their consumption of news content. Consumers contacted were from Canada, France, Germany, the Netherlands, Switzerland the UK and the USA. Interviews were also conducted with 30 leading newspaper publishers and 10 leading advertiser and media buyers around the world. The report was compiled by the PricewaterhouseCoopers Global Publishing Centre of Excellence.
   
3. Download Outlook for newspaper publishing in the digital age