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

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).

Ann O’Connell, Partner, Entertainment & Media Practice, PwC Ireland said:

“Ireland has a deep rooted traditional newspaper following and as a result the migration from print to online media is not expected to impact the sector to the same extent as other countries such as the US, where the newspaper industry is facing significant difficulties.

It is likely that Irish consumers will for the foreseeable future, continue to place a significant value on the commentry and opinion provided by the well-established newspapers”

The fight for survival continues

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.

In Ireland, newspaper sales are not declining to the same extent as in other parts of the world. However numerous issues exist, such as the dramatic slowdown in advertising revenues as a result of the recession, the ongoing migration of readers to online sources for content, combined with the challenges facing publishers resulting from a growing need to maintain a new media online presence.

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.

Ann O’Connell concluded:

“Despite the current difficulties facing the market 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.”

The 21st 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 Customer Relationship Management 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.

ENDS

Notes to Editor:

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. The Centre comprises experts within PricewaterhouseCoopers globally who have deep knowledge of the publishing industry. For further information on the Publishing Centre of Excellence contact Johanna Dehaene on 086 810 6542
Copies of the report can be downloaded from www.pwc.com/e&m
PwC will host the launch of its Irish Global Entertainment and Media Outlook 2009-2013 report at its Dublin offices in early July. The report will present trends and projections for consumer spending and advertising spending across 14 different sectors of the Entertainment and Media Industry. For more information please contact Johanna Dehaene on 086 810 6542.
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