Newspapers facing worst year on record

Tony Harris sent me a link to this story in the New York Times which says that this year is shaping up to be the worst on record for newspaper advertising revenue.

I’ve been predicting a steady decline in advertising revenue for years (The Future Of Newspapers, State of the News Print Media in Australia 2007, Aussie Newspapers in decline and denial ) as people move online to get their news. The newspapers report people are moving online to their sites, but unfortunately they don’t make as much money from online advertising as they do from print, because online they have competition.

So what happens when revenue is in decline? They have to sack people and stop investing. The rot sets in.

A couple of the big metro newspapers in Australia seem to be holding steady but I suspect that’s got more to do with funny statistics more than anything substantial in the trending. They will inevitably fall prey to the same forces bringing down the newspapers in the US.

This is a good example of where shareholder activism (as Stephen Mayne was talking about on the show last week) is needed. Why aren’t the shareholders of Fairfax and News creating more of a shitstorm about what those companies are doing to make sure they don’t go down the tubes over the next decade? All I ever heard from Fairfax’s management is “things are great, we’ll be around forever” which just shows me that they are either in denial or just lying their asses off, hoping they’ll get out before the whole facade crumbles around them.

10 thoughts on “Newspapers facing worst year on record

  1. Fairfax are more proactive than most.

    It would appear (to me anyway) that they bought out the radio stations- 3AW* included- to top up their online content offerings.

    http://media.theage.com.au/?rid=38962

    The above was generated and edited by 3AW for use on Fairfax networks. This happens a lot these days.

    In time, I imagine the stations will move to Fairfax digital CMS platform and that will make cross pollinating content an automated process.

    Mark Jones pointed out at Pubcamp that the AFR has not yet moved to a free content with advertising model as their experiment with it saw a huge drop in paper sales without a commensurate bump in online advertising revenue- it seems that big office librarians would cut n paste articles into intranets but without the ads. So thought is required on how to get the AFR online and not damage it Bulletin style…. (thoughts?)

    Tom
    Fairfax buy into Radio:
    http://www.smh.com.au/news/business/hello-world-this-is-john-fairfax/2007/07/03/1183351209079.html
    *3AW are an employer of mine.

  2. One dying industry buying another dying industry doesn’t seem to be a recipe for survival. Deustche Bank just CUT it’s valuation of Fairfax by 20%.

    The longer the AFR stays inaccessible the longer it stays irrelevant to people looking for online content. Hiding your content away behind a firewall is a surefire way to make sure people don’t read it and find other places to get their content. It’s circulation has been in a steady decline since 2001 (link), dropping nearly 10% in five years! So much for that brilliant strategy….

  3. Yes, Fairfax buying 3AW is like running around buying the remaining chairs on the Titanic. Are there growing online media businesses Fairfax and News could take a minority stake in for the present and increase their stake if it goes well. Yes, there are, especially if you include media strategy, media buying and creative media agencies on your list. Will they? No, probably not, because they Won’t Have Been Invented Here.

  4. I really feel for my friends who went into journalism. It’s a really tough industry to be in at the moment and the prospects don’t look especially good.

    The advertising model for news really worries me. I just don’t like the idea of the news agenda being influenced by advertising spend.

    In a way I sort of like the UK model except without the monopoly of the BBC.

    Super contributions are compulsory in Australia as is the medicare levy. I’d argue that news is as important as superannuation and health. Why not make everyone get a news subscription? That would be a non-advertising way of getting news funded.

  5. “One dying industry buying another dying industry doesn’t seem to be a recipe for survival”

    Cam, don’t get carried away with radio being dead. I know you love to herald its demise, but what I think you are seeing is failure to react. Once there is a reaction- that is to say the embracing of the possibilities, then you might be suprised at a resurgence.

    It has survived the coming of television- free to air and cable- and when combined with 2.0 thinking will continue to flourish in the future. I say this not because I am “invested” in it, but because I think it is true (ok, so I need it to be so a bit- just like podcasting needs it to die).

    Do you have evidence to suggest that radio is dying in the talk sector? All I see at AW is ratings going up with revenues to boot.

    I see radio and podcasting being complimentary media- one is live and all about the here and now, the other can be more in depth and niche-y. I see a future where longer interviews, video and discussion takes place on the media websites.

    Tom

  6. “Once there is a reaction”… it will be way too late, just like the music industry and the newspaper industry. Radio survived TV for one simple reason – you had to be rich to own either a radio station or a TV station. Both were controlled markets. The internet isn’t. So radio now has to compete with a huge tidal wave of competition and I don’t see how they can survive.

    Southern Cross Broadcasting (the former owner of 3AW along with 2UE and a number of other talk radio stations) had flat revenue year on year before being aquired by Fairfax. There’s your evidence.

  7. A flat year is a flat year. It’s not the end.

    There are huge costs for radio networks- and a sales team is one of them. As you would know there is not a great deal of options for online podcasting advertising in the manner of Google Adsense (not that I use that as a perfect model), but when there is, the station will be able to monetize online better and trim their sales teams.

    Also on air “names” are expensive- though they are tied to ratings in the main. If their audience goes elsewhere, either they go or they take a pay cut. The pay cut seems more likely if the industry is topped out. It’s not the end. Radio is still hugely influential in Australia- politically and socially.

    When Kevin Rudd is weekly G’Day world guest, we’ll talk radio’s demise a little further.

    Tom
    PS I acknowledge that radio has taken a hit as options for content delivery have increased. Once upon a time Australians went to the cinemas, the beach or listened to the radio. That was it!

  8. A flat year is an indication of stagnation. Businesses are either growing, declining or standing still. If radio is standing still, what does that tell you?

    If you think having Kevin Rudd on the show and “names” are going to save them, then you’re locked into the 20th century model which trumpeted “celebrity” media and I think we’re pretty much over it. I’m much more interested in what real people think rather than what a celebrity or ex-journo thinks.

    There simply isn’t any growth left in radio because all of the people who are ever going to listen to radio already are. The next generation certainly aren’t.

    My kids don’t have a radio, don’t care about the radio, and probably never will. Their entertainment comes from torrents, XBOX and the net.

  9. The problems with TV,radio, and print media seems mostly down to content management, interactivity, and timeshifting.

    As the punters get used to being in control of their media appetite, they will increasingly resent having that control taken back off them. The changeover from being passive consumers of whatever tripe is dished out to them.

    I routinely program my media intake a week in advance, with podcasts, TIVO’d digital media etc. I find it physically painful to listen to commercial radio with poorly selected playlists of the same looped 200 tracks and intellectually insulting banal advertising. Similarly for TV.

    I hate not being able to pause my media flow while I attend to something else. My time is valuable and I will choose what media intake I’ll invest my time in. Not whoever has the largest advertising budget.

  10. I think I will adddress this one element at a time:

    > A flat year is an indication of stagnation. Businesses are either growing, declining or standing still. If radio is standing still, what does that tell you?

    The mining industry was flat for a long time. Our current account deficit was astronomical. Now Iron ore is in demand, the price to China went up %85 and mining has made WA the potentially richest place to be.

    A flat year is exactly that- flat. There is no sense that it’s game over- nor anything like that. I grant you that old media are somewhat arrogant at times, but generational change and harsh realities will see them find a new configuration. They won’t suffer like record companies as they already work on a free content model.

    > If you think having Kevin Rudd on the show and “names” are going to save them,

    I am simply pointing out that Kevin Rudd and his ilk do weekly sessions with major talkback hosts as it is valuable. You can ring and ask a question. Live. Podcasts can’t do that.

    > There simply isn’t any growth left in radio because all of the people who are ever going to listen to radio already are.

    Correct. So they may seek alternate revenue streams- offer multiple digital streams like free to air TV will, offer podcasts, offer longer pre recotrded interviews, offer more diverse content. In effect, be a bit like TPN.

    > My kids don’t have a radio, don’t care about the radio, and probably never will. Their entertainment comes from torrents, XBOX and the net.

    Well here I really beg to differ. When your kids reach teenageship (?) they might find JJJ/FM radio compelling so they can hear new music and tap into what their friends find interesting. Yes, you have unique, forward thinking kinds. But many like to feel invested and involved in popular culture and radio still delivers that. Want to be in on the joke Hamish and Andy were on about last night on air? Listen to radio.
    I would also add that I have been testing the new FG Falcon- the first Australian built car with an iPod data cable plugin. I still listen to the radio as my 80gig ipod – even with podcasts galore, does not (and frankly cannot) deliver the full spectrum of content I want. As Jay Mueller says “When you see smoke on the horizon, you turn on the radio”

    Oh and if you want proof that radio is still doing alright and is surviving in a web 2.0 world, check out the top Australian podcasts- dominated by mainstream radio/free-to-air TV show podcasts. In the top 100 podcasts in Oz, the only and highest ranked TPN podcast is the AFL show at 61. Three behind The Hillsong Church.

    There’s a way to go eh Cam?

    Tom

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