New platforms, new paradigms, old newspapers

Newspapers have not yet found a sustainable business model because although they have embraced the new technologies, they have not fully taken on board the new paradigm.

Sergio Sparviero
24 November 2012

The crisis of the publishing industry has also been affecting some of the most established daily newspapers. These are the institutions that give their readers access to deep news, i.e. the information that enriches the person, promotes social cohesion and facilitates democratic governance, because it contributes to creating personal and social values.

Although in different proportions, values like wellbeing, health, knowledge, self-conviction, truth and democratic participation are enjoyed by all readers. They can be directly affected by the creation and support for values (for example by learning how to be healthier) or indirectly because of the positive changes that a mass scale promotion of values has onto the environment they live in.

Proportionally, however, daily newspapers contain a larger amount of light news, i.e. information that entertains readers rather than creating and supporting values. This happens because major daily newspapers are large and integrated organisations that must appeal to a mass audience in order to be economically viable. Notably, mass consumption is achieved through standardisation, i.e. the realisation of a product that is affordable and appealing to a large group. However, if on the one hand most readers of a daily newspaper share the same values and therefore tend to benefit from the same deep news, on the other hand, this same mass audience presents a larger variety of tastes when it comes to information that they find entertaining, simply intriguing or useful for their hobbies.

Depending on the treatment of information, potentially deep news can fail to create value for the reader and, as a consequence, be supplied as light news. This happens when news reporting lacks depth of analysis or fails to engage with the reader and to create meaning. Therefore, more realistically, deep and light are two extremes of the news spectrum, rather than two separate containers. Nonetheless, in order to appeal to a mass audience, daily newspapers have to provide a ‘one- size-fit-all’ product composed mostly of lighter news with a relatively small portion of deeper news.

The results of a recent report published by Reuters Institute for The Study of Journalism show that the information delivered through two natural containers of lighter news, i.e. the entertainment and celebrity and sports sections, for example, interest on average a considerably smaller proportion of readers (15% and 28% respectively as an average of all five countries of the survey: U.K., Germany, U.S., Denmark and France) than news about the country’s politics (54%) or other domestic news (66%), i.e. two types of news that are more likely than the former to create and support personal and social values. This suggests that most readers do experience the same core parts and then have a more diverse interest in the two lighter news sections.

There are many reasons to explain the negative trend experienced by daily newspapers in mature economies over the last twenty years, but the availability of free news on the internet is by far the most celebrated. However, researchers explain that the additional competition of newspapers, i.e. the sources of information that are ‘online native’ and appeal to relatively large audiences, are also likely to be providers of lighter news rather than deeper news.

One can assume that the creation of value from deep news comes about on condition that a reader has an established relationship with the source of information and trusts it. Notably, readers transform information into knowledge only if they believe it, while they can realise the entertainment value from light news from more occasional and/or practically unknown sources. To a large extent, the online competition that is currently challenging the daily newspapers mostly concern their role as lighter news providers, and comes from a large amount of specialised and less established sources of information.

The distribution of news via the internet still represents a challenge for most newspapers. Presently, most daily newspapers distribute free online news, which they subsidise with online advertising. However, the revenue from online advertising, in most cases, does not compensate for the loss of revenue that was generated from advertising on traditional media. Although growing, online advertising is still a fraction of the traditional advertising market and more media outlets compete for its shares. Therefore, given that online platforms generate much lower revenues, the fact that the young online generation is gradually replacing the older print-and-television generation is a source of concern for newspapers.

Alongside the emergence and diffusion of the internet, a broader societal phenomenon has emerged and has been co-responsible for the negative trends experienced by daily newspapers. This much less celebrated factor has to do with the smaller amount of adults engaged in political parties, unions, churches, but also in communities and other less formal institutions and social formations. Some observers talk about the emergence of a ‘Me-culture’ and of a large proportion of people more interested in themselves and their close relations, than in the people of their communities or nations. Such a trend translates into a smaller proportion of deep news-addicts and into a reduced demand for daily newspapers in normal circumstances, i.e. outside of the peaks of attention created by catastrophes, elections or major scandals, for example.

Therefore, the ‘one-size-fit-all’ model of newspaper created in conditions of higher demand will no longer do, and in order to cope with the new environment, newspapers have articulated a strategy consisting of two driving principles: cutting costs and/or increasing the revenue from editions distributed digitally. Given that the cost of distribution of the print edition represents about 40 to 60 per cent of the total cost of production and that digital distribution can be realised with half of that cost, newspapers invest a lot of effort into designing and promoting the digital and cheaper version of the print edition: i.e. the tablet edition. Some newspapers in different parts of the world are also attempting, with the help of the relevant authorities, to force aggregators like Google, which re-post the free information published by newspapers under the conditions of ‘fair use’, to share the revenue that they generate from advertising in their role of information middlemen.

More importantly, however, in order to cut costs, newspapers have been changing the way in which they create content. Many accounts of the changing world of journalism explain that, compared to the pre-digital era when the ‘one-size-fit-all’ model of newspaper was successful, these institutions employ less journalists. Moreover, rather than knowledgeable in any particular field, journalists of the new generation must be good communicators, sometimes even when they engage with different types of content, like text, audio or audio-visual. Also, in order to reach the required level of productivity, they deal with many stories, a variety of topics and with many updates of these stories and different formats. They therefore have little incentive to investigate and research the stories and topics they are dealing with, and investigations are more likely to take place online rather than in person. Even though citizen-journalism and websites like Wikileaks help journalists by bringing stories directly to their desks, there is no doubt that, in general, news are going from deeper to lighter.

The value-creation process that results from the existence and popularity of newspaper is an important aspect of democratic societies. Some argue that given the public and worthy characteristics of (deep) news, the commercial model of news-provision is failing: people do not have the right incentives to act and contribute individually to what is best for society, and the provision of news is under-financed if left to the market. Public funding and charities, where available, must provide a solution to the financial crisis in current newspapers and support those news organisations which deliver the deeper news that create social values.

Ignoring the new paradigm

Nonetheless, the point I would like to make with this article is that newspapers have not yet found a sustainable business model because although they have embraced the new technologies, they have not fully taken on board the new paradigm.

Online versions of newspapers benefit from hyperlinks and videos, for example, but substantially they use a new platform to provide an additional version of the same traditional, ‘one-size-fit-all’ mass product. The digitalisation of the economy and also of media industries, however, has diffused a new logic of innovation that best fits the potential of the new information and communication technologies. Among other things, this logic preaches the realisation of economies of scope before the realisation of economies of scale, and modularity and joint ventures rather than vertical integration.

Rather than mass production, new businesses are characterised by mass customization, i.e. the delivery of products that are finely tuned to the need of the users. A lot of digital goods and services, for example, are supplied for free in their most basic forms, and yet customers are willing to pay for the more advanced versions of the same.

In the new paradigm, businesses tend to focus on their core activities and to collaborate with other players of their ecosystem for the additional activities that they require in order to deliver complex products. In the market of personal computers, for example, customers can choose between many manufacturers, which are actually specialised in designing, assembling, marketing and delivering computers. To a large extent, however, the parts of these computers are the same for all manufacturers, as they are produced by independent, specialised component makers.

The core activity of the traditional daily newspaper is social and individual value creation through the delivery of deep news to a large audience. As explained above, the presence of lighter news increases the value for money for the readers and it is a vehicle to attract the attention of a large and diversified population: the provision of lighter news, however, is secondary and instrumental to the provision of deeper news.

Of course, what actually defines deeper and lighter news depends on the newspaper and its readership, and it is up to the former to investigate and draw a line between the two. However, the current strategy followed by many newspapers, which privileges the delivery of a one-size-fit-all model, even across different platforms and produced by a vertically integrated organisation, over the quality of the content delivered, can only weaken the relationship between newspapers and their readership. 

Moreover, this can hinder the creation of personal and social value, and therefore, reduce traditional newspapers to competing with the less trusted, online sources of (lighter) news.

But there is an alternative. Traditional daily newspapers could easily collaborate and create synergies with more specialised providers of lighter and/or niche information. To a certain extent, mixing original and ‘imported’ content is a practice that is already carried out by newspapers in their online and traditional editions. However, if newspapers used this practice in order to free up resources for producing deeper news and investigative work, rather than for further increasing the amount of lighter news, they might, on the contrary, convince an extended base of regular readers, for example, to pay for an edition of the newspaper that is digitally delivered but deeper and therefore more valuable than the free online version.

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