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The news is dead – long live the news?

In a media world where the Big Five digital players are calling the shots, Jim Chisholm sees hope emerging from a growing breed of “new newsers”.

Image: The Economist front cover, 6 March 2003, Fair use.

It’s 60 years since Francis Williams forebodingly noted in 1957 the closure ‘of at least 225 weeklies and 21 out of 41 regional morning dailies’ (1). Since then countless others from Bill Gates to The Economist have anticipated the newspaper’s extinction (2). 

There is nothing we newspaper folks report more enthusiastically than our own demise.  As I’ve written before (3), the news is flourishing but just not as we knew it.

Some harsh realities….

In Europe the average print newspaper has about five years of viability (4). Bar some exceptions, digital revenues (and critically gross profit) are not growing as fast as print revenues are declining. The notion of paywalls paying – with some notable exceptions – is unlikely. News media have always depended on advertising, and here lies our core challenge/opportunity. The reason that news media – and other aspects of life – are under threat, is in large part because of the unfettered control and revenue extraction of the Big Five digital giants: Alphabet, Apple, Amazon, Facebook and Microsoft. Not only are young people turning to Facebook and Twitter for their news rather than connecting with traditional news media, but the belief that they somehow adopt traditional news media as they get older is false, as this chart of cohort behaviour over time shows:

Caption: Cohort model of readership trends drawing from the past (5)

So what does all this mean for our crucial role as the fourth estate in society?

The future viability of news media will depend in part on the forces of demand and supply –

what do news consumers of different demographics want/need? And what are both legacy and emergent news providers offering?

Oscar Wilde wrote: “The public have an insatiable curiosity to know everything……except what is worth knowing….. journalism.... supplies their demands.”(6)

Today quality journalism is torn between society’s insatiable thirst for trivia, and President Trump’s and others’ attempts to present news as fake; an issue the European Commission are now addressing (7).

CP Scott, editor of The Guardian famously said: ‘Comment is free. Facts are sacred.’ So news media must reinforce its reputation. New approaches to news that appeal to the young and disillusioned are part of this evolution.

The new news and what is happening

To demonstrate how the news industry is in fact thriving, let me focus on my birthplace Edinburgh, a population of 500,000. It’s very sad that the area’s flagship newspaper, The Scotsman has seen its circulation fall over the last 40 years from 100,000 to 20,000, of which half are full price. Some of this is due to the growth of The (London) Times, which has seen circulation rise from 16,000 to 25,000 in the last five years, driven by investment in content. Established evening and local weekly papers have seen significant falls.

As a consequence, though, there are a raft of new initiatives. Firstly, take the plethora of community newspapers.

South of Edinburgh, the Hawick News was a dominant local newspaper until its parent company made its senior editorial staff redundant. One of them launched the Hawick Paper in competition. After two years, the Hawick Paper outsells the News by more than two to one (8). Same people. Same market.

In a tiny district of Edinburgh, the Broughton Spurtle (9), produced and distributed by a group of up to 70 volunteers enjoys a circulation of 2,500 and a monthly online base of 12,000-15,000, (in a community of less than 10,000) based in a local florists (10). Subscriptions are ‘£15 or whatever you can afford’.

Across the city there are 44 defined communities (11), whose community councils each produce a newsletter of varying quality, mostly online, but in many areas a printed publication, funded by local advertising. Serious digital news media

Daily Business (12), founded by a previous business editor of The Scotsman, is now described by one of Scotland’s leading entrepreneurs as ‘My first go-to read of the day’, a sentiment echoed by many. It is funded by advertising, sponsorship, paid-for-content, a range of business-to-business services, and voluntary payments.

The Ferret (13) is an award-winning, not-for-profit consortium of experienced, independent investigative journalists. Their stories are regularly republished in the national and international press. It is funded through voluntary subscriptions, and contribution fees.

Holyrood Magazine (14) covers the activities of the Scottish Parliament every fortnight in print and digital formats. It is funded by subscriptions, advertising and sponsored content.

Humans of Edinburgh (15) is a Facebook site created by a young Edinburgh photographer that every day interviews someone on the streets of the city. It was the first medium to report that film producer Danny Boyle would be making a sequel to Trainspotting (16): The scoop attracted more than a million visitors and was picked up by dozens of news-media around the world.

Then there are innumerable niche publications covering entertainment, sport, lifestyle, and tourism, and the inevitable student newspapers, which are distributed free of charge across the city, each with accompanying websites.

Without access to detailed figures, it would be reasonable to assume that this myriad of ‘new news’ media collectively create a local media economy at least equal in size to the established media.

Who are the new newsers?

One observation I would make is that, with notable exceptions, most of these new news media are produced by talented, seasoned journalists, who have become either disillusioned or deemed dispensable by the corporate publishers. Here is firm evidence that the decline of the traditional press is not a fault of its ever-declining number of employees. Many of the new news success stories across the UK have been created by staff well into their 50s, and beyond.

However, with the exception of the thriving student press, very few new products are being produced by the under 35s. In addition, very few women appear among these new news players.

If established publishers want to survive, they must seriously focus on the needs of millennials, whose needs, interests and views are never going to be satisfied by their current offerings.

New news - where’s the money?

Not surprisingly, most new initiatives are led by journalists. With no disrespect to these often brilliant, pioneering writers, I observe a lack of commercial expertise and in many conversations, I would suggest there is also commercial naivety. There has always been a healthy conflict between the content creators and the money-makers, but today realism must prevail. At one time newspaper organisations employed as many commercial staff as editorial. Now the ratio is around two journalists to every one revenue generator (17). In the new news world the emphasis is strongly on content with often little regard to the realism of revenue.

This problem is exacerbated by the fact that these are small operations fighting for funds from fewer, ever-larger, media-buying houses.

The same is true of technical systems, where smaller publishers are at a disadvantage in terms of acquiring top-drawer scalable content management and commercial software. In the US, the mighty Berkshire Hathaway’s have outsourced the management of its small network of newspapers, with the Poynter Institute noting: “It's harder for smaller companies to keep up with technology needs and centralize operations like larger media companies have.” (18)

However, time has shown even the biggest publishers are struggling to make headway against the dominance of the Big Five (Alphabet, Amazon, Apple, Facebook, Microsoft). To this end I have long advocated the creation of an Association of Independent Publishers, that provides a platform for mutual support, idea exchanges, cross-market networks, but as importantly, a collective approach to commerce, technology, training, legal services, etc.

Traditional media – striking back on advertising?

Traditional News media have generally relied on advertising to deliver the majority of their gross profit (19). Publishers are scratching around looking for paywall models, simply because such a high proportion of advertiser spend is being lost to the Big Five.

Once the digital value chain looked like this:

The original digital value chain

In this version of the digital value chain, generally 10 per cent to 15 per cent of the advertisers’ spending is taken by the media-buying agency (plus creative costs).

Today it’s more like this:

The complexity of the digital media transaction process (20). Source: LUMA, www.digitaladblog.com, and others.

The economic impact of this on publishers is stark.

The dilutive effect of intermediaries on the digital value chain (21). Source: AEMII Future Media Lab. Chisholm submission to House of Lords’ inquiry into advertising.

In this version of the value chain, for every £100 that an advertiser spends, only 29 per cent ends up in the hands of publisher, with a further 10% going to the media buyers.

However, ways exist that enable publishers and advertisers to bypass this value-chain grabat least doubling the share of ad spend that the publisher receives. It will also significantly increase an advertiser’s return on investment (ROI) because of better targeting, without wastage (22).

Another response is the various attempts by the national press to work together in their selling activities, the latest being the joint-venture between The Guardian, Telegraph and News UK (23).

Alternative thinking on revenue

One notable trend is the increasing reliance on voluntary subscriptions. The Guardian is the most significant example (24). It now boasts over 800,000 ‘supporters’ globally, of whom 500,000 make recurring monthly payments, with a further 300,000 one-off donors. This may be a tiny fraction of the medium’s 150m visitors worldwide, but their impact on the publisher’s future viability has been dramatic.

This, combined with significant, largely operational cost savings, has resulted in The Guardian halving its losses to £18.6m on a turnover up one per cent to £217m, at a time when most publishers are reporting revenue declines.

Today in 2018 more than 50 per cent of their turnover comes from digital, up 15 per cent year on year; reader revenues from donations and print circulation now outweigh advertising sales. The group is on course to break even on an operating basis in the new financial year.’

So what will the news media landscape look like in, say, five years’ time?

The only consistency is tumultuous change, affecting every element of society, for better or worse.

After the boom years from 1950 to 1990 we must assume that economic growth rates will return to the historical norms of one per cent to 1.5 per cent (25). The erosion of fair wealth distribution means that today’s young people are the first generation to earn less than their parents.

Meanwhile, technology itself is evolving rapidly. The digital environment is increasingly dominated by mobiles and tablets. By 2020 more than a third of all advertising – and two-thirds of all digital – will be on mobile platforms (26). Mobile networks will continue to develop, with expanded bandwidth, and availability, and also advances in micro and auto-payments; think PayPal meets Vodafone. We read more and more about artificial intelligence, robots, data journalism, virtual reality, etc – but my view is that while these may enhance content provision, they are secondary to the need to identify viable business models that can fund quality journalism.

In 2018, as I write, governments, at least in Western Europe, have recognised the plight of the news industry (27). In the UK, the Prime Minister instigated the Cairncross Inquiry (28) into the future of the press. In France and Germany there are already government initiatives to control the influence and impact of the Big Five. In Brussels the European Commission is proving forceful in cracking down on the Big Five’s excesses. But we must not rely on any government intervention as our means of survival or adaption.

And in the end…

For many printed newspapers extinction awaits. The question is how many of them will survive the point of inflection from print to digital profitability. Some undoubtedly will. But others will succumb to the Big Five and their own mismanagement.

The good news is the flourishing new news. But to succeed, these excellent publishers need to adopt the entrepreneurial skills as they demonstrate in editorial. The new news has a bright future in tomorrow’s society, but unless the Big Five are reigned in, who knows what will happen?

This is an edited version of a chapter from the new book Anti-Social Media: The Impact on Journalism and Society, edited by John Mair, Tor Clark, Neil Fowler, Raymond Snoddy and Richard Tait, available from Abramis priced £19.95. Email Richard@Abramis.co.uk to order a copy.

Notes

  1. Dangerous Estate ISBN: 12502346, 1957.
  2. The Economist: https://www.economist.com/britain/2003/03/06/fading
  3. Last Words?: How can journalism survive the decline of print? ISBN: 9781845496968
  4. Jim Chisholm report: Future of printed news http://www.jimchisholm.net/
  5. Source: UK National Readership Survey
  6. Oscar Wilde: The Soul of Man under Socialism". 1891. ISBN: 9780140433876
  7. https://ec.europa.eu/digital-single-market/en/news/draft-code-practice-online-disinformation
  8. Local Publisher figures, confirmed with independent calls to local outlets.
  9. Broughton Spurtle – A “Spurtle” is a Scottish word describing a spoon, aka “stirring”: http://www.broughtonspurtle.org.uk/about-us
  10. Broughton Spurtle: Publisher’s figures
  11. Edinburgh communities: http://www.edinburgh.gov.uk/directory/28/community_councils?page=2
  12. Daily Business https://dailybusinessgroup.co.uk/
  13. The Ferret: https://theferret.scot/?s=Glenrothes
  14. Holyrood Magazine: https://www.holyrood.com/
  15. Humans of Edinburgh: https://www.facebook.com/officialhumansofedinburgh/
  16. Trainspotting 2 Scoop: https://www.dailyrecord.co.uk/news/scottish-news/trainspotting-2-filming-underway-director-7531382
  17. Review of company reports
  18. https://www.mail.com/business/economy/8577692-lee-enterprises-to-manage-berkshire-hathaway-newsp.html
  19. “Gross profit = Revenue - Cost of Goods Sold.” https://www.investopedia.com/terms/g/grossprofit.asp
  20. Source: LUMA, www.digitaladblog.com, and others
  21. Source: AEMII Future Media Lab. CHISHOLM submission to House of Lord’s Enquiry into advertising. http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/communications-committee/the-advertising-industry/written/76536.html
  22. Source: AdAppTive: http://www.adapptive.eu/
  23. https://www.theguardian.com/media/2018/jun/20/guardian-news-uk-telegraph-launch-advertising-business-ozone-project
  24. https://www.campaignlive.co.uk/article/guardian-chief-pemsel-arent-complacent-halving-losses-186m/1488698
  25. Thomas Pickety. Capital. ISBN 978-1-912302-30-7
  26. Source: Zenith Optimedia
  27. http://www.newsmediauk.org/News/ofcom-newspapers-play-vital-role-in-democratic-society
  28. Cairncross Enquiry: https://www.pressgazette.co.uk/culture-secretary-matt-hancock-confident-cairncross-review-into-future-of-uk-press-will-find-solutions-to-help-news-industry/
About the author

Jim Chisholm  advises media organisations worldwide on strategy and diversification. jim@jimchisholm.net,

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