By Mathieu Wener
Since the emergence of the internet, media executives have begun building the digital future of their industry. While newspapers' print readership has slowly declined, their online readership hasn’t yet surpassed it: a 2015 study by the University of Texas at Austin examining 51 local-market print newspapers in the United States shows that within each market, the print version of a newspaper always had a consistently larger reach than its respective online iteration. This is because readers are moving away from print news journalism and going online, although they are not going to the web versions of the newspapers they previously read. Instead, these readers are shifting to news aggregators such as Yahoo, Buzzfeed, MSN and Reddit.
Strategic Planning: Journalism’s Business Side
Newspapers can no longer rely on subscriptions for revenue as they did in the past. With so much content being available free of charge, offering paid content can be hard to justify. Still, there are those who believe that high-quality content should not be offered without a paywall after a few preview articles. This is the essence of the "Ramen Noodle Theory," the brainchild of Iris Chyi, a researcher at the University of Texas who specializes in the economics of new media. The rationale behind her theory is that consumers may consider free content to be an inferior good, and so having to pay for content perceived to be consistently superior is thus worthwhile. Clearly, it is crucial to turn all page visits into some form of revenue, whether it be advertising or subscriptions.
In constructing an online platform, selecting the location and number of ads is an impactful decision. From 2011 to 2015, the percentage of ad revenue for newspapers coming from their digital versions went from 17 percent to 25 percent. Internet users, annoyed by the presence of advertisements, have designed ad-blocking software to ensure themselves a more seamless reading experience. According to the Wall Street Journal, between 10 to 25 percent of internet users have equipped their browsers with such software. In response, websites have adopted ad-blocker detectors in order to prevent circumvention of advertising. Some online news platforms like The Atlantic have created a paid, ad-free version of their content, while also disabling access to the free version if an ad-blocker is recognized. Kim Lau, chief of business development at the Atlantic expressed her objection to ad-blockers: “Digital advertising is the single biggest source of our revenue. It’s obviously a concern to us if there’s a segment – and potentially a growing segment of the population – that doesn’t understand that value exchange.”
An undeniable market force at play here is the lowered barrier to entry; anyone can launch a new webpage with relative ease, without incurring the higher costs associated with a printed publication. This added competition translates into smaller profits and readership. Chyi has some harsh advice for media executives trying to keep up with the times: build a paywall to indicate the web content’s value, and hope this helps the performance of the printed edition. As well, don’t expect to exceed profit margins of average S&P 500 corporations; the days of high margins are over.
Can a newspaper successfully transition to an online version?
La Presse. On the third anniversary of its digital launch, it had secured a 42.7 percent share of the mobile news applications market in Québec. A media release proclaimed success in shifting its revenues from subscriptions to advertisements:
Three years after the launch of the app, advertising revenues from La Presse+ already account for more than 75 percent of La Presse’s total advertising revenues, while all of its digital platforms, taken together, generate 88 percent of those revenues. These excellent results show that advertisers are continuing to transfer their investments to La Presse+.
Commitment to the digital iteration, La Presse +, was solidified in early 2016 with the decision to distribute physical copies on weekends only, consequently reducing printing costs. This move was justified, as the company’s paper subscriptions fell by a half after its strong digital launch. Company president Guy Crevier went on to say that 70 percent of total revenues are accounted by its digital operations following the change to weekend printing.
However, a newspaper truly succeeding online is the exception, not the norm. The Toronto Star attempted to replicate La Presse + with its own Star Touch app, but it has not transpired into similar gains: more than 250 jobs were cut in 2016, a year after hiring a few dozen new staff to help promote its new digital endeavour. Scarce are newspapers who have been able to effectively guide their print readership to the online edition. According to Politico, in the US, “only the New York Times and the Wall Street Journal have succeeded in attracting a mass audience willing to pay for paywalled online editions, but they are national, not local newspapers.”
Many of the biggest news providers publish hundreds of articles, videos and infographics each day. The Washington Post publishes around 500 news stories or videos daily. Meanwhile, the New York Times, Buzzfeed and the Wall Street Journal post around 200 per day. Chyi suggests newspapers are too short-term oriented, and that in the long-run, shoddy articles meant to keep up with the competition will actually hurt brand image. One must simply head over to the Facebook page of any major newspaper and find a misleading headline: the comments section will surely indicate worry about what journalism is becoming.
Traditional news outlets must today compete with an ever-growing number of borderline blog-news type organizations for which ethics are questionable and regulation is virtually non-existent. In order to collect the most clicks (read: advertising revenue) everything is fair game. Misleading, ridiculously sensationalized titles, superficial fact-checking and the substitution of lengthier written analysis for infographics or memes have become commonplace.
The Importance of Print Media & the future of journalism
The digitalization of news has changed the landscape of journalism. While pixels are rightfully seen as the medium of the future, it seems as though an important detail has slipped past many people’s thoughts: print, while slowly declining, is still very much alive. According to a 2012 Rasmussen poll, 66 percent of American adults prefer reading the paper version of a newspaper to its online counterpart. The importance of print journalism cannot be denied from a business perspective; neither can it be diminished on a societal level.
It would be short-sighted to dismiss the physical newspaper as a relic of the past: to this day it continues to bear the crucial task of informing people of recent developments in all areas of the globe. However, it must also be understood that the greater costs involving production of physical copies can only be undertaken by large, already established organisations for which regulation and industry standards have been jeopardized in the last few decades.
As a result of changing legislation, most print journalism the public would hope remains consistently reliable and trustworthy is now dominated by a small number of corporations, whose interests are often aligned despite being competitors. Deregulation meant to encourage competition has actually allowed media to be controlled by fewer firms. Business Insider reports that in 1983, the US market was divided up by nearly 50 firms, whereas nowadays 6 conglomerates control around 90 percent of the industry. On top of this, the Fairness Doctrine was revoked by the American FCC in 1987: it stipulated that some content must be dedicated to matters of “public importance” in a manner that may be partisan, but not entirely one-sided. In Canada, deregulation has led to comparable consolidation of media ownership, sparking controversy about editorial freedom.
It must not be forgotten that a trustworthy news sector is one of the main checks and balances which allow us to enjoy our current standard of living and the freedoms we cherish. Media executives, long-time journalists, online bloggers and readers alike must face the prospect that profits may now be at odds with the requirements of rigorous reporting. While such a thought still debatable today, it is nonetheless worth pondering - if only to remain vigilant.
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