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Can Daily Newspapers Survive?

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The media is accustomed to calling 'time' on industries. How many (or how few) newspapers ever spoke out in support of ailing car, steelmaking or shipbuilding industries, under siege from low-cost manufacturing countries and newer technologies? Media pundits have frequently amplified the calls for long-established industries to 'face facts', 'get real', and 'stand on their own two feet'. Well, Fleet Street, now it's your turn.

Consider the facts. In the UK, the country so proud of its raft of national daily newspapers, July 2011 copy sales fell by almost 8% compared with last year. The Daily Star managed to record a table-topping 16% decline but there were double-digit losses also for The Times, Guardian and Financial Times. These are just the latest gravitational figures from newspapers whose total circulations have fallen by more than one-third in 10 years. The impact, even on those newspapers generally regarded as strong and successful,has been striking. The Sun, which was selling 3.4m copies a day just 10 years ago, is now down to 2.8m, well short of its 5m peak. The Daily Mail is down 19% across the same period and The Times is off by one-third. As if to emphasise the scale of the crisis, the Financial Times, perhaps the bastion of 'must read' information, is down 16% in the past 10 years.

The UK's Sunday newspapers have not fared any better, with total circulations down some 25%, in the decade. Even Rupert Murdoch's once-mighty Sunday Times is now selling fewer than 1m copies a week - down one-third in under 10 years. The Sunday Mirror crowed recently about the former News of the World readers it had won over. But this 'success' disguised the fact that about half of the buyers of what had been the largest-selling and most profitable Sunday newspaper greeted Murdoch's closure of their favourite newspaper with an immediate decision not to buy anything else instead. Readers are so lukewarm that it only takes a shockwave for them to drop once-favourite newspapers, as may eventually be seen in the protest fallout from the News Corp phone hacking revelations.

The plain facts are that only about half of UK national newspapers are profitable. And the lucky few are declining fast - everywhere. To reinforce the point, a hawk-eyed commentator in Australia noted recently that not one of the country's four largest dailies, Sydney Morning Herald, Australian Financial Review, The Age (from Fairfax) and News Corp's The Australian is now consistently profitable. There's pain everywhere in newspaperland. But nothing like there's going to be.

These falling newspaper circulations are nothing new. Perhaps the only surprise is that newspapers seem to be so slow in reacting to the changing times. This slow-motion dance with death derives from newspaper publishers guessing variously that:

  • Some newspapers will close and the rest will find ways to get back to (fairly) profitable ways as the economy recovers
  • Sooner or later, the papers will find ways of making profits from web and ipad-like operations
  • Other advertising and/or retailing activities might help stabilise or increase profits, even with reduced circulations.

    It's wishful thinking. Such views ignore the post-internet realities of news, viz:

  • Readers and viewers are increasingly reluctant to pay for general news. Upmarket audiences might pay for newspapers (whether in hard copy or digitally) but the mass market, increasingly, will not. The New York Times is making its ipad edition work (now with some 350,000+ subscribers). But the same cannot be said for the UK audiences of The Times; and the Daily Mail will discover soon enough how free ipad readership is no clue to reader motivation once they put up a paywall. For millions of people around the world, journalists from Time magazine or the ABC or BBC posting so-brief latest news on Twitter is plenty good enough. Speed beats depth.

  • Readers are increasingly content with "good enough" news and information, so will accept 'bite-size' free newspapers and magazines rather than supposedly "better" paid-for publications. How else would you explain the London readership (and advertising) success of Metro, City AM, and the Evening Standard, all free newspapers with growing revenues and,mostly, profits? Advertisers are increasingly inclined to support 'guaranteed' free circulations, sometimes in preference to collapsing paid-for newspapers which have papered over the cracks with bulk copies in trains, planes and hotels.

  • Online free-to-view aggregators like the Huffington Post, CNN's Zite, Flipboard, the new Hitpad, and the wide-ranging BBC increasingly satisfy the information needs of a market for whom paid-for daily newspapers were once the only way.

    Significantly, most of that new media activity (and, of course, also the seismic waves from tech giants like Google and Apple) has little to do with the newspapers that, until the 21st century, dominated the news agenda. The world has moved on. There are many reasons why the old model is broken: advertising-topped profits have been driven down by sliding circulations; and web sites have done little more than add to the losses. But the greatest obstacles to the competitiveness of newspapers in the digital world are their own costs, notably the number of people they employ, especially journalists. Newspaper editors who recruit 'new media' people for their web sites are accustomed to being asked "what do they all do?".

    It is time for newspapers to learn (and quickly) the digital lessons which high street retailers might find familiar. One post-internet reality is consumers' ultra-sensitivity to price and value; and that 'lowest-reasonable costs of production' are, therefore, imperative for success in any business. Just as the itunes generation will pay only for the tracks they want (not the music company's priced-up, multi-track album), so today's declining band of newspaper readers are savvy, picky, and know the choices.

    Try telling that to the UK's daily newspapers, many of whom employ anything up to 400-500 journalists, writing less and less for fewer and fewer readers. And some editors are depressingly sniffy about newspapers like The Independent which have tried to re-write the old rules on staffing levels. But new wave free papers like City AM employ about 10% of the number of journalists on The Guardian, for example.

    The fact is that what was once known as 'Fleet Street' still has staffing levels too close to those that were viable when they were all-powerful, when TV news was more primitive and less pervasive, when online didn't exist - and when newspapers were flooded with advertising. Well, that spell has been broken. Many of the readers and much of the advertising (especially the 'rivers of gold' classified ads) have gone forever. And that, of course, is as much a death-sentence for the country's regional dailies as it is for the legendary nationals.

    Of course there is profit in news, information and entertainment and there are a myriad of companies proving it even now. And there will also be future profits for some paid-for newspapers. But the only way for many newspaper publishers to survive will be to invest - at arm's length - in new businesses that are more capable of meeting the needs of readers and advertisers in changing times.

    Some (like the Daily Mail, which owns Metro) have shown themselves willing to make those fresh-air choices. Others must join in cannibalising their own businesses - if they are to survive. They must get used to competing with themselves as well as with the ever-widening range of other media that is slicing up their audiences and revenues. But many will fail. Which long-established national daily will be the first to find its demise compared with that of Woolworth's?

    Like the 'rust bucket' industries that reporters have (almost) enjoyed writing off, many newspapers (and thousands of journalists) are having to come to terms with the fact that they are no longer essential to many people's lives. Last month, millions were glued to the as-it-happens TV news from Libya. Few were waiting for the morning newspapers, running off the presses while the news was happening.

    Distinguished former newspaper editors are almost uniformly pessimistic about the future of their former profession. In Australia, former Sydney Morning Herald editor Eric Beecher says: "Throughout history, if you look at the American railroads or the Encyclopaedia Britannica or the people that used to make saddles, or whatever it is , when new technology comes along out of the blue, it's very hard for them to acknowledge, particularly when they've been so successful. In the case of newspapers, they used to have power as well as success (so) it's very difficult for them to change that mindset. In the UK, former Daily Mirror editor Roy Greenslade describes the newspaper business model as "a dead duck".

    The (eventual) loss of Rupert Murdoch's partly-sentimental patronage of newspapers is just one of the things that will, if anything, hasten the demise of paid-for dailies in the UK, Australia and the US. But it's much more about the cost burdens of these legacy businesses - and about readers who have a clearer view of their requirements than traditional newspapers which are sleepwalking to the edge.

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