Newspaper Publishing – comparison of success and failure

Newspapers as a medium for news and advertising have a long history and challenged some competition from Radio, TV and now the internet. All had and have their effect on circulation, which is itself affecting the amount of money Publishers are making with advertising and their general health. So I had a glance on different developments of newspaper circulations and found two extremes in the US and Australia. The US with rather old-school management due to the strong segmentation of the market and little competition and two modern Publishers in Australia competing in all media areas against each other. So let’s have a look how these two scenarios differentiate and influence the portfolio and competitiveness of the industry.

Decreasing circulation in the US

In the publishing world, especially the boulevard press, you often have editors designated to headlines. And I am surely not an expert as I am not writing in my native language, but this one is at least in it’s message correct. Some readers may wonder about the word success with regards to the Publishing industry as you can hear for ages now that circulation in the US is generally going down for more than 20 years now. And the latest figures do not look better, only 2 (USA Today and The Wall Street Journal) out of the top 25 newspapers have a (slight) increase in circulation. These I refer to as failure as there are only a few Publishers in the US that are able to stop that trend. A lot of that is result of changed market conditions and slow reactions to the new competition from the Internet. As mentioned in another post Publishers are somewhat reluctant to change and mostly very print centric. But to make this statement more precise, I’m talking about publishers that have their own market secured and no to little industry competition – as many of the large metropolitan newspapers: only 5 out of the top 25 Newspapers (3 of them nationwide) are located in the same city: three in New York (THE NEW YORK TIMES, DAILY NEWS, NEW YORK, NEW YORK POST) and two in Chicago (CHICAGO TRIBUNE, CHICAGO SUN-TIMES). For a complete list of all the Newspapers in the US look at the US Newspaper List. What I am saying here is that newspaper publishers with a quasi-monopoly re-acted to late to the new competition from the internet. Trying just to keep their stakes in the printing market, they did not see the internet as big enough threat, possibly considering to sit the trend out and wait till the market is settled and shared as it did before with radio and TV.

Increasing circulation in Australia

Another market, another story. Australia is rather different to the US with basically three major publishers: Fairfax, News Corp and WAN (Western Australian Newspapers). These own the majority of australian Newspapers and only Fairfax and News are in direct competition in the same markets (east cost and internet). News corp with its master mind Rupert Murdoch has always proven to be on the edge and recognizing itself not only as newspaper or print publisher, but already in early stages as media publisher and distributor. And much of the said applies to Fairfax as well. Modern management and quick in adopting and pushing new trends and media. No wonder that internet-based media has already a big stake in both publisher portfolios. They don’t let ‘small’ internet sites craigslist-style raise and become a thread to their revenues, no they do fill this gap on their own with some really nice sites, like domain.com.au (Fairfax real estate) and other. Let’s stick to the Fairfax example, their figures in the latest financial report are quite impressive with an overall increase in revenue and even in circulation for their print mastheads (Sydney Morning Herald +0.5%, Canberra Times +1.4%, The Sunday Age +5.6%). With good reason they called that slide ‘Strong circulation results’. Some slides before the results for ‘Australian Publishing and Priniting’ are even better with a EBIT increase of 7.4%! I bet a lot of other Publishers would love to have such good news to announce for their print departments. But that’s not the end, even higher grow Fairfax Media achieved in its ‘Australian internet’ activities (40% EBIT increase). Even though I did not check the financial reports in detail, News corp is equally doing well (here a slight decrease in Newspaper revenue, but The Wall Street Journal circulation grows for third consecutive year).

The question why these two Publishers are that successful is clearly their competition. They have to find ways to be better than the other and that drives innovation stronger than any other independent source is capable of.

Anything to learn from success and failure?

Good question. As a side note, Australia has been in a 20 year economical rally, whereas the US at least had their little bumpers in their steady grow. And the markets are different, concentrated in Australia, segmented in the US. Besides that, some comparisons are possible and business models to be considered very useful. Certainly it does not mean that large US Metropolitan Newspapers need to artificially strengthen their competition, but to realize that their competitors have changed. Where are advertising dollars going to? The number of startups and new ideas in the biggest global economy is immense and they do not restrict themselves to local areas, but use scaling effects to grow audience nationwide as well locally and subsequently attract advertiser dollars previously spend in print. Examples for online trading and classifieds are the well known Craigslist (started on a very local market and grew to a global product), OLX, ebay and its classified site Kijii. Another examples is cars.com. All these have been started by non-Publishers. Why not by a Publisher that has already everything in place to sell, take and publish classifieds? Possibly that there is a nationwide driver missing, like the NAA (Newspaper Association of America). Could it be such a driver and get all Newspapers into one boat to start their own initiative and innovative online services? Or is there a software vendor required to create solutions and bind the powers of Newspapers together to create unique and trustworthy sites?

Honestly, I doubt that any of the above will happen. First option, a Publisher initiating a independent and nationwide service is not very likely to happen. As stated, too much concentration on local market and their own brand. At least in the US, as we saw above, it was possible in Australia, but that is a far smaller market and not as segmented as in the US. So, logically the NAA as head organization of all Newspapers would be suited due to the lack of one nationwide Publisher. But I doubt that this is the intention of the NAA. A Vendor? Unlikely. Most of the solutions still sold in the Publishing industry are rather old systems. Mature, yes, but not very flexible. But that’s what is asked for. Reluctance to change in a pretty conservative industry. And vendors are providing what is asked for. And if something revolutionary good is presented, vendors have to fight for a first installation as no experiences exist so far with it. The first installation is the hardest. And with regards to web services vendors are slowly considering these options, though especially smaller publishers are looking forward to solutions that they don’t have to buy for huge amounts upfront but rather lease them.

As usual, finding a solution is hard, but something has to happen to leverage the reputation of newspaper brands onto the web and finally make money. And a lot happens, so we have to see the decrease of print ad revenues in relation to overall performance. Some publishers are trying to cooperate with Online giants like Yahoo or Google for online advertising, not sure whether this will pan out, but at least it is a try. Where will it all go? I’m not too negative about the future of Newspapers in general. And the Fairfax and News Corp examples should encourage: Diversify, innovate and don’t leave it to the rest of the world. Experiment. Mergers and aquisitions as well will help to get more out of each spend dollar. Merge your online and offline news rooms! Offer true multi-media campaigns. Change your sales model, not some big drivers for sales staff, but best value for advertisers. Automate where possible. But do not wait until it’s to late.

To be continued.

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3 Responses

  1. […] am surely not an expert as I am not writing in my native language, but this one is at least … MORE >>Creadit By weight […]

  2. Somehow i missed the point. Probably lost in translation 🙂 Anyway … nice blog to visit.

    cheers, Galluses.

  3. Thanks for the compliment… It did make sense for me while I was writing it, though I seem to miss its purpose somehow. See it as a write down of some thoughts, next time it will be worked out better. Promise… 😉

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