Peter Coleman: Finding a business model for local journalism

Dec 14, 2016 at 10:38 pm by Staff


It's been a week for navel-gazing in the local newspaper industry on both sides of the globe.

In Australia, the deal for News Corp to pick up APN News & Media's regional titles for a bargain-basement $36 million has got the nod from the competition regulator. ARM's well-regarded chief executive Neil Monaghan has been elevated to a new role as News' managing director of regional media, and says readers can expect better sport, state, nation and world coverage. Which they may, at least in the 12 daily newspapers and their websites, albeit at the cost of a loss of "voice", which we've written about before.

Across the Tasman in New Zealand, while the competition regulator there has been agonising over whether to let the former APN business - now spun off as NZME. - buy Fairfax NZ, an approach by a possible alternative buyer for the Fairfax interests has been acknowledged, although Fairfax is legally bound not to pursue it, for the moment at least.

US hedge fund Apollo Global Management was named in a report in News' The Australian, pointed to by "some sources", as was the possibility of a consortium of New Zealanders. Is it possible that News itself - which has quietly changed the name of its local unit to News Corp Australasia (instead of Australia) - could be interested?

Job done in Perth and regional Australia, perhaps executive chairman Michael Miller could be looking for the next growth opportunity?

Local newspapers - as the Brits call their non-daily regional press - are a talking point in the UK as well at the moment, with the publication of a new book Last words? How can journalism survive the decline of print.

Newspapers here and there are two different animals: the "push" marketing platform of suburban and regional weeklies and biweeklies - which are delivered free to every home that hasn't specifically refused them - and the more sophisticated model of mostly metro dailies (although their audiences are in no way restricted to big cities).

Here I believe Fairfax may be getting its value equation wrong. The cost of The Age in Melbourne and the Sydney Morning Herald continues to rise - which would be fair enough if the offering didn't continue to decline. If resorting to merely weekend publication is to be avoided, the weekday product needs to be bigger, brighter and more entertaining.

Having largely resolved their production cost issues with the switch to printing in Ballarat and North Richmond, Fairfax should look at the value they deliver, and the look of the paper, frequently the biggest cause of complaint when I talk to Sydney readers.

Perhaps there's a paid-sale future here with the Australian Financial Review (319,000 weekdays and 127,000 at the weekend, according to new emma readership figures) which could take on The Australian (479,000 and 576,000 respectively) nationally if its weekday content were expanded on the weekdays where its metro stablemates struggle for advertising.

Yes, making anything in Australia is tough when most relative values are compared with China - and I bought a 40 cm floor fan for $11.80 this week - but the Fairfax metros are now 10c more expensive than the Australian at $2.80 weekdays ($3.80 Saturday). I could go on about layout and the way the design is used - compare i in the UK for its use of mostly the same typefaces - but not now.

Editors in India tell me our Australian cover prices are way too high, and there's no doubt that they are doing better with newspaper sales, albeit in a vastly different environment. Indeed their tiny cover prices do little more than pay for distribution.

Free newspapers in Australia reflect their environment: many city suburbans (especially in affluent areas) now get a glossy product, and the biweekly free that covers the regional area where the GX office is - one of those being unloaded to News - includes a fat glossy property section. As a genre, they're generally profitable and, of course, an industry segment in which independent publishers appear to thrive and in some cases flourish.

As I've said before, the local paper is the first thing I read, and would probably be willing to pay for.

For publishers, the balance of paying for blanket distribution or having a smaller number of readers pay you, including a token for production, has always been something of a quandary.

And in the UK, where Last words? How can journalism survive the decline of print has brought together the thoughts of a collection of former editors, academics and commentators - and prompted debate among others - the free London Evening Standard has shown that you don't always get what you pay for.

Journalists' website HoldTheFrontPage is running excerpts from Last words (yes, free!) and offers Roger Parry, chairman of Johnston Press from 2001-2009, who makes the point that readers can even be encouraged to take pride in providing their own content.

My own experience as a local newspaper editor/publisher in the UK ended almost three decades ago, but I recall that reader content such as meeting and obituary reports - including lists of floral tributes, for which we charged by the word - was highly valued and well-read.

Ours were paid-sale titles, though we dabbled in free distribution in non-core areas (and made most of our money by printing the free papers of others). I sold them, ahead of moving the Australia, to a neighbour who had earlier advised me to make at least one title free... but decided against doing so when he owned them.

Parry says local print media can survive, but that a difficult journey is ahead, and I agree. I also believe that there will continue to be two classes of local newspaper, just as there are many types of web newsmedia.

Johnston Press grew by exploiting the economies of scale; canny Scotsmen building on the basis of what was once just the little Falkirk Herald until it had embraced many of the biggest regional publishers in the UK (including the then evening daily Portsmouth News, on which I learned much of my journalism).

LocalWorld (as FutureForum attendees in Sydney heard from Blanche Sainsbury in August) made massive profits from aggregating regional titles and flogging them off to Trinity Mirror.

But these profits and agglomerations - including that between News and APN ARM, and NZME and Fairfax - have nothing to do with the future viability of print; perhaps quite the opposite. Because the interests of shareholders (especially institutional ones) can run against the interests of the readers and advertisers exist to serve.

News Corp - a last bastion of the owner-publisher - may be an exception, but I don't believe its unqualified protestations of a commitment to print, which may last only as long as it suits the vanities and political objectives of its owner.

Parry says the newspaper industry isn't - as others including journalists' union the NUJ say - "cost-cutting itself into oblivion" by reducing editorial quality, but costs and quality are both clearly issues.

This week has also seen the curious spectacle of commentator Roy Greenslade lashing at the print enthusiasm of 91-year-old publisher Sir Ray Tindle - whose UK group of more than 220 titles is one of the country's ten biggest and a major supporter of niche print.

Yes, print in all its forms, beloved by an older generation is - like them - dying out. But it will be a while going, especially in local markets. And it seems unlikely that we shall run out of journalists, while universities continue to produce (because of market drivers) far more than there are jobs for.

By way of outlets, Google and Facebook - both of which in their own strange, superficial ways, acknowledge the need for content producers - provide a poorly-paid distribution system for those who need it.

It's easy to be negative about Google and Facebook, but in an INMA post this week, Harvard Nieman Fellow Grzegorz Piechota urges instead that we should demand of them a viable business model for real news. "Embrace news brands as labels of quality," he says, arguing that it will take financially sustainable newsrooms "to clean this mess" and reputable content to provide a safe environment for serious advertisers.

Fiddling with algorithms is like "plasters on a burn" leaving the root cause of the problem unaddressed. "The rise of fake news is a side effect of the new media moguls' enterprise design that rewards likes, shares, or links rather than evaluation of the content itself," Piechota says. He blames the failure to incentivise sources to produce content that is not fake for the internet becoming "a cesspool".

Those comments - based on a study of Facebook algorithms - have little to do with the future of print, but something about that of journalism, provided you factor in the conflict of interests. And they could be pie in the sky: Facebook's recruitment of a 20-year news veteran to be its "public-facing voice" and that of its "role in the news ecosystem" may be progress or the opposite.

Meanwhile, a business model needs to evolve that leverages the talent, enthusiasm and energy of young journalists to provide valued and true content and perhaps provides a career progression (or a good pension scheme) as they get older. In the ongoing proliferation of smaller independent publishers - in print and online - it may already exist.

Sections: Columns & opinion

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