Newspapers have been working with the internet now for over a decade. Initially newspapers simply treated the internet as a medium to replicate their print editions, with little thought for developing a new business. In those times the web edition was put together by a small group of technologists, rather than a business group of editorial, advertising and business staff. The web editions were not designed to compete with the print editions. Advertising was limited and key sections like classified adverts were often just replicated from the print edition. A few publishers saw new opportunities for business, such as Sï¿½ddeutsche Zeitung in Germany, which created a major motor advertisement portal. For most newspapers the web edition was just a prestige operation that lost money. I remember hearing the vice president responsible for the internet editions of USA Today, speaking at an American Newspaper Publisher’s event. She stated that newspapers had lost the battle of the internet to other organisations. USA Today at that time had the highest internet publishing revenues of any newspaper in the World. It however had found it could not compete as a major web portal against companies like AOL, Microsoft, and Yahoo in attracting site visitors.
Since those mid to late 1990s times, things have changed significantly for newspapers. Print revenues have continued to drop as more people have given up reading printed newspapers. The biggest drop appears to have been in afternoon and evening newspapers, which have been particularly hit by readers switching to get information from radio, TV and the internet. Circulation falls are not new, and printed newspaper circulations have been dropping slowly for almost fifty years. It is just that it has increased in recent years. This was seen particularly in people below 25 years of age, who were just not starting to read newspapers.
Change of approach
In the past few years, newspaper publishers have made major changes in their business approaches to both their print and internet editions. One of the first key changes was the arrival of the Metro. This started in Europe, and grew particularly in the UK. This is a free newspaper aimed at the morning business commuter providing a quick view of news, sport and entertainment for a specific city. It was specifically targeted at people who did not read a morning newspaper. The latest development in this has just happened in London, where Associated Newspapers was finding its London afternoon paper, The Evening Standard, was showing serious circulation declines. Its solution was a slimmed down version, Evening Standard Lite, which is distributed as a free paper, aimed specifically at female office workers to pick up and read at lunchtime. This it is hoped will complement the main edition and draw readers to it.
The move to free newspapers paid for by advertising reflects the problem publishers of paid of newspapers have with churn. Churn is the loss of paid for circulation subscribers, which is often in the region of 50 per cent per year. The cost of generating new subscribers with free offers seldom pays for the costs of circulation. Larger circulation free editions paid for by advertising are seen as a significant move.
Another interesting trend is to change the newspapers format. In London both The Times and The Independent have switched from broadsheet to tabloid format and have seen major rises in circulation. Both have taken a more aggressive, web like, approach to using the front page as a key to what to find in the paper. Many international publishers are watching these London developments with interest. Expect more tabloid format quality papers in future.
The internet however is where real change has happened. Cox Newspapers in the USA is perhaps one of the best examples of this. It has realised that the newspaper is the ideal source of all forms of local information. Major web portals like AOL and Yahoo are fine as national portals, but not good for local information. Newspaper web sites now often have larger audiences than all other local media. Cox has made it easy for readers to add local content to their sites for information that would never appear in a printed edition. Through site registration and profiling technologies to discover the characteristics of the online audience, newspapers can deliver advertising to specific segments to compete against other media. It is interesting now in the USA that many newspapers are getting more than 6 per cent of their advertising revenues from internet advertising, and that figure is rising. One interesting area of advertising revenue is e-mail advertising. People will accept such adverts from a trusted source like a newspaper, but will not accept spam from unknown advertisers. One key benefit Cox Newspapers have developed is its Top Jobs employment advertising. This places vacancies in front of key people who may not be looking for a job, and who would not visit a major employment site.
For newspapers being able to offer a multimedia experience for advertisers has shown real benefit. At KnightRidder, one of USA’s largest publishers, in 2003 the internet accounted for 3.7 per cent of the company’s gross revenues, but 6.5 per cent of its overall profits.
The newspaper publishing business is changing. For from disappearing as many people predicted, it is a powerful force in utilising its market reach and its brand, to remain a key information provider, as well as one of the strongest advertising mediums. With its key understanding of its markets many newspaper publishers are certain to be at the forefront of future changes in information delivery. The paid for printed newspaper may be losing some influence but the newspaper, as a media property, is getting stronger.