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Game over for newspapers?
Are we finally looking at the end of an era for newspapers? This would certainly seems to be the case in the United States
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Are we finally looking at the end of an era for newspapers?
This would certainly seems to be the case in the United States. Faced with declining revenues due to decreasing subscriptions and advertising, many newspapers in the US have been forced to cut back, downsize newsrooms, write down assets, or worse, file for bankruptcy. Investors too have started to look away. In February 2009 the stock price of the New York Times Co. was actually cheaper than the price of its
The era of the newspaper began with the invention of printing technology that enabled newspapers to become a fast way to distribute important information. It was so fast that what happened today would already be in the paper tomorrow. But with the arrival of the Internet, tomorrow is not fast enough anymore. Let’s face it; when a newspaper is fresh off the press, its news is probably already 6 hours old, and who wants to buy old news when more up to date material is available online almost instantaneously?
So is this the end for newspapers altogether?
Not yet – for Asia, at least. As the numbers contract in Europe and North America, circulation in Asia has grown by more than 4.7 percent (according to the World Association of Newspapers).
Why the contrast? Low availability of Internet access is one reason, especially in places like India and Indonesia. The growing middle class in Asia can only turn to newspapers for news. But as Internet access gets cheaper and more widespread, this situation will not last. Sooner rather than later, there will be less and less demand for paper-based news media.
Unfortunately, simply moving away from printed to electronic media does not solve newspapers’ dilemmas. Why? Because Internet access has also introduced another problem: the liberalization of news reporting.
Previously, in the era of newspapers, it was the editors who determined what was newsworthy. What we read was determined by what the editors thought we wanted or ought to read. Not anymore. These days individuals can be reporters. As soon as something happens, there is usually someone, somewhere, who can quickly report on to the public either via a blog, a short text message on Twitters, or even with video uploaded to YouTube. These days, we are no longer just consumers of news, but we are all reporters too, and that gives newspapers some serious competition.
Is this a death sentence for journalism? No. Good journalism will never lose its relevance. Faced with an abundance of news and information, consumers will need to figure out which information sources to trust. Sources with experienced journalists and editors that report the news in great depth, responsibly and with accountability, will always be in demand. The problem now is that the business model has changed and the competition is fiercer than ever with non-traditional news media joining the game.
And the more competition there is, the less slice of the advertising revenue newspaper companies get. It is said that online ads only bring in one-tenth of what newspapers got for print advertising, which is one of the reasons why US newspapers are still in financial trouble even after they have gone online. It will be interesting to see how things play out in the US, as newspapers struggle to find alternative sources of revenue to stay afloat.
Newspapers have three main sources of revenue – advertising, subscriptions and retail sales. Advertising is the easiest revenue generator to replicate online, but as mentioned above it cannot provide all the revenue needed on its own.
Collecting revenue from subscriptions and retail sales in the online world would mean charging readers to access online news. This is of course the oldest trick in the book and has been tried with varying results. However, judging from the fact that most US newspapers give away their content free of charge, we can assume it won’t work. Other free sites are just one click away, after all.
Now that newspapers are under great pressure to generate revenue, this thought is being revisited. Is there a better way of charging readers without driving them away?
The arrival of smartphones and electronic readers (like Kindle from Amazon) may provide one answer: Such devices enable consumers to read newspapers in electronic format without computers. The seamless micro-payment facility that comes with such devices allows newspapers to charge monthly subscription fees or provide a pay-as-you-go facilities where readers can choose to only pay for news they are interested in. Whether this method will become mainstream or not, it is still too early to tell, but it certainly brings new hope to US newspapers.
Whatever the future holds, there are three points to underline:
One, the glory days of delivering news through print media will soon be over. News in print may not disappear completely, but newspapers will find it increasingly difficult to stay mainstream as more and more people connect to the internet and get their news more cheaply and quickly online. And good riddance: think of how many trees we will save. After all, a newspaper’s business is selling news, not paper.
Two, when it comes to online news readers it will be less about those who sit in front of computers and more about those who are mobile and accessing the internet on-the-go. According to ComScore, the number of people accessing news and information using mobile devices in America has doubled since last year. Expect the same if not bigger growth in Indonesia, where many will gain access to the internet for the first time using a mobile phone rather than a computer.
Three, American newspapers have proven that having a website and using advertising as a sole source of revenue will not save them. Indonesian newspapers should take note: When it comes to electronic media, it is still important to have a platform that can generate revenue from sources other than advertising.
And yes, although the trend is obvious in the US, we have not seen it here in Indonesia yet. Paper-based news media is still booming here, but this is exactly the point: Indonesian newspapers still have time to anticipate the trend and adjust accordingly.
This is way better than being forced to play catch-up like their American counterparts. See how the newspaper industry falls apart in America and imagine the same happening here if we fail to act. Remember, technology advances in leaps and bounds. Remember some years back when cell phones were so expensive that only the haves could afford them? Now look around.
The same will happen to mobile Internet access.
What is happening in the US is a clear indication of things to come here. It would be wiser for Indonesian newspapers not to ignore it.
Riwanto Megosinarso holds a master’s degree in Industrial Engineering, and has worked as a management consultant for seven years. He resides in Vienna, Austria.
