The Future of Print Media Capstone Report 2011 Samantha Barthelemy Matthew Bethell Tim Christiansen Adrienne Jarsvall Katerina Koinis Advisors: Anya Schiffrin, Columbia University Martha Stone, World Newsmedia Research Group Abstract: Many commentators and analysts have confidently declared that the age of the printed newspaper is over. Industry wide developments including falling advertising revenues and fragmented audiences that are increasingly shifting online are said to signal the end of the newspaper industry as we have come know it. This paper seeks to establish to what extent this characterization of the newspaper industry’s decline is accurate through an in-depth literature review, a series of lectures by experts in the field, and by conducting 24 interviews with publishers and editors from six countries. The study finds that while there are clearly significant shifts taking place within the print industry, particularly around attempts to monetize online content and find alternative sources of revenue to replace falling advertising revenues from print, the decline of the industry is overstated. News organizations are going through a process of transition and adaptation. In addition, the paper shows that the narrative of newspapers being in perpetual decline is mostly Western centric, and does not take into account regional variations and the fact that in many emerging countries, print newspaper sales are robust and growing. [ C o m p a n y   A d d r e s s ]   [Author  Name]   [Company  Name]   2 TABLE  OF  CONTENTS     INTRODUCTION.......................................................................................................................................4   METHODOLOGY.......................................................................................................................................7   POLICY  RELEVANCE  AND  IMPLICATIONS......................................................................................10   TWIN  CRISES  OVERVIEW...................................................................................................................12   ALTERNATIVE  REVENUES..................................................................................................................17   ONLINE  MONETIZATION....................................................................................................................26   REGIONAL  VARIATIONS......................................................................................................................34   CONCLUSION...........................................................................................................................................42   APPENDICES...........................................................................................................................................44   BIBLIOGRAPHY......................................................................................................................................45   3 The Future of Print Media – INTRODUCTION At the 2010 International Newsroom Summit in London, Arthur Sulzberger, Jr. The New York Times editor said, “We will stop printing the New York Times sometime in the future, date TBD.” This admission by the editor of one of the leading newspapers in the world was only a small part of the widely held debate in the news media industry on the “death of print”1. This paper examines the validity of the claim that the era of newspapers having a business model based around print is over. The traditional business model, where journalists would write stories, submit them on deadline for copy editing and then the resulting content would be sent to the printing press, is said by many to be redundant in an age of fragmented audiences, high speed internet and mobile devices. By gaining an in-depth view of the current media landscape across the globe we have sought to evaluate these assertions, that at times can develop into hyperbole. At the heart of the research are interviews with newspaper publishers and editors from around the world to find out their assessment of the current media climate, as well as their papers’ strategies for future growth. Our client for this research is the World Newsmedia Research Group (WNRG), a global, not-for-profit research association. It is a subset of the World Newsmedia Network, a not- for-profit multiple media association devoted to advocacy on the media industry’s key issues around the world. WNRG's mission is to provide media owners with actionable, strategic research for their businesses in TV/video, radio/audio, newspaper, magazine, mobile, Internet, e-reader and any future channels. WNRG produces two significant annual research projects: The World Newsmedia Innovation Study, and the World Newsmedia Digital Revenue & Usage Trends Yearbook. This Capstone used the knowledge acquired throughout the semester and interviews conducted to provide WNRG with case studies to be included in their upcoming World Newsmedia Innovation Study. 1 Levy, David, Changing Business of Journalism and its Implications for Democracy, Reuters Institute for the Study of Journalism, 2010, p. 117 4 The central questions we sought to answer are whether the alleged death of print is a global phenomenon and what strategies individual print media organizations are pursuing to continue operating. The conversations often, albeit not always, developed into a discussion on the Internet, online media and the big question about how to get the traditionally free provision of online news content to be profitable. This challenge preoccupies editors and executive across the globe, though not with the same degree of urgency. From the information gathered, can we conclude that we are witnessing the death of print? The answer is no, at least not globally. The pessimistic narrative of print’s decline has mainly been driven by Western economies – the United States, the United Kingdom and central Europe – that have experienced dramatic reductions in print newspapers’ major revenue streams: advertising and print sales. Indeed this paper will show that we are witnessing not the “death” of print but rather the adaptation of print and news organizations to rapidly changing consumer patterns and a corresponding shift toward digital content, exacerbated by the recent financial crisis. The core of this research highlights various business strategies to maintain sustainable revenue streams in print, online and through alternative media channels. Initially, we outline the research methodology used to gain in-depth knowledge of the state of print media today and the external variables affecting it. We examined current academic findings, conducted interviews with editors and executive of print news organizations across the globe and conversed with experts and industry insiders. We highlight the policy relevance of an independent and diverse media realm and what challenges current developments pose to free media. We then provide a snapshot of recent developments that have led to the “doomsday mood” among some industry professionals, what we name the “twin crises.” Focusing on our findings we present new and adapted business models from regional consolidation of print business into one organization, to broadening the model to include alternative revenue streams and, importantly, the challenge to monetize online news. Finally, it is important to note that the newspaper industry has been in the process of adaptation to a new technological era for longer than many commentators and analysts 5 have acknowledged. The changing news environment is not a new phenomenon brought about by the Internet alone. This paper seeks to place the most recent challenges to the traditional business model in context, and establish where the industry is moving in the medium term. By supplementing analysis of literature and commentary with interviews with those best placed to discuss industry trends and developments, we were able to gain a more accurate sense of the future of print media. 6 The Future of Print Media – METHODOLOGY The goal of our study was to detect and evaluate business trends in the newspaper industry worldwide. We interviewed leading publishers and editors in over six countries across the globe and supported our findings with additional research and analysis. Given the unparalleled speed at which the media realm has been changing in the past ten years, this research project, like any other, is only going to provide a snapshot of the state of the industry. By talking to editors and publishers, our objective was to find out how the newspaper industry is coping with changes brought on by the “twin crises;” the transition from a traditional print business model and the increasing impact of the internet. We sought to achieve this objective by identifying our market, researching market trends both in the print and digital realm, and engaging with decision makers, academics and practitioners. Our topic guide for interviews was focused on the present and the future of print newspapers and media organizations’ business strategies. We sought to find out not only what participants’ current strategies were, but also how they intended to adapt to trends in the next three to five years. We put together our topic guide while we gathered and analyzed current research and literature, enabling us to better probe our participants as to their predictions around the future, industry trends and how they relate to their publication. We did so by broadly focusing on the following topics: 1) The most important strategies for their respective print paper(s) going forward; 2) Discussing these (and in some instances additional) strategies in the context of the twin crises; 3) Exploring the subject’s attitudes toward existing alternative strategies we encountered throughout our research. Our conversations rested on two pillars: an in-depth literary review, as well as drawing on the knowledge of experts from the academic and professional realms. Experts 7 included Eli Noam, Professor of Finance and Economics at Columbia Business School, Reg Chua former Editor-in-Chief of the South China Morning Post, Kamal Beherwanti, CDO of the Spanish Media Conglomerate PRISA and Ava Seave, Adjunct Associate Professor at Columbia Business School. Figure 1 - WNIS Methodology In the second phase of our research process we conducted interviews with representatives of major media companies and newspapers in the countries selected for the study – Brazil, Chile, Germany, Greece, Switzerland and the United Kingdom. The World Association of Newspapers (WAN), Pew Research Centre for the People and the Press, the Organization for Economic Development and Development among others served as important sources. 8 The 24 in-depth interviews focused on business strategies of the organizations, with questions focusing on the single most important strategies the organization is pursuing in 2011, the three most important business projects for the respective newspapers for the coming two to three years, and growth potential. Areas discussed included both reporting and journalism, business strategies of print newspapers and issues related to the monetization of online content. Though subjects were reluctant to discuss detailed strategies, we were able to detect universal and regional trends and the interviews were supplemented with relevant up to date market data. 9 The Future of Print Media – POLICY RELEVANCE AND IMPLICATIONS Vibrant and robust media is a critical part of a functioning democracy. It keeps the public informed and allows people to engage in lively debate. Citizens depend on the media for information, a tool with which they can engage in informed discussion and hold political leaders accountable. The media provides a “marketplace for ideas” that “scrutinizes arguments and forces ideas to confront each other in common forums,”2 and is unquestionably a cornerstone of a successful representative democratic system. This has become more pronounced in the past months as citizens from Tunisia to Libya took to the streets to demand freedom from oppression. While it is new, social media’s role is being hailed as having carried information across boundaries, informed and thus supported the revolutions. However newspapers, their reporting, analysis and commentary, played the leading role in providing in-depth analysis of these major international events. This applies to mature readers and youth in equal measure “who are just as interested and just as concerned about these events as their parents,” according to Dr. Aralynn McMane, Executive Director of Young Readership Development at WAN- IFRA. The rapidly changing media environment to which newspapers have had to adapt forced many to rethink traditional news-making. In addition, publishers and editors are considering questions around the way in which news is consumed and whether alternative revenue streams ought to complement the traditional news-making model. In the United States, newspaper circulation dropped an average of 8.7 percent between 2007 and 2009. Although it has since slowed to 5 percent, according to the U.S. Audit Bureau of Circulations, the industry is far from being “out of the woods.” As a result of this instability, media ownership threatens the diversity of voices and viewpoints. However there is a significant amount of variation in industry trends. Markets in Europe and the United States face significant pressures due to declining readership and losses in 2 Snyder, J and Ballentine, K, Nationalism and The Marketplace for Ideas, International Security, 1996, p. 12. 10