Digital Content

Newspapers are facing the greatest threat in their 400-year history. The rise of the Internet as a publishing medium is undermining, and could ultimately destroy, print as a news medium. Is that such a bad thing?

Retrenchments in the US media industry rose 88% last year, to nearly 18000 jobs, as advertisers continued to shift their spend from print to online media. “With more than 2000 job cuts announced by media companies in the first half of January, it appears that the downsizing trend will continue in the foreseeable future,” says a report by consultancy Challenger, Gray & Christmas

In the past month, Time Warner’s Time Inc unit and the New York Times Co both announced deep cuts in editorial and production staff. They follow sweeping retrenchments at major print media houses in developed countries in the past few years as newspaper circulations decline and advertisers follow readers to the Web. “The decline in newspaper and newsweekly subscriptions will continue as more and more people purchase computers and gain access to the Internet,” says Challenger CEO John Challenger

Sales of daily paid newspapers in the European Union fell 5,26% between 2000 and 2005, according to data from the World Association of Newspapers. North American papers have shown an even steeper decline.

In the developing world, where Internet penetration is significantly lower, newspaper circulations are still rising. The number of paid daily titles was up 4,5% in Africa in 2005, the highest growth of any region.

But newspaper publishers in developing markets are living on borrowed time. As the cost of accessing the Internet comes down and more people get connected, fewer people will turn to newspapers — especially those they have to pay for — for their information.

Right now, most people rely on their PCs to access online news. But comparatively few, especially in the developing world, have access to the Internet, let alone a PC. Mobile phones, whose penetration is significantly higher than PCs, will change that.

It is already possible to have the type of news you specify delivered directly to your mobile phone, free of charge. It’s a matter of time before millions of people receive news this way. Cellphone screens are getting bigger and clearer, making them suitable for reading for longer periods, and the costs of downloading mobile data are falling worldwide. In SA, downloading text to a cellphone is already so cheap it may as well be free.

So, with the world’s news resources available at your fingertips, and the information flow fully customisable to suit your tastes, why would you buy a newspaper that contains yesterday’s news anyway? The medium cannot compete with the immediacy of the online world. Newspapers are expensive to print and they’re environmentally unfriendly.

That’s not to say they will disappear overnight. For many millions of people, especially those born before 1970, the thought of replacing a newspaper with an electronic gadget or a computer screen does not sit well. But to younger people as comfortable online as they are offline, buying a newspaper is almost a foreign concept. Young people are shunning newspapers and that, ultimately, will lead to their demise. It might take 15 or 20 years, but it will happen.

The challenge for newspaper publishers is figuring out how to use the Web to make up for the decline in print revenue. No-one has got the model right yet. Paid subscription models don’t work as people have become accustomed to getting their news free. And advertising is not making up the shortfall.

As Challenger says: “Until [newspapers] can figure out a way to make as much money from their online services as they are losing from the print side, it is going to be an uphill battle.”

Financial Mail