The newspaper industry has seen a long-term decline in circulation volume and advertisers have been moving from newspapers to online channels and into new formats to reach its target groups. At the same time several newspaper publishers that have started online TV-like experiences in relation to their online news sites, thus finding new audiences beyond their traditional print readers. The global economic downturn has accelerated the need for many newspaper publishers to adjust their business models to survive and as this 56 page report concludes "there will be some casualties and losses of well-known papers along the way."
The report On the outlook for newspapers in the digital age: Moving into multiple business models, is an interesting read from PricewaterhouseCoopers. Based on interviews with industry actors and 4900 consumers, it focuses on two key issues: the change of consumer behavior with respect to their consumption of news content, and the response of newspaper publishers, advertisers, advertising agencies and media buyers to these changes.
The change of consumer behavior
PwC concludes that print will remain the largest source of revenue generation for some time but will have to coexist with other media in new ways. Consumers see breaking news and general interest news as commodities, something that is more difficult to charge for online than offline. Instead they place a high value on deep insights and analysis provided by journalists, and a growing segment is increasingly demanding specialized information.
Consumers increasingly expect to be part of the debate and to be able to contribute to their newspaper, both in terms of commenting and in providing content. Perhaps surprising is that the rapid adoption of mobile technology and devices, has not yet resulted in high preference to use mobile devices for accessing information due to the difficulty of reading content and thus the overall willingness to pay for news on e-paper and mobile devices is low. Perhaps new business models around Amazon Kindle or perhaps a future e-reader from Apple? will do the trick?
The authors conclude that the shift of advertising revenue from print to online is expected to continue over the next few years even though TV appears to remain the most attractive medium for advertisers. However, advertisers can, and choose to, use multi-platform approaches, combining newspapers, magazines, mobile, the Internet, TV, cinema, radio, sponsorship and outdoor advertising. Main focus in the economic downturn is to use reliable and measurable media types to achieve the best return on investment. Another interesting conclusion is that advertisers are still reluctant to invest in user-generated content and social networking sites due to the difficulty of controlling the environment.
The authors conclude that traditional newspapers have a relatively loyal reader base even though younger readers increasingly prefer to read news online. And although there is a huge potential for growth online and many younger readers prefer to read news online, the conclusion is that print will remain the largest source of revenue generation for some time. At the same time newspaper publishers are reassessing the role of the aggregator and are starting to introduce new subscription models combining multiple platforms and new technologies as new channels for distributing content.
PwC concludes that there is a shift in the organizational structure of newspaper publishing operations from a structure based on channel distribution to one based on content production. As actors in adjacent industries such as telecom providers are becoming media participants, newspapers can leverage their advantages of being a trusted source of information and having content creation as a core competence.
What about business models around APIs?
Something I miss in the report is the concept of a newspaper as an open platform. Newspapers such as the Guardian and the New York Times, and news organizations such as BBC and NPR have started to provide API (application programming interface) which allow third-party developers to access and reuse content databases in their own applications. This is something that the content owners can chose to charge for, enabling very interesting business models.
How will news be experienced online?
In the early days of the television, news was presented as if being in a newspaper. The Internet is only in its very early days and companies are exploring new ways to use algorithms analyzing twitter conversations to identify breaking news and combine videos, links, blogs, comments and communities to explore ways to provide deep insights and analysis. I believe the consumers answering these questions have a clear perception of how online news is and will be presented, and as Henry Ford allegedly once said "If I'd asked my customers what they wanted, they'd have said a faster horse."
This is a great report to dive into and contains much more than what I have covered above. For those of you interested to read more download the full report and watch a short video here.
The Freemium Business Model
Subscription-based business models
Eric Schmidt on news, newspapers and real time content
Tim O'Reilly on NYTimes.com as a news and information platform
Tim O'Reilly on Open Publishing