Fairfax Media is in turmoil – its struggling to find revenue, the company’s share price is tanking and the board faces pressure from Gina Rinehart to have two seats at the board. But, now it is the time for the company to look at itself, and possibly take a risk – stop printing and move towards a digital-only strategy.
Stop the Presses
It’s a risky move – stop printing titles such as The Age and Sydney Morning Herald (not to mention the several more regional newspapers), and switch to digital. However, it does make sense when you look at the numbers. Print subscriptions are down by 11 percent for the weekday editions, 8 percent for Saturday and 10 percent for Sunday from year-on-year (and are continuing to fall).
For its digital editions, however, there are signs of growth.
In April, more than 3 million people access the Sydney Morning Herald‘s website from either their computer or on their phone’s mobile browser, and more than 2 million for The Age‘s website. Collectively, their tablet apps have now over 500,000 downloads while their phone apps are nearly 200,000. On the tablet edition, more than 54 million pages are viewed – which is substantially more than what the web brings in.
What Fairfax is doing now is wrong – by thinking that it could simply save money by cutting jobs constantly to get profits somewhere. What Fairfax needs to do is to re-evaluate if printing a viable business model.
In this new age of digital delivery – it is not.
Fairfax spends nearly $245 million just on the printing of the papers, another $137 million on distributing it. Switching to an all-digital format would effectively make that $0 – and obviously reinvested into trying to prop up its digital offerings.
However, while it would be revolutionary for Fairfax to stop printing The Age or Sydney Morning Herald and move it to the web – it wouldn’t be the only major newspapers to do so. Back in 2008, The Christian Science Monitor announced that it would stop printing and move everything to digital. They didn’t entirely kill their printing business – they still publish a weekly newspaper that focuses more on international news.
Obviously, there are some different circumstances – Monitor is funded by an endowment by the Christian Science Church (though, they do not have any editorial influence) in addition to sales of its newspapers. However, the Church – like Fairfax’s shareholders like Gina Rinehart – were demanding the paper to make money. In 2008, it only made $12.5 million in revenue – a large of chunk of it was from subscriptions, not advertising – and had $25.8 million in expenses.
Four years in, and its starting to look positive. Revenues have increased more than 50 percent for the fiscal year ending on April 30, and the Church’s subsidy has decreased. Page traffic has increased to five times what they were before the switchover, and is on its way in getting towards “break-even”. Its weekly print edition has 60,000 subscribers – 40 percent increase of what it had before the switchover.
But, does moving towards a digital-only schedule diminish journalism? It simply depends on the culture of the newspaper. Let’s take two newspapers in the UK: The Daily Mail and The Guardian – both have made a push towards digital-first news while maintaining their newspapers. The Guardian has adopted Twitter, live blogs (as seen with the Arab Spring and the Levitson Inquiry) and publishing stories with the same quality of journalism you will find on its newspaper.
The Daily Mail, however, is pushing trashy, celebrity gossip and link-bait stories. They hope that they could try to get your attention on Google. But they are also publishing stories online with the same quality of journalism you will find on its newspaper. It is, after all, a British tabloid after all – with a weird habit of listing things that will or won’t give you cancer.
Both The Age and the Sydney Morning Herald have a history of quality journalism – regardless of whatever political leanings you are. So, that will most likely – and should – continue online. The audience want quality journalism – not useless link-bait articles that promise titillating stories and candid celebrity photos.
But what about the ground-breaking investigations? Can that continue on a digital-only publication where profits are thin and quick turnarounds for articles? Well, yes. And as a digital only publication, it can take advantage of the new formats – video, audio and higher-quality images.
We can take a look at some of the other digital publications who do investigative journalism – such as ProPublica. Some investigative pieces include the “The Wall Street Money Machine” series and “The Deadly Choices at Memorial” – both winning them a Pulitzer Award for Investigative Journalism, the first website to do so.
It’s not necessarily the news media – others are joining in: The Verge, a tech blog, recently published its investigation inside the internet scamming business; and The Global Mail, which started up this year, already has some investigative pieces up. Now, if only they can fix that awkward design…
The Age has had some brilliant investigative pieces in the past – such as investigating Melbourne’s sex trade or allegations of criminal activities by the Reserve Bank’s associated companies. If they can do it for print where they are losing money, surely they can still do it for the digital products as well?
If they are committed to continue investigative journalism, then time doesn’t really matter. It just has to be excellent.
Advertising alone is not enough
However, while online advertising can sustain a blog, it isn’t enough to sustain a big media organisation such as Fairfax.
It will have to introduce a paywall to entice existing readers to move to subscribe to a digital edition of the paper, or use the tablet and or phone apps. And while we saw a mixed reaction for the Herald Sun’s paywall – it might be a different story for Fairfax.
People are willing to pay for quality journalism. Yes, that term is highly subjective, but broadsheets tend to avoid the celebrity and the sensationalist stories. Compare the Herald Sun to The Age, and you’ll see it in the headlines.
So we have to look at rival publications of a similar vein – such as The Australian, and it has been somewhat successful with its paywall. It has managed to get 40,000 people to subscribe – 30,000 of those subscribers purchased the Digital Pass.
Internationally, we can look to the New York Times – who also put up a paywall, and has also found success. It even turned a modest profit of $15.7 million in the third quarter of 2011 compared to the loss of the same quarter in 2010. Let us also remind ourselves that The New York Times is also a metropolitan paper, despite we know it more for its national notoriety – similar to The Age or the Sydney Morning Herald.
If your paper is known for quality – then they are far likely to convert readers to pay for your service.
Change now, for the future
Print is a dying breed – and by 50 years time, we’ll either see these news brands shifting online or dead. As predicted by the IBISWorld’s “A Snapshot of Australia’s Digital Future to 2050″, it says that the entire news media (and lot of other media companies) could be gone if they don’t change.
As said by Paul Ruthven, IBISWorld’s chairman, to ABC’s PM programme: “One’s only got to look at both News Limited and Fairfax to see how desperately they’ve been trying to get into the electronic media… because the rate at which consumption of print media’s been declining has been somewhat greater than their ability to migrate to the new media.”
For Fairfax, it has to change – and a radical change to its business model isn’t a bad place to start. And possibly, it might have a fighting chance to still be relevant in the digital era.