Newspaper future clearer after decade of digital dithering

There is reason to believe a few things that should have been clear years ago have finally sunk in.

Despite the gloom about the latest job cuts at local publishers News Corp Australia and Fairfax Media, there is reason to believe a few things that should have been clear years ago have finally sunk in and the future is becoming clearer.

Managing director of Fairfax’s Australian metropolitan publishing division Chris Janz a fortnight ago committed the company to continued production of print newspapers and made two points about content that I made at length in my book last year: Fairfax needs to publish from the ­centre of national opinion and its online offerings need unique news for which people are prepared to pay rather than the click-bait that has dominated its capital city ­websites for several years.

The changes were announced as part of a plan to cut $30 million of costs from the newspapers.

As I argued in Making Headlines, the idea that in the face of rapidly collapsing digital advertising revenue either publisher could move to a digital-only model was childish. With Google and Facebook claiming as much as 90 per cent of global online ad revenue, why would publishers shut print products that provide 90 per cent of publishing revenue in News’s case and 70 per cent in Fairfax’s?

Rework the cost base sure, but why shed the bulk of the revenue? And far too few publishers are honest about the internal content cross subsidies from print to ­digital. The Australian and The Aust­ralian Financial Review have made a success of digital subscription revenue because of their high levels of unique, specialist content. At both papers online sales and print sales are close to equal.

At the city-based tabloids of both publishers, digital subscriptions remain a long way short of print sales and they do not have the high paywalls the nationals do.

This is where we get to the key to survival of private sector public accountability journalism: consumer revenue. Print price rises and digital subscriptions growth need to replace falling ad revenues. At News, savings will focus on photographic and editorial print production. This is the focus adopted by this newspaper over the past seven years, as it sought to offset the costs involved in launching the company’s first comprehensive paywall. The Australian’s picture editor Milan Scepanovic reduced his full-time staff photographer complement from 24 to 12 (Sydney and Melbourne metros still have more than 50 each) and relied on buy-ins for things we felt were not core to our pictorial needs.

Total print production staff also fell by more than half between 2008 and 2015. This was done to protect reporters’ jobs because I believed unique content was the key to print survival and digital success. These changes were made under John Hartigan, the former chief ­executive of News Corp’s local ­operations, and were not copied by the metropolitan papers under his successor, Kim Williams.

Of course, under the News model, editors, picture editors and section editors are going to face ­increased pressure to ensure ­pictorial coverage does not decline and standards of accuracy and grammar — important to many ­readers — are maintained.

Senior editors will end up ­writing most story intros and headlines, however hard people try to train reporters to do the same. Management would be shocked to see the raw copy of many senior reporters. Seriously.

The recovery of revenue at The Australian has been largely attributable to consumer revenue: lifting paid digital subscriptions and print cover prices. The Australian’s intense focus on breaking news and its status as the country’s last broadsheet and best source of exclusive political, national affairs and business news has allowed it to maintain and grow print display advertising, to increase print cover prices and to defend a greater proportion of its print circulation than any other metropolitan paper in this country. This was needed to offset the loss of more than $40 million a year of classified recruitment revenue to online competitors and government websites.

News last week launched in its Sunday newspapers an Anzac Day medals promotion. The collectable, now in its third year, shows News is prepared to spend serious marketing dollars to support print sales. So despite the undeniable troubles confronting publishers, and the sad loss of jobs that were once key to the publishing business, the prognosis for print is looking better than it once did. Why?

Well as the Fairfax statement finally made clear, publishers and advertisers are realising the split digital/print brand personalities of their mastheads are hurting value perceptions among both readers and advertisers. The two national papers always maintained online the same brand attributes that made them work in print. But anyone reading The Sydney Morning Herald online cannot but be amazed at how different it is from the print edition. And, as the statements from both companies make clear, the rise of fake news presents an opportunity for traditional ­publishers to go back to first principles to regain read reader trust.

As Media columnist Mark Day argued on Q&A last month, the traditional methods of journalism will light the way forward from this period in which many news consumers complain they no longer know which sources to trust.

The dangers of digital for journalism were entirely predictable a decade ago. Publishers who did not want to seem like “digital dinosaurs” began giving away their valuable content, creating two classes of readers. One was loyal, lucrative and attractive to advertisers. The other intensely flighty and not worth much commercially, though The Guardian seems happy enough to chase those ones.

Publishers should have seen the rise of bloggers and news sites like Mamamia as a sign low barriers to entry in digital made anyone a potential rival for readers as well as advertisers. Internet space is limitless and the barriers to entry only marginally more than imagination. Smart publishers should have seen the intense penetration of Google in everyone’s digital lives and the immensely broad platform of Facebook as genuine rivals for news distribution and advertising. The first fight back from traditional media was Rupert Murdoch’s 2009 decision to charge for content. So what have we learned since?

We know some people will pay for unique news valuable to them. It may be business, national affairs or politics news that they can use. In some markets, such as Melbourne, even the best AFL coverage will be a driver of propensity to pay. But for most sites offering commoditised news, gossip, entertainment and celebrity — the diet of mass free aggregator sites — charging will be very difficult.

Publishers, like their journalists, need to go back to basics. Forget the algorithms and learn what readers actually value monetarily. Then retrain advertisers about the value of deep engagement between readers and news products.

A few seconds on a mobile phone news site will not be of value to most advertisers, while deep ­engagement with a serious print product or website most definitely will be valuable. For the metros that should mean re-engagement with their cities and states. The only real test of an ad is results. As columnist Mark Ritson has demonstrated in this newspaper many times, advertisers waste much of their budget on digital campaigns.

The future will continue to be hard, but I reckon people are starting to be able to sort the wheat from the chaff in publishing.