Is the crisis in the newspaper industry a threat to democracy?

Asks Evans Boah-Mensah.

There is no point denying the fact, newspapers are in pain.

The newspaper industry exited a harrowing 2008 and entered 2009 in something perilously close to free fall. Perhaps some parachutes will deploy, and maybe some tree limbs will cushion the descent, but for a third consecutive year the bottom is not in sight.

And if newspapers are in trouble, it is because of their strange business model. Most newspapers make their money from advertising, which brings in more than 70 per cent of newspapers revenue while sales add the rest.

Printing quality newspapers is very expensive and journalists who collect the information do not come cheap, if quality news should be guaranteed.

Newspapers have co-existed with a variety of competitors for decades including radio, TV, magazines and the Internet. While each of these media provides information, only newspapers consistently deliver a customer-tailored package of detailed, fact-checked, local, national and international news daily.

Most newspapers have tried to cut costs but, ironically, they have cut in a place that undermines their product, the newsroom. Reducing quality and content is not a recipe for revival. Newspaper fixed overheads are high. Trucks, fuel, newsprint, ink, pressroom labor; everything that goes into printing a paper has been squeezed.

The current financial crisis has forced businesses to tighten their purse strings, and media companies are sweating.

Advertising revenue has taken a deep dip since the financial crisis began and as a result many media companies are struggling to survive while others enter into mergers to stay in business.

Foremost news media companies such as the Financial Times in the UK, the Wall Street Journal in the USA, Germany-based duo, The Spiegel and Handesblat have all announced a decline of about 30 per cent in advertising and sales revenue since the beginning of the year. The Rocky Mountain News closed in February and the Seattle Post-Intelligencer has also followed suit.

Back home in Ghana, many newspapers that mushroomed over the past few years are now struggling to print on a regular basis, while the Daily Guide has cut staff and the Business Chronicle, a subsidiary of Ghanaian Chronicle as well as the Ghana Market Watch among others have closed down their operations due to what former staff say was ad squeeze.

And the pressure to regain adverts is not getting easier. The web is given many mainstream media readers a choice to find news and other information. And this has limited the number of newspapers that would have been sold to make up for the loss in adverts.

Online Competition

Lately, adverts have drifted onto the web where advertisers believe they can have a greater reach at less cost.

The respected US-based research firm, Project for Excellence in Journalism (PEJ) in its ‘State of the News Media 2009’ report said more people especially the younger generation have turned to the web for news and information and this has put the mainstream media in a more precarious position.

According to the report, global ad revenue of radio, newspapers, and magazine fell by an average of 15 per cent while online ad grew by about four per cent last year.

At the same time, online media attracted about 28 per cent more of their readers while radio, newspapers, and magazines saw their listeners and readers fall by about five per cent.

That is how vulnerable the mainstream media has become from the threat of online media and the financial crisis is not making things any better as businesses look to cut cost.

It has been argued by several pundits that newspapers must go on the web and let people pay for the content through walled subscription services. But the problem with their argument is that “free” news will always exist - through newspapers and journalists that won’t wall their content, through CNN, and via the bloggers and other social networking sites who will distribute the free content. What else could other newspapers add to the news that someone will pay for?

That is how weak the newspaper industry has become. And if eventually newspapers die, there will be no journalists on the ground to collect information, which most online media depend on to feed their sites. That will mean everybody will suffer an informational crisis.

So as governments all over the world pump money into companies to save them, media companies are hopeful businesses will advertise more so that they can also stay in business.

Maybe the mainstream media will find consolation in the fact that in spite of the threat posed by online news media, it is currently not profitable and its business model is questionable. Will online news sites continue to provide free news services to readers? In some cases, some news sites have tried to make people pay (through subscription) to be able to access some materials but this shows only limited success.

Besides, newspapers attract more than 1.7 billion readers per day world-wide, according to PEJ, and print advertising takes the largest share of global advertising revenue. Again, newspapers remain the most trusted medium, and have a profound impact on the audiences they serve.

But with its growing usage and acceptance, online news media is by far the greatest threat to media survival.

And if newspapers fold up and less information becomes available, that will undermine the ability of ordinary people to make informed decisions about their lives.

Surviving the turbulence

So is the end in sight for the mainstream print media? No, it would be shortsighted to say that the industry extinction is imminent. The industry is still profitable and it will continue to be an integral part of our lives helping us to make inform decisions. But its business model and content strategies would have to change to attract much-needed adverts.

When media mogul Rupert Murdoch, who owns US-based News Corporation, publishers of Sky TV, Fox News, and various range of products announced plans for the world’s largest printing plant for newspapers, the move was seen as a vote of confidence for the future of print. One year after the US$917 million project began operations, it has become something more – an outsourcing success story and a symbol of print’s viability in the digital age.

So the newspaper industry will survive the financial turbulence but they will have to offer high quality with more analytical stories to stay in business. People now have less time to read and it is only well written stories that will win the time of business executives and those are the newspapers that will survive the test of time.

Also Newspapers must transform from one-product-fits-all enterprises to businesses publishing aggregations of niche products. Call it what you want, the concept is all about creating a diversified product base that improves market penetration and profit.

A broad product portfolio and a wide content portfolio within the products bring new revenues and new audiences to the newspaper and fulfill the reader's needs for tailored content.

Print opportunities must be exploited to the full in order to survive and thrive in the future media landscape.

The print media industry will survive no matter what. But chaos across the financial markets is bound to cause nervousness among business people in every sector, and that nervousness will delay advertising start dates, shorten contract commitments, and may temporarily slow down the migration of funds to relatively new channels such as digital news media.

Newspapers can be viable, vibrant and profitable again but it will require work and some pain. The business model will have to change.

If you have any questions, comments or suggestions, please forward them to me on boahmensah@gmail.com