Newspapers retain value in current media business
With less than a month to the new year, newspapers around town are all gearing up for the peak consumer season of December and, at the same time, preparing plans and budgets for next year.
In reviewing the past year and projecting for the year ahead, it is clear that competition will remain very keen both amongst newspapers and with other media. In the face of a multitude of challenges, there is, however, a silver lining to the clouds that overhang the media market.
On a global basis, the media market remains in a state of flux and continues with its ever-changing evolvements. In this age of information overload, the media industry, inclusive of newspapers, electronic media and the internet, has been subject to a range of operational pressures. The current year has, for example, witnessed the sale of a free paper and a weekly magazine. On the other hand, annual or interim results of individual newspaper groups have shown improvements in their core business.
A major development during the year for the newspaper industry is the upward adjustment of the cover price, a move that had been ruled out for years. Statistics show that the price rise has had a smaller impact than expected. Viewed over a longer period, the decline in newspaper readership has slowed down significantly in recent years after a sharp drop initially. A number of newspapers, for instance, have managed to hold their readership for the last two years in spite of the impact of the internet.
According to an IPSO (Independent Press Standards Organization) media survey, the total newspaper readership in 2015 was 5.42 million, and 5.4 million last year. The number for the current year as at the end of the second quarter was 5.35 million, reflecting minimal movement. In view of the closure of a new free paper, there was a slight drop in the amount of free newspaper readership. For paid newspapers, the readership of 2.18 million in 2015 declined to 1.88 million last year, before rising to 1.92 million in the first half of the current year. The figures show that there are still a very sizable number of newspaper readers, and the price rise has had little or no effect on circulation.
It would be worth the while of the newspaper industry to analyze the market dynamics of the minimal effect of a price rise this time round. Irrespective of the market response, the industry has reaped two advantages from the move. First, although the main source of income for a newspaper is from advertising, the industry itself is basically not a hugely lucrative business, any additional income from its circulation, therefore, brings benefits. Second, the market’s acceptance of a price rise means the reader has made an assessment of value for money. In passing the test, the media industry proves its vitality, but it mustn’t rest on its laurels. In fact, it must continue to strive for excellence and improvement.
The latest results announced by various newspaper and media groups have shown a mixed performance. In other words, there is not a one-sided development trend in the market. Initial analysis suggests that, in an increasingly crowded media market, businesses can no longer follow the laissez faire policy of the good old times. Currently in the online market, there is increasing network connectivity, but internet advertising rates are low, while the social media platforms are sharing a big portion of revenue. Consequently, online content providers, no matter they are newspaper-related or not, are still probing for a working business model of the future.
Judging by the performance of various media groups, a promising way out of the dilemma is to combine advertising in both newspaper and the internet as they complement each other. An alternative is to target readers separately on either platform. To date, the cost-effectiveness of the internet is still comparatively low; it is being buffeted by social media which simply upload expensive content, the cost of which is currently irrecoverable. Therefore, it would be risky to undertake a simple wholesale transformation from a newspaper format into a digital format.
Newspaper advertisements still command a solid price, which shows that the market acknowledges the huge amount of resources devoted to reporting and editing. Newspapers continue to have an influence on society and operate in a distinctive mode that differs from the internet which merely focuses on hit rate. The successful experience with the recent price hike in paid newspapers, and the resurgence in income for a number of newspaper groups, reflect that the print media can still be a moneyspinner. Instead of loosening the grip, the industry would do well to nurture its further development.