The turbulence surrounding Fairfax's newspapers and the rapid march to a potential digital-only future poses many questions about the survival of the print media business.
If you want to look into the future, it's instructive to examine the US newspaper market, which has led the way in downsizing, innovating, and tackling the free content threat.
US newspapers have contracted, closed, moved entirely online, switched to the tabloid format, launched tablet apps, and erected paywalls in the hope of staving off extinction. News is even being crowd-sourced as publishers seek to slash costs.
US online advertising spending is tipped to hit $US$39.5 billion this year — pushing it ahead of total spending on print newspapers and magazines, according to eMarketer. Print advertising revenues at newspapers are expected to fall 6% to $US19.4 billion in 2012, after falling 9.3% to $US20.7 billion in 2011. While the numbers do not equate to falling off a cliff, they are heading south.
The closure of the Pulitzer Prize-winning Rocky Mountain News, the local paper in Denver, Colorado, at the start of 2009, sent a cold chill down the spine of journalists. It was a harbinger of bad news to come, as hundreds more local papers closed. A few months later the Seattle Post-Intelligencer shut its paper, and went online, followed by The Christian Science Monitor.
Other venerable media institutions, were forced to cut a swathe through their editorial desks, including the The New York Times, while The Washington Post is considered a shadow of its former self.
Pundits in the US believe that it's too late for the big newspaper chains to reinvent themselves, and that the economics of the newspaper business is broken, and beyond repair. Still, the Old Print companies are doing their level best to be profitable and most of them are hoping that digital subscriptions will be their saviour.
As Fairfax executives mull their strategic options they will need to recognise that building paywalls to offset print revenue decline is no guarantee of success, as new technology accelerates the commodisation of content and fragments audiencies. It's also a bumpy road for even the best content producers.
In April, The New York Times raised eyebrows when it revealed its online ad revenue had fallen 2% in the past year, even though digital subscriber numbers had jumped 16% to 454,000. They attributed that decline to the weak global economy. Those numbers coincided with its one year anniversary of its 'levered paywall'. Interestingly, the paper said it was pleased with the number of paying customers that had started with a free subscription.
US community newspaper chain Gannett, which owns 80 local papers, plans to spend $US100 million slapping digital subscriptions across its content properties. Gannett will also taper its pricing and paywall strategy to each individual market, leaving the details of pricing, bundling and meters to be applied on a paper-per-paper basis. However, Gannett is tacking on pure digital businesses, just this month adding news aggregator Quickish to its flagship USA Today sports news service.
The lessons for Greg Hywood and his management team at Fairfax is they will have to be flexible and far more nimble than the company has been in the past. Many commentators believe the winning newspapers will offer an array of hybrid solutions and many payment collection points, from monthly subscriptions, to micro-payments and advertiser-funded content.
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