Wednesday, July 5, 2017

The decline of the media and its implications for democracy

This is the complete version of an article I wrote earlier this year on the crisis in the news media, an edited version of which appeared in The Listener in May. Reproduced with the kind permission of Listener editor Pamela Stirling.

From Monday, May 1, the Marlborough Express ceased to exist as a daily newspaper. After 150 years of publication, 137 as a daily, it’s now published on Monday, Wednesday and Friday mornings.

The paper’s editor, Nicola Coburn, put on a brave face in a statement last October pointing to likely changes. “We are proud to have been an integral part of this region for so long,” she said. “But now it is time to start securing our future.

“Let’s be clear the Express isn’t going anywhere. We are here to stay. We love this province and its people.

“But, equally, we cannot deny that the time has come to change. Digital audiences are growing rapidly, people are slowly moving away from print and advertising revenues are declining. At some point in the future we will not be able to sustain a daily newspaper.”

In a media world buffeted by unprecedented turbulence, the changes at the Fairfax Media-owned Blenheim paper (circulation 5600) were an infinitesimal blip.

But the reduction in the paper’s publishing days was symptomatic of a deep and possibly terminal malaise in the New Zealand print media, and pointed to the likelihood of a similar fate for other long-established provincial newspapers.

Already the Nelson Mail, another Fairfax-owned paper with a 150-year history, appears to be setting off down the same path. In a recent announcement that repeated almost word-for-word what Coburn had said six months before, editor Victoria Guild said the Mail too would be “exploring a potential new publishing model”.  Industry observers saw the announcement as the prelude to a downsizing similar to that undertaken by its stablemate in the neighbouring province.

No one can predict with any certainty whether even the bigger metropolitan papers will survive in print form, or for how long. It’s an industry that appears to be dying a slow death by a thousand cuts as readers stop buying papers and as advertisers, the industry’s main source of revenue, abandon the print media for digital platforms such as Facebook, Google and Trade Me.

The two dominant print media companies, Fairfax and NZME, argued before the Commerce Commission that they had a far better chance of surviving the crisis if they were allowed to merge into one. But some industry pessimists believed a merger – which the commission disallowed – would have merely postponed the inevitable demise of a once powerful and prosperous industry.

At best, they argued, it might have bought more time for the merged company to develop a new business model to replace one that is in tatters. But no one, not even the two media groups themselves, seemed to know what form that model might take, still less whether it would work.

THE FIGURES are stark. Between 2009 and 2014, the number of New Zealand newspaper readers declined from nearly 1.5 million to fewer than 900,000. The circulation of the country’s biggest paper, NZME’s New Zealand Herald, has been tracking steadily downwards for years, falling last year from 134,000 papers a day to 127,000.

At its peak in 1992, the Herald sold more than 250,000 copies daily. The most pronounced decline set in after 2005, when website readership began eating into newspaper sales.

The picture is much the same elsewhere. Sales of Fairfax’s Wellington Dominion Post were down more than 12% last year to 52,000 copies. When the paper was established through the merger of The Dominion and The Evening Post in 2002, its circulation was almost twice that.

The same company’s Christchurch daily, The Press, has fared slightly better, registering a 10% decline last year and now marginally outselling its Wellington stablemate. But like the Dominion Post, readership of its print version has halved since the 1990s.

Some provincial papers are bleeding even more profusely. NZME’s Daily Post (Rotorua) suffered a circulation drop last year of more than 15%. For Fairfax’s Manawatu Standard, the figure was over 13%.

And the carnage isn’t confined to dailies. Fairfax’s Sunday Star-Times also took a circulation hit of more than 13% in 2016, slipping to fewer than 88,000 copies (marginally below its NZME-owned competitor, the Herald on Sunday). Meanwhile the Sunday News, also published by Fairfax, looks to be on life support with sales of less than 20,000 (down 19 % in 2016).

But more damaging by far than the slump in circulation figures has been the flight by advertisers to the internet. And as newspaper sales declined, that flight accelerated as advertisers saw less reason to stick with a medium that appeared to be on the way out. The industry found itself trapped in a vicious downward spiral.

THE survival strategies of the two newspaper groups have followed a broadly similar pattern. Waves of editorial redundancies, imposed to cut costs (and in some cases, industry critics say, to dispense with older journalists who didn’t whole-heartedly embrace the digital revolution) have resulted in an enormous loss of institutional knowledge.

Some of the most capable and experienced of the redundant journalists have found lucrative work in corporate and government communications, further tilting a playing field that increasingly favours PR spin and information control over the public’s right to know.

The casualties of the job cuts have included sub-editors, the now-extinct class of senior journalists whose job was to keep errors out of the paper, and whose absence is reflected in increasingly frequent embarrassing mistakes that provide fuel for gleeful newspaper critics on social media.

In other attempts to control costs, editorial control has been centralised and a greater proportion of content is shared between papers, inevitably reducing each paper’s distinctive imprint and sense of local identity.

Some smaller papers that previously used their own on-site presses now print in other cities, sometimes several hours away. This saves money but forced the papers to bring forward their editorial deadlines, thus compromising their ability to report up-to-date news. It was another act of self-harm.

The editorial tone of newspapers has changed markedly too, although the situation varies from paper to paper. Generally speaking, there is less of what journalists call “hard” news and a lot more syndicated, lifestyle-oriented content – food, fashion, health, personal finances, entertainment and travel – and soft “human interest” stories. Pick up some daily papers and you could be excused for thinking you’re reading a women’s magazine.

Most noticeably there has been a dramatic reduction in what might be called journal-of-record coverage – the sometimes dull but often important news generated by courts, council meetings, parliamentary debates, select committee hearings and the like, which filled the inside pages of newspapers in the pre-digital era. 

In its place, news websites now highlight clickbait – titillating headlines designed to lure the casual browser. A typical selection of clickbait headlines from the Stuff and New Zealand Herald websites recently included “Five Beauty Tips from Adele”, “Matt McLean [a TVNZ weather presenter] drops C-bomb” and “What Men Think While Waiting at the Altar”.

CRUCIALLY (some say fatally), both Fairfax and NZME embraced a “digital-first” strategy that prioritised online content over the companies’ printed newspapers, to the detriment of the latter. Critics say the digital-first policy merely served to give readers even less reason to buy newspapers.

Making online content available free of charge compounded the problem. Wellington lawyer Hugh Rennie QC, a close observer of the newspaper industry for several decades and a founder of The National Business Review, argues that New Zealand’s big two media companies got it badly wrong.

Rennie recently told the NBR: “[Newspaper publishers] are now busy basically tearing their print media apart by putting the content on the internet immediately, so that you read it on one or other of their websites and you open up the paper next day and there’s the article you’ve already read.

“It’s a business model that makes no sense at all – I mean, it’d be like a baker giving away free bread today so you can buy stale bread tomorrow.”

Newspaper managers often argue that the shift to digital was consumer-led – that readers now prefer to get their news online and publishers had no option but to respond. But there’s a counter-argument that by running down their newspapers in favour of digital platforms, publishers gave readers little option but to go online in search of the news of the day, simply because papers no longer provided the coverage they were accustomed to.

Both companies have persisted with the digital-first approach even when it has demonstrably failed to deliver the desired financial benefits. Fairfax still derives 85% of its income from old-fashioned print newspapers, even in their hollowed-out state. For NZME the figure is 60% – lower than for Fairfax because NZME also generates income from its substantial radio holdings. 

Both companies gambled that when they put editorial content online, advertisers would follow. They didn’t. Even now, Fairfax and NZME earn only 12% of their revenue from digital sources.  

It rankles with the two companies that digital advertising is largely hoovered up by Facebook and Google, which is also where many online readers now get their news. The two global internet giants are portrayed as parasites, feeding off content generated by news companies while creating none themselves. One commentator has described them as the modern equivalent of 19th century American railway barons in the way they ruthlessly exercise market dominance.

But the print media crisis is not unique to New Zealand, and neither are New Zealand newspaper companies unique in seeming powerless to deal with it.

Former New Zealand journalist Robin Bromby points out in his recent book Newspapers: A Century of Decline that the digital revolution has been catastrophic for the print media everywhere. No one – yet – has come up with an answer.

American newspapers are still waiting for their websites to turn a profit, even as their print sales continue to plummet. Even Britain’s Daily Mail, generally acknowledged as a world leader in the online market, still makes nearly seven times more money from its print edition than from its website.

Bromby, who began his journalism career in Wellington but for several decades has worked in Sydney, mostly for Rupert Murdoch’s down-under flagship The Australian, describes digital disruption of the newspaper industry as the media equivalent of a hospital superbug.

Like Rennie, he argues that newspaper owners have made things worse for themselves by favouring digital content over their print products. “The problem now is that however much newspaper companies may have come to regret their initial decisions on digital strategy, there is no easy way to unscramble the omelette.”

This probably explains, Bromby says, why many newspaper managers are “publicly so bullish about the digital side: they cannot afford to admit it has not turned out as they hoped”.

IT WAS against this gloomy backdrop that the trade union E Tu, which represents most of the relatively small number of New Zealand journalists who still belong to a union, sponsored a recent conference on the news media in the Grand Hall of Parliament. Its title, Journalism Still Matters, recalled a similar event – Journalism Matters – held at the same venue nearly 10 years earlier. 

On that occasion, the news media were yet to feel the full destructive impact of the digital revolution. Much of the discussion then revolved around union anger over cost-cutting and redundancies as newspaper owners began responding to the looming threat from the internet.

This time the tone was markedly different. There was a sense that the industry was fighting for its life and that all conference participants – industry executives and unionised journalists alike – had a common interest in coming up with strategies for its survival.

Industry participants were refreshingly candid about the challenges facing the print media, and about errors of judgment made in the past.

New Zealand Herald editor Shayne Currie acknowledged that “we made some big mistakes 20 years ago. We made a big mistake when we made content available free. But there’s no going back.”

Rick Neville – then an executive with APN, as NZME was previously known, and now editorial adviser to the Newspaper Publishers Association – argued unsuccessfully for a paywall when he was at the Herald, but agrees that “that horse has bolted”.

In fact, after initial hesitation, both NZME and Fairfax developed plans to charge readers for online access, which would have at least partly offset the loss of advertising revenue, but neither put them into practice. The two companies became locked in a mutually destructive game of chicken, each fearing that whichever company was first to introduce a paywall would lose readers to its rival.  

Paywall proposals are now off the table – an acknowledgement that it’s too late to act, because online readers have come to expect their news free. Fairfax group executive editor Sinead Boucher told the conference that her company’s modelling showed a paywall would generate so little income as to be ineffectual. “Optimistically, we might make $1 million a year but risk losing readers.”

The consensus at the conference was that paywalls could still work where a media company offered exclusive or specialised content, as in the case of the National Business Review or a titan like The New York Times, but that readers would refuse to pay for everyday “commodity news” that was widely available.

Boucher outlined the industry crisis in stark and blunt terms, saying the traditional business model was fundamentally broken. Fairfax papers were still profitable – “at the moment” – but Facebook and Google were eating into the company’s income and new sources of revenue had to be found to sustain present operations.

“We have 550 journalists around New Zealand,” she said. “Regional journalists are most at risk if we can’t find a sustainable model.” The Marlborough Express, Boucher added, would not be the last to be forced to make adjustments.

Boucher said print subscribers now made up only a small minority of Fairfax readers. Nonetheless, she said it was the loss of advertising, rather than print readers, that had done the serious damage.

Papers are now being padded out with “house ads” – unpaid advertising promoting the publisher’s own products. Paid advertising has dried up to the point where Boucher said “we can’t make our papers any thinner. If we made them any smaller they would blow away.”

She also pointed to a demographic issue underlying the industry’s problems. Newspaper subscribers in the provinces, she said, were typically aged in their late 60s. The generation of New Zealanders for whom reading the daily paper is a lifelong habit is slowly dying.  

At other end of the age scale, millennials have never acquired the newspaper habit because they can get the news on their phones and tablets. Worse than that, they are accustomed to reading it free of charge and can’t, or won’t, be persuaded to pay for the privilege.

YET SOME local newspapers – including Masterton’s Wairarapa Times-Age, bought from NZME last year by its general manager – appear to be thriving. The Times-Age (circulation 5500) is reportedly making money and has hired several new reporters since the change of ownership.

Rennie has pointed out that the West Coast, despite being one of the country’s most economically deprived regions, still sustains three daily papers that emphasise local news. Similarly, Neville told the conference that lively community papers had secured a strong foothold in places like Devonport and Waiheke Island.

Why do some independent papers appear to succeed where those owned by the big companies often struggle? Neville suggests one factor is that independently owned papers aren’t burdened with a share of the costly overheads that come with being part of a national group.

On the downside, as Boucher pointed out, such papers can be more vulnerable to attempts by local advertisers to influence editorial content. “There’s much more protection in a larger group.” But she acknowledged that the owner-operator model can succeed where larger companies can’t, and she wished independent proprietors luck.

Some challenges facing the print media are only indirectly related to the digital revolution. Several conference participants expressed disquiet and frustration at the increasing control exerted over access to information of public importance by organisations such as government departments, city councils, the police, district health boards, big companies and sporting bodies.

Taking advantage of understaffed newsrooms and the ready availability of hired PR guns, some of these organisations have assembled large teams of well-paid communications staff whose job is largely about controlling the flow of information to the public and putting a positive spin on whatever material is released.

It’s the age-old battle between spin and journalism, but the advantage seems to have shifted to what journalists call “the dark side”, with worrying implications for participatory democracy and the right to know.

Another consequence of the crisis in the news media was highlighted by James Hollings, senior lecturer and programme leader at Massey University's journalism school. Hollings says journalism schools are finding it harder to attract students because parents are telling their children there’s no future in the profession.

BUT THE PICTURE is not entirely bleak. Industry leaders at the conference seemed sincerely committed to quality journalism, and Currie says more people are reading, watching or listening to the news than ever before.

The problem is how to make money from them. Good journalism, after all, doesn’t come cheap.

Newspapers are still uncovering important stories, but Currie points out that website users aren’t necessarily interested in them. As an example, he told of an exclusive story by Herald investigative reporter David Fisher corroborating information about the SAS in the controversial Nicky Hager-Jon Stephenson book Hit & Run when the political controversy over the book was at its peak.

The story was placed at the top of the paper’s website for several hours, but online readers were far more interested in a story about British pop diva Adele, who was performing in Auckland at the time.

On a more encouraging note, the digital revolution has created opportunities for new entrants to the industry. Small, innovative, online-only media players – “digital newsrooms” – are attracting a growing audience. They include the pioneering Scoop, The Spinoff and Newsroom – the latter established by former news executives of NZME and MediaWorks.

A potentially significant recent arrival on the scene is the Tauranga-based online platform Newsie. A digital echo of the old New Zealand Press Association, it publishes news contributed by local and community papers from around the country and shows signs of developing into the online equivalent of a national newspaper.  

New entrants to the industry are experimenting with a variety of funding models. Corporate sponsorship, subscriptions, crowdfunding and philanthropy, as well as the traditional advertising, are all in the mix. Digital papers overseas, such as the not-for-profit Texas Tribune, are showing it can be done.

As Paul Murphy of the Australian media union the MEAA pointed out, digital start-ups aren’t burdened with the “legacy” cost of having to print and distribute newspapers. “There are great opportunities for new entrants.”

Corporate sponsorship is a new and unexpected development. Business journalist Bernard Hickey, editor of Newsroom’s subscription-only service Pro Newsroom, explained that business leaders valued New Zealand’s transparency and corruption-free reputation and were worried that it might be damaged by a weakened media. Newsroom’s sponsors include digital infrastructure company Chorus and Holden.

“Many people in the business community understand the need to hold people to account,” Hickey said. “They see that things are not being covered [by the media] and they worry that people will get away with stuff without a watchdog.”

There’s also evidence of a new spirit of collaboration emerging. Newsie uses a co-operative model and there’s more sharing of editorial content by major players too, notably through a partnership between Fairfax, NZME and Radio New Zealand. “It makes sense in a small market like New Zealand,” says Currie.

Media organisations are thinking about ways to avoid wasteful duplication in the coverage of routine “commodity news”. Six organisations reporting the same road death or court case is a luxury the industry can no longer afford.

Media commentator Gavin Ellis, a former editor-in-chief of the New Zealand Herald, suggested a model in which Radio New Zealand could provide a core news service, with other providers all contributing additional content. It would be a case of back to the future, going some way toward replicating the successful New Zealand Press Association model that was wound up in 2011 by the Australian interests that controlled the industry.

Paul Thompson, chief executive of Radio New Zealand, agreed Ellis’s idea had merit. “If there’s a useful role we can play, we would be part of it.”

There was even discussion about whether the state should help fund the news media – a proposal Neville said would once have been flatly ruled out by newspaper owners. But times had changed, he said. “It’s about protecting democracy.”

Whether politicians care about the future of journalism or would be interested in underwriting the media is another matter. All parties in Parliament were invited to speak at the conference, but only three – Labour, the Greens and United Future – were represented.

In any case, former TV current affairs producer Richard Harman, speaking from experience, was sceptical about the state taking a role. He had never had to jump through so many hoops as when he sought NZ on Air funding, he said. “If you take the state’s money you have to dance to the state’s tune.”

TWO STATEMENTS kept recurring throughout the day, and together they neatly delineated the industry’s predicament. One was that the old model is broken and there’s no going back, no matter how loud the lamentation for a past when newspapers were sustained with “rivers of gold” from advertising.

The other is that there’s no silver bullet – no clear formula that will ensure the news media’s survival in the digital era.

A third, quietly persistent theme was that there’s much more at stake than company profits and journalists’ jobs. At the heart of the debate over the future of the news media is the recognition that good journalism is vital to an informed society, which in turn is a fundamental pre-requisite for effective participatory democracy.

Some commentators shrug their shoulders and argue that the decline of the print media is just another example of creative destruction – the constant cycle by which old ways of doing things are overtaken by innovation and new technologies. Just as the cassette tape and the typewriter have been rendered obsolete, so newspapers have also reached the end of their natural lifespan – or so the argument goes.

Even some journalists find this process exhilarating. Something better will emerge from it all, the optimists insist. But in the meantime, something of inestimable value may have been lost. As Joni Mitchell famously sang in Big Yellow Taxi, you don’t know what you’ve got till it’s gone.


FOOTNOTE: As foreshadowed in this article, Fairfax's Nelson Mail announced last month that it would no longer publish on Tuesdays and Thursdays.

3 comments:

Brendan McNeill said...

If ever there was an industry ripe for disruption, and some might argue overdue, it was the print industry. They ran a virtual monopoly (or duopoly) in NZ for decades, charged outrageous prices for advertising and delivered very good returns to shareholders, which was all fine while it lasted.

I for one do not lament their gradual passing as commercial enterprises, any more than one laments the loss of blacksmiths in the 21st century. They served as a valuable institution in their time, but times have moved on.

The question as to what will replace the print media as an ‘authoritative’ voice in journalism remains open. That said, it is difficult to label the content in either stuff.co.nz or the nzherald.co.nz as journalism. It is for the most part opinion, and that from the political left of the spectrum.

Both sites run populist campaigns either to discredit ‘opponents’ or to affirm their point of view. At present Stuff.co.nz appears to be promoting the legalization or decriminalization of cannabis. Well, ok that may be the view of the editorial staff, but who expects to pay for that opinion, or desires to have it promoted to themselves, or their children daily?

I suspect the NBR can be profitable behind a paywall because it is a serious publication that delivers value to its readers. Is it too late to expect our daily newspapers to attempt a similar strategy?

I know several adults who do not watch either free to air TV, or Sky, but who select ‘on demand’ programs that interest them over the Internet. These people do not purchase newspapers but may occasionally visit news websites, and then probably international ones rather than those locally you described somewhat derisively but correctly as passing for ‘women’s magazines’.

We are heading into uncharted territory when it comes to ‘news’. Who is trustworthy and who is not is now an open question. We would be better served if all newspapers declared their presuppositions in their banner, something akin to a health warning, so that everyone understood their bias before imbibing.

Maybe Karl it will come down to people like yourself who while engaging in opinion based commentary, are still attempting to coalesce around the facts.

Lolita brother said...

Brendon [8.24 ]Yes, it will come down to people like Karl to salvage what [if anything ] conventional journalism has to offer.
And it won't be easy, I have about twenty web sites I cycle through and comment in.
This site, Karl's, is high value, and yet I haven't been here for several weeks.
Many of the sites have a request tip box, or voluntary subscription.
I do subsribe to Stefan Molyneux, a couple of Australian blogs, and now after a long spell of his share grunt Whale Oil NZ.
Cam Slater has grown up on the sharp edge and he has the scars to prove it.

Now, I find myself totally ignoring and side lining anyone who uses the term > Fascist, redneck or Nazi, because the progressives are so dumb they haven't even noticed that the Conservative right eats children.
My TV set in New Zealand is a dual monitor for my laptop; I could not tell you of any program on TV. I sometimes saw Paul Henry, but I think he was about 42 then.

I miss the Christchurch Press, because it was a good blotting paper when I over ran the sink water, and as a floor covering when I paint.
I read one for reference, the most annoying parts the opinion wafflers who, instructive and pompous in a pretentious intellectual way, still think in their dying days that guidance is their function, and that it is still 1992.



Brendan McNeill said...

Karl

By way of update to your column, a UK writer whom I respect, Douglas Murray, associate editor of the Spectator UK and recent author of "The strange death of Europe" (an important read for any of us concerned about what is happening there), has just joined a new media group 'Unheard.com'

His reasons for doing so here:

http://unherd.com/2017/07/18/the-current-media-mindset-can-only-end-in-mutually-assured-destruction/?utm_content=bufferb3d79&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

Could be worth keeping an eye on.