A fatally flawed model

(First published in the Nelson Mail and Manawatu Standard, February 27.)

Last week’s papers contained further depressing evidence of turbulence in the print media.

The Australian owners of the two big newspaper groups, APN News and Media and Fairfax Media, both reported gloomy financial results.

Unlike APN, which announced a whopping loss, Fairfax (which publishes the paper you’re reading) at least managed to declare a profit. But it looked anaemic once the proceeds from the company’s sale of its remaining 51 per cent in Trade Me were excluded.

In the same week, it was reported that APN’s chairman, chief executive and three directors had quit in a boardroom bustup – proof, if proof were needed, of continuing upheavals in the industry.

Both companies are struggling with high debt and declining revenue. Like newspaper companies worldwide, they are dealing with a crisis of a magnitude never before encountered and sometimes give the impression of having no clue what to do next.

So it’s not a good time to be in the newspaper business. The industry is bleeding and morale could hardly be described as buoyant.

I have spent my working life in the print media and it saddens me to see the industry in disarray, but I console myself that I was privileged to experience what was, in hindsight, the golden era of New Zealand newspapers.

From the 1970s till the early 2000s, the industry suffered the inevitable cyclical ups and downs of a capitalist economy but was mostly prosperous. Several afternoon dailies died as television ate into evening reading habits. But overall, newspaper readership was steady and revenue from advertising was such that the Australians coined a term for it: rivers of gold.

Papers were comparatively well-resourced, although of course we employees never thought so, and they were generally well-managed – the more so after the many small family-owned provincial titles were acquired by the two companies that then dominated the industry, INL and Wilson and Horton.

It was also a period of robust journalism, when editors and reporters were prepared to take risks and to hold the powerful accountable – something that couldn’t be said of the generally timid New Zealand press of the 1950s and 60s.

So what went wrong? By my reckoning, several things.

Crucially, the classified advertising that once provided newspapers with much of their income shifted to the Internet, which is why Fairfax made the smart decision (now reversed) to acquire Trade Me.

Another profoundly significant change was that INL and Wilson and Horton both fell into Australian hands. Fairfax took over INL – owner of the Dominion Post, The Press, the Sunday Star-Times and a stable of provincial papers – and APN acquired the old Auckland family firm of Wilson and Horton, which had the formidable New Zealand Herald as the jewel in its crown. These ownership changes had consequences.

If there’s one word that characterises Australian attitudes to New Zealand, it’s indifference, and I suspect that apart from wanting to run their businesses at a profit, the Sydney-based boards of directors that control the New Zealand newspaper industry are largely indifferent to what happens here.

In an industry that so closely reflects a country’s ethos and culture, that’s a problem.

I believe they also made the mistake of assuming New Zealand to be just a smaller version of Australia, a sort of more distant Tasmania, which it isn’t. They not only lack an emotional investment in New Zealand; they don’t understand the New Zealand market.

Perhaps they should have taken a lesson from another Australian. Rupert Murdoch controlled INL for decades but was content to leave the running of the company to trusted New Zealanders. The corporate culture was unmistakeably that of a New Zealand company.

One sad result of the Australian takeover was the demise of the New Zealand Press Association, a long-established national news sharing agency. Because it was foreign to the Australian way of doing things, the NZPA was disestablished.

I predicted at the time that New Zealanders would know less about themselves as a result, and so it has turned out.

What else has changed? Well, journalism has been feminised.

Before the feminist lynch mobs assemble, I should explain that I’ve worked with outstanding women journalists and editors who could match any of their male colleagues. Of all the editors I've worked for, there was none I respected more than Sue Carty at the Evening Post.

It’s not female journalists I’m concerned about – far from it – but the creeping feminisation of newspaper content.

By this I mean the increasing proportion of newspaper space devoted to “soft” topics – fluffy human interest stories, gossipy items and lifestyle-oriented content better suited to women’s magazines. In metropolitan papers especially, café reviews and profiles of celebrity chefs, fashion designers, baristas and TV personalities have displaced investigative reporting and traditional “hard” news about events and issues of importance.

The feminisation of newspaper content runs parallel to another peculiar trend, the cult of youth. It seems some editors have been instructed to woo younger readers, even to the extent of publishing articles written in Generation Y jargon incomprehensible to anyone over 40.

The problem with this approach is that the most loyal consumers of newspapers are older readers, and it seems perverse to risk alienating them in pursuit of an elusive, capricious and quite possibly mythical youth market.

But the newspaper industry’s most destructive mistake of all, I believe, has been its response to the digital revolution.

Unnerved by predictions of the print media’s imminent demise, newspapers were panicked into placing their content online, where it can be viewed at no charge. In doing so, they painted themselves into a corner from which there is no easy escape.

The theory was that advertisers would flock to newspaper websites, but it hasn’t happened. I know of no newspaper offering free online content that makes money from its website. All that’s happened is that consumers have abandoned the medium that generates revenue in favour of one where they can read the news for nothing, as was entirely predictable.

But it’s even worse than that, because by ploughing journalistic resources into online content to the detriment of the traditional print product, as is undoubtedly happening, the industry is effectively cannibalising itself. It’s like the trapped animal that tries to free itself by gnawing off its own leg.

Even more bizarrely, newspaper bosses seem to regard increased website traffic as a cause for celebration. In effect, they are applauding their own impending extinction.

Here’s how I see it. Consumers realise they can read content online, often long before it’s printed, and not unreasonably deduce that there’s no point in continuing to buy the paper.

Sales consequently decline and advertisers respond by pulling out of the paper. But crucially, those advertisers don’t seem to be shifting to newspaper websites, so there isn’t enough revenue from the brave new digital world to offset the slump in print advertising.  Result: a vicious cycle of steady decline.

Am I the only person who sees this as a fatally flawed model?