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Newspapers: how the Internet is forcing innovation

By David Myton - posted Thursday, 10 May 2007

Newspapers are facing their greatest challenge in the history of newsprint. Last century newspapers weathered competition from radio and television, but in the 21st century they face a new order of competition that derives from the Internet. It is a threat of a kind unimaginable just a few years ago, and one which is forcing proprietors, editors and journalists to innovate on the move.

In the newspaper industry adversity has always been the mother of invention and it is responding with initiatives - technological and journalistic - that it hopes will help it to at least maintain audience share. In April, for example, the Fairfax Media CEO David Kirk announced changes which include training for journalists in multi-media equipment and news gathering techniques, as well as scaling down the size of the hard copy Herald and Age to somewhere between a broadsheet and a tabloid.

The Fairfax move comes amid much talk of doom for the newspaper industry. One recent prediction foreshadows the first quarter of 2043 as the moment when newsprint dies in the US “as the last exhausted reader tosses aside the last crumpled edition”. Newspapers are seen as an “endangered species” with “the business of selling words to readers and selling readers to advertisers … falling apart”.


As well as the news aggregators such as Google and Yahoo, there are 70 million bloggers out in the world, numerous online journals and magazines, video on demand, and social networking sites, all enticing people into a new media experience.

The planet’s most powerful press baron, Rupert Murdoch, has warned that the new technology will change the old order forever. Societies or companies that expect a glorious past to shield them from the forces of change driven by advancing technology will fail and fall, says Murdoch: “A new generation of media consumers has risen demanding content delivered when they want it, how they want it, and very much as they want it”.

The threat to newspapers is immense, not just from blogs, social networking sites and news and features platforms, but also from new advertising players such as craigslist, which operates local classified services in 450 cities worldwide, and which is draining money away from traditional newspapers.

But rather than buckle under the pressure of new technologies many newspaper companies instead are utilising those technologies to resist and repel the advances of new competitors. Entrepreneurs do not stand still - today they are exploiting the digital world to boost their profits.

New technologies have allowed newspapers to be printed faster and more efficiently. New digital media platforms have enabled publishers to broaden their content offerings and offer advertisers additional benefits through cross-platform sales. And they've provided publishers with new ways to market their titles and extend their reach (“The future is here”, The Guardian, February 12, 2007). In the words of John Sommerville (The News Revolution in England, 1966) - the search for profits has made news publishers ingenious.

Today’s challenges are profound. An IBM report, Navigating the Media Divide, warns of a clash between old and new media. In the traditional world, it says, content produced by professionals and distributed through proprietary platforms still dominates. But in the new world, content is often user-created and accessed through open platforms.


“In web 2.0 terms we are moving from connecting computers together to connecting people together. So it's not just providing compelling content but providing compelling experience and part of the experience may be something that extends beyond traditional content,” says Steven Canepa, vice-president of IBM’s global media and entertainment industry.

Newspapers navigated pre-Internet threats by broadening their content, incorporating lifestyle features, background information, and entertainment utilising supplements, including colour magazines, to focus on areas such as the home and property markets, technology, food, and health.

While the industry is being challenged by new players, it should not be assumed all newspapers everywhere are in terminal decline. Data from the World Association of Newspapers show that, contrary to conventional wisdom, newspaper circulation worldwide is growing and new newspapers are being launched at a remarkable rate.

The WAP figures reveal that global newspaper circulation is up 9.95 per cent over five years and 2.36 per cent over 12 months, while daily newspaper titles surpass 10,000 for first time in history; more than 450 million copies are sold daily; there are more than 1.4 billion paid-newspaper readers; and that total free daily circulation has more than doubled in five years.

According to Australian Press Council data, Monday to Friday 2.3 million Australians buy one or more national and metropolitan newspapers which are read by nine million people. Those purchases increase to more than three million on Saturdays with 10.4 million readers and to 3.5 million with 10.8 million readers on Sundays.

However, circulations are in decline except for Saturday editions and Sunday titles. APC figures show that in the decade 1995-2005, there was a 6 per cent overall decrease in Monday to Friday national metropolitan circulation from 2.426 million to 2.273 million, steady circulation in Saturday editions at 3.038 million compared with 3.054 million 10 years earlier, and a significant growth of 5.3 per cent in Sunday circulation from the earlier figure of 3.278 million to 3.453 million.

The APC acknowledges the data are threatening and that newspapers are clearly in a transformational phase, pointing out that the best business model for a prosperous future for newspapers is not obvious. However, while it cannot be said the local newspaper industry is in terminal decline “the juggernaut of change is challenging everybody in the print part of the news industry”, it says.

The “juggernaut of change” is impacting on newspapers in the United States with circulation of 814 of the nation’s largest daily newspapers declining 1.9 per cent over the six months ending March 31, 2005 compared with the same period the previous year, according to the Newspaper Association of America. Circulations of major newspaper titles are also on the decline in the UK, falling by June 2004 year-by-year by 4.7 per cent.

While some newspapers are doing well, the overarching trend is declining circulation and dwindling revenues from advertising, particularly for national and major metropolitan titles.

But the industry is waging a counter-attack. Newspaper companies are rapidly transforming into multimedia companies. According to the Australian Press Council, the indicators reveal an increasing number of Australians are turning to Internet sources for information in real time, which it says has led major metropolitan newspapers, and some regional dailies, to establish parallel print and online editions.

In the UK, The Guardian is investing £15 million in its websites over the next 18 months as it aims to update its digital services for the web 2.0 era with features including video. Guardian Media Group chief executive, Carolyn McCall, says the organisation had to adapt and change. “What we’ve done so far is our own version of web 1.0, but we want to continue to web 2.0 and what comes after that. We need to be agile and ready to change.”

The UK regional press is also moving to multimedia services. Johnston Press - owners of the Lancashire Evening Post - is planning to create 70 multimedia newsrooms capable of filing video reports. “If we bury our heads in the sand, this industry is going to go nowhere apart from deeper into the sand. The opportunity to multi-skill and be comfortable in a variety of platforms will be increasingly commonplace,” says chief executive Tim Bowdler.

The Times of London, has also ventured into multimedia, with a £10 million relaunch of its website Times Online. The money has been spent on design, IT editorial and marketing of the new site which went live on February 5 this year. Times Online has grown to become one of the most read newspaper websites in the world with more than 10 million unique monthly users, according to the UK Press Gazette.

In Australia The Sydney Morning Herald has developed an extensive multi-media website at with blogs, video and podcast all standard. In 2005 recorded a 21 per cent rise, from 1.9 million average monthly unique browsers to 2.3 million for the corresponding periods, according to Nielsen/NetRatings. The recorded a 26 per cent increase in traffic, from 1.4 million average monthly unique browsers in the final quarter of 2005 to 1.7 million for the same quarter a year later. The five main News Limited websites all rose, ranging from 15 per cent for to 63 per cent for

Innovative responses to new challenges have become standard practice in the newspaper industry. The Financial Times has launched a new mobile service allowing users access to FT content via mobile telephones and PDAs, reports online Press Gazette. The FT Mobile News reader is a free application giving users access to FT news, comment and analysis, stock prices, a 30-day search function and premium content for subscribers, and is compatible with most new phones, including BlackBerry.

The UK Guardian, ever in the vanguard of innovation, last year launched a new web service which allows readers to download and print out a rolling version of the newspaper that is updated every 15 minutes. G24 is an eight- to 12-page PDF covering news, international news, economics, sport or media stories. It is aimed at the lunchtime and evening commuter market who may want an updated print product to read on the train or bus.

The Guardian’s ability to innovate is resonating with readers. Its online presence, Guardian Unlimited, announced record user figures for January 2007. The Guardian's website was visited by 15.7 million people internationally in January with 5.3 million UK unique users in the same month. International page impressions were up 14.8 per cent from January 2006 to 153.4m in January 2007. UK page impressions rose 12.3 per cent year-on-year to 67.7m.

Back in the United States, newspaper consumers are drifting to the Internet to get their news and information. By the end of 2005, more than 90 million American adults got news online during a typical day, a big increase since 2002 when around 27 million did so.

It is much the same story in Australia, with advertisers spending big online. A report from technology analysts Frost & Sullivan showed that spending on Internet advertising climbed nearly 50 per cent in 2006 to $605 million, with the report's author, Foad Fadaghi, predicting 25 per cent annual growth for the next four years, bringing total online advertising spend to more than $1 billion a year in Australia by 2009. He said Internet's share of spend will top magazine and radio advertising by the end of next year, catching up with newspaper revenue in 10 years and commercial television in 15 years.

However, there are those who believe newspapers that adapt to the digital age can survive and attract advertising. Newspapers such as the UK’s Telegraph “are not media brands shuffling quietly to their graves”, says Simon Marquis, an advertising industry consultant and a former chairman of Zenith Optimedia.

A survey organised by the World Editors Forum and Reuters found that 85 per cent of senior news executives see a rosy future for their newspaper. They accept competition from online sources and free papers, and in turn are making efforts to adapt to the 21st century readership. According to the survey, they know how to effectively transition towards online journalism without dismissing editorial quality.

In the words of Murdoch MacLennan, the Telegraph Group's chief executive: "Beware the Jeremiahs of doom. During the past 70 years newspapers have survived despite the radio and television revolutions and the throttling grasp of the trade unions. Today, newspapers are fatter, more diverse and more entertaining than at any time in the previous century."

Proprietors and editors also know they have to adapt to the online world, or slowly fade away.

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About the Author

David Myton works in the Vice-Chancellor’s Office at Macquarie University and is also a PhD candidate in the Macquarie Institute for Innovation.

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