Learning that the newspaper industry is in trouble is like finding out traffic wardens are taking a severe pay cut: you’re not exactly going to shed any tears. But on reflection, do you really want to live in a world without them? After all, there’s only so much punishment they can take.
Take Trinity Mirror, one of the biggest newspaper groups and the owner the Daily Mirror as well as numerous local papers. It just announced a 14.6% drop in its first half revenues to £320m. Circulation revenues were down 6.3% despite price rises, while print display advertising fell 17.9%.
There was no particularly shocking event that caused it and Trinity Mirror is not especially unusual in the sector. This is just what you expect for newspapers now.
Print media has been wasting away since the late 90s, when the internet convinced us all that talk is not just cheap, it’s free. Anyone with an opinion or a story could put it online. Fearful of being left behind or undercut by their rivals, the papers started uploading their own content to the web, for nothing.
Given the pittance that could be earned from digital advertising, it didn’t look like much of a business plan - especially once executives realised their websites were cannibalising their own far more lucrative print products. Circulations have nearly halved in a decade, while advertising revenue has plummeted as the tech giants offer ever more targeted ways of reaching potential customers.
After a sluggish start, the industry did evolve in response, and is continuing to do so. Common strategies involve a mixture of sponsored content, live events, ecommerce and lead generation, ancillary services (like Guardian Soulmates), leveraging user data for marketing purposes and, of course, investing in their websites.
Some have implemented paywalls, most successfully the Financial Times, while others have gone for scale. The stellar example there is the Mail Online, which has a truly vast global audience and continues to grow by double figures each year.
Yet the relative success of its parent business, Daily Mail and General Trust (DGMT) actually has far more to do with the rise of its B2B division (business information, events and other such things), which now dwarfs both print and online - £1.2bn turnover in 2016, compared to £484m and £93m respectively.
That’s a very effective example of diversification rescuing a declining business. Good news for media companies wanting to survive, but it leaves the rest of us with a major problem.
Journalism is supposed to provide a public service. When it does its job, it holds truth to power, it exposes corruption and it gives voters, businesses, investors and consumers the facts to make informed decisions. Free information is the oil of a free society.
Unfortunately, an individual’s decision to buy a paper or read an article online has nothing to do with that public good. We have other reasons for wanting to know what’s going on, ranging from a healthy interest in current affairs to a morbid curiosity about celebrity cosmetic surgery fails. Few of us buy papers or read online stories to be better citizens.
So we run into a classic game theory problem. It’s best for the whole group if everyone pays a little to support a healthy media, but it’s best for any individual if everyone else pays for it, except me. Indeed, only 6% of us are reportedly willing to cough up for online news, while approximately 30% of us now use revenue-denying adblockers.
The result is that the resource that actually goes into general purpose journalism (as opposed to industry niches) has declined substantially and is continuing to do so as headcounts drop and salaries stagnate. The media business survives by diversifying, but its purpose does not.
It’s hardly surprising in the circumstances that we’re seeing a rising tide of ‘clickbait’, or indeed that papers are increasingly beholden to wealthy owners seeking public influence. Ultimately, you get what you pay for.