Will this huge decision pay off?
Last week, one of the UK’s most established newspapers announced that it was going digital-only. There had been speculation for some time about The Independent, since its daily circulation had reduced to less than 60,000 (from a high of 400,000) and print revenue was suffering as a result. At the same time, its corresponding website has over 58 million monthly visitors and expects revenue growth of around 50% in 2016. A no-brainer, perhaps?
Unfortunately, it’s estimated that there will be over a hundred redundancies, although this isn’t yet confirmed. In a more positive development, there will be more digital-based roles for the new online operation, plus sister publication the i is seeking around thirty new staff after its buyout by Johnston Press. However, the loss of one of Britain’s most recognisable newspapers has dismayed many avid readers, journalists, and media experts.
Paul Bryson, our Head of Operations, had some thoughts on this development;
“This is fascinating, as it’s largely an economic decision. It was no longer economically viable to keep the paper in print, and they’ve changed approach not due to readership demands, but because the paper was losing so much money. I think others will have to follow suit in the near future. The challenge to all newspapers is that many people see news as free content. However, they could benefit from a change in perception whereby subscription is seen as more acceptable, thanks to the success of other media suppliers such as Spotify, Netflix, and others.”
We also spoke to our Technical Lead, Paul King, who has vast experience in the publishing industry and has witnessed its challenges first-hand;
“I think this highlights recent changes in market conditions, and reflects that demand is driven by the customer – even if they don’t necessarily know it. People want something in their hand that they don’t need to go to the shop for, and this has impacted traditional publishing and media all over the world.”
The Independent’s owner, Evgeny Lebedev, paints the situation as a positive and progressive move. In a statement, he said;
“The newspaper industry is changing, and that change is being driven by readers. They’re showing us that the future is digital. This decision preserves the Independent brand and allows us to continue to invest in the high quality editorial content that is attracting more and more readers to our online platforms.”
Johnston Press buys offshoot
At the same time as moving to digital-only, the owners have sold The Independent’s popular lightweight 40p partner, the i, to Johnston Press; a publisher with great experience in running newspapers and magazines both locally and nationally. This is a deal worth a reported £25 million, and shows that many still see a bright future for print. The publication currently has a 20% market share in the newspaper ‘quality market’ and was named 2015 National Newspaper of the Year.
The two parties have also struck a deal for the i to license content from The Independent and Evening Standard’s websites, which is said to be worth around £850,000 annually.
This move to sell the i marks a complete break from print publications for The Independent’s owners, leaving no grey area about where their focus lies for the future. Jobs are said to be safe after the sale, and in fact Johnston Press are said to be recruiting to expand operations at their newest acquisition.
What does this mean for others?
Newspapers and magazines are undoubtedly bearing the brunt of the digital revolution, and have been for over a decade. Publishers are frantically trying different methods of maintaining and growing their revenue, with varying levels of success.
The Times is a subscription-based model, which is currently £1 per week for six weeks, and £6 per week thereafter. It’s far from the most inspiring of websites in the visual sense, but focuses on its reputable journalism and loyal readership. After more than a decade of considerable losses totalling almost £400 million, 2014 saw The Times record a £1.7 million profit.
In the past couple of years, Telegraph Media Group has invested £8 million in digital operations, and in 2015 it reported a profit of nearly £55 million. In a press release on Telegraph.co.uk, the group referenced their increased focus on digital as a key driver for their momentum. Despite good overall performance, print circulation is down for the Telegraph, too.
One of the biggest success stories is Daily Mail’s Mail Online website, which saw revenue of around £73 million up to September 2015, with a proposed target of £80 million by the end of that year. Whilst print circulation is falling by single-figure percentages, the Daily Mail remains Britain’s most popular newspaper.
The Guardian provides free online news, monetised by adverts and a non-mandatory subscription model for the most loyal of its readers. Here’s our Head of Digital, Matt Goolding, on how he sees this publication riding the waves;
“Despite a tough few years, the Guardian is trying interesting things. For starters, they’ve done a brilliant job by building online communities across popular culture, music, industry, politics and sport. They have invested considerable efforts in online content, utilising freelance writers, students and interns, as well as traditional journalists. This content is targeted to specific elements of their audience and is only available online. These communities are cemented by regular email newsletters, events, social media discussions, and more. The Guardian’s podcast programmes are brilliant, and have attracted sponsorship and advertisers, although it’s difficult to know if this merely covers costs or drives profit.”
However, It could be argued that none of the above matters if the bottom line doesn’t look good. In January 2016, Guardian News & Media announced plans to reduce operational costs by 20% due to slow digital revenues and the unexpected 25% reduction in print advertising. Underlying losses at the group were around £20 million last year, but they’re seeing improvements year-on-year. That said, in order to stay competitive, newspapers and magazines must generate value for the reader in areas other than pure news. Readers still need to feel part of something that involves them.
When there’s so much choice, generating brand loyalty is imperative.
The advertising model
For a while the online advertising model was the saving grace, offering publishers the opportunity to monetise content in a new way. However, publications have experienced another hurdle in recent times, because the revenue generated from online adverts has been impacted by the popular use of ad blockers. These apps allow browsers to block invasive adverts and experience content without interruption or distraction. Great for the user, but terrible for the blogs and websites that rely on advertisers to make money.
In 2009, around 20 million people were using an ad blocker. By 2015, this number had risen to 200 million. In a bold move, tech and gadget-focused website WIRED recently offered its readers two choices; either pay $1 per week to read articles advert-free, or turn ad blocker off to access any of WIRED’s content. Around 20% of its visitors were using ad blocker while browsing, and this was a continually upwards trend.
This is another example of how the digital revolution continues to disrupt, and highlights another challenge for the publishing sector to overcome. To read a brilliant article about how publishers are fighting back ad blockers, click here to read PubNation’s piece.
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