Grim Outlook for the World's Newspapers

An exhaustive 98-page report issued this week by the Organization for Economic Cooperation and Development paints a grim picture for the future of newspapers, saying that publishers in most OECD countries face declining revenues and readership, and that there appears little reason to hope things are going to improve markedly.

Of the 30 OECD countries, newspaper publishers in 20 of them face declining readership, with young people – future readers – attributing less importance to print media and increasingly getting their news, if they want news, from the Internet. The largest declines, the report says, were in the US, the UK, Greece, Italy, Canada and Spain, with 2009 being the worst year so far. Job losses in the industry have been particularly severe in the US, the UK, the Netherlands and Spain.

The report, titled "The Evolution of News and the Internet," was completed in December and revised slightly in March, so its conclusions are not completely up to date. As the global economy has turned up slightly, newspaper advertising sales have risen along with them.

For example, after continuing disastrous results, the New York Times Co. in April reported first-quarter profit of US$83.3 million, up from US16.4 million year-on-year. Nonetheless, total revenues were down 3.2 percent year-on-year, an indication that the continuing attempts to chop away at costs are what are producing the profits, not rising revenues.

"If the patient is not in emergency care, does that count as a recovery?" asked a Hong Kong newspaper editor. "I think 2008 was diabolical, in 2009 things started picking up at the end. Luxury ads are back as the crisis has waned. It's not the end of the world."

To some extent, another Hong Kong-based newspaper executive said, advertising agencies are beginning to discover that newspapers still give them the best bang for the buck because the media are so fragmented. Newspapers, he said, provide advertisers with more diverse classes of readers, unlike, say, the Internet, where readers tend to go after specific information and do not browse.

"The internet is not a media for the mass market," he said. "If you want everybody in Hong Kong to see your ad, it's the newspapers. I can promise you everyone in Hong Kong who you need to see you ad will see it. With the Internet it's hopeless. People don't act on ads on the internet. In major cities, if you want everyone in New York to see an ad, it's the New York Times, the Wall Street Journal, the Daily News, everybody who reads a tabloid."

Hong Kong, with an astonishing 48 daily newspapers – just two of them English-language dailies – printing 1.52 million copies a day, and four television stations, according to the government press guide, is an anomaly.

Here, the advertising decline has slowed dramatically, "people are no longer fleeing the media," said another local newspaper executive. "They may be finding other ways to do things, but as for now, newspapers are in the room, and ad planners are considering the newspapers as a part of their strategy. When the rate of decline slows, the double-digit decline days are hopefully behind us."

That doesn't mean they are healthy. While the bottom line for most papers appears to be stabilizing, the top line is continuing to shrink as newspaper corporations continue their cutbacks. "In terms of revenue growth, I am guessing that it is flat at best. If there is improvement, it is marginal. The only thing that is good is that the market has stopped hemorrhaging, "said a local Hong Kong editor.

On the revenue side, according to the OECD report the global newspaper publishing market derives about 57 per cent of its revenues from advertising, with the reliance on ad revenue much higher in countries like the US. And any hope that Internet advertising would replace it for the papers that maintain websites is extremely slim. Online ads only accounted for around 4 percent of total newspaper revenues in 2009, and in fact fell strongly during the year.

"In general, the online revenues of newspapers are miniscule in comparison to total revenues and online revenues of other digital content industries," the report said.

In some OECD countries, the report found, more than half of the population read newspapers online --up to 77 percent in Korea – but nobody wants to pay for it.

"The willingness to pay for online news remains low," the report said. Nonetheless, despite refusing to pay for their news, "the share of people who only read online news is likely to grow rapidly with new generations who start using the Internet early in life. The real concern is that a significant proportion of young people are not reading conventional news at all."

The changing landscape means the industry is being pulled in two directions, the report found.

"One extreme is that online and other new forms of more decentralized news will liberate readers from partisan news monopolies which have tended to become more concentrated and to dominate the production and access to news. The other extreme is that the demise of the traditional news media is with us (partially caused by the rise of the Internet), and with it an important foundation for democratic societies is at risk. "

Given the importance of news in maintaining a democratic society, the report said, "The evolutions of news creation and distribution are a matter of public interest. The question is whether and how the production of high-quality and pluralistic news content can be left to market forces alone.

Some OECD countries, the report said, have put emergency measures in place to provide financial help for the struggling industry. But "question is currently being debated what potential roles government support might take in preserving a diverse and local press without putting its independence at stake."

An ominous answer might be found in countries like Malaysia, where the political parties own all of the major media outlets. The quality of news in those countries has suffered drastically, although particularly in Malaysia a vibrant Internet community has arisen, with publications such as Malaysiakini, Malaysia Today and Malaysia Insider are continuing to provide strong, independent news.