Inside an industry: stop the press

Lucy Mair asks whether the UK's newspaper industry can survive in the digital age

The birthplace of the British press looked little different to your local coffee shop. Yet instead of the hiss of machinery and tapping of fingers on keyboards, the hum of conversation filled establishments as brokers and merchants, students and artists shared information with each other and debated the news of the day. From the coffee houses of eighteenth century Fleet Street, where the first news books and letters were circulated, the newspaper industry grew rapidly with industrialisation, rising rates of literacy and, crucially, an insatiable public appetite for news. Whether one chose a local or national title, a tabloid or broadsheet, or a partisan or non-partisan paper, by the twentieth century reading the newspaper was a daily ritual in households across the country.

But in the past two decades, the traditional business model of the newspaper industry, which relies principally on advertising revenue supported by a small cover price, has been undermined by economic crisis and the emergence of the internet. Although a number of industries have been quiet victims of these cyclical and structural changes, newspapers are a special case. Not only are newspapers profit-making businesses, they have an important role to play in society by holding people to account and bringing them to justice, which has been demonstrated recently by the Guardian's uncovering of phone-hacking at the News of the World, and the Daily Mail's campaign for justice for murdered teenager Stephen Lawrence. Consequently, it is vital that the newspaper industry adapts to modern media and readers' demands - and survives.

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The decline of the British press has been covered religiously by journalists themselves, who have devoted endless column inches to the industry's troubles. And it's not surprising: according to Audit Bureau of Circulations' (ABC) figures, circulation fell on all national daily newspapers in 2011, and on 83 out of the 86 regional titles that publish their results. Meanwhile, 32 regional weekly newspapers were forced to close their doors last year, and five daily titles switched to publishing weekly to save money. In part, these closures can be blamed on the present economic climate, which has caused advertising spend to contract dramatically since the onset of recession in 2008. Sly Bailey, chief executive of Trinity Mirror, which publishes five national and 130 regional newspapers, made this point clear in January when she admitted to the Leveson Inquiry that, since 2007, the publisher's revenue from recruitment advertising has fallen from £150 million to £20 million.

But economic difficulties have only catalysed the general decline of the print medium, which is largely due to the availability of free, easily accessible news content on the internet. Readers have migrated from print to digital in their millions, with advertisers closely following each click of the mouse. The Daily Mail, for example, which overtook the New York Times to become the world's leading online newspaper in December 2011, saw its website traffic increase by 65 per cent in 2011 as the newspaper's print circulation fell by 4 per cent. But, with a huge supply of places to advertise online, the cost of doing so is extremely low and the revenue that news organisations can earn from online advertising is insufficient to compensate for the fall in print advertising.

Turning the page

As a result of changing reader and advertiser habits, newspapers have been forced to adapt their business models. A number of publications, including the Times and the Financial Times, have erected pay-walls on their websites to compensate for the loss of print revenues. Many newspapers are also expanding their paid-for services to include book clubs, wine clubs, dating services and mobile applications. The Daily Mail is enjoying success online and in print (relative to its competitors) because its website content is designed as a supplement to the newspaper, rather than a replacement of it. Meanwhile, the Guardian's website makes all of the newspaper's content free to access online, but its parent company maintains a portfolio of other profit-making businesses, from an investment fund to a business-to-business publishing company, in order support its journalism. Both the Daily Mail and the Guardian are also pursuing expansion in the United States in order to tap into a bigger advertising market and earn greater revenues.

It isn't time to pen the obituary for print just yet, though. Some newspapers are fighting the battle against the internet by cutting their costs and increasing their cover prices to stay in print. For example, the Financial Times raised its weekday cover price by 30p in January 2012 to £2.50 - the second price increase in three months. Yet other publishers are moving in the opposite direction, slashing prices to boost their circulation. The i, a slimmed-down, cut-price version of the Independent has been successful since its launch in 2010. Furthermore, although news readers may be trading print for digital when at home or at work, during rush hour the majority of commuters still have their nose in a newspaper. The launch and success of free sheets including Metro and the London Evening Standard show that the survival of print is largely a question of cost and convenience. While the circulation of paid-for national dailies fell by 6.75 per cent in 2011, Metro increased its circulation by 2.5 per cent and, since becoming free in 2009, the London Evening Standard has more than doubled its circulation to 700,000. And with impressively high readership figures, free sheets certainly aren't being abandoned by advertisers.

The challenge for newspapers, whether in their print or digital format, is not only to find new ways of making money, but also to re-engage with their readers. Newspapers should start conversations, as they did three centuries ago, rather than broadcasting old information. Although ink-stained fingers may be a thing of the past, building social and participatory news environments online will guarantee the future of newspapers, in their digital form at least, until the next technological innovation.

Chris Wade: Group Director of Communications at Guardian Media Group

What is the business structure behind the Guardian and Observer newspapers?

Our parent company is the Scott Trust, which was set up in 1936 in order to secure the editorial and financial independence of the Guardian newspaper. The Trust owns the Guardian Media Group, a commercial group comprised of various businesses. The core business is Guardian News and Media (GNM), which is the publisher of the Guardian and the Observer. There are also other businesses and investments within the Group whose purpose is to generate financial value in order to help the Scott Trust fulfil its mission of securing the independence of our newspapers. So, while the Guardian is currently loss-making, other elements of the Group make money that balances out the losses and helps us sustain the long-term future of the Guardian.

How is the Guardian Media Group adapting to overcome the challenges facing the print journalism industry?

All newspapers across the developed world are facing great challenges in terms of circulation and advertising revenues, but we're seeing rapid growth in digital audiences. No newspaper has yet cracked how to make digital revenues compensate for the decline in print revenues, so bridging that gap is an issue that everyone is facing. To attract online advertisers you have to show that you have a highly engaged audience and we think that our journalistic approach, which is open and collaborative, puts us in very good stead, both commercially and editorially, to do so. We launched our "digital first" strategy last year - to become an organisation that is digital first in philosophy and practice, with the aim of ensuring our financial sustainability within five years. We'll do that through a broad mix of different revenue streams, including display advertising and recruitment advertising online, sponsorship, paid-for applications and reader services, such as dating service Soulmates.

We've also made a significant push in the US with our Guardian News site. A third of our digital audience is US-based and we have a new commercial team to make sure that we get our share of advertising spend there.

Is it the end for print journalism?

No, print is hugely important to us and will remain so for some time. At the moment we're still set up as a print-focused organisation and, although we need to change that and become digitally-focused, we'll continue to produce newspapers for as long as our readers, advertisers and commercial partners want them. We have an extremely optimistic view of the future of news and journalism, and the fact that our audience is now bigger than ever before in our history fills us with tremendous confidence.

Paul Malone: Founder and Editor of the Newry Times

How was the Newry Times founded?

I graduated from the University of Ulster with a degree in politics and criminology in June 2011. When the newspaper I'd been working for while studying could no longer afford to pay me, two fellow graduates and I decided to set up the Newry Times, a hyper-local e-newspaper, which launched in November 2011. Our motto is: "If it matters to you, it matters to us", so we're aiming to cover news stories that interest and affect the local community, from crime to Gaelic football.

Many regional newspapers are experiencing circulation problems and a number have shut down - do you think there's still a market for local news, and how will the Newry Times tap into that market?

I think now, more than ever, there's a demand for local news. People have become accustomed to national, 24-hour news channels and they want to go back to knowing what's happening in their local communities, to the people they know in the areas they're familiar with.

The current economic situation has had a big impact on the regional press, but I think the main factor contributing to the decline of local newspapers is an unwillingness to change and adapt to new technology. People don't want to wait a week for their news or pay for a paper when they can find out what's going on for free via Facebook or Twitter. That's why the Newry Times is online-only and free to use. We're updating the site by the hour and we've had over 170,000 page views since the website launched. We're also using social media to engage with our readers and we've even created a smart phone app, which has been downloaded over 10,000 times so far, so people can keep up to date with local news wherever they are.

How do you plan to develop the Newry Times into a profitable business?

At the moment, everyone involved in the Newry Times works on a voluntary basis. But my business partners and I are going to put our heart and soul into making the Newry Times a success so we can forge careers out of our commitment. Our business model is, like all print and digital newspapers, based on advertising revenue. We've already got several advertisers on board and we hope to attract more. We're exploring other routes too, including having a property section and a recruitment section on the website.