Dealing with difficult times in print
On 7 October, The Wall Street Journal will stop publishing its Asian edition, the newspaper announced last week, even as it ceased printing the paper in Europe. Editorial restructuring and declining revenue were cited as reasons for the development. According to a report in theguardian.com, the decision comes after the paper’s parent company, News Corp., reported a loss of $643 million (£479 million) for the most recent fiscal year, which ended on 30 June. The report, however, added that digital subscriptions of the paper were on the rise and WSJ plans to focus on encouraging customers in Asia and Europe to read the paper online.
It is probably instances such as these that make John Harrison say it is a difficult time for the media globally, especially print. Harrison is the global media and entertainment sector leader at consulting firm EY, and was on his maiden visit to India recently. India’s print media market is “definitely better” than most markets, he says. “But I think you have a tale of two cities too—you have the large metros and then you have got the regions, and those regions are made up of smaller sized cities and smaller communities.” He believes that while the print media market in total is growing, there is some slowdown in advertising revenue growth, particularly in the metros. Consequently, some decisions need to be made on how to invest capital to position for an eventual transition of ad revenue out of print and into other platforms.
Although digital platforms are in place in India, the trick will be to actually capture the value of those platforms and the advertising dollars. “My experience is that the ad dollar sold in print is going to generate higher margins than ad dollars sold over digital platforms,” he says.
However, several newspapers in the US, which have seen the curve of the print revenue decline, have invested heavily in digital. “There is a digital ad revenue component that is volatile—generally growing, but volatile. What newspapers have done is they’ve made their content vital and paid for, either in the circulation of the print product or paying for access to the digital app,” he says. WSJ, The New York Times and Financial Times have been successful in this. “For the broader industry, the issue remains,” he adds. To be sure, traditional media companies are aggressively looking at their cost structure as their core revenues stagnate or decline.
According to Harrison, investments are being made in digital platforms just to make sure that even though it is a competitive landscape for dollars and there are large capitalized players that seem to be aggregating most of the dollars, there still is a large piece available for everyone else. So, they’re investing in digital platforms to make sure that they are delivering an experience that consumers want and also a vehicle to deliver advertising so they keep that share of the pie.
But the fact remains that the industry is in transition “and we are in between time where the old business is fading and the new business is exciting and attractive, and probably in the long term very interesting—but is not growing today as much as you’d hope. We are in that transitory time and it is very difficult when you have got a cost structure that has to be in both worlds,” he says.
So what should the companies be doing? He advises them to make smart investments for growth, and experiment smartly. “It doesn’t mean taking a pile of rupees or dollars out into the backyard and lighting them on fire on a bunch of crazy projects. But making smart targeted investments around different ways to access the consumers on renewed platforms, whether it is digital or mobile or whatever, different advertising solutions whether it is programmatic, highly targeted or customized,” he says.
He also suggests that media companies must think very hard on how they should market themselves to Gen Z. And the attributes and skills they are going to need to effectively penetrate that group because “ultimately over time, that group is going to be the most important group out there as they age.” (Gen Z or Generation Z refers to the generational cohort following the millennials)
Lastly, Harrison says that newspapers have to also invest in quality reporting and journalism. “You can get the news on Twitter, but when a big story breaks, say, an earthquake in Mexico, hurricane in Puerto Rico and floods in Mumbai, you get the facts but people dig deeper and need the analysis around the facts. In newspapers, that model plays a vital role in helping people understand the issues of the day.”
Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pressing issues related to all three. Or just fun stuff.