The Newspaper Outlook Big Trends and Big Ideas Worldwide
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The Newspaper Outlook Big Trends and Big Ideas Worldwide Earl J. Wilkinson Executive Director INMA www.inma.org Creation of Value Shareholders Readers Advertisers Employees Geographic communities Demographic communities Virtual communities Newspaper Market Caps Publicly Traded Newspaper Companies 25% 20% 15% 10% 5% +25% 0% -5% -10% -15% -21% -20% -25% U.S. Newspapers Non-U.S. Newspapers Sources/Notes: U.S. newspapers, Yahoo, 2005-2006; non-U.S. newspapers, Bloomberg (April 2007), 2006 Value Levers Storylines of Publicly Traded Newspaper Companies Inside United States High profit margins Continued earnings growth Moving toward multi- media Value Levers Storylines of Publicly Traded Newspaper Companies Inside United States Outside United States High profit margins Embraced digital revolution Continued earnings Expanded beyond its growth geographic market Moving toward multi- Medium, stable profit media margins World’s Value Leaders Schibsted Singapore Press Holdings Market cap: US$2.8 billion Market cap: US$6.9 billion Norway’s top publisher Saturated newspaper market with 14 dailies in 4 languages Norway’s top search portal Moving from “Singapore Inc.” 40% of profits from online strategy to “Regional Footprint” strategy: 20 Minutes free commuter Protect core business daily launched in Europe Create adjacencies close to core as launch pad into Southeast Asia (magazines, classifieds, outdoor, Minority partnerships with internet) global media players Wrong Storyline Market Isn’t Buying What Newspapers Are Selling: Stock Performance, 2005-2006 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% U.S. Newspapers S&P 500 Strategic Choice Become larger businesses with smaller profit margins OR Become smaller businesses with higher profit margins If companies have to accept lower margins in the short-term to sufficiently invest in content and audience aggregation, so be it. -- Freedom Communications CEO Scott Flanders How did we get to this fork in the road? Global Newspaper Industry 11,207 daily newspapers circulating 500,000,000 copies each day Europe North America Newspapers: 2,398 Newspapers: 1,577 Middle East Newspapers: 272 Asia Newspapers: 5,071 Africa Newspapers: 400 South Pacific Latin America Newspapers: 89 Newspapers: 1,400 Value Disruptors Technology: Creates alternative access points for information, creating a concierge class for news-feeding Abundance: Creates a disconnect between news and success (relevance), especially among lower middle class Technology and Abundance U.S. households have more television sets than people Threshold crossed in the past 3 years In this environment, is there really demand for another newspaper section? Newspapers Amid Abundance: Case Of Libération Upscale, legendary Paris tabloid Single-copy in nature Editors wanted to add value for readers Added 24-page supplement to 72-page daily format Top-flight journalism, highest quality Newspapers Amid Abundance: Case Of Libération Circulation dropped 30% Research conducted on what went wrong Answer: Nothing, traditionally speaking Readers maintained high opinion of Libération Newspapers Amid Abundance: Case Of Libération Circulation dropped 30% Research conducted on what went wrong Answer: Nothing, traditionally speaking Readers maintained high opinion of Libération Readers felt guilty about not being able to read cover to cover (no time) Value Levers Audience Brand Content Value Levers 90% 5% 5% Audience Brand Content Value Levers 50% 25% 25% Audience Brand Content Complexity Accelerating Source: Mediaedge:CIA Backvertising, Assvertising, Nailvertising Lipvertising, Teethvertising, Headvertising, Fruitvertising The Big Picture: Chasing Fragments Consumers Fragmenting: Technology and abundance disrupting information consumption Advertisers Chasing Fragments: Advertisers shifting to multi-media Newspapers Regrouping: Newspaper business model changing as a result Fast Change Rewarded: Companies changing faster rewarded, those changing slower punished Goals For This Presentation Link value creation to big trends at newspapers Share global best practices The transition from mono-media to integrated multi-media Circulations Down 8% Paid Dailies in Western Democracies During Past Decade Usage, Engagement 100% 5% Engaged have become more Junkies 8% 90% engaged; disengaged have 15%Loyalists 12% become more disengaged 80% 70% 25% 28% Specialists “No time to read” Engagement 60% Fast consumption: looking 50% at, not reading 30% Upper Mass 40% 26% Simultaneous media use 30% 20% 20%Lower Mass 21% Place shifting (print 10% newspaper at home, free Disconnected 0% 5% 5% daily on train, internet at 1995 2005 work, Blackberries in transit) Source: Urban & Associates data on U.S. newspapers 10,000,000 12,000,000 2,000,000 4,000,000 6,000,000 8,000,000 U.K.: Qualities, Populars 0 '70 '72 '74 '76 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 Up-Market Mid-Market Down-Market U.S.: Mornings, Evenings 50,000 45,000 40,000 35,000 30,000 25,000 P.M. 20,000 A.M. 15,000 10,000 5,000 0 1940 1950 1960 1970 1980 1990 2000 2006 U.S. Population vs. Daily Newspaper Growth 350,000,000 300,000,000 Population up 118% 250,000,000 200,000,000 Readership Gaps Working women 150,000,000 Single-parent households First-generation immigrants 100,000,000 Daily newspaper circulation up 33% 50,000,000 0 1940 1950 1960 1970 1980 1990 2000 2005 Circulation Winners, Losers Circulations decrease, 1996-2006 Circulations increase, 1996-2006 Others: unaudited, incomplete So Goes the Middle Class Circulation and readership trends are consistent worldwide within ABC1 demographics Print circulation performance mirrors the middle class If middle class grows, circulation grows If middle class stagnates, circulation stagnates What Readers Value What Readers Value Expectation of “always on,” customisation Looking for connector of ongoing conversation Sense of community: from geography to interests Consuming more media, smaller bites Faster consumption: looking at, not reading Value “best at,” not “sort of good at” The Newspaper Macro View Diabetic News Consumer: Consumers reading more than ever before, but in smaller “bites” throughout the day as technology allows Search For Value: Print newspaper content package has been commoditised by internet, mobile, readily available free print products Acceleration, Not Discovery: Trends been going on since 1950, internet is simply accelerating trends for all traditional media News Diet Changing Evening News Buffet, 1945-1970 6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00 News Diet Changing Morning News Buffet, 1970-2000 6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00 News Diet Changing Diabetic News Consumer, 2000-Present 6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00 Advertiser View Chasing consumers anywhere they live and breathe Battle for attention spans Growing preference toward measurable media over mass media as technology allows Will continue to associate with media that produce quality, exhibit creativity Moving from product focus to “marketspace” focus Owning “Space” Procter & Gamble Oral Care: Selling different things to the same customer (owning “toothspace”) Amazon.com: Selling different things to different customers (owning “internet retailspace”) IDG: Selling the same thing to different customers (owning “knowledgespace”) Federal Express: Selling more of the same thing to the same customers (owning “shippingspace”) Newspaper “Marketspace” Young Old Poor Rich 1988 Newspaper Marketspace Young Print Daily Newspaper 75% household penetration 23% advertising share Old Poor Rich 2008 Newspaper Marketspace Young Print Daily Newspaper 48% household penetration 15% advertising share Old Poor Rich 2018 Newspaper Marketspace Young Print Daily Newspaper 35% household penetration 12% advertising share Old Poor Rich 2018 Newspaper Marketspace Young The Newspaper Dream Single print product Keep the old and rich Attract the “young and rich” Flirt with the “wannabe young and rich” Monetize for advertisers Print Daily Newspaper 35% household penetration 12% advertising share Old Poor Rich 2018 Newspaper Marketspace Young Entertainment Magazine Weekly Free Daily “Lite” Daily Print Daily Newspaper 35% household penetration Luxury Magazines 12% advertising share Business Weekly Old Poor Rich The push for “marketspace” means multi-media Multi-Media Future Television Radio Mobile E-mail Web Publications Total Audience Print Web Mobile Total Audience: Aftonbladet, Sweden Unduplicated Audience Print Web Mobile Unduplicated Reach: VG, Norway Print Newspaper: 1,356,000 daily readers Total Mobile/SMS: Unduplicated Web Site: 58,000 daily readers Daily 926,000 daily readers Coverage: 1,847,000 (47% of population) Duplicated Audience Print Web Mobile Duplicated Reach: Asahi Shimbun, Japan Emerging models to manage audiences Pricing Value Tiers Light Medium Heavy Allow 30 free Annual online Subscriber to print FT.com articles per subscription newspaper month to be £100/year Maintain average consumed free daily rate of £1.00 Single-copy buyer – lower than single-copy price of print newspaper Increased from £0.30 to £1.30 “What our business will be about going forward is the skillful management of the slow decline of the printed product and the accelerated growth of the internet.” -- John C. Mellott, Publisher, Atlanta