No More Free News for All? Merja Hannele Myllylahti 2015 School Of
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No more free news for all? A study of how the business models of APN and Fairfax have evolved towards paywalls Merja Hannele Myllylahti 2015 School of Communication Studies, Faculty of Design and Creative Technologies A thesis submitted to the Auckland University of Technology in fulfilment of requirements for the degree of Doctor of Philosophy (PhD) TABLE OF CONTENTS List of tables, graphs and figures v-vi Attestation of authorship vii Dedication viii Acknowledgements ix Abstract x-xi Chapter 1: Introduction 1-7 1.1. Chapter overview 7-9 1.2. Theory and methodology 9-11 1.2.1. Rationale and scope of the study 11-15 1.2.2. Method and main research questions 15-20 1.2.3. Data collection and limitations of method 20-24 1.3. Case studies 24-26 1.3.1. Case 1: Trans-Tasman APN News and Media 26-29 1.3.2. Case 2: Trans-Tasman Fairfax Media 29-32 1.3.3. Case 3: NBR and AFR 32-36 Chapter 2: The critical political economy approach and key concepts 37-46 2.1. Conglomeration and commercialism of media 46-53 2.2. Commodification of news content and news audiences 53-62 2.3. Digitalisation and commodification of news work 63-66 2.4. Financialisation of media corporates 67-74 2.5. Internet, social media and the public sphere 74-83 i Summary 83-85 Chapter 3: Decline of traditional newspaper revenue models 86-86 3.1. Shrinking print revenues 86-92 3.2. Slowly increasing digital revenues 93-95 3.3. Digital news consumption and delivery 96-98 3.4. Job cuts and outsourcing 99-101 Summary 101-102 Chapter 4: Online news and business models 103-104 4.1. Searching for a sustainable business model 104-105 4.2. Earlier academic research and examples 106-113 4.2.1. Hybrid, online-only and digital native 114-117 4.2.2. Hyperlocal news sites 117-120 4.2.3. Digital subscriptions, paywalls 120-126 4.2.4. Crowdfunding 126-128 4.2.5. Non-profit, philanthropy and trust models 129-132 4.2.6. State support and public broadcasting models 132-135 4.3. Business models, democracy and society 136-138 Summary 138-141 Chapter 5: Ownership structures and the corporate economies of APN and Fairfax 142-145 5.1. Evolving ownership structures 146-152 5.2. Market capitalisation and share price 152-157 5.3. Revenues and profits 157-162 5.4. Debt and investments 163-169 ii 5.5. Print and online readership 170-176 5.6. Commodification of online news 176-181 5.7. Digital revenues 2011-2013 181-188 5.8. Newsroom structures and news work 188-193 5.9. Breakdown of APN’s and Fairfax’s commercial model 193-205 Summary of findings 205-211 Chapter 6: Toward a critical political economy of paywalls 212-212 6.1. Financialisation, digitalisation, and commodification 213-218 of news 6.2. Paywalls and news commodification: public sphere 218-225 considerations 6.3. Paywalled content of the NBR and the AFR: 225-232 a content analysis 6.4. Trans-Tasman comparisons: paywall issues in 232-236 Australia and New Zealand Summary 236-239 Chapter 7: Summary of findings and conclusions 240-244 7.1. Summary of chapters and answers to the main research questions 245-258 7.2. Concluding remarks and future research priorities 258-264 References 265-282 Appendices 283-291 Appendix 1: List of annual reports analysed 283 Appendix 2: APN and Fairfax revenue profiles 2004-2013 284 Appendix 3: APN and Fairfax ownership 2004-2013 285 Appendix 4: Fairfax and APN newspaper circulation New Zealand 286 iii Appendix 5: Circulation of The Age and The SMH 287 Appendix 6: Content study coding sheet 288-291 iv List of tables, graphs and figures Tables Table 1: APN main newspapers in New Zealand and Australia 27 Table 2: Fairfax leading newspapers in Australia and New Zealand 31 Table 3: Subscription packages of NBR and AFR per year AUD$ 34 Table 4: Fairfax largest shareholders 2013 149 Table 5: Fairfax substantial shareholders 2013 149 Table 6: APN largest shareholders 2013 150 Table 7: APN substantial shareholders 2013 150 Table 8: Major investments and divestments by APN in 2004-2013 168 Table 9: Major investments and divestments by Fairfax in 2004-2013 169 Table 10: Digital packages of Fairfax’s general newspapers AUD$ per month 179 Table 11: Comparison between Fairfax and APN business indicators 210 Graphs Graph 1: Newspaper revenue structure in the US 2013 87 Graph 2: Print advertising revenue in the US 90 Graph 3: Australian newspaper industry revenue 2002-2012 91 Graph 4: Circulation of New Zealand newspapers in 2001-2011 92 Graph 5: Fairfax financial ownership 2004-2013 147 Graph 6: APN financial ownership 2004-2013 151 Graph 7: Fairfax share price 2005-2013 154 Graph 8: Fairfax market capitalisation 2005-2013 155 Graph 9: APN share price 2005-2013 156 Graph 10: APN market capitalisation 2005-2013 156 Graph 11: APN total revenue 2004-2013 158 Graph 12: APN profit/loss 2004-2013 159 Graph 13: APN publishing income split in 2013 159 Graph 14: Fairfax total revenue 2004-2013 160 Graph 15: Fairfax profit/loss 2004-2013 162 Graph 16: Fairfax publishing income split in 2013 162 Graph 17: APN total borrowings 2004-2013 165 v Graph 18: Fairfax total borrowings 2004-2013 165 Graph 19: Circulation of The NZ Herald and The Dominion Post 1998-2013 172 Graph 20: Net paid sales of The Age and The SMH 173 Graph 21: APN and Fairfax newspaper readership in New Zealand 2013 174 Graph 22: Stuff and The NZ Herald online readership 2005-2011 174 Graph 23: Fairfax digital subscriptions 2013-2014 180 Graph 24: Fairfax group’s digital revenue 2011-2013 (including Domain) 183 Graph 25: Fairfax news revenue sources in 2013 184 Graph 26: APN digital revenue 2011-2013 185 Graph 27: APN news revenue sources in 2013 186 Graph 28: Fairfax revenue structure 2013 187 Graph 29: APN revenue structure 2013 188 Graph 30: Fairfax employee numbers - 2008-2013 190 Graph 31: APN employee numbers - 2007 & 2013 191 Graph 32: Locked content on nbr.co.nz August-September 2015 227 Graph 33: Locked and free content on nbr.co.nz August-September 2015 228 Graph 34: Locked content on afr.com September-October 2015 229 Graph 35: Locked and free content on afr.com September-October 2015 230 Figures Figure 1: How the business models of Fairfax and APN evolved in 2004-2013? 194 vi Attestation of authorship I hereby declare that this submission is my own work and that, to the best of my knowledge and belief, it contains no material previously published or written by another person (except where explicitly defined in the acknowledgements), nor material which to a substantial extent has been submitted for the award of any other degree or diploma of a university of other institution of higher learning. ____________________________________________ Merja Hannele Myllylahti Auckland, June 2016 vii Dedication I dedicate this thesis to my parents. First, to my mother Riitta Myllylahti because of whom I became a journalist. Secondly, to my father Eino Myllylahti who taught me not to be afraid of powerful people. I also want to dedicate this thesis to all the newsroom workers at APN and Fairfax who have lost their jobs. viii Acknowledgements I would like to thank my supervisor Dr Wayne Hope at Auckland University of Technology. Wayne supported me with this process, and I am grateful for his constructive criticism, guidance and encouragement. Wayne’s theoretical knowledge was helpful for my thesis. I would also like to thank Dr Verica Rupar at AUT for her sound advice and support, especially when it was badly needed. I thank my husband Paul Davidson for providing healthy competition as we were both racing to finish our theses at the same time. Kiitos. ix Abstract This thesis critically examines how the business models of trans-Tasman media corporations Fairfax and APN evolved towards online news commodification – paywalls – from 2004 to 2013. The research analysis, grounded in the critical political economy of communication tradition, examines how the digitalisation of media, and financialisation of media ownership, contributed to the commodification of online news content. The research is exploratory in nature, and utilises case study, document and content analysis methods. The relevant data were mainly gathered from Fairfax’s and APN’s 2004-2013 annual reports, and other financial documents. Digitalisation fundamentally changed the patterns of news production, consumption and delivery, and this affected APN’s and Fairfax’s print reliant business models. In 2012, their revenue structures entered crisis as their ability to commodify news substantially weakened. The companies gained in financial ownership, and this intensified their profit imperatives. As a consequence, both companies launched plans for online news commodification. In 2013, Fairfax introduced paywalls for its Australian general newspapers The Age and The Sydney Morning Herald. This thesis finds that Fairfax and APN failed to transform their revenue models from a print to a digital environment from 2004 to 2013. In 2013, only 14 per cent of Fairfax’s, and three per cent of APN’s total income came from digital sources. Additionally, in 2014 only two per cent of Fairfax’s total income came from paywalls, and therefore the findings confirm that they don’t offer a viable business model for the company in the long term. There were, however, differences in APN’s and Fairfax’s paywall strategies. This suggests that multiple factors, including the size and structure of a media market need to be considered when evaluating news publishers’ paywall strategies.