Department for Digital, Culture, Media & Sport Overview of recent dynamics in the UK press market April 2018 Mediatique Limited 65 Chandos Place London WC2N 4HG www.mediatique.co.uk DCMS: Overview of the Press Market Contents of this report Executive Summary ......................................................................................................................................... 4 1. Introduction ........................................................................................................................................ 7 Background ...................................................................................................................................................................... 7 2. Current market structure and players ................................................................................................. 11 Newspaper market structure and main ownership / business models ......................................................................... 11 News provision – TV and radio ....................................................................................................................................... 21 News consumption ......................................................................................................................................................... 29 The role of digital intermediaries in the consumption and dissemination of news ....................................................... 33 Contribution to editorial investment ............................................................................................................................. 35 3. Current dynamics in the regional and national press market ............................................................... 37 Drivers of change ........................................................................................................................................................... 38 Circulation trends ........................................................................................................................................................... 43 Online readership trends ............................................................................................................................................... 46 Advertising expenditure trends ...................................................................................................................................... 49 International perspective ............................................................................................................................................... 50 Supply-side responses .................................................................................................................................................... 53 4. Key challenges faced by the local, regional and national press ............................................................ 57 Implications of our analysis ............................................................................................................................................ 57 Lower propensity to pay for news online....................................................................................................................... 58 Print pounds vs digital pennies ...................................................................................................................................... 59 Platforms’ algorithms – lack of transparency................................................................................................................. 61 Monetisation difficulties in digital .................................................................................................................................. 61 Problems more acute for local and regional players...................................................................................................... 62 Rising costs ..................................................................................................................................................................... 65 Digital natives facing pressures ...................................................................................................................................... 65 5. Strategic responses available ............................................................................................................. 66 Pivot to pay / subscription online .................................................................................................................................. 66 Importance of registration and data .............................................................................................................................. 70 PAMCo and new user data sets...................................................................................................................................... 71 Innovation and collaboration with platforms (including use of aggregators) ................................................................ 71 Recourse to the BBC Local Journalism Partnership ........................................................................................................ 71 Consolidation and re-structuring ................................................................................................................................... 73 Co-operation / efficiencies in ad sales, printing and distribution .................................................................................. 74 Marketing services for SMEs .......................................................................................................................................... 74 Adjacent revenue streams (e.g., advertorials, B2B, betting, travel, financial services) ................................................. 74 Alternative ownership and distribution structures ........................................................................................................ 75 The limits of self-help ..................................................................................................................................................... 75 6. Conclusions ....................................................................................................................................... 77 A1. Annex 1: Glossary .............................................................................................................................. 79 A2. Annex 2: Additional methodological notes.......................................................................................... 81 Interviews with industry stakeholders ........................................................................................................................... 81 Modelling assumptions .................................................................................................................................................. 82 A3. Annex 3: Initiatives by digital intermediaries ...................................................................................... 86 Google – Digital News Initiative ..................................................................................................................................... 86 Facebook – The Facebook Journalism Project ............................................................................................................... 87 Apple – Apple News ....................................................................................................................................................... 87 1 DCMS: Overview of the Press Market Table of figures Figure 1 – The press industry in 2007, 2012 and 2017 ................................................................................................................................................................... 6 Figure 2 – Breakdown of weekly newspaper circulation, July 2017, and newsbrands advertising expenditure (£m), 2017 ........................................................ 11 Figure 3 – Total number of local and regional newspapers and market share by circulation, July 2017 ..................................................................................... 12 Figure 4 – Breakdown of local newspapers by frequency and distribution model, July 2017 ...................................................................................................... 13 Figure 5 – Top 10 local daily titles by average daily circulation, Jul-Dec 2017 ............................................................................................................................. 13 Figure 6 – Top 10 local free weekly newspapers by average daily circulation, Jul-Dec 2017 ....................................................................................................... 14 Figure 7 – Top 10 local paid weekly newspapers by average daily circulation, Jul-Dec 2017....................................................................................................... 14 Figure 8 – National weekday newspapers’ share of the market by circulation*, and readership** ............................................................................................ 17 Figure 9 –National Sunday newspapers’ share of the market by circulation*, and readership** ............................................................................................... 18 Figure 10 – National daily newspapers by quality cohort ...........................................................................................................................................................