Why are newspapers going broke?

In a recent report from the Pew Research Center, The State of the News Media 2013, it states that 60% of the American population had heard “little to nothing” about the financial problems besetting news organisations. The Americans aren’t alone; most people around the world are unaware of the “broken newspaper model” and the search for a new income stream.

So to the young and uninitiated, here are the facts about newspapers and why they’re going broke.

Prior to the Internet newspapers made 90% of their money from classified advertising. If you wanted a job, car or house then you had to buy a newspaper because nowhere else advertised such things.

It’s the revenue generated from advertising that pays the salaries, rent, electricity, telephone, transportation costs, and any other expenses associated with running a newspaper. (The actual price of a newspaper barely covers the cost of the paper and ink.)

When the Internet arrived many advertisers moved their business online because it was cheaper and reached a wider audience. It’s estimated that newspapers have lost over 90% of their advertising revenue to Google, Yahoo and other websites. Newspapers now advertise online, however, they left their run too late and are now having trouble competing in an already established online market. For every dollar a newspaper loses in print advertising they gain less than 10c in online advertising, which is catastrophic. The outlook is bleak.

In the last five years over 200 newspapers around the world have closed or been forced to shut down. Tens of thousands of journalists have lost their jobs.

Investigative journalism, which is expensive to produce, has always been subsidised by other sections of the newspaper that were cheap to produce and which attracted additional advertising, such as the sports section, magazine features, home life, gardening etc. With the loss of advertising revenue, newspapers can no longer afford to fund investigative journalism because it’s not profitable. This is one of the reasons why broadsheets now produce more opinion pieces because they’re cheap to write.

Why newspapers are important

We can take the view that it’s not our problem but that would be short-sighted. The loss of newspapers affects us all. The Irish statesman, Edward Burke, once said “In order for evil to flourish, all that is required is for good men to do nothing”.

Newspapers play an integral part in keeping those in authority accountable to you and me—the general public. They report crime, political corruption and corporate wrongdoing. They are also the voice of the tired, the old, the weak and the young. And they are the custodians of free speech, something dear to us all, particular Americans who have based their First Amendment on it.

It’s no coincidence that corruption flourishes in countries where a free press is forbidden. Conversely, countries with many newspapers have a strong voice, greater diversity and fiercely defend their right to freedom.

The Pew report also goes on to state, “In Washington, the news organisations have drastically reduced their coverage of the federal government and some of its most visible departments, such as State, Defense, Justice and Treasury. For instance, in 2003, 23 reporters covered the Pentagon. Seven years later, 10 did. During the same period of time, reports covering the State Department dropped from 15 to nine. Financial pressures also have led to a sharp reduction in the number of reporters who travel with the president in the United States and abroad”.

When one newspaper closes there is one less voice speaking on our behalf. When thousands of journalists lose their jobs then our collective voice diminishes as a whole.

Learning from environmentalists

Let’s not be ignorant, the digital revolution has brought with it much in the way of technology and freedom. But are we sacrificing one freedom for another? What is the ultimate price?

If newspapers are to survive then we must pay for quality news, and an education program must be put in place outlining the reasons why.

Converting Gen Y (1976–1999) into paid subscribers after 18 years of free news will be a challenging task. They are the first generation never to have bought a paper. For them, news has always been online and free. And as the Pew research indicates, they’ve never been educated as to why they need to start paying.

Gen Z (2000–2013) the true digital natives were each born with an iPad in their hands. Circumventing a newspaper’s paywall won’t prove too difficult a task for this group as they’re all gifted technicians. And based on Gen Y’s aversion to paying for news there is nothing to indicate that Gen Z are about to reverse the trend.

Environmentalists got it right when they started educating the very young as to the issues that faced our planet. That strategy has now paid off and it’s one newspapers can learn from. Education must be part of a newspaper’s sustainability plan. To not have such a plan is both reckless and irresponsible.

Forming a consortium

The good news for newspapers is that the tutoring industry is a new global economy worth an estimated US$100 billion. Broadsheets can enter the lucrative education market by turning a by-product, 5W (who, what, when, where, why) into a digital teaching tool that can be used to gain market share and access to the 12-18 year-old demographic, which prefer to frequent high click-bait celebrity news sites.

5W presents newspapers with an opportunity to engage with a younger audience by providing them with a much sought after commodity. As a consortium, operating from the one platform, the top 25 newspapers could each supply one news link a day without giving away content. As a collective group it would be the largest supplier of 5W links in the world.

5W is a 100% by-product of news production with a cost factor of zero. Repacked as a primary product it provides news organisations with a new audience and demographic. As a free resource and supplier of both quality journalism and 5W drills it would be a highly sought after teaching tool used in schools around the globe.

The US, UK and Australia have a combined high school audience of over 30 million students—a pipeline that runs into perpetuity. Add English speaking India, Pakistan, Hong Kong, China, Canada and Singapore, and the number exceeds 100 million. And every one of these students has to master the art of essay writing. Who better to teach them than newspapers?

With a captive audience of high school students for six years, broadsheets have an opportunity to build a relationship with students and educate them about the importance of investigative journalism. Upon leaving school and gaining full time employment the desired outcome is, “Which newspaper should I subscribe to?” and not, “Why should I pay for news?”

Newspapers: a digital tool in every classroom

Students may not read newspapers but they know they exist. They see them in coffee shops, service stations and news agencies around the country. However, it won’t be for much longer.

It’s estimated that within the next 10 years newspapers will cease printing and become digital entities only. Once this happens all communication with a younger audience will be lost. The last bus will have left the station.

Add to that mix 44% of Australian teachers who are over the age of 50 and due to retire in the next decade. They will be taking with them an appreciation of quality journalism and its role in society. Their younger colleagues won’t have the same loyalty to the older established news brands.

The loss of newspapers won’t be mourned by a younger generation who has never read them nor had any reason to migrate to their online sites, instead preferring the titillating, high click-bait news aggregators, which are launching daily and in vast quantities.

Where exactly are the future subscribers of newspapers going to come from? Scarborough Research reports some 59% of ages 18-34 read newspapers in print or online during an average week. All very well and good, but how many of them are paid subscribers? If you stand at a train station handing out free muesli bars you’re guaranteed a 100% take-up. Getting consumers to part with cash however, is another matter.

The published take-up figures for paywalls aren’t broken down into age groups. The question no one seems to want to answer is what will happen when those 50 and 60 year-olds eventually move on to that big reading room in the sky? Will their news subscriptions be taken up by Gens Y, Z and A?

The Internet, which is still in its infancy, has managed to inflict a near fatal body-blow to the news industry. Fifteen years ago companies such as Google, Yahoo, Facebook and Twitter weren’t in existence and yet they are now a large part of the digital space in which we operate. Who could have predicted such a thing? Nostradamus certainly didn’t.

Navigating the next decade will be a challenge for all news organisations, which is why an educational program is now a necessity.

While no one has all the answers we do know that the tutoring industry is a new global economy worth an estimated US$100 billion. We also know that the news industry is the only producer of 5W: a highly prized commodity for those wanting to learn essay writing. It therefore makes sense to bridge the two.

A consortium would not only connect newspapers with a younger audience but also provide them with an opportunity to showcase their value, and educate students about the importance of free speech and why we need to protect and defend it.

People won’t support a cause they know nothing about. If 60% of the American population is unaware of the problems that plague newspapers, then now is probably a good time to start educating them.

5W isn’t a solution for all things that beset news organisations, but it’s a start. And a mutually beneficial one at that.