On the future of newspapers

GWA[By Gisèle Wertheim Aymés] First National Bank CEO Michael Jordaan unwittingly sparked a public debate on the future of newspapers recently. Writing in the bank’s weekly e-mail newsletter, he asked employees whether they’d be willing to help the company save more than R1m/ year — and spare the environment — by reading news online instead of having it subscribe to newspapers.

Business Day editor Peter Bruce picked up on this communication and challenged Jordaan’s views in defence of his paper’s print income stream.

Of course newspaper proprietors are not the only media owners who have to consider how they are going to deal the growing power of the Web. Every media owner — whether in television, radio, out-of-home, cinema or direct — has to review his or her business model and figure out how to harness new technologies to create conversations with customers.

Online penetration in SA is still tiny compared with more developed nations — around 5% against the 25% global average. And though mobile penetration is pervasive, the use of the mobile device as the primary means to download high-end content is still limited to affluent consumers who have the handsets that allow them this indulgence.

Advertisers in SA are still pumping billions of rand into television, print and radio. Only 3% of ad spend goes to the Web. But this will change as cellphone rates come down and once there is more equitable and affordable access to broadband. It’s not a question of if. It’s a matter of when.

Delivering the keynote address at the recent Newspaper Association of America’s annual conference, Google CEO Eric Schmidt said newspapers will “have to get used to the idea that they are not just generators of trusted, professional content, but also aggregators of the new kinds of information the Web has enabled — collectively edited knowledge structures like Wikipedia, and user-generated information like blogs, images and online video”.

For Schmidt, the consumers are in control.

News Corp founder Rupert Murdoch has also added his voice to the debate. An octogenarian and self-proclaimed digital immigrant, and arguably the most powerful newspaper proprietor in the world, Murdoch told financial analysts at a Goldman Sachs conference that The Wall Street Journal, owned by News Corp, would soon begin charging for access on mobile devices.

Murdoch predicted that print newspapers would be extinct within 20 or 30 years, replaced by portable electronic readers.

“All the new digital enhancements won’t cure newspapers’ problems overnight,” he said. “More people will be buying their newspapers on portable, flexible devices instead of crushed trees. It won’t be soon. It could take 20 years. But there will be no paper, no printing plants, no unions.”

It’s clear that newspaper publishers — and content producers more broadly — are struggling to come to terms with the changes.

Look at the Associated Press. The wire agency announced in September that it intended to try to control the dissemination of its news content. Commentators took this to mean that AP was putting itself on a collision course with Google, whose Google News service aggregates the world’s news sources.

AP’s decision was met with widespread disdain, with many suggesting its refusal to adapt to the demands of the Internet marketplace would result in its extinction.

I’m optimistic about the SA media industry’s ability to work all this stuff out before it’s too late. SA has the luxury of watching the rest of the world go through these pains and to formulate a response. We still have a small, albeit fast-shrinking window of opportunity to put strategies in place to deal with the challenge.

There is evidence of leadership in SA media circles. Kagiso Media, for example, has announced the formation of a new division, Kagiso Media Convergence, to drive the strategy towards new media.

And you must know there’s hope when an old-school publishing company like Caxton announces its intention to invest in digital channels.

Then there’s Naspers, of course, which has shown strategic digital prowess, developing Web and mobile assets and investing in Internet ventures around the world.

I’m confident that the SA media industry will find a way to make it work and avoid the kind of “denialism” that has led in the death of newspapers and media outlets elsewhere.

I was amused at a recent blog post by Arianna Huffington’s about the Web denialism she says is still prevalent at some big US news groups.

Huffington, founder of The Huffington Post — an early new-media breakaway and one of the real success stories of online publishing — wrote in a blog post that the “key question is whether those of us working in the media (old and new) embrace and adapt to the radical changes brought about by the Internet or pretend that we can somehow hop into a journalistic Way Back Machine and return to a past that no longer exists and can’t be resurrected.

“As my compatriot Heraclites put it nearly 2 500 years ago: ‘You cannot step into the same river twice.’”

  • Gisèle Wertheim Aymés is head of media at First National Bank
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  • http://www.sandboxsavant.com justinspratt

    good piece. love the Schmidt quote. sums it up perfectly.

  • http://www.clivesimpkins.com Clive Simpkins

    Good article. Hope Michael Jordaan reads it! ;-)

  • http://www.drivemagazine.co.za Russell Bennett

    The Web is the Way, no doubt about it. Wish it would happen faster of course – did you know it takes the equivalent of half an average-sized tree to print a single copy of a 100-page glossy mag? That’s just plain unnecessary, not to mention the toxins in the chemicals used…
    .
    Nice article, just up that 20-year timeframe a tad please.

  • gisele wertheim aymes

    Latest news in, Online Advertising in UK surpasses Television. This is a real milestone in the growth and influence on the web. Considering SA only spends 3% of current ad spend online, you can see the future potential for SA. http://www.guardian.co.uk/media/2009/sep/30/internet-biggest-uk-advertising-sector

  • http://www.leonjacobs.com Leon

    I can see a day, not too far from now, when we’ll be buying blank sheets of news print for lining our birdcages, protecting our floors from paint, and for rolling up to swat flies.

  • http://twitter.com/Johan12 Johan Nel

    All the trends are definitely heading in the right direction for digital. All the graphs we see and talk about always shows the positive hockey stick effect. I am just worried that more audience and more online users doesn’t mean more money online. Or if it does, it is a big challenge for publishers to actually make money and be profitable online. The world has hit its reset button and traditional is losing faster than we can come up with ways to replace that loss. CPM is not cutting it, e-commerce might be the way, but we have a lot to figure out in a short time. I would love to hear of examples where the online publishers are actually profitable? Currently the traditional print businesses support these digital divisions with the hope that it will be the holy grail. We need to stop hoping and actually build something sustainable.

  • Alan

    Of course whilst these media groups are on about covering the costs of quality content, they themselves are not putting that back into their staff or freelancers.
    Ie; one large media house slashed word rates by more than 50% for specialist writers and photographers, “take it or leave it”
    Yes, the advancement of digital brings great possibilitys, but it also leaves the door open for explotation. Something many of these media groups are guilty of.

  • http://www.skillsportal.co.za Alan Hammond

    Thanks for a great article. However I think the 5% penetration figure is outdated. Nielsen are reporting 7.7 million local readers to OPA member websites. If we take SA’s population as 48 million that’s 16% penetration!
    The more important point – that OPA Chair Adrian Hewlett often mentions – is that this figure is a little bigger than the total of people who pay income tax. So if you want to market to people who earn more than R60 000 per year internet penetration is 100%!

  • http://www.2b-marketing.co.za Ann Williams

    Since the days of ABIS (when I was involved in the idustry), the precursor of the OPA, I have been amazed at how the print industry still views the internet advertising space in almost the same light as the print media advertising space.

    When are the media buyers going to wake up to the fact that advertising online is no longer about eyeballs but rather about action. (See how Google and now FaceBook advertising has changed things.)

    Who cares if every single internet user in the country has at some stage seen a page that has been served by an OPA member! Quantity doesn’t count anymore – it’s ultimately about who clicks through and buys from you; rather than some airy-fairy (and expensive) exercise about who, in what income/age/geographic category might have caught a brief glimpse of your branding square somewhere on a page stuffed full of other banners and buttons.

    As an example let’s take a major national bank. It is much better if they got 10 000 viewers of a weekly property section with 500 who click on an ad placed there with 120 conversions into homeloan customers.

    To do this the bank should be far more interested in placing an ad, on only the pages in that specific section, that promotes a great homeloan product that they have – in preference to buying 500 000 impressions to a generic bank branding ad that are scattered throughout the site.

    Online advertising can be a fantastic tool in that you can get feedback so much easlier than you can usually do in print media; and one can also be so much more product specific. Online advertising allows you to go directly for results instead of only taking the first step of getting eyeballs on ads!

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