Newspapers will survive in long term, says PwC study

Tags: advertisers | newspaper | PricewaterhouseCoopers | survive

Written by Emily Tan

Thursday, 30 April 2009 11:43

But survival rests on agility and willingness to adopt new business models and content delivery platforms

The challenges faced by print which are being exacerbated by the current economic downturn has seen the demise of many newspapers. However, a new study by PricewaterhouseCoopers (PwC) concluded that newspapers have a long-term future and will co-exist with other media.

But it added that the survival of newspapers will depend largely on their agility and willingness to adopt new business models and content delivery platforms.

The conclusions of the study, carried out in cooperation with the World Association of Newspapers, were based on an online survey involving over 4,900 consumers in seven countries in Europe and North America, namely Canada, France, Germany, the Netherlands, Switzerland, the UK and the US. Additional input and research was included from Australia, India, Italy and Spain supplemented with industry reports, annual reports, and analysts’ reviews. From the industry side, the researchers conducted interviews with 30 leading newspaper publishers and 10 leading advertisers and media buyers around the world.

The report, titled Moving into multiple business models: Outlook for newspaper publishing in the digital age , examined the change of consumer behaviour with respect to their consumption of news content, and the response of newspaper publishers, advertisers, advertising agencies and media buyers to these changes.

One of the key points that emerged from the study is that if price were not a factor, and if their choice was restricted to paper, online, e-paper and mobile devices, 69% of respondents would pick traditional newspapers as their first choice for news consumption.

Twenty-nine per cent would make online sources their first choice, with the remaining 2% opting for e-paper or mobile devices first. The gap between traditional newspapers and online was, however, significantly smaller for younger respondents.
The study also said consumers placed “high value on the deep insight and analysis provided by journalists over and above general or breaking news stories”.

“Both consumers and advertisers have demonstrated a willingness to pay more for high value, topic-specific publications than they would for newspapers providing general news only,” wrote authors Marieke van der Donk and Marcel Fenez in the report’s executive summary. “There will be some casualties and losses of well-known papers along the way.”

The report also predicted that in future, “generic” editorial content would be syndicated and newsrooms would exist to create “tailored” content. Publications must evolve to meet the increased demands for specialised and tailored information, it said. Also, both consumers and advertisers were far more willing to pay for quality, specialised online content rather than general online content.

“Our consumer research indicated that consumers are willing to pay for this content, but newspapers need to develop strategies for monetising their content and intellectual capital,” said the report.

Interestingly, the two genres most in demand by consumers were finance and sports content. On average, financial readers were willing to buy financial online content for 97% as much as they would pay for a traditional paper. Meanwhile, sports fanatics would pay as much as 77% as they would for a traditional paper, for an online edition that focused on sports. The study said newspaper publishers should therefore leverage on the niche approach as an opportunity for future growth and provide targeted and relevant information across multiple platforms.

It also noted that a growing demand for specialised, targeted and relevant information is driving a move from mass markets to niche audiences, and pointed to the success of the Wall Street Journal and the UK’s Financial Times.

The study also showed newspapers are still major sources of news and information for consumers, with survey respondents listing almost equally television, the Internet (free and paid), and newspapers (free and paid) as their main source of news and information. Furthermore, all 4,900 respondents were willing to pay for general print news content.

This is not to say that newspapers should not make the move online, said the report. Over 60% of respondents were willing to pay for general online news. Furthermore, based on the report’s findings, a key future trend is the willingness of younger readers to pay for online content.

According to the report, newspapers have been able to earn readers’ trust and loyalty, thus giving them the opportunity to both lead and follow audiences as they migrate online and into the use of portable electronic media like mobile devices. “Indeed, with the core principles of deep analysis and trusted editorial, the medium is secondary to the brand,” said the study.

It also noted that although the rapid adoption of the Internet and mobile technology have created a market for mobile devices, especially for those under 35, they are low on the list of preferences for accessing information because of the difficulty of
reading content on these devices.

At the same time, the report recommended that newspapers capture the opportunity to tap into this younger audience by adapting and delivering content via multiple channels, including print and online. Ideally, publications should have a team of journalists who work within a multi-platform environment, creating and delivering content ranging from video to editorial copy.

Tailored, specialised content should be paired with a flexible and innovative marketing approach, it said. An Australian publisher interviewed by the researchers pointed out that news content providers should learn from the online music industry. “You used to have to buy an album for just two songs. Now you can buy just the two songs online. With newspapers, you buy the whole paper, but you may have only wanted the sports section.” In future, customisable product offerings that allow consumers to buy only what they want may be a necessary step for newspapers.

From the advertisers’ perspective, the study said niche content could provide increased return on investment on ad spend, a key advantage amidst the renewed focus on accountability in the economic downturn. It added that advertisers are also looking for greater accountability from the media they use, translating their mass spend into measurable results. It also said the current downturn would speed up the shift of ad budgets to more reliable and measurable media types.

Report co-author van der Donk concluded in a press statement that the prospect for newspapers is not all “doom and gloom”. “It is an exciting time to be part of the newspaper industry as it must continue to evolve to meet the requirements of its readers and their demands for ‘old’ world content delivered to them via ‘new’ world technology,” she said.

This article appeared on the Media & Advertising page, The Edge Financial Daily, April 30, 2009.

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