Tuesday, June 22, 2010

Media: Changing media landscape not without risks

By IDN Media Watch

Republished courtesy IDN-InDepth NewsAnalysis

PARIS (IDN) – A new report has confirmed that the changing global media landscape offers fresh opportunities and is, at the same time, fraught with risks that might jeopardize democracy.

The report provides an insight into the international newspaper market and its evolution, with particular emphasis on its economics, the development of online news, related opportunities and challenges and policy approaches.

Analysing the evolving newspaper publishing industry, its economics and the downturn, the report of the Organisation for Economic Cooperation and Development (OECD) says:.

After very profitable years, newspaper publishers in most OECD countries face declining advertising revenues, titles and circulation. The economic crisis has enlarged this downward development.

About 20 out of 30 OECD countries face declining newspaper readership, with significant decreases in some OECD countries. Newspaper readership is usually lower among younger people who tend to attribute less importance to print media.

The regional and local newspapers are particularly affected and 2009 was the worst year for OECD newspapers, with the largest declines in the United States, the United Kingdom, Greece, Italy, Canada, and Spain.

Employment losses in the newspaper industry have intensified since 2008 particularly in countries such as the United States, Britain, the Netherlands and Spain.


"However, large country-by-country and title-by-title differences and the data currently do not lend themselves to make the case for 'the death of the newspaper', in particular if non-OECD countries and potential positive effects of the economic recovery are taken into account," says the report released on June 16.

The highlights of the report on the economics of the newspaper industry are:

On the revenue side, the global newspaper publishing market derives about 57 per cent of its revenues from advertising. The reliance on advertising is extremely high in countries such as the United States.

On average, online advertising only accounted for around four per cent of total newspaper revenues in 2009, and suffered an acute decline. In general, the online revenues of newspapers are miniscule in comparison to total revenues and online revenues of other digital content industries.

On the other hand, costs unrelated to editorial work such as production, maintenance, administration, promotion and advertising, and distribution dominate newspaper costs. These large fixed costs make newspaper organisations more vulnerable to the downturns and less agile in reacting to the online news environment.


About online news: the report says:

In some OECD countries, more than half of the population read newspapers online -- up to 77 per cent in South Korea -- but at the minimum 20 per cent read newspapers online. The willingness to pay for online news remains low.

For the most part reading news online complements other forms of news reading. Most surveys show that active offline newspaper readers tend to read more news online. Countries such as South Korea where offline newspaper reading is less popular than online newspaper reading are the exception.

While younger age groups are much more active online news readers, it is usually slightly older groups -- 25-34 year-olds -- who are most active in most OECD countries.

"Despite these findings, the share of people who only read online news is likely to grow rapidly with new generations who start using the Internet early in life. The real concern is that a significant proportion of young people are not reading conventional news at all," says the report

The report points out that:

In all OECD countries, Internet traffic to online news sites has grown rapidly. About 5 per cent of all Internet visits are related to reading news online, which is a conservative estimate.

More recently newspaper websites have seen strong growth in their own pages, with large newspapers reporting several million unique visitors to their pages per month.

Search engines and their news services are very important in terms of referring Internet traffic to other online news sources.

The future of news creation and distribution holds out both opportunities and challenges because the impacts of the changing media landscape on news are pulling in two opposite directions.

"One extreme is that online and other new forms of more decentralised news will liberate readers from partisan news monopolies which have tended to become more concentrated and to dominate the production and access to news," says the report.

It adds: "The other extreme is that the demise of the traditional news media is with us (partially caused by the rise of the Internet), and with it an important foundation for democratic societies is at risk."

Discussing business and policy issues, the report says: "Given the central role of news for democratic societies, the evolutions of news creation and distribution are a matter of public interest. The question is whether and how the production of high-quality and pluralistic news content can be left to market forces alone."

Some OECD countries have resorted to short-term emergency measures in order to financially help the struggling newspaper industry. At the same time, the question is currently being debated what potential roles government support might take in preserving a diverse and local press without putting its independence at stake.

Support measures and topics being debated include: (i) the improvement or intensification of existing state support policies (direct or indirect subsidies) and an extension to online news providers; (ii) new approaches to the protection of newspaper content, (iii) the relaxation of competition and media diversity laws; (iv) the role of public broadcasters; and (v) the reliability and governance of online news.