x Abu Dhabi, UAESaturday 22 July 2017

Newspapers' last and best hope: the internet

Increasing reader engagement and content on the websites of news publishers will lead to greater distribution and discovery of articles - and to additional revenue.

During the New York newspapers' strike of 1953, citizens flocked to a Times Square stall that sold out-of-town papers. Ralph Morse / Time Life Pictures / Getty Images
During the New York newspapers' strike of 1953, citizens flocked to a Times Square stall that sold out-of-town papers. Ralph Morse / Time Life Pictures / Getty Images

Debates about the decline of newspaper readership have far too often focused on the "problems" created by the internet. In fact, the decline of print newspapers began more than half a century ago; for most developed economies in the West, newspaper circulation peaked in the 1970s.

It is generally agreed that most of this decline was because of competition - first from broadcast TV and then cable news. When TV became widely available, readers no longer had to wait 24 hours for the next morning's paper. Instead, on-demand, live news became the norm. This trend was further enhanced by the rise of the internet, which allowed rival news sources to compete on a day-by-day basis with the local paper.

While the internet has no doubt contributed to some degree to the decades-long decline in newspaper circulation, in today's debates it seems to bear a disproportionate amount of the blame. However, unlike the media that preceded it, the internet may in fact represent the newspaper industry's best chance to reinvent itself, providing opportunities for greater distribution and discovery of articles, as well as substantially enhancing newspaper revenue.

Consider that more than half of the cost of a newspaper's production today is in printing and distribution. As a good rule of thumb, the cover price of a physical newspaper in Europe pays for its production and distribution, while the editorial costs are covered by advertising revenue. These production and distribution costs are essentially eliminated by moving to online distribution, leaving more funds to contribute to the critical editorial functions.

Furthermore, once news is online, it can be indexed, accessed, and linked to easily, any time and anywhere. This means more people can access the news and view advertising impressions along with news stories, generating revenue for the publisher. Google is a powerful force in this value chain, sending more than 6 billion clicks per month to news sites around the world, generating hundreds of millions of euros in advertising revenue.

Of course, greater discoverability also means greater competition. A newspaper can no longer rely on a regional monopoly but must compete with other sources of news. To survive in this new era, newspapers must produce a highly engaging online experience for the reader - and, at the same time, must confront some stark facts around the differences of online and offline engagement.

Subscribers to physical newspapers spend about 25 minutes a day reading their papers. In contrast, the typical time spent on an online news site in the United States and United Kingdom is two to four minutes per day, about one eighth as much. Interestingly, newspapers also make about one-eighth of their advertising revenue from online advertisements. If readers spent as much time reading the online content as the offline content, ad revenue from online content would rise to something much closer to the offline revenue.

The crux of the problem is not, as is often said, simply about finding new ways for newspapers to make money. It is fundamentally about how to increase reader engagement on news publishers' sites.

Luckily, online news can be a rich reading experience. Ideally, it can provide the emotional immediacy of TV along with enhanced interactivity, custom content and the analytical depth of the printed word.

New devices can help to deliver these capabilities to readers. According to a recent report by the Pew Research Center's Project for Excellence in Journalism, 64 per cent of tablet owners access news on their tablets. If you look at the time-of-day pattern of online news readership on desktop devices, you will see that use is concentrated around business hours.

People glance at stock prices, sports scores or headlines between tasks, at coffee breaks or during lunch. Reading news on desktop computers is to a large extent a labour time activity.

The pattern for mobile phone access to news is spread more evenly throughout the day. People exhibit the same episodic consumption of the news on their mobile devices during work hours, but also browse the news during news and cafe visits.

Tablet use shows a rather different pattern: it peaks in the morning and evening hours. This is because tablets are primarily used for leisure-time reading. They show the kind of reading patterns that we have traditionally seen with print newspapers. A reader armed with both a mobile phone and a tablet becomes the ideal newsreader - someone who glances at the headlines during the day then digs in for an in-depth analysis during his or her free time.

Proposals to make it more difficult for readers to scan the headlines, sports scores and financial pages are bound to hurt, not help, newspapers. Such moves would ultimately lead to less engaged readers.

Rather than fight the internet, the newspaper industry would do well to play to its strength of enabling access any time, anywhere. If newspapers focus on creating great content, and make sure that readers can find it, they can increase engagement, enlighten their readers … and make some money in the process.

 

Hal Varian is the chief economist at Google