Nieman Foundation at Harvard
How to b-e-e of use: Signal Cleveland hosts second annual community spelling contest
ABOUT                    SUBSCRIBE
Oct. 10, 2013, 10:40 a.m.

The newsonomics of 10 ways we’ll judge 2014

This year’s been a struggle, and there are plenty of trend lines still headed in the wrong direction. Here are the ideas and developments to watch as the news industry moves into 2014.

At the World Publishing Expo held in Berlin this week, two CEOs of major international news companies — Andrew Miller of The Guardian and Mathias Döpfner of Axel Springer — were asked a question: On a scale of one to 10, how far along were there companies in their digital transition? How far have they traveled on the road to where they need to be?

Miller: 3. Döpfner: 4.

At the conference, held by WAN-IFRA, Döpfner summed up the chances of all this activity producing a happy result in a single word: “Perhaps.”

As the news industry approaches 2014 — wary and uneasy, its annual budgeting exercises by now a familiar form of torture — that “perhaps” sums up so much.

Over the past three years, new hopes and strategies have been fueled by the new knowledge that readers will indeed pay — and sometimes a lot — for digitally delivered content. But the deepening print ad downturn has allowed no one to enjoy that lesson.

You can sum up 2013 in news publishing in a single word: sobering.

So as that budgeting starts to take out more staff and change the nature of how news companies are run, let’s take a look at the 2014 soon to come. Let’s look at the 10 of the most impactful facts that look ready to shape the year ahead:

  1. The print ad decline continues unabated. As recently as this year, news publishers expected the drop in print advertising to flatten out. Marketers’ rush to shift print dollars and euros to digital would slow a bit as advertisers found some balance in their spending. A recovering economy would help lift their print boats a bit.

    It hasn’t happened. Quite the opposite. If anything, we’ve seen an acceleration of the transition; European publishers are telling me of double-digit print declines, while U.S. ones are struggling to keep their losses in the high single-digit range. Most importantly, they now believe next year will just offer more of the same. Negative print revenue is a foregone conclusion in 2014 budgeting; the only question is how much.

    The big question: If it took almost a decade for news publishers to lose half of their print ad revenue, might it take just half a decade to lose another half? The astounding toll so far: The global newspaper industry is down $51 billion a year in total revenues from 2006, having lost 39 percent of its take.

  2. Consolidation and layoffs are the order of the day. We’ve seen more than a half decade of serious cost cutting. Only more cost cutting will preserve the relatively meager 5 to 10 percent profit margin many publishers now crank out, down by two-thirds or more from good old days. So in anticipation of continuing print ad losses, we’re seeing new rounds of layoffs. From Gannett to Reuters to Sao Paulo, announced and mostly unannounced, newsroom staff reductions continue.

    We’re also seeing lots of new consolidation, from Digital First’s Thunderdome and Gannett in the U.S. to Local World in the U.K. and Funke Media and Madsack in Germany. Work-saving consolidation — putting together a common set of nation/world pages, for instance, and sharing it across groups — can make great sense, but it’s all in how well it is done. 2014 will show us that on several continents. The dean of the old clusterers, MediaNews builder Dean Singleton, must be amazed at the clustering chops of this new generation of consolidators.

  3. Long-term private investors enter the U.S. newspaper market. It’s a parade from public to private. From Tampa to Orange Country and San Diego, and now Boston to D.C. — and with Tribune newspapers still hanging in limbo — we see longer-term focused private investors taking over. (Just this morning, Aaron Kushner’s Orange County operation announced it was buying the Riverside Press-Enterprise from A.H. Belo, shifting it from public to private ownership.)

    What’s crystal clear is that trying to meet Wall Street’s demands for quarterly numbers over the next three years will require gymnastic skill, given all the transitions and needed investments still unmade. The big question for 2014: Will we see these new private owners pump breath into their companies, taking a longer-term view, and laying down a multi-year path to revival? Will they, as 2013’s most famous new newspaper owner has promised, provide runway?

  4. Jeff Bezos Amazonizes The Washington Post. Will he or won’t he? Will Bezos send occasional emails and text messages to the Post leadership, or will his Bezos Expeditions venture troops — who have already visited the Post and started poking around — exert real influence? The mind reels at all the Amazon-like potential of modernizing a strong news brand like the Post’s with state-of-art analytics, product development, and customer relationship management. 2014 will be disappointing if the Post doesn’t start to move profoundly to produce new models for itself — and the industry worldwide.
  5. Paywalls 2.0 debut. Yes, I know that a lot of 1.0 paywalls are still rolling out. About two-thirds of U.S. dailies haven’t yet taken the plunge. While northern Europe has made a number of preparatory moves in 2013, 2014 will be the year paywalls kick in there, and start to populate southern Europe.

    But the next generation of paywalls will, as New York Times Co. CEO Mark Thompson puts it, “work the engagement curve.” The Times will debut several niche paid digital products six months from now, and we’ll see many more efforts to find new ways to extract money from digital news content. We’re finally moving beyond sales of omnibus subscriptions only — take ’em or leave ’em — to a world of delivering the best, timely content to the right reader at the right time and being paid for it. 2014 will offer a beginning.

  6. We’re on the brink of mobile-mainly. News companies worldwide report around a third of their traffic is coming from smartphones and tablets. Within a couple of years, that traffic will amount to more than 50 percent of all news traffic, as it already does at certain moments of the news cycle. (The BBC recently recorded its first mobile-mainly weekend.) How prepared are news publishers to take advantage of this big shift? In product development, the national/global players have a lengthening lead on most local publishers.

    The big dilemma, as 2014 move closer to 40 percent mobile audience: mobile advertising. Guess who already dominates there? Google, which pulls in 53 percent of mobile ad dollars in the U.S. The runner-up: Facebook.

  7. New strategies will be tested. We’re bound to get some sense of how the major strategies put into local markets this year are working. Think Advance’s Slim-Fast three-day-a-week home delivery plan is a good or bad idea? Let’s see — or least divine, since Advance is privately held — the results. How about Aaron Kushner’s major reinvestment in southern California? What’s the payoff in circulation, reader revenue, and advertising? As DFM’s Thunderdome rolls out for a full year, will it be a hit or a miss?
  8. Selling more stuff adds up to more, or less. On the reader side, the revolution in reader psychology and payment has been fast and furious. On the ad side, publishers who used to sell advertising now sell so much more: digital services, events, sponsorships, content marketing, and education, to name the top of the list. Which of these will excel at replacing lost ad revenue and margin? 2014 will tell us a lot, as major companies test and benchmark against each other.
  9. Local commerce becomes a more nuanced battleground. We’ll see if Patch really regroups and reinvests in the halfway-there success that Tim Armstrong has described — or if it’s left gurgling, further stretched in resources and on its journey to the digital museum. While the moves into local digital services have gotten far less attention than Patch, that’s where the action is: thousands of sales people are selling marketing services to tens of thousands of small and medium businesses. Hearst, Gannett, Gatehouse, Digital First, and McClatchy are among those clawing for new business, to replace lost ad dollars. 2014 will be a pivotal year in toting up how real, and big, that business can be.

    We’ll see the rollout of the son-of-the-Yahoo Newspaper Consortium. The Local Media Consortium has just announced itself, after a long formation. At announcement, though, no new partnership relationships were bannered, unusual in the announcement trade. We’ll see whether such a consortium, with its own changing cast of publisher members, is as relevant in 2014 as it was when The Newspaper Consortium inked its five-year-plus deal with Yahoo way back in 2006. A lot has changed in ownership and the marketplace.

  10. The news crisis continues. It’s easy to become inured to journalism loss. It’s mounting every day across the world. While it can range from upsetting to life-changing to energizing (for the lucky) for those laid off or bought out — for readers, it’s mainly a tale of loss. They know less about more, at a time when democratic societies are struggling and often failing to deal with fundamental issues before them. As we reshape the business of news, we’ve got to ask better questions about how those reshapings affect what readers get — and what they don’t.

Photo by Artis Rams used under a Creative Commons license.

POSTED     Oct. 10, 2013, 10:40 a.m.
Join the 60,000 who get the freshest future-of-journalism news in our daily email.
How to b-e-e of use: Signal Cleveland hosts second annual community spelling contest
“Listening is great, and talking to community members is great, but we also have to figure out how to be of use.”
How South Africa’s largest digital news outlet plans to cover the chaotic 2024 election
“There is definitely anticipation in the air of change — not radical change, but some change.”
Postcards and laundromat visits: The Texas Tribune audience team experiments with IRL distribution
As social platforms falter for news, a number of nonprofit outlets are rethinking distribution for impact and in-person engagement.