Monday, 7 June 2010

The slow death of the traditional newspaper

Graham Stewart, writing for Critical Reaction, explains the dire financial situation of the major newspapers, and considers Rupert Murdoch's paywall plan:
In 2007-08, pre-tax losses at The Times and Sunday Times reached £50 million. In 2008-09 they worsened considerably, to £87.7 million. Nobody - not even Rupert Murdoch - can continue to sustain this level of loss indefinitely.
The Guardian Media Group’s 2008 accounts show a pre-tax loss of almost £90 million. Its national newspaper division, Guardian News & Media – which includes the Guardian, The Observer and the immensely popular (and free) Guardian Unlimited website – made an operating loss of almost £37 million.
By contrast, the Telegraph Media Group’s £15.7 million pre-tax loss in 2008 may seem more encouraging. But really, if the country’s bestselling quality newspaper has been running at a significant loss, what hope is there for anyone else?
It would be interesting to see the results for the online segments alone. It won't be long before all but the most technophobic appreciate the benefits of softcopy, and the switch to electronic-only should provide huge benefits for the newspapers in massively reduced production and distribution costs.

At the same time, new devices like the iPad should make it easier for newspapers to make the switch from free online service to electronic subscriptions.

Stewart highlights the market-distorting role of BBC News, which is uniquely able to "levy a nationwide poll tax to fund its operations". He concludes (emphasis mine),

Instead of castigating Rupert Murdoch for charging Times readers a fraction of the price to read online what more than half a million of them are already happy to pay £1 a day to read on paper, we should accept that quality journalism has yet to find a viable alternative way of recouping its losses. It is ironic that many of those who criticise Murdoch for ‘dumbing down’ journalism now accuse him of creating a service which will be more exclusive, catering not for the idle gawper but for those who actually place a financial value on the news they read. In reality, his actions may prove to be what saves quality journalism. Otherwise the future will consist of the BBC and the blogosphere and nothing in between. And that cannot be sufficient for a pluralistic society.

Despite the inconvenience of paywalls, and the obstacles they present to casual linking, I'm inclined to agree with Graham Stewart. The blogosphere is still heavily reliant on the mainstream media for source material. We would certainly be in a worse position if the only British perspective on major events were provided by the BBC.


  1. UPDATE:

    I was hit today by the inconvenience of a paywall when following a link by Daniel Hannan to a piece he'd written for The Scotsman

    The paywall is especially annoying for publications like this, which I would never subscribe to. The same would apply to The Guardian.

    The ability to buy into a 'bundle' of online publications may help, and I would expect this option to emerge if the paywall concept takes off, but we would still see rival paywall blocks.

    It's a shame, because in any form of journalism it is important to get as close to the original source material as possible. Blogging is no exception. Indeed, because blogging is largely a volunteer effort, free and easy access to source articles is especially important.

    Graham Stewart does discuss the purely ad-funded approach, favoured by Alexander Lebedev. If this is sufficient to finance quality journalism, it is obviously the best outcome.

    As usual, the worst possible outcome is government intervention:

  2. Micropayments would be another option, of course.

    I'd pay 1p, and possibly as much as 10p, to read an article in a newspaper that I wouldn't otherwise subscribe to.