WNC 2009: Time for serious thinking on pay for online access

By Rahul Sharma , afaqs!, Hyderabad | In Media Publishing | December 02, 2009
Newspaper companies are realising that increase in ad spends on digital media does not necessarily translate into major gains for them

Going digital, which was perceived as the ultimate solution for all the woes of the newspaper companies, especially in the developed countries, no longer evokes the same feeling. Print media companies are realising that though having an online presence is a must, they need to change their strategy in order to maximise their gains.

According to the annual world press trends update given by the World Association of Newspapers and News Publishers (WAN-IFRA), "At no time in the foreseeable future, will digital advertising revenues replace those lost to print; making the search for new business models, including paid for online access for news, a pressing concern for the news publishing industry."

& #BANNER1 & #Moreover, the increase in advertising spends on the digital medium does not necessarily translate into brighter prospects for the web portals of newspapers. While only a Rupert Murdoch could publicly accuse Google of "kleptomania" and behaving as a "parasite"; many content generators today agree that advertising spends, and any increase in their proportions, on the digital media will largely accrue to the search engines.

"This industry is the principal architect of its great difficulty today," said Les Hinton, chief executive officer, Dow Jones & Co., USA, at a session on 'Newspapers: A multi-media growth business', at the 62nd World Newspaper Congress (WNC) in Hyderabad.

He was referring to the fact that most media companies are, in a way, responsible for creating an environment, where people have been habituated to free news on the internet. He emphasised that the content generation business involves huge costs; and therefore, content should not be given for free.

"If newspaper companies wish to maintain their strong content leadership, someone is going to have to pay. It looks like we have to solve the digital payment issue, and soon," said Timothy Balding, co-CEO of WAN-IFRA.

The report, which was released yesterday, also said that in the foreseeable future, revenues from the digital space would not be able to come even close to compensating for the losses in print revenues. The total size of the press advertising industry is $182 billion. Last year, newspapers earned less than $6 billion in revenues from their digital operations.

As per forecasts made by PricewaterhouseCoopers (PwC), this figure is not expected to grow to more than $8.4 billion by 2013. With ad spends of print expected to decline, PwC predicts that by 2013, the combined print and digital ad revenues will be less than print-only ad revenues in 2008.

For companies who fear that having an online property might just eat away the mother brand, Andreas Wiele, member of the Board / president, BILD Division and Magazines, Axel Springer AG, said they need not fear cannibalization. He cited the computer magazine of the company, which benefitted from its online version. But even he agreed that the bulk of the ad spends on digital goes to search engines.

Paul Jansen, CEO, SPH Search, Singapore Press Holdings, Singapore pointed out to an attribute of search engines that gives them an edge. "Search understands consumers better than we do," he said.

According to the WAN-IFRA survey, newspaper circulation grew, on a global scale, by 1.3 percent in 2008, the last full year for which data exists, and almost 9 percent over five years. "Despite the endless predictions about the death of newspapers, they actually continue to grow, at least on a global scale," said Balding.