New Zealand papers are in dangerous decline – here's what's at stake

by Karl du Fresne / 19 June, 2017
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With worrying implications for democracy.

On Monday, May 1, Blenheim’s newspaper, the Marlborough Express, ceased to exist as a daily journal. After 150 years of publication, 137 of them publishing five days a week, it’s now produced on Monday, Wednesday and Friday mornings.

The editor, Nicola Coburn, had put on a brave face in a statement last October, when she foreshadowed change: “Digital audiences are growing rapidly, people are slowly moving away from print, and advertising revenues are declining. At some point in the future, we will not be able to sustain a daily newspaper.”

In a media world in crisis, the changes at the Fairfax-owned paper (circulation 5600) are an infinitesimal blip. But they are symptomatic of a deep and possibly terminal decline in the fortunes of the New Zealand print media. Already the Nelson Mail, another Fairfax-owned paper with a 150-year history, appears to be setting off down the same path.

No one can predict whether even the bigger metropolitan papers will survive in print form, or for how long. The two dominant print-media companies, Fairfax and NZME, argued recently before the Commerce Commission that they had a far better chance of surviving the current crisis if they were allowed to merge.

But some industry pessimists believe a merger – which the commission nixed – would have merely postponed the inevitable and at best bought more time to develop a new business model. And no one, not even the two media groups themselves, seemed to know what form that model might take, still less whether it would work.

Writing on the wall

The figures are stark. Between 2009 and 2014, the number of New Zealand newspaper readers declined from nearly 1.5 million to fewer than 900,000. While its free online reach has grown, the circulation of the country’s biggest paper, NZME’s New Zealand Herald, has been tracking steadily downwards for years, falling last year from 134,000 papers a day to 127,000. It now offers subscriptions for $1 a day.

At its peak, in 1992, the Herald sold more than 250,000 copies daily. The most pronounced decline set in after 2005, when website readership began eating into newspaper sales.

The picture is much the same elsewhere. Sales of Fairfax’s Wellington-based Dominion Post were down more than 12% last year to 52,000 copies. When the paper was established through the merger of the Dominion and the Evening Post in 2002, its circulation was almost twice that.

The same company’s Christchurch daily, the Press, has fared slightly better, registering only a 10% decline last year and now marginally outselling its Wellington stablemate. But as at the Dominion Post, readership of the print version has halved since the 1990s.

Some provincial papers are bleeding even more profusely. NZME’s Daily Post in Rotorua suffered a circulation drop last year of more than 15%. For Fairfax’s Manawatu Standard, based in Palmerston North, the figure was more than 13%.

And the carnage isn’t confined to dailies. Fairfax’s Sunday Star-Times also took a circulation hit of more than 13% in 2016, slipping to fewer than 88,000 copies (marginally below its NZME-owned competitor, the Herald on Sunday). Meanwhile the Sunday News, also published by Fairfax, looks to be on life support: its sales of fewer than 20,000 were down 19% year-on-year.

Richard Harman: “If you take the state’s money, you have to dance to the state’s tune.” Photo/David White

Advertisers jump ship

But more damaging by far than the slump in circulation has been the flight by advertisers to the internet. The industry is in a vicious downward spiral, as waves of editorial redundancies, imposed to cut costs (and in some cases, industry critics say, to dispense with older journalists who didn’t wholeheartedly embrace the digital revolution), have resulted in an enormous loss of knowledge and talent.

Many redundant journalists have found lucrative work in corporate and government communications, further tilting a playing field that increasingly favours PR spin and information control over the public’s right to know.

The casualties of the job cuts have included subeditors, the now virtually extinct class of senior journalists whose job was to keep errors out of the paper and whose absence is reflected in embarrassing mistakes that, with increasing frequency, provide much glee on social media.

In other attempts to control costs, editorial control has been centralised and a greater proportion of content is shared, with the inevitable result that each paper’s distinctive imprint and sense of local identity are reduced.

Some smaller papers that previously used their own on-site presses now print in other cities, sometimes several hours away. This has forced the papers to bring forward their editorial deadlines, thus reducing their ability to report up-to-date news.

The editorial tone of newspapers has changed markedly, too, although the situation varies from paper to paper. Generally speaking, there is less of what journalists call “hard” news and a lot more syndicated, lifestyle-oriented content, such as food, fashion, health, entertainment, travel and soft “human interest” stories. Pick up some newspapers and you could think you’re reading a women’s magazine.

There has also been a dramatic reduction in journal-of-record coverage – the sometimes dull but often important news generated by courts, council meetings, parliamentary debates and select committee hearings. In its place, news websites now highlight titillating clickbait to lure the casual browser.

Crucially (and, some say, fatally), both Fairfax and NZME embraced a “digital-first” strategy that prioritised free online content over the companies’ printed newspapers. Wellington lawyer Hugh Rennie, a close observer of the newspaper industry for several decades and a founder of the National Business Review, argues that New Zealand’s big two media companies got this badly wrong.

Rennie recently told the NBR: “[Newspaper publishers] are now busy basically tearing their print media apart by putting the content on the internet immediately, so that you read it on one or other of their websites and you open up the paper next day and there’s the article you’ve already read.

“It’s a business model that makes no sense at all: it’s like a baker giving away free bread today so you can buy stale bread tomorrow.”

Both companies have persisted with the approach even though it has demonstrably failed to deliver the desired financial benefits. Fairfax still gets 85% of its income from old-fashioned print newspapers, even in their hollowed-out state. For NZME the figure is 60% – lower than for Fairfax because NZME also makes money from its substantial radio holdings. Even now, the companies earn only 12% of their revenue from digital sources.

Needless to say, it rankles the two companies that digital advertising is largely hoovered up by Facebook and Google. They see the two global internet giants as parasites, feeding off content generated by news companies while creating none themselves. One commentator has described them as the modern equivalent of 19th-century American railway barons in the way they ruthlessly exercise market dominance.

Former New Zealand journalist Robin Bromby points out in his recent book Newspapers: A Century of Decline that the digital revolution has been catastrophic for the print media everywhere. American newspapers are still waiting for their websites to turn a profit as their print sales plummet. Even Britain’s Daily Mail, generally acknowledged as a world leader in the online market, still makes nearly seven times more money from its print edition than from its website.

Refreshing candour

It was against this gloomy backdrop that trade union E tu, which represents most of the relatively small number of New Zealand journalists who still belong to a union, sponsored a conference on the news media in the Grand Hall of Parliament.

Industry participants were refreshingly candid. NZME managing editor Shayne Currie acknowledged that “we made some big mistakes 20 years ago. We made a big mistake when we made content available free. But there’s no going back.”

In fact, both NZME and Fairfax developed plans to charge readers for online access but, locked in a mutually destructive game of chicken, neither put them into practice. Paywall proposals are now off the table. Fairfax group executive editor Sinead Boucher told the conference that her company’s modelling showed a paywall would generate so little income as to be ineffectual. “Optimistically, we might make $1 million a year, but risk losing readers.”

The consensus at the conference was that paywalls could still work where a media company offered exclusive premium or specialised content, as in the case of the National Business Review or a titan like the New York Times, but that readers would refuse to pay for everyday “commodity news” that was widely available.

Boucher outlined the industry crisis in stark and blunt terms, saying the traditional business model was fundamentally broken. Fairfax papers were still profitable – “at the moment” – but Facebook and Google were eating into the company’s income. “We have 550 journalists around New Zealand,” she said. “Regional journalists are most at risk if we can’t find a sustainable model.”

Boucher said print subscribers now made up only a small minority of Fairfax readers. Nonetheless, she said, it was the loss of advertising, rather than print readers, that had done the serious damage.

Papers are now being padded out with so-called “house ads” – promotions for the publisher’s own products. Paid advertising has dried up to the point where Boucher said “we can’t make our papers any thinner. If we made them any smaller they would blow away.”

Bernard Hickey: business worries about weaker media.

Local heroes

Yet some local newspapers – including Masterton’s Wairarapa Times-Age, bought from NZME last year by its general manager – appear to be thriving. The Times-Age (circulation 5500) is reportedly making money and has hired several new reporters since the change of ownership.

Rennie has pointed out that the West Coast, despite being one of the country’s most economically deprived regions, still sustains three daily papers that emphasise local news. Similarly, lively community papers have secured a strong foothold in Devonport, on Auckland’s North Shore, and on Waiheke Island.

Such papers aren’t burdened with a share of the costly overheads that come with being part of a national group, yet, as Boucher pointed out, they can be more vulnerable to attempts by local advertisers to influence editorial content. “There’s much more protection in a larger group.”

And they have little leverage against the increasing control exerted over access to information of public importance by organisations such as government departments, city councils, the police, district health boards, big companies and sporting bodies.

Taking advantage of understaffed newsrooms and the ready availability of hired PR guns, some of these organisations have assembled large teams of well-paid communications staff whose job is largely about controlling the flow of information to the public and putting a positive spin on whatever material is released.

At the heart of this debate is the recognition that good journalism is vital to an informed society, which in turn is a fundamental prerequisite for effective participatory democracy.

And yet industry leaders at the E tu conference seemed committed to quality journalism, and Currie says more people are reading, watching or listening to the news than ever before. The problem is how to make money from them.

The digital revolution has created opportunities for leaner new entrants to the industry. Small, innovative, online-only media players – “digital newsrooms” such as Newsroom – are attracting a growing audience.

And a potentially significant recent arrival on the scene is the Tauranga-based online platform Newsie. A digital echo of the old New Zealand Press Association (NZPA), it publishes news contributed by local and community papers from around the country and shows signs of developing into the online equivalent of a national newspaper.

New entrants to the industry are experimenting with a variety of funding models. Corporate sponsorship, subscriptions, crowdfunding and philanthropy, as well as traditional advertising, are all in the mix. Digital papers overseas, such as the not-for-profit Texas Tribune, are showing it can be done.

New sponsors

Once verboten, corporate sponsorship is an unexpected development. Newsroom’s sponsors include digital infrastructure company Chorus and Holden. Business journalist Bernard Hickey, editor of Newsroom’s subscription-only service Pro Newsroom, insists that business leaders value New Zealand’s transparency and corruption-free reputation and worry that a weakened media might affect it.

Others insist that corporate sponsorship itself will affect it. Gavin Ellis, a former editor-in-chief of the New Zealand Herald, is promoting a model in which Radio New Zealand could provide a core news service, with other providers all contributing additional content. It would go some way towards replicating the successful NZPA model that was wound up in 2011 by the Australian interests that then controlled the industry.

There’s even discussion about whether the state should help fund the news media – a proposal that would once have been flatly ruled out. Former TV current affairs producer Richard Harman is still sceptical. He reports he’s never had to jump through so many hoops as when he sought NZ on Air funding. “If you take the state’s money, you have to dance to the state’s tune.”

One thing is abundantly clear. In the digital era, no single formula can now ensure the news media’s survival.

Karl du Fresne was the editor of the Dominion from 1989-92.

This article was first published in the June 3, 2017 issue of the New Zealand Listener.


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