Newspapers – A industry learning to survive thanks to Digital Transformation

Introduction

 Digital transformation has been the harbinger of change in several industries but one industry that has witnessed the most dramatic impact is probably the newsprint or newspaper (as we all recognize) industry. With the advent of radio and later television around the world, the speed with which news was being consumed increased dramatically. The traditional news cycle of 24 hours changed suddenly to hours and minutes. Newspaper readership started dwindling worldwide and newspaper publishers were challenged to adapt or cease to exist. They survived the radio & television onslaught but when internet became popular, newspapers got a second chance thanks to digital transformation.

Over last 2 decades, hundreds of newspaper titles have discontinued due to declining readership and resulting lack of revenue growth from advertising. However, there are many that have not only survived but thrived in these challenging times for the print news media. New York Times is widely considered as the leader in digital transformation that has immensely benefited from it[i]. Likewise, the turnaround of The Washington Post (in USA) and O Globo (in Brazil) as well as successful growth by Financial Times (in UK) and The Wall Street Journal (in USA) are also noteworthy.

Digital transformation is however not an easy task and takes more than just an intent. There are several factors crucial for a successful digital transformation of any newspaper. And most importantly, these factors are almost similar in any part of the world – thus making it more critical for newspapers all over the world to learn from successful examples. Newspapers in not only Saudi Arabia but entire Arab world can benefit immensely from the lessons in digital transformation.

Digital transformation in Newspaper – early days

 Traditionally, newspaper publishers have relied more on 53% revenue share from advertising to generate massive profits while rest 47% of revenue came from subscriptions[ii]. However, as more people started accessing news via online resources, the newspaper circulations took a massive hit. To address the decline, news publishers came with various innovative ideas – some which failed but many which succeeded.

Le Monde – the French daily started online edition in 1995 and The New York Times started in 1996. The ability to search through the archives was probably the biggest advantage that came from the 1st round of digital transformation that happened at the newspapers around the world. During November 1999, The Yomiuri Shimbun – a Japanese daily, which also happens to be world’s largest newspaper in terms of circulation, gave its readers access to its digital archives. Prior to that in 1998, USA Today had started paid digital archives access program.

Several newspapers started paid online news article access programs but almost all failed to take off. Due to reluctance of public to pay, majority of such initiatives were abandoned, and free access became a norm. The growing popularity of cable TV and emergence of newer media options such as online news aggregators and blogs etc., resulted in continued decline of newspaper readership and thereby revenue from newspaper sales. Consequently, the overall revenues from advertising also took a hit. As per the OECD report "The future of news and the Internet", in USA alone the advertising revenues declined from $60 billion in 2004 to $40 billion in 2009.

Web 2.0 – 2nd chance for digital transformation

 The 80's and 90's saw most of the major newspapers around the world entering the digital space. Almost all these initiatives were straightforward digitization of print content – in many cases simply making a scanned copy or digitized version of the newspaper available to the online audience. The revenue growth from digital platforms was limited for newspapers. Up until 2007-08, online operations accounted for 15% or less for most of the newspapers[iii]. LA Times, in 2008, reported that online revenues were helping the paper break even.

It was in 2008, when the scale tipped in favor of online news from traditional print newspaper[iv] with more people preferring to use internet rather than newspaper to get news. The focus started shifting from being a print newspaper to a digital newspaper first. In 2006, Guardian newspaper in UK initiated “web first” service whereby journalists will share the news on the online version of the paper before it got printed in the next newsprint[v].

During the same period, social media emerged as a new platform for people to connect with each other on global scale. Earlier attempts to include common citizen as news reporters had some relative success – especially during the 2004 Tsunami and 2005 London city bombings. With Web 2.0 social media tools, news organisations started moving away from treating online platforms as means for drawing audience interested in static content to engaging with audience on broader level where they not only consume content but also help generate it[vi].

Today newspaper organisations are using social media channels to reach out to maximum possible audience. And they are engaging with the audience not just through plain articles and photos but also through videos, podcasts and even user generated content such as comments, opinions and blogs. Newspaper circulations witnessed 18 years of consecutive decline and in 2016 alone the decline was 10%[vii]. Organisations managing to adapt with the digital transformation have not only survived these turbulent times but also flourished. The New York Times now draws over $500 million from estimated 2.5+ million subscribers.

Digital Transformation – hope for newspapers in Middle East

 Declining newsprint readership is not just a western phenomenon. Even in Saudi Arabia, the National Distribution Company (sole distributor of newspapers) had to halt distribution of local newspapers due to increasing losses resulting from reduced readership[viii]. Similar closures are happening across several countries in the Arab world. And the main reason is shift in the news consumption habits of the audience. More and more people are joining the social media platforms daily.

For the survival of traditional newspaper publishers in the Kingdom and wider Arab world, it is important for them to embrace the benefits offered by digital transformation, Instead of having simple digital version of traditional print copies, newspapers in the region must adapt “web first” approach and implement extensive digital transformation programs. Such programs must include not only technological integration but also changing of processes and most critical inclusion of digitally aware manpower that understands and appreciates the power of digital media.

[i] “The New York Times leader in the digital transformation” https://medium.com/digital-assets-the-power-force-and-potential-of/the-new-york-times-leader-in-the-digital-transformation-611577f855a7

[ii] "The future of news and the Internet" https://www.oecd.org/sti/ieconomy/45559596.pdf

[iii] “Print and Broadcast News and the Internet” - https://multimedia.journalism.berkeley.edu/tutorials/digital-transform/

[iv] “Americans Spending More Time Following the News” - https://www.people-press.org/2010/09/12/americans-spending-more-time-following-the-news/

[v] “Guardian to offer news online first” - https://www.theguardian.com/media/2006/jun/07/theguardian.pressandpublishing

[vi] “Web 2.0 and the Rise of Social Media” - https://multimedia.journalism.berkeley.edu/tutorials/digital-transform/

[vii] “Five years later: the prediction on the end of printed newspapers” - https://www.digitalcenter.org/columns/prediction-printed-newspapers/

[viii] “Distribution of print newspapers halted in Saudi Arabia” - https://thearabweekly.com/distribution-print-newspapers-halted-saudi-arabia