We’ve finally reached “the core”

There are signs that the steepest declines in newspaper circulations are behind us – and that we’ve arrived at a core of loyal readers. But is that so cataclysmic, wonders Chris Blackhurst.

It’s customary at this time to look at the 12 months ahead. Given the headlines swirling round our industry I could be forgiven for making this a very short piece indeed, and reaching for several stiff brandies.

Falling circulations, declining advertising, closing local titles, ad blockers… the picture for the next few weeks, let alone year, on the face of it appears grim. Add to that the prediction that 2016 will be when mobile Internet advertising overtakes newspapers and the stage is set for more woe.

According to ZenithOptimedia, mobile advertising will account for 12.4% of the market. It will grow by 38% to $71bn worth. Newspapers, meanwhile, will be responsible for 11.9%, dropping by 4% to $68bn.

When the landmark is reached, expect more beating up of newspapers, more writing them off as yesterday’s chip paper.

Steve King, ZenithOpitmedia’s chief executive, said: “Mobile technology is rapidly transforming the way consumers across the world live their lives, and is disrupting business models across all industries. We are now witnessing the fastest transition of ad budgets in history as marketeers and agencies scramble to catch up with the consumers’ embrace of the mobile way of life.”

That’s it then. Game over. No more dear old newspapers.

Except here is Sir Martin Sorrell: “There is an argument at the moment going on about the effectiveness of newspapers and magazines, even in their traditional form, and maybe they are more effective than people give them credit for.”

Coming from the WPP advertising mogul Sorrell’s words are music to the ears. More so when you consider that in the very recent past he’s been such a doomsayer for the future of print. He was fond of quoting analysis showing how little time relative to advertising spend was taken on reading a newspaper. And he had pushed WPP increasingly into digital, saying it will generate 40% to 45% of its revenue over the next five years.
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So to hear him citing research showing that traditional media is often more engaging than digital content is refreshing – hell, it’s a cause for celebration.

Professor Naomi Baron at the American University in Washington surveyed 400 university students in five countries for Words Onscreen: The Fate of Reading in a Digital World. What did she find? That “millennials all over the world believe that reading in print is a different and preferable experience to reading in digital.” A whopping 92% of those surveyed by Baron maintained their concentration is highest when reading in print.

Still, it’s with some trepidation, however, that I open McKinsey’s annual Global Media Report. True enough it says that global spending on media will rise 5% every year for the next five years. But the market for newspapers and magazines will slip in the face of soaring interest in digital media. Ho hum.

But wait, McKinsey goes on to say: “We believe that many of the people likely to abandon print newspapers and print consumer magazines have already done so.”

That chimes with the beliefs of executives at those newspapers that have suffered the steepest declines, that the drop, which has been going on for several years, has now reached the “core”. It’s a word they repeat over and over, that their paper is now being bought only by its “core” audience.

But is that so cataclysmic? What they’re seeing is that the falls in sales are slowing, that these are the readers who remain resolutely loyal to the brand, who will only stop buying it when they’re forced to. (In circulation meetings at one newspaper I worked for, we were given an estimate as to how many readers were likely to die each year or “become incapable of taking the paper”, code for going into a nursing home).

These are purchasers who, given increased life expectancy, may be around for many years yet. They’re deeply wedded to their favourite paper and are unlikely to switch in large numbers even if the cover charge increases (although not by too much – everything has its price).

While their circulations plateau, the same news organisations’ websites continue to grow. Those same advertisers that are choosing mobile Internet over print are also selecting newspaper sites. The two are now co-existing in a way that was not thought possible some years ago when most “inkies” viewed the web with disdain approaching disgust.

It’s a relationship that is increasingly built upon the knowledge that content is king. Large corporations may form their own newsrooms but the words, graphics, pictures they produce will never command the same regard as the output from established newspaper houses.

That realisation, plus the ever-rising web traffic totals, are putting a spring into the step in newspaper offices. Nikkei did not pay £844m for the pink pages of the Financial Times; it paid £844m for a worldwide, world-class financial news-gathering operation that services websites as well as the familiar pink pages. Same with the payment of £469m for 50% of The Economist. Yes, the purchaser wants the weekly magazine but that’s only part of the picture, a portion of the price.

Making content accessible has become a mantra. So The Sun abandoned its paywall and has seen a 26% increase in unique browsers. The decision by its sister paper, The Times, to follow suit cannot be far away.

Alas, that same McKinsey report highlighted the one area of weakness in the market: glossy consumer magazines. They’ve not made the transition to digital as easy – their content, which is long form, written months ahead, and feature-based rather than news, does not lend itself to online.

Tellingly, while magazines are folding (Condé Nast pulled Details last year, citing “It’s been tough”) there are fewer new ones (magazine launches in the US and Canada were 35% down in 2015).

Previously, the high barriers to entry (starting a mag with high production values is a costly venture) have been outweighed by the potential for profits. Now it seems that is no longer the case, that entrepreneurs cannot see a worthwhile return.

Generally, glossies excluded, the outlook for 2016 is not at all bad. On second thoughts, I’ll put the brandy away. While cracking open a bottle of champagne may be unwarranted, I can see justification for one or two glasses of Prosecco.

Chris Blackhurst is a journalist and a former editor of The Independent.