Falling revenue is manageable, brand burnout is not
Feb 2, 2017
Falling revenue threatens newspapers, but brand burnout is the real danger in the digital age.
The first time I travelled to Europe, in 1997, I remember being fascinated by the possibility of reading the daily editions of newspapers from other countries. The main European newspapers - The Times, El Pais, Frankfurter Allgemeine - were available at any slightly larger newsstand, and their brands were unquestionable in terms of audience and authority. However, it was the sports dailies that I found most sensational. The Gazzetta Dello Sport stood out physically (due to the pinkish colour of its pages) among many other titles. The last time I visited the continent, in January, I only found the Gazzetta in two out of 32 newsstands. The loss of revenue is dramatic for newspapers, but theoretically at least, remediable. The loss of relevance is fatal - and the disappearance of newsstands is a symptom of what is happening.
To continue with the example of my experience in Europe: the Gazzetta Dello Sport was, until the last decade, the most important sports publication in the world alongside the French L'Equipe. The team of journalists at Gazzetta, historically, was the best in Italy and only experienced and talented names covered Calcio and the most important sports like F1 and volleyball. From 2000 onwards, the pink newspaper had numerous digital projects, including investment, without success. The newspaper's record print run was the day after Italy's 2006 World Cup win, with 2.3 million copies, but from a business perspective, Gazzetta is suffering. The creation of a betting site (something between ironic and questionable for a newspaper in a country that has match-fixing scandals almost every year), a Fantasy Football and a premium version of the site for subscribers were some attempts to create revenue that led to a noticeable drop in quality. The Gazzetta is today - both as a newspaper and as a business - worse than it was two decades ago.
The relationship between relevance and revenue is not direct, of course. Even the Guardian, a leading journalistic group that started focusing on digital earlier (the decision for digital first came at the turn of the millennium after a long debate on the Trust council that manages the newspaper), is having difficulties paying the bills, even with a lean, innovative and hugely successful operation. The dramatic thing for the Gazzetta and other newspapers was trying to adapt a printed operation to a digital one with the resources (and costs) inherited from the original operation, as well as practices, deadlines, objectives, etc.
In the case of the RCS group, owner of the Gazzetta and several other important titles, the blow is violent. Revenue fell by half and the company has been losing money since 2011. Even with a still limited drop in subscriptions (the public value is around 350 thousand daily readers, including subscribers) and with an audience of 3 million unique users per day, the big bleed is in the brand. The Gazzetta today has been swallowed up by digital conversation and can no longer hold a leadership position. And the market cannot be said to be retracting - the advertising money per user increases every year (and is expected to keep up at least until 2019).
The Gazzetta and the Italian print are not the exception, but the rule. In England, where media products mature earlier, even the Sunday editions of the big newspapers (which have much more cold content than normal days), more protected by the habit of reading on a rest day, had significant drops in 2016, (on average, -10% ). The crux of the matter here is the same: most brands have been swallowed up by the noise caused by digital and will not return. And, industry assessments aside, the movement leaves a "hole" that society cannot fill.
Social networks have, for several years, been pointed out as the "future" for publications in terms of this lost revenue. This is not going to happen. Networks have their own dynamics of operation and have a very clear goal - to bill. Although yes, publications have to have a consistent social presence, all attempts to generate relevant revenue in social networks have worked for exceptions (like Buzzfeed) and not for the rule. The increase in advertising revenue that is going to digital does not reach large publications to the extent that they need. The entire contract between publications (and journalists or whatever) and the audience has to be established again and only then can forms of remuneration be considered as lasting and/or consistent.
Journalists (or any other information producers) and the audience need to understand the language of the dialogue they will have. This last sentence may seem like academic clutter, but it is not. In history, the positions of sender and receiver have always been clear, and the media (here, read, the channels through which information went from one to the other) were well defined in terms of form and rule. Newspapers, TVs, radios produced, the audience consumed. There were not many forms of narrative, they were known and only worked on them. The newspaper knew what the reader wanted and the reader always wanted the same thing. Now, brands are losing relevance because newspapers (and others) no longer say what the reader wants to hear. This reader gets what he wants through other channels. It doesn't matter that the big brands do "quality journalism". Quality is subjective and only makes a difference if the consumer has the same perception. Breaking your head to figure out what makes the audience crave a value that they accept to pay, within a viable cost is the task for brands that do not want to die or be resized to niches. It is not simple, nor easy, but it is the only way.
There is a lesson waiting to be learned by all brands - existing and to be created - in relation to the reader/user. Credibility is an agreement closed between the parties that has no date to start or end. It is slow, constant and to a certain extent, uncontrollable. The search for this contract goes through the previous items (find out what the new reader wants, how much he pays and how much it costs) and one more - to take on the previous role of journalism as a "custodian" of the state and society.
Returning to Gazzetta, even for an average reader and not for a journalist, the deterioration of the final product is visible, especially in the free digital. The texts are smaller, with click-bait materials that are halfway between well-done journalism and irresponsible entertainment. If 10 years ago it was possible to know everything you wanted from the Italian Championship on the Gazzetta website, for example, today it is not anymore. The options given by the brand range from insufficient (open) to excessive, carefully sent to subscribers. They are not enough. To see the pink page again in all corners of Europe, a new engineering needs to be done, starting from a starting point that is not print.
The declining revenue is a problem that may have a solution, but the deterioration of brands, does not. For an industry with investment capacity, this could have been possible. It could have been - because the failed attempts of the last decade burned the cards they had in hand. Now, the big brands need a miracle, or they will no longer be big…