Fairfax delays paywall, dismisses threat from The Guardian
By Charis Palmer of The Conversation
Fairfax chief executive Greg Hywood has dismissed the threat from the impending Australian launch of UK media group The Guardian, telling shareholders it is not a strong competitive brand in Australia.
“The Guardian is an extremely good brand in some suburbs of London,” Mr Hywood said, after Fairfax Media announced a first-half net profit of $386.3 million.
The sale of Fairfax’s remaining stake in Trade Me and its US agricultural publishing business made a significant contribution towards the profit result, as the company chose to reduce its debt.
The results show Fairfax spent $69 million in redundancy payments during the half, as part of the Fairfax of the Future transformation program. This is now expected to deliver improved savings of $251 million by 2015.
Fairfax also revealed its plan to introduce domestic paywalls to its metro websites, originally slated for March would proceed in the June quarter. It will however deploy the paywall to international readers within the next month.*
“I think this shows the level of concern about the long term decline for print newspapers,” said Andrea Carson, PhD researcher at the University of Melbourne, adding that this is the third quarter in a row that circulation figures for Fairfax showed significant declines.
Mr Hywood today argued circulation figures were no longer a relevant measure of the performance of the business, with 75% of the audience of the metro SMH and Age businesses now accessing the brands digitally.
“It’s not up to us to say to our audience you have to buy a newspaper,” Mr Hywood said, adding that Fairfax would remain in the newspaper business for as long as it was profitable.
However digital advertising revenues remained soft and volatile during the half. December revenues were 5% below the same period last year, with second-half revenues in the first six weeks 9 to 10% lower.
“While they’ve got the paywalls on ice they’ve yet to realise a sustainable revenue model to deliver the kind of revenues the print newspapers have done,” Ms Carson said.
Ms Carson said the upcoming launch of The Guardian in Australia would have played a role in the decision-making process related to Fairfax paywalls.
“I think The Guardian is a direct competitor with Fairfax and it’s going to have a lot of interest.
“It’s the third largest read online site in the world behind the Daily Mail and the New York Times.”
Mr Hywood dismissed the threat however, and argued it was Fairfax and News Ltd brands that had the strongest relationship with Australian readers.
“The brands that dominate the public agenda in this country are Fairfax brands and to give our direct competitors some credit, News Ltd brands.
“They have the relationship with audiences, the depth of journalism and the credibility of the long-term standing of the brand,” he said.
Mr Hywood said Fairfax was focused on substantial change without compromising the quality of its journalism.
“Our work on and in the business is about more than taking cost out … no one cuts to greatness.
“We’re taking a fresh look at territories once considered sacred cows and smashing silos that once seemed untouchable,” Mr Hywood said.
“While we are optimistic about our future there is not a single pair of rose coloured glasses in the building.”
Fairfax’s ongoing cost cutting program mirrors that being undertaken at other newspaper publishers around the world.
It comes on the back of a $2.8 billion write-down of its assets last year.
Yesterday Seven West Media posted a $109 million loss for the December half, after it made a $260 million write-down to the value of its magazine business and stake in Yahoo!7.
Brian McNair, Professor of Journalism, Media and Communication at QUT, said media sector cost cutting was clearly a short-term measure in response to an immediate crisis.
“In the longer term the risk is the very thing that makes traditional media viable – the quality of the journalism – can be put at risk.
Professor McNair said while new technologies provided real opportunities to cut costs, cost cutting had not stopped the decline in print circulation in the UK.
“There’s been a lot of rationalisation of services and many regional and national groups, but it hasn’t stopped circulation decline, it’s just led to criticism of decreasing standards and quality.”
This article was originally published at The Conversation. Read the original article.
*Article updated to reflect the nature of the paywall deployment planned for March.
I am surprised and glad they delayed the paywall.
I think if they have an online competitor that does not charge, they could be in serious competitive trouble.
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I’ve never minded Hywood before but some of the stuff he’s coming out with is childish and petty. To describe the Guardian as being a strong brand ‘in some suburbs of london’ is the most ridiculous thing i’ve ever heard when he knows full well it is number 3 in the world!!
I hope they take significant market share from Fairfax and News as with this type of arrogant attitude, this is all they deserve
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Guardian is the favoured paper of all cross-worders across Europe . . .
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…….. and originally a Manchester paper
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Words that will come back to haunt Mr Hywood. Proof that Fairfax still thinks it’s the only planet in the solar system. Such arrogance, such disresepect.
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Guardian brand will be an easy sell to agencies. Given that agency-land is peppered with our British ex-pat friends, I see the uptake being faster than Fairfax would ever imagine.
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The Australian Guardian will do minimum damage to Fairfax and News. It’s more likely to take eyeballs from dedicated leftie sites such as Crikey,New Matilda and the Global Mail, the first two of which get by on the smell of a proverbial oily rag while the third’s staffers seem to be at continual war amongst themselves.
Fairfax has pretty much given up on any sort of partisan politics now that its hardcorce leties, led by David Marr, have taken the money and run. Their new Canberra guy, Chris Kenny, picked up from that font of political wisdom the Adelaide Advertiser, is right of centre, if anything. Anyway, going compact, not tabloid, next month means a lighter, brighter approach and less preaching politics as the shift from print to digital gathers pace.
The News sites will simply continue to be well right of centre, especially the Australian where corporate types who specialise in sacking staff while collecting massive bonuses are written up as heroes of the nation.
This is the age of fragmentation where you can have your opinions, or prejudices, reinforced on any number of platforms in any number of ways. The disillusioned hard line lefties will no doubt find such gratification at our version of the Guardian and as long as its quality arts and sports stuff is also readily available it will do okay. But the overwhelming majority of internet users, who are more interested in Taylor Swift’s latest love disaster than Julia’s on-going political disasters, won’t give a hoot.
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Whatever he thinks of The Guardian, he knows an SMH / Age paywall now is a non-starter.
And with digital revenues down, there’s more pain to come.
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Hywood needs to explain what he is doing. There is no future in a strategy where revenue keeps falling and costs keep chasing the gap. It is pathetic that he is simply flaccid in the face of such obvious disintegration.
The fact that he thonks he can diss the guardian is a sign of his poor understanding of his own job.
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Fairfax have a distinct advantage over News because they don’t have a pay wall on SMH and the Age etc. My advice is don’t do a pay wall or as a consumer the Guardian or any other free news source are looking good. News Ltd already know this, although they won’t admit it, their online readership is less than it’s Fairfax counterparts. The mass consumer will always move to free online news sources…
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From the ABC today:
“Fairfax is planning to introduce metered paywalls for its Sydney Morning Herald and The Age websites later this year, with paywalls for international users to be thrown up in March, and domestic paywalls rolled out over the following months. The Guardian announced in January that it plans to launch its own Australian-focused site later this year, which is likely to provide its content for free, in line with the media brand’s global approach…
Mr Hywood defended allegations that Fairfax was stepping back from its commitment to political coverage, and claimed the paywalls would not radically affect most readers’ experience of Fairfax sites. He said that Fairfax is still working out the number of free articles readers will be allowed to access a month, but the plan is to force only heavy users of the site to subscribe.
‘We think it will probably impact 10 per cent of our readership,’ Mr Hywood said.
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‘We think it will probably impact 10 per cent of our readership,’ Mr Hywood said.
I think Mr Hywood is in for a big surprise! Many heavy users of the Herald Sun website never went back after the paywall, they simply switched to something else. I’m a heavy user of the Age website and I’ll switch to other sources.
Mr Hywood defended allegations that Fairfax was stepping back from its commitment to political coverage, and claimed the paywalls would not radically affect most readers’ experience of Fairfax sites.
Really? Have you been on the Fin Review – AFR.com.au site? You get nothing but the first sentence of the article…
Surely, someone in this industry can innovate and think outside the box.
The internet has provided free information and content for a long time, but now, because these publications can’t make money, they want the consumer to pay and provide information about their lives so this data can be used to market to them
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I might be Robinson Crusoe on this one, but I’d be happy for the SMH to be paywalled if it meant the website reversed course and went upmarket instead of getting trashier by the month. At the moment you have to sift through the ever-increasing volume of ‘offbeat’ stories, iPhone news, lurid overseas crime and assorted other clickbait to find the one or two articles that are actually worth reading. If the new revenue from subscriptions means it’s a bit more NYT and a bit less Buzzfeed, sign me up.
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I asked a younger colleague of mine today (23 year old) the following questions:
Have you ever purchased a printed newspaper:
– No never. The only time I have really used one is on Melbourne Cup Day in the TAB
Would you pay to read news online?
– Why would I do that?! (yes the person exclaimed and thought I was mental).
Now, that was my very brief survey, only using one young adult. What about the 16 year old, will they ever pay for news?
The person also commented along the lines of: Hold on, so an online paper is funded by advertisers right? That brings in loads of cash and for the user can clutter up their pages? Then Fairfax, or News etc want to charge me to read the adverts? Pfffffffffft.
The Guardian is painted out by the hillbillies to be some sort of communist paper. It is not. The sport coverage is absolutely excellent. It’s coverage of the arts is fantastic. The Guardian is all about quality. I am not a leftie, however I love reading the Guardian, which is a fact; not an assumption. Arrogance and assumptions, in business, leads to failure. Greg Hywood, it is up to you to sir, to ‘brush off’ or face facts. The Guardian is coming. (I wonder what their AFL coverage will be like?) 🙂
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I used to read The Australian six days a week and read it on line foe updates. When they introduced a pay wall I stopped buying the paper and turned my attention to the SMH. If Fairfax introduce a pay wall I will also stop buying their newspaper and reading it on line too. There are plenty of fish in the sea.
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