Reinventing the news model in the digital era

MalcolmOn Friday night Communications Minister Malcolm Turnbull launched Morry Schwartz’s The Saturday Paper at a function in Sydney. This is an abridged version of his speech. 

Just a few years ago in 2008 the president of France Nicholas Sarkosy said: “democracy can not function with a press permanently on the edge of an economic precipice.”

When the US congressional commerce committee held a hearing into the future of journalism in 2009, its chairman, John Kerry, paraphrased Joseph Pulitzer’s line that “our Republic and its press will rise or fall together”, and added, “Well, certainly the quality of the dialogue in the Republic will.”

This anxiety is not misplaced, for surely the work journalists do is as essential to our democracy as the work of legislators, judges and ministers.

It is also true that for many years the most important foundations of journalism have been the great metropolitan newspapers.

With their lock on classified advertising, “the rivers of gold” as Rupert Murdoch once described them, nobody else had the resources to employ so many reporters, or to dedicate so much space so comprehensively cover the events of the day.

As we all know those foundations have been changed. The internet has smashed the business model of those papers by providing a more cost effective platform for advertising.

The hyper platform of the internet, of course, challenges all other media – print, radio, free-to-air and subscription television included. But as the launch of The Saturday Paper shows, the rumours of the death of newspapers, even printed ones, appear to be exaggerated.

Of course, Pulitzer’s warning about the Republic and the press rising and falling together was not entirely altruistic.

He was not only a congressman for a short time, but also one of America’s most famous, and now revered, newspaper proprietors. Not least because of the journalism school he founded at Columbia and the Pulitzer prizes that it established.

And, who knows, perhaps Morry Schwartz will do the same as Pulitzer, and run for Parliament? They have so much in common. Both radicals, both idealists, both born in Hungary, both Jewish, and above all, both with ink in their veins. To mangle another line from Apocalypse Now this week: “They love the smell of newsprint in the morning.”

In Gay Talese’s famous book on The New York Times The Kingdom and the Power he gives a sense of the immense cost of publishing a daily newspaper. That company in 1966 had 5600 employees and devoured an estimated five million trees a year.

In Talese’s world newspapers were very near a natural monopoly. The strategy was simple – lower the face value of the newspaper, go for circulation and rely on the high entry costs of the business to keep out competitors.

Many American newspapers earned as much as 80 per cent of their revenue from advertising. The share in Australia for newspapers like the Herald and the Age was not quite so high but nonetheless that is what drove them and circulation was a less important figure.

Newsrooms could be aloof from the grubbiness of commerce, enjoying the proceeds of the classified rivers of gold with the aloof independence of a duke receiving the rents of his tenant farmers.

These days, few newsrooms have the luxury of ignoring where their funding comes from. In large part, the industry is yet to settle on a single model, or even a strategy, that guarantees viability.

I’ve often said that within the digital age perhaps the scarcest commodity is attention span. As Mark Thompson CEO of the New York Times said last year: “Every media company faces the same challenge. Imagine their total market by graphing every reader who accesses their product every month on an X axis, on the Y axis is the amount of time they spend reading the news. The total area below that slope represents what can potentially be monetised by media companies.”

We are in such a state of flux that it is no longer smart for those companies to have a single approach for all consumers.

Those high up on the slope are willing to pay a large amount of money to get a physical copy of the newspaper. That’s why I have always encouraged Michael Stutchbury, who can I say my estimation of Michael Stutchbury has dramatically diminished ever since I read the persistent editorialising in The Australian about of how he never kept his desk clean — his deficiencies. It’s extraordinary.

That’s the great thing about The Australian — there is nothing too small…

That’s why I have always encouraged Michael Stutchbury, to increase the price of the Financial Review. I tweeted an article on that very good online site Monday Note arguing that newspapers should increase the cover price of their physical papers, to capture as much value from readers who still value physical reading as possible.

Chris Mitchell this week noted that although The Australian has 65,000 paying digital subscribers print still accounts for 90 per cent of its revenue. Across the Australian industry, digital revenue still only accounts for nine per cent of all income — advertising still accounts for 61 per cent and physical circulation accounts for 29 per cent.

So it is too early to assume that digital revenue will step into the breach in the ongoing fall in print advertising revenues.

Now there are all sort of models for media organisations to survive. Some can be subsidised by great men, like The Australian for example, some can be subsidised by a trust such as The Guardian, some can be subsidised by the taxpayer like the ABC.

It is interesting that in the United States philanthropists such as Jeff Bezos are increasingly investing in media companies for the same reasons they might have invested in universities or think tanks – to contribute to the civic life of their communities and without wanting to join the conga line of hagiographers that naturally attend events where people launch newspapers, Morry, it is worth reflecting on this.

The contribution you have made to the intellectual life of Australia — the public debate in Australia — establishing, supporting and bringing to economic viability The Monthly, The Quarterly Essay and Black Inc alone is an extraordinary one.

That’s a remarkable thing to do. You have made an enormous impact. Many people have spent a lot more money a lot less effectively than you. The combination of vision, passions, truths — you have added immeasurably to the intellectual life of Australia.

As a government the one thing we have to focus on is that we are doing everything we can to promote diversity and innovation in the media sector.

One of the great ironies of the previous government’s so-called media reforms was that they proposed to counteract media consolidation in an era when the main trend is leading towards diversity.

Julia Gillard said at one point we’ve got two newspaper companies who deliver their services online and on the page they take 86 per cent of the Australian market and so there is a degree of concentration.

You can only make comments like that if you focus on a subset of news production which covers the physical printing of papers.

On the consumption side the story is incredibly different. Over the decade to 2013 the proportion of Australians over the age of 14 reading print only newspapers fell from around 61 per cent to 49 per cent for News Corp title and 25 per cent to 18 per cent for all Fairfax titles.

But that doesn’t mean people weren’t interested in the news. Newspaperworks Enhanced Media Metrics Australia (EMMA) shows that newspaper readership is actually up overall due to a seven per cent boost in digital readership.

The appetite for journalism is unabated – journalists have more readers than ever, their digital presence amplified by the social media. What is less obvious is how to get paid for it.

The boom in digital and digital platforms has rapidly reset the economics of the industry. The truth is if you start, albeit with a print position, you might be able to shed the legacy costs of the old incumbents.

It is not small cause for optimism that one of the newest local entrants The Guardian has reportedly exceeded its revenue forecasts by 300 per cent.

The bias in the digital age is to competition. News.com.au and the SMH.com.au still retain top places among Australian new sites but compared with the rising class of the Mail Online it has more unique online readers than the Courier Mail. The BBC is the tenth most read news website in Australia while The Guardian and Buzzfeed sit at more than one million readers each month.

I think this is a time for enormous optimism and Morry you have given everyone enormous optimism not because you are a rich guy – as Deng Xiaoping it is glorious to be rich – but you not only start these publishing venture but you have actually made them profitable.

You are not some demented plutocrat pouring more and more money into a loss making venture that is just going to peddle your opinions.

Now I just say to conclude, the truth is to capture the imagination of a reader – to inform, to explain, to amuse and amaze – is still, by and large, an art more than it is a science.

It is in this art that I have reason to have an optimistic outlook on newspapers and journalism in Australia. Sharing stories is the most human thing we can do and the long form of journalism you have supported throughout your long publishing career – whether it is in books, essays, The Monthly or now with The Saturday Paper is one of the most pure and most enduring examples of that.

On that note, I want to firstly thank you. I mean there is actually nothing more reckless than being a politician launching a newspaper that you have not seen. You worry the headline will be something like: “Turnbull must go”, or “Abbott in disgrace”, I mean you seem to be writing about Manus Island but it seems to be Kevin Rudd who is getting the worst serve. And Kevin, as you know, has a very thick skin…

Anyway on note I want to wish you Erik as editor, Morry as proprietor, and all the journalists on The Saturday Paper the best of luck in your endeavours.


Get the latest media and marketing industry news (and views) direct to your inbox.

Sign up to the free Mumbrella newsletter now.



Sign up to our free daily update to get the latest in media and marketing.