Traditional news media is facing a day of reckoning, which isn’t as far off as many would hope. The days of big fat cat corner offices, massive expense accounts and fat layers of management are going to become a thing of the past as they grapple with the new economic challenges of publishing.
Whilst we’ve seen poor growth in digital media advertising in South Africa, which has struggled to match more developed markets, the big players in the country have been smiling, as they are able to prolong their status quo longer than international counterparts.
Being an industry controlled by a small number of big players, the incentive to invest in quality digital platforms just hasn’t been there. And who would blame them? Once you take the digital plunge, your competitors move from being titles beside yours on the newsstand, to any publisher in the world. A few years ago, Business Day or The Star would never counted the BBC, New York Times or The Guardian as competitors, but now, through technology, local advertisers can reach South African audiences on these sites at a fraction of the cost it takes to advertise with local publishers directly.
Not to mention the host of new ‘publishers’ who now command half of all digital budgets, like Facebook, Google and YouTube, none of who existed 20 years ago. So when faced with the problem of digital dimes, no wonder we’ve seen the big media companies in South Africa do their best to retard the growth of the digital market.
Why invest in a digital title that is likely to cannibalise your print operations?
Stats from the USA show a bleak picture for the future of newspapers. Google, a company barely 20 years old, now generates more advertising revenue than the whole of the US newspaper industry combined. This only adds to the dilemma, because it means that publishers will have to evolve their business model beyond just selling ads and trying to recover the costs of print and distribution, because selling digital adverts will not cut it alone. It’s not a far stretch to adopt a business model that follows the mantra ‘what can we do that Google and Facebook can’t’.
I say the day of reckoning is coming, because as we hopefully encounter the watershed-breakthrough year for digital in South Africa in 2014, coupled with the double whammy of dropping circulations, big media will need to deal with the conundrum of declining print revenues and the burden of massive traditional overheads. The drop in circulation may force the market to gravitate to one title, especially in the weekly space.
This has a knock-on effect in so many areas. We’re seeing newsrooms being cut everywhere at most major titles, with the dailies under more threat than most. More and more newswire copy is being used on front pages instead of its originally intended ‘filler’ role. This leads to a lack of diversity and quality in our media coverage as the more expensive and challenging feature-based coverage is overlooked for the cheap and nasty. We only need to look at the early days of digital publishing (some may even accuse today’s digital publishers of the same) of what the economic pressures will force publishers to dress up and offer as journalism.
Because of these massive traditional media overheads, we’ll see publishers make counter-intuitive decisions like putting up the world’s most expensive paywalls, upping the amount of advertorials and swimming in the murky waters of native advertising, all in hope of staving off the impending doom.
And let’s not forget about the budget-sucking spectre of government cronyism that bleeds advertising from publishers not connected to the ruling party.
But as our digital economy grows, hopefully these challenges will present other brave and stubborn souls like us at Daily Maverick to invest in quality digital journalism. The difficulties we’ve had to endure over the past four years will soon become a massive advantage as we’ve been forced to streamline the production process, and require extraordinary efforts from each person, in order to keep costs low and production quality high.While every digital news site has their cost of content production subsidised by a newspaper, radio station or television station, we’ve operated without that luxury.
What big media hasn’t yet contemplated is the scenario of what happens to those news sites when the newspaper is no longer around to carry those costs.
This post is based on a recent speech to the Cape Town Press Club. Styli Charalambous is the CEO and publisher of Daily Maverick. Follow him on Twitter @StyliChara.
