Will Steve Jobs go down as the saviour of the British newspaper industry? Quite possibly, if iPads are the big Christmas hit this year. That would mean they are becoming essential gadgets for business people, commuters, air travellers and the reading classes in general. They might just mark a turning-point for the fortunes of a British industry grappling desperately with dramatic declines in sales, defection of advertisers and woeful returns on the huge investments made in glitzy websites and marketing budgets. It is an industry praying for a miracle.
Few newspaper readers appreciate the nightmare facing the companies who produce them. Classified ads, once about a third of an average newspaper’s revenues, have steadily migrated online — a shift accelerated by the recession. Display advertising is now defecting too. And with so much content available cost-free on the web, and free-sheets given away to commuters, circulations are plummeting. Normal readers are also defecting — either grabbing a free-sheet on their way to work, or picking up their news via Google for free.
Newspapers everywhere have been affected but no country, apart from the United States, has suffered as much as Britain. Since 2007, UK circulations have fallen by a quarter according to a new OECD report. In America, they have fallen by a third — with 293 newspapers and 1,120 magazines folding last year alone. Advertising revenues may recover a little this year, but the trend is clear: over the last year, British broadsheets have seen declines of up to 16 per cent. Few businesses can deal with structural change on this scale. The losses are mounting.
The Times newspapers are losing £1.6 million a week between them. The Guardian and the Observer are losing £3.2 million. ‘No matter which way you look at it, the numbers are just unsustainable at this level,’ muttered one senior editorial figure after discussing the rosy hue painted on the results by outgoing chief executive of Guardian Media Group Carolyn McCall. Something fairly substantial has to change. Even the remaining profitable newspaper groups like the Telegraph are not immune to the flight of advertising and readership trends.
What does a newspaper do? Salvation may come in the form of a Russian sugar daddy, as it has for the Independent. Others may give themselves away free, like the London Evening Standard. But most proprietors and executives are frantically looking for a new way to make the newspaper business model work. Newspapers may well have powerful brands and high-quality content honed to the tastes of their target audiences, but hold on to the wrong business model for the digital age. Some 80 per cent of their costs tend to go on things like paper, printing presses, distribution. But the bit the punters are actually buying — the content — is as powerful a draw in the digital markets as at the newsagents.
The iPad and the host of digital tablets following may well become game changers, because the iPad makes browsing your book or newspaper feel almost like the real thing. And because it is a new mobile platform (a bit like a big smart phone) publishers believe there will be little resistance to paying a subscription, as long as it is not exorbitant — maybe a tenner a month. For their money the punters will get a product which is miles ahead of the newspaper website. Publishers can deliver a complete, packaged paper, like a giant PDF, which means they can shape the layout, embed video and audio clips, and use clever navigation tools which learn about user preferences and give you your newspaper in the order you like to read it.
Once the principle of paying is established — as it is already for music through the runaway successes of iTunes — the next step will be to see if it can be applied to newspapers. Rupert Murdoch is, not for the first time, blazing a trail for his industry here by erecting a £2-a-week paywall around the websites of the Times and the Sunday Times. The argument advanced by James Murdoch in a speech recently is that the company is ‘placing a proper value on creative endeavour’ in the belief that its output is worth paying for. Journalists who have grown accustomed to loathing Mr Murdoch now grudgingly wish him luck: if he pioneers a business model, others may follow.
Another potential lifeline is being offered by Google, which is the world’s biggest media business. This sounds ironic, given that the company has long been described as the Darth Vader of the news world with its ‘Google News’ search engine, directing users to whatever they want to read, for free. It pledged resources into helping fix the ‘monetisation problem’ — that is, how to persuade people to pay for the news found through its search engine. Google is cagey about details, but appears to be working on some solutions. One, apparently called Newspass, will be a system which allows users to make tiny payments to read articles and charge from a Google account. Google would, presumably, take a cut in the transaction.
As for the iPad itself, it is perhaps the biggest step yet on a road towards highly sophisticated, light, portable reading devices which will make paper and smudgy ink look medieval. If it takes off, it could be the portal that allows users of both Google and Murdoch to pay for their product. Each publication could sell an App. What has made newspapers and magazines huge successes over the decades — their range and their personalities — ought to triumph on the new platforms if properly projected.
The clock is certainly ticking. Microsoft gives newspapers ten more years at most as printed artefacts. One Financial Times executive has suggested that the FT will be out of the pink newspaper business in five. Other publishers give it longer: but the time-frame is years rather than decades. To stay ahead of the game, newspapers and magazines — even the one you hold now — will have no choice but to migrate to an online format that people will want to keep paying for.
In launching the iPad, Steve Jobs probably never gave a moment’s thought to the survival of age-old British newspapers. But if his iPad takes off, and leaves its owners willing to pay a little for something of quality to read on it, than this device — and its successors — may well save Fleet Street.
Mark Wood is a former editor-in-chief of Reuters and CEO of ITN.
Find out more about The Spectator's app at new.spectator.co.uk/app