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Thursday, 13 July 2017

NEWSPAPER GROUPS JOIN FORCES TO DEAL WITH FACEBOOK AND GOOGLE




On both sides of the Atlantic, news publishers are starting to think about doing what was once unthinkable: making alliances with former foes and competitors to stop their readers and revenues being subsumed by the twin digital forces of Facebook and Google. 

The News Media Alliance, which represents almost 2,000 publishers in North America, this week called on the US Congress to allow them to negotiate collectively with digital distributors. “It’s a difficult environment for any kind of legislation right now, but we have to try,” said David Chavern, chief executive of the NMA. 

It is unclear if Congress will grant an exemption, which would effectively clear publishers to operate as a cartel. But such is the publishers’ desperation that all options are being considered: print advertising revenues, once the bedrock of the industry, have collapsed, with big titles such as the New York Times and Wall Street Journal hit by revenue declines of more than 20 per cent in 2016. Digital subscription sales have offered some respite, but with digital advertising failing to grow as quickly as print advertising is declining, the industry is nearing a crisis point. 

It is not just revenue that publishers fear they are losing to the digital giants. Many readers now access news and information through social media sites and search engines, meaning publishers no longer have a direct relationship with readers or access to data about their audiences. 

“News is valuable and it’s right to expect it to be valued,” Mr Chavern said. On the publishers’ agenda are negotiations over sharing advertising revenue and reader data, support for subscription models and preserving the identity of individual news brands on digital platforms. 

“You have two companies with these massive online positions, yet individual companies can’t get together to talk to them,” he added. “It’s an imbalance that needs to be addressed.”

Google and Facebook are on track to control 60 per cent of the US digital advertising market this year, according to research group eMarketer, cementing their role as gatekeepers to the online revenues publishers need, as traditional print sales erode. 

Newspaper and magazine owners are suffering steep declines in their print businesses. Magna Global, the media buying agency, forecasts global newspaper ad revenues will drop 9 per cent and magazine ad sales 10 per cent this year. 

Last month, a group of international publishers, including the Washington Post owner and Amazon founder Jeff Bezos and John Elkann, chair of Exor, the company which owns 43 per cent of The Economist, met in Turin to discuss how newspapers tackle the disruption from the tech groups. 

Speaking at the conference, Mr Elkann, who is also head of the Agnelli family and the owner of Fiat and Juventus Football Club, said time was running out to forge a workable relationship with Google and Facebook. 

“There will be a window of opportunity in the next 12 to 18 months to establish a relationship and find a way to make payments work. We must protect what people buy and we must prevent piracy.”

Newspaper groups in the UK have been talking for months about forging a joint advertising sales house to give them a stronger bargaining position with advertisers. 

With print advertising revenues continuing to plummet — Daily Mirror publisher Trinity Mirror recently reported a 21 per cent fall in the 26 weeks to July 2 — groups are taking increasingly radical steps to slash costs and find ways of unlocking new revenues. 

However, the joint sales initiative was dealt a blow earlier this year when Trinity Mirror and DMGT, parent company of the Daily Mail, pulled out of the project. The remaining publishers, including Rupert Murdoch’s News UK, are still in talks. 

Publishers are also responding by tightening their belts and turning to digital paywalls, as they search for ways to offset print losses that have yet to be matched by digital gains. 

The Wall Street Journal is scaling back print production outside the US and ending distribution of its print edition in Europe, while The Guardian is shifting to a smaller print format. The Journal and the New York Times are offering buyouts to staff, while Time Inc, owner of Fortune, People and Sports Illustrated magazines, recently eliminated 300 jobs and is looking to sell some titles. Meanwhile, Bloomberg, the US financial news and information company, is putting 88-year-old Businessweek magazine behind a paywall.

Financial Times

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