Many journalists, while naturally inquisitive about the world, have a curious blind-spot about the economics driving the industry supporting their trade. If only the public would buy newspapers again, they say, the advertisers would return and the industry would be saved. Yes, and if only kids would stop downloading music online, record stores might reappear.
For those caught up in the first wave digital wave that rolled through the print industry more than a decade ago, this is familiar. In strategy meetings over years at Fairfax and at other publishers here and abroad, all the arguments you are hearing now for reviving papers have been brainstormed to death.
This blogger still has nightmares of small, airless offices at Fairfax with yellow post-it notes covering the walls. I spent three years as the AFR’s ‘acting’ online editor (‘acting’ because they dare not give the digital world equivalence with print). And most of that time was spent in brain-eating meetings alongside business people, earnest McKinsey blow-ins and tech-head contractors cooking up a pie-in-the-sky scheme to try to turn the newspaper into a Bloomberg-style data portal.
The Frankensteinian result of that process was ‘AFR Access’, a quixotic attempt by Fairfax Business Media to play in the online space while protecting existing and still lucrative print revenues. It was a classic Fairfax punch-pulling exercise, the result of a timidity and lack of imagination among print-only news executives who, like the apocryphal boiling frog, dared not tackle change that was going to be forced on the industry anyway.
While the talk was about a digital future (I was inspired enough to start a blog), the message absorbed from on high across the editorial floor was that journalists should not go out of their way to be cooperative with the “new media” people, who would end up cannabilising the newspaper and taking their jobs. Well that strategy worked out well, didn’t it?.
So for we digital refugees now plying our trade outside the media the news from Fairfax of a painful restructure, accompanied by the axing of 1900 jobs, is like stumbling over the obituary for someone you thought had died years ago.
The truth is the business model for the commercial industry supporting newspaper journalism has been busted for years, with the early signs quite evident at the end of the 1990s. But Fairfax spent most of the ensuing decade preoccupied with protecting its existing print properties and using digital purely as a marketing strategy.
F2, which later became Fairfax Digital, sat symbolically across the water from Fairfax’s Dead Trees division at Darling Harbour. The digital business was run by marketing people, with no understanding or interest in the value of journalism. But it was built that way because Fairfax itself could not see that quality journalism was what its business was about. Instead, it entrusted to mobile phone entrepreneurs the business of building a digital platform for its newspapers. The result is the cretinous brand-destroying online versions of the SMH and the Age.
This bungling at Fairfax had its origins in the ascension to the CEO position in 1998 of management guru Fred Hilmer, author of an influential report on productivity. A year before his appointment, online employment portal Seek was born. It was Seek, along with car sales and real estate web platforms, that planted the seeds for the destruction of Fairfax. Ironically, Hilmer at the time had the option of buying Seek, but flagged it away. This might have least bought him some insurance.
A professor who once famously described journalists as “content providers for advertising platforms”, Hilmer freely admitted that he was not a keen reader of newspapers, which continued a fine tradition at Fairfax of hiring people with no feel for journalism and its worth.
Many of us argued all along that the obvious thing to do was to merge the digital with the print divisions and hire and promote journalists who could think outside the narrow print box in which the company was slowly burying itself. But the risk-averse executives couldn’t – or more correctly, wouldn’t – do it. Of course, NOW they get it, but with much more painful results.
There is no easy answer to funding quality journalism. Buying newspapers en masse won’t save print. That’s because advertisers now have other alternatives as publishing platforms and because the car, job and property ads have a utility in themselves independent of journalism they used to subsidise.
In any case, cover prices of newspapers provide less than 20 per cent of print revenues. And while the advertising yields from print remain significantly higher than those online, print journalism is a very expensive way of aggregating audiences to sell to advertisers.
Fairfax Media’s s share price has plunged by more than 90 per cent in the past five years, destroying hundreds of millions in shareholder value and now the jobs of many hard working people. This wealth destruction has been caused partly by prolonged bungling and political infighting, and has now left the company a sitting duck for a takeover by Gina Rinehart. The world’s richest woman – an aggressive climate change denialist and mining plutocrat – is seeking to not only control Fairfax but veto its choice of editors. In other words, she plans to destroy whatever brand value it has left.
The Rinehart grab for Fairfax is a reminder that newspapers – regardless of their busted business model – retain significant currency as influence peddlers for those who would use the Fourth Estate to force public opinion and public policy to their own commercial ends.
What we don’t know yet is the price, if any, the public is ready to put on the loss of quality independent journalism separated from the advertising model that used to feed it.
We are about to find out.
Don’t Just Blame the Web for Fairfax’s Failure – Jonathan Green, The Drum
Fairfax or Gina-Fax? | Andrew Jaspan, The Conversation
Go Ahead, Gina, Build Another Content Company | Alan Kohler, Business Spectator
The Journalism We Need | Jake Lynch, New Matilda
(See here SMH/Age front page under Rinehart)