A former regional editor has questioned the prospects of a ‘digital rescue’ for the newspaper industry and concluded that readers will ultimately have to pay for journalism.
Now a freelance consultant and part-time journalism lecturer, he also writes a blog focusing on journalism matters.
In a recent post, Keith says the way newspapers will survive will be to become what he calls “small, low cost, digital and print businesses.”
Arguing that digital revenues are unlikely to replace falling print revenues, he says figures from one regional publisher show it is gaining £1 in digital sales for every £21 in lost print sales.
He predicts that the end result will be some form of paywall and thus smaller audiences for regional newspaper websites.
Writes Keith: “Traditionally, news has been paid for by advertising, particularly classified advertising such as recruitment, property and motors.
“That’s not going to happen any more – classified advertising works better online than it does in print. And newspaper companies that think that they can build big online classified businesses are deluded.
“The best way to pay for journalism is for the reader to pay for it. In print, that means a much higher cover price. That, in turn, will mean a much smaller readership as far fewer people will value news at the higher price.
“Online, it means some form of paywall. But those who will not pay £1 (or £2 or whatever other price is needed) a day for a print package are not likely to pay £1 a day for a digital package either – news providers, particularly local news providers, are going to have to find a way to let people pay for what they want and nothing else.”
Keith goes on to argue that with smaller audiences will come different forms of newspaper ownership, with big publishing groups exiting the scene.
“Local news companies will be owned by small local businesses. There just won’t be enough money in them to make it worthwhile for large national or international businesses, especially for those with big debts.
“Renowned billionaire investor Warren Buffett recently said he expects a 10pc return on local newspapers he has bought, and that he expects that margin to reduce. If he’s right, and returns drop to below 10pc, it is difficult to see any large business with debt and head office costs, wanting to be part of the local media scene.
“If that happens, it seems to me that the most likely scenario is that more newspapers will close down, but will probably be replaced by much smaller, locally-owned businesses.”