Speaking truth to power: my speech to the CBI

On Thursday this week (June 10), I’ve been invited to speak at the Senior Executive Lunch of the West Midlands CBI. I’ve been asked to talk about “Tomorrow’s news today -  changes to regional media and what the future holds for news journalism.”

It’s a well-worn theme and I’ve spoken on this at many events before, but mostly to media-dominated audiences. In front of an audience of very senior business figures, I thought I would try to give them an insight into where the media is going, and even steer them towards the realisation that smaller media enterprises will become more and more significant in the near future.

This is my first draft, and I’d welcome suggestions for other points to make to this audience.

(June 9 update: thanks for all the challenging and thought-provoking reaction to this post. I never expected to get such a response, as I said nothing here that I've not said before - mostly on this blog as it happens. In the light of yesterday's announcement by Jeremy Hunt that IFNCs are dead, I'll try in the speech to better represent broadcasting issues. For the moment, though, I've concentrated on tidying up some of my editing howlers on this draft and will try to update more fully later. June 10 update: I added a couple of pars about IFNCs and the Jeremy Hunt announcement. They're pasted at the bottom of this post)

Journalism has no God-given right to exist and journalists are owed a living by nobody.

By the same token, none of you have any ‘right’ whatsoever to receive a daily print newspaper that provides you with hundreds of stories focused purely on your needs as a senior business decision maker in this tiny outpost of the global economy.

Sadly, listening both to both journalists and to readers over the past few years, you would think that news journalism was like the air that
we breathe – ubiquitous and free. Unfortunately it’s not. Even if you’re the BBC – state-run and paid-for by us anyway – journalism has to be bank rolled by somebody, somewhere down the line.

For as long as newsprint held a near-monopoly as the major delivery channel for advertisers, none of us really had to worry much about this. The arrival of TV advertising coincided with a 50-year consumer boom, so a few lost readers didn’t worry the newspapers much, living high on the hog of ever-growing ad revenues.

“We survived TV so we can survive anything” is still a far too commonly heard mantra of newspaper people.

But when the internet finally got into gear between five and ten years ago, it did three things:

One, it started occupying a bigger and bigger slice of the average person’s time per week – time that may in the past have been spent browsing a newspaper. But they weren’t just looking at digital versions of what might have been in that paper – they were travelling the globe from their laptop buying and selling on ebay, and talking to thousands of people on social media services. Suddenly the clunky utility and quaint warmth of your local paper seemed a lot less attractive.

Second, it gave advertisers a much more cost-effective way to reach audiences. When the classified advertising site Craigslist launched, it took hundreds of millions of dollars of advertising business from major city papers in the US, several of which have now closed. Why spend £600 on a tiny job ad in your local paper which may be read by a few dozen people when £100 will put it on a myriad of jobs boards browsed by thousands of active job hunters daily?

Third, the web rode a perfect storm as the recession stated to bite three or four years ago, forcing businesses to spend reduced marketing budgets much more wisely and in a much more targeted way.

Suddenly, everything was conspiring against the newspaper business.

But don’t feel too sorry for it.

I spent the last 15 years of my newspaper career regularly attending industry conferences in which the threats and opportunities of the internet were endlessly discussed and analysed. Pretty much everything that has come to pass was predicted, but what did the big newspaper groups do? Very little that was right, it turns out. Saddled by a shareholder base that had grown used to the cash cow returns of a monopoly, the regional newspaper industry in particular was structurally incapable of adopting the entrepreneurial approach that is the only option available when almost every aspect of your business model is rendered obsolete.
So, where are we now?

Hundreds   Dozens of newspapers in the UK alone have shut. Thousands of newspaper staff have been made redundant. Readership numbers and revenues for those titles that survive are a fraction of where they were just a few years ago.

Every newspaper has a website – some considerably better than others.  So if the internet is the answer, all these online newspapers are doing fine, right?

Wrong. Still the woe continues – the internet hasn’t fixed the newspaper business model – precisely because it remains the newspaper business model.

Newspapers are still trying aspiring to the revenue levels of the old days, so the mantra is: ‘”You can’t make money from the internet ... Lose a pound in print advertising, make a penny online.”

Well, that’s true – but it’s only a problem if you’re trying to make an online revenue stream pay for a newsprint cost base.

Despite all the slash-and-burn cost-cutting of the past few years, the newspaper business is balanced precariously atop extraordinary pensions obligations, massive ongoing capital bills for print plants, and debt that was affordable when cashflow was fuelled by lorry-loads of classified revenues but is now raping the bottom line.

So even ‘forward thinking’ online-minded, digitally enabled newspaper groups are trying to fight with several limbs tied behind their backs. No wonder they say ‘there’s no money in online advertising'.

What’s left for them? Cue the desperate hope that so many of them are attaching to Rupert Murdoch’s decision to make readers of the Times and other newspapers pay to read the titles online.

That’s the answer they cry – make the buggers pay to read us online. They pay for a newspaper, so why not charge them for digital access? Hurrah!

This is such a wrong-headed argument I hardly know where to start to demonstrate to you its folly.

Let’s start by looking at the very premise that you pay for a newspaper anyway in the first place. Well, you do, but that’s all you do – you pay for the very paper you hold in your hand. Your 70p goes absolutely nowhere to meeting the full costs of what you’re reading – the journalists’ salaries, the IT and all the other component parts of  complex business producing a highly perishable manufactured product. The difference is subsidised by advertising or the depth of a proprietor’s pocket – or both. If consumers were truly ‘buying’ and therefore valuing the journalism itself rather than the means of delivery, they’d happily pay £5 per copy of the Daily Rag. But of course they don’t – and won’t ever - but that’s exactly what paywall fans think will happen online.

With a newspaper, all you’ve bought is the delivery channel – the paper and perhaps the space on the newsagent’s counter. Just as now you’ve paid £700 for your home PC, £30 a month for your broadband connection and perhaps another £30 a month for your smartphone.

Is it any wonder that people are so reluctant to ‘pay for content’ online? They’ve already stumped up more than they ever did to buy a newspaper two or three times a week, so why should they add to the burden by paying for content that is available elsewhere for free?

Often when I give talks like this, it’s at this point that many in the audience think – and often say – “Ah, but I really like a newspaper in my hands; I can’t read  a little screen; the internet is full of nutters etc etc.”

Well, all of that may be true, but the market doesn’t care what you think, anymore than it would if you said you’d rather travel by steam train. Another technology came along to replace steam, and most people liked the convenience and speed, leaving nostalgists to form special clubs to re-enact the wonders of the old days.

And that’s what frustrates me most. When hard market facts tell us the media business is only going in one direction, you have nostalgists like Chris Bullivant recapturing the days of yore and launching old-style newspapers – and what’s worse, big players like Trinity Mirror humouring him by spending money on funding counter-launches when they should be moving their brands online ever more aggressively.

But I suppose I more than anyone shouldn’t be complaining. After all, I’ve put a 20-year newspaper career behind me and have firmly tied my colours to the online mast.

TheBusinessDesk.com is a purely online entity that provides highly focused, targeted news stories at a very tightly defined niche – business leaders and professionals in the English regions. We deliver that content in very particular ways – mostly through a daily morning email with links through to the website. While we have an Iphone app and  other major developments on the way, what we do is essentially very old-fashioned. Good, solid journalism published in a timely way and paid for by advertising. We just happen to be using new delivery tools to the best of our ability, and our exceptionally low-cost business model means we stand a chance of being around serving our readership for a long time to come.

Our growing readership and revenue numbers suggest it’s a model that works for us and our customers and we’re certainly optimistic that there’s great potential for the growth of the business.

But I’m also optimistic about journalism.

Does journalism have an important role to play in a democratic society? – you bet it does.

And do you need daily information that helps you live your life and do business profitably? Of course you do.

Journalism that’s good for society and good for business can and will survive – but only if it is part of a profit-making industry sector whose growth and sustainability makes it an attractive prospect for shareholders. 

I believe the biggest challenge to journalism is not the internet – it is the inherent inability of the largest media groups to squeeze from it the revenues and profits they’ve been built on. It is also the tendency of too many journalists to leave ‘business issues’ to the money men and ‘the management’.

The sooner more of them get down and dirty in the guts of what can turn a small idea into a successful business, then I think we’ll have a lot more answers to the question: “where is news journalism headed?”

(These lines were also included in the speech:
And that brings me neatly to this week’s announcement that the government favours the idea of 80 city TV stations based on the US model. It has scrapped three pilot schemes for Independently Funded News Consortia which would have delivered region-wide public service news, some of which would have replaced the currently inaffordable local ITV news programming.

I helped advise the government on the selection of the bidding consortia, and I firmly believe the pilots would have helped answer some of the burning questions of what regional news looks like in the 21st century. Sadly, because of Jeremy Hunt’s apparent nostalgia for old-fashioned telly stations, we face another two or three year delay before his alternative can be truly tested. I fear by then it may be too late. )


  1. great stuff - I'm sure this will go down well at the CBI lunch! and the BusinessDesk.com is showing how it can be done...
    I'm very sceptical of epople's willingness to pay for online content as you rightly note (maybe the FT can do it as a highly specialised provider but that's perhaps an exception that proves the rule)

  2. Hi Marc. Interesting speech. I'd question whether to go so hard on the jobs ads point, as it's a market which is still there and which still delivers a response. As for TM not pushing its brands online aggressively enough, I'd argue we are moving much faster than even, say, at the end of last year. The 'lose a pound, gain a penny' point I've only heard from very few people, and I think there's a difference between the anti-web brigade who say 'there's no money in online' because they feel the need to find a thing which blame for downward circulation, and those who know both can work hand in hand. To that end, I feel you're painting an overly-negative image of print. Finally, your speech title seems to be about the media, not just print/online - where does local TV go from here in the Midlands, and local radio for that matter?

  3. I agree with David's comments and believe that for the providers of excellent services/products, that the marketing will look after itself.

    While TheBusinessDesk.com seems very helpful, it will be worth getting feedback from some of the niche - delegates at the CBI Lunch - as to what they like/dislike about the website, the business model and how they would like to see it develop.

    Best wishes for Thursday.

  4. Thanks David, David and Patrick.
    David H, you're right about including some remarks about TV - I'll take that on board. I think though you're being a little optimistic about print job advertising. Newspaper job revenues are at around 20% of where they were 10 years ago, in my estimation, and the decline is mostly structural. Any specialist or skilled jobs are now advertised on the appropriate sector-specific online job boards, leaving newspapers to pick up only the low value blue collar jobs, on the whole, and even these will decline as mobile and broadband access penetrates more sections of society.
    As for 'lose a pound in print, gain a penny online' being an unknown saying, I've got to say I heard little else from MDs and sales directors.
    Patrick, marketing never looks after itself.

  5. Hi Marc - maybe I am being optimistic but I'm not sure the value of a 'xx% of what it was 10 years ago' because cost bases have also changed in that time. I'm also not sure about the point about 'low value' jobs. Sure, they may not be the high-flying, mega bucks jobs but they are jobs which suit the market certain papers are aimed at. This is where having a print/online combined proposition can help a lot.
    One other thing - I've just been going through my notes from the Newspaper Local Heroes conference the other month as the Newspaper Society says 60 papers have closed during the most recent downturn, which surprised me, because I thought it would have been higher.

  6. The fog is lifting and it is definitely a digital landscape out there, just as many people within newspapers forecast. Unfortunately, many of those making the decisions within the industry over the last few years were old school and, like you said, they had seen it all before. Don’t panic - it’s cyclical, we were often told.

    Of course, it’s not all bad news...forgive the pun. Media organisations and/or individuals using graft and creativity will prosper in this new, exciting age, providing they can respond quickly to change and technological innovation.

    Yes, an entrepreneurial spirit is required in order to 'cash in' on opportunities created by the internet, rather than territorial counter attacking or using blocking tactics to protect tired, unprofitable print titles with ever-dwindling audiences.

    Media organisations need to focus on what they are good at: identifying news, gathering news, creating an irresistible package of news and fast-passing it to ‘readers.’

    The demand for news is greater than ever but it is important that media organisations listen to the consumers better than ever and deliver what they want, when they want it and how they want it.

    Tesco do it so well. Always thinking ahead. Anticipating the market. Reacting to customers’ requirements. Recognising its field of expertise as sourcing at low cost, the supermarket giant turned its attention to the wine market in the late 1980s and early 1990s, delivering a devastating blow to traditional outlets such as Ashe and Nephew, Augustus Barnett, etc.

    If Tesco had stuck to peddling baked beans and bog rolls they may have gone bust. Soon (ssh...whisper it) they may turn their attention to news if others don’t get their act together.

    I know from my own time at Trinity Mirror in Merseyside, that big news organisations are often not sufficiently nimble to make the most of new opportunities. They also often lack strategic clarity. Sly Bailey seems to blow hot and cold on digital matters.

    For instance, just months after journalists were equipped with decent video kit and trained how to use it, there has been some breathtaking back pedaling over video content for websites at a time when shooting, editing and uploading HD footage now takes minutes not hours. Meanwhile, broadband and smartphones allow simple, enjoyable, on-the-go watching of snappy, quick-fire videos.

    Some might say that video does not bring in sufficient numbers of new viewers/readers. Others will say it never will if it’s not there! The secret, of course, is not just putting video content there in the first place, it is in using marketing skills to place it under people’s noses or rather at the end of their fingertips. It all comes back to making the package irresistible.

    Some newspaper websites are also not embracing the lifebelt that is Twitter in terms of gathering and driving audiences to online content. Easy, cheap (well, free actually) stuff. The Daily Mirror Twitter (2,789 followers) has less followers than some corner shops!

    It must be frustrating for journalists, not just within Trinity Mirror, with a passion and expertise for multimedia.

    I often think that years of managing decline has developed a negative, can’t-do attitude within parts of the news industry, especially where risk threatens profit. Of course, there is a risk if you do and a risk if you don’t.

    Anyway, I could bang on and on about how I see the future of news, especially local/regional news, but I’ve got to go and pay my paper bill!

    Good luck with the talk, Marc.

  7. Marc - while agreeing with much of what you say I would shy away from falling into the trap of Enders and co and dispense with the "End of the World is nigh" sandwich boards for now.
    Surely we can't claim that hundreds of newspapers have closed in the UK.

  8. "...the market doesn’t care what you think, anymore than it would if you said you’d rather travel by steam train. Another technology came along to replace steam, and most people liked the convenience and speed, leaving nostalgists to form special clubs to re-enact the wonders of the old days."

    What a superb way to sum up that whole argument! And a very good speech overall.

  9. David and Nick : happy to change 'hundreds' to 'dozens'. Thanks.
    However, Nick, I'm not saying it's the end of the world for newspapers per se - but it is - and should be- the end of the world for ownership structures and business models that demand more returns from newspapers - in print and online - than they can possibly deliver in the new world.

    "... years of managing decline has developed a negative, can’t-do attitude within parts of the news industry, especially where risk threatens profit. Of course, there is a risk if you do and a risk if you don’t."

    Well said.

  10. Definitely agree with your argument, Marc. However I'd quibble a little with this: "I believe the biggest challenge to journalism is not the internet – it is the inherent inability of the largest media groups to squeeze from it the revenues and profits they’ve been built on. It is also the tendency of too many journalists to leave ‘business issues’ to the money men and ‘the management’."

    I believe the biggest challenge to newspaper journalism is the structural inflexibility of the large organisations which run newspapers, their unwillingness and inability to alter their business models, and their head-in-the-sand approach to innovation. But journalism generally is thriving in the digital age in hundreds of other forms. Framing a threat to print news as a threat to all journalism is another, subtler form of print protectionism.

    Journalism is starting to make money online with business models that make sense. Big news orgs have to innovate or die - but that's been true for, what, 15 years now, and print businesses have sat and watched while other people transformed the worlds of classified ads, property pages, job searches and all the other little things that paid for the apparatus of publishing in the print medium. It's hard to see where they're going to get the flexibility, creativity and willingness to take risks that will be necessary to forge working business models now.

  11. Marc - Agree with most of this with the minor qualification that the problem for existing news publishing companies is part financial (print cost base) and part psychological/cultural. They're just not ready to throw spaghetti at the wall. See http://georgebrock.net/?p=182

  12. Morning Marc

    You make a very good argument. Unfortunately it is stilll a flawed one. Not everyone has access to 'free content' or even the interest in going online to get access to it. Please don't make the mistake of writing off the printed media - it still has a a very valuable role to play in modern life. Interesting that the nationals still sell millions of copies a day, despite their own websites, TV, radio competition etc etc. Readers still value something they can hold in their hands, look at and judge accordingly. The important thing is that they can do it at their own leisure. Not easy to do if you have to do it on a website. Online has a place, but it is not the be all and end all that some would have us believe.

    Steve Pain.

  13. "Sadly, listening to both journalists and to readers..." Both journalists? Sounds like the average weekly paper staffing level. Make that "Sadly, listening (both) to journalists and to readers..."

  14. Steve Pain - "the nationals still sell millions of copies a day …" yes, and how many of those buyers are under 30? When a social change happens, it takes 10 to 20 years for the effect to work right through society, until those born too early to break their habits finally all die. Demographics means newspapers are doomed, because they're not recruiting new readers fast enough to replace the ones that are dying, as can be seen by falling circulation figures everywhere. "Readers still value something they can hold in their hands, look at and judge accordingly …" You're making that up. Where's your actual evidence?

  15. Nick, your pedantry has put me to shame. I could argue the draft I published was just that, but you're right to point out my errors anyway. Thanks.

  16. Terry - I use my eyes and ears, much as I have done in nearly 40 years of journalism, to judge what the evidence is. And it tells me very strongly that many people - regardless of their age - still want to buy a real newspaper. Try getting out a bit more and find out for yourself.

    Steve Pain