News media has not only survived but thrived across centuries since the printing press was invented in the 15th century. From tabloid journalism to photojournalism to slick magazines to the earliest online forums, news industry has always found successful ways to respond to new technologies, cycles of recessions and shifting audiences. Having survived the onslaught of radio, tv, cinema and OTT, the news industry is now facing an existential threat owing to the COVID-19 pandemic. Will it be able to survive the economic fallout of the pandemic or is this going to be the final battle?
In order to reach any conclusions, lets first understand the current scenario.
News consumption in the last couple of months has seen a humongous spike as readers flock news sites to keep themselves abreast of the COVID-19 situation.
However, this rise in consumption has not led to a surge in revenues. Infact, just when we all need good journalism the most, the news industry is facing its biggest crisis ever. This is the toughest time for the industry where news and journalism behemoths are laying off people or furloughing them and some local newspapers are shutting down altogether.
So what’s plaguing news companies across the globe?
Their reliance on advertising revenue! More than 80% of total revenues come from advertising and campaigns have all but dried up.
The media industry in the UK has lost more than 50 million pounds in revenues in two months, according to The Guardian.
Ad spend in the US, tied directly to the state of the economy, has already dropped by at least $80 billion since the outbreak began, according to WWD.
Media companies in the UAE have seen a similar fate as most of their counterparts around the world
Indian companies last year spent nearly $9 billion on advertising, including about $2.6 billion on print media, according to a Pitch Madison advertising report. But the Indian Newspaper Society, which represents around 1,000 publishers, has estimated that the national media industry stands to lose more than $2 billion over the next six months, and has urgently sought federal government support through a 50% increase in government advertisement rates.
Infact, even ads on their digital platform which has seen a triple digit surge in traffic, has nosedived. With the pandemic getting 24×7 eyeballs and coverage everywhere, many major brands have slashed or stopped spending on news websites. Most companies have put advertising on hold, unsure of the public’s mood and unsure if their ads will connect well in this crisis. Recent research suggests that 55% of advertisers have paused campaigns in response to the situation. Most advertisers are shying away from “negative” or “anxious” content like coverage of a pandemic. (research from Integral Ad Science). Also, since the consumption is next to zero, companies have slashed their marketing budgets to almost zilch.
Is there anyone in the business we can learn from in the current crisis situation?
The dip in the revenues for the news industry started with the 2008 recession where ad revenues of the newspaper business fell 60 percent between 2008 and 2018, according to a Pew Research Center analysis. This is also the same time when Google and Facebook started dominating the digital markets and managed to get more than 60% of total digital spends worldwide. This is when news media behemoths like The New York Times, Financial Times, The Washington Post and The Wall Street Journal diversified their revenues by adding millions of paid digital subscribers. Some of the other media houses have followed suit by adapting the metered paywall strategy. The rest who thought there is a contradiction between good journalism and the market place were proven wrong and those chickens are coming to roost.
This pandemic has signalled to all news media houses (& others) who have not already adapted to a paywall strategy, that their existing business models are broken or at breaking point and they must adapt to survive. Apart from encouraging readers to pay for good journalism, media need to find new ways to brand themselves as community- or data-driven hubs. Since data is the new oil, media can sharpen their act database marketing via newsletters, upselling to marketers with a sharper psychographic profile of its readers and creating B2B content like e-books, whitepapers and webinars for brands to position themselves as thought leaders.
Content aggregator companies like Facebook and google also must share higher revenues with content creators. Facebook announced a $100 million investment to support local news papers during the coronavirus pandemic, with $25 million in emergency grants going to local news outlets and $75 million more for marketing to help those struggling to survive the current decline in advertising. As the Times reports, this money comes in addition to the $300 million that Facebook has already committed to local news by the end of 2021. “If people needed more proof that local journalism is a vital public service, they’re getting it now,” said Campbell Brown, the former NBC News journalist who now serves as Facebook’s VP of Global News Partnerships.
Long Live News media!
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