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The Good News

With so many pundits talking the newspaper industry down, it is refreshing to find someone prepared to fight its corner. Gavin O’Reilly acknowledges some structural problems with the UK market, yet sees a bright future for the printed newspaper. Ray Snoddy met with him to find out why.

By Ray Snoddy

Suggest to Gavin O’Reilly, president of the World Association of Newspapers, that at long last the newspaper industry is mounting a fight-back against all its digital tormentors and the answer is surprising.

"It’s not a fight-back. It’s just to say ‘you guys look at the bare facts,’" O’Reilly explained to InCirculation.

The bare facts and nostrums about newspapers that O’Reilly, chief operating officer of the Dublin based Independent News and Media, is now putting on the agenda are many and various.

First and foremost he believes reading newspapers is about enjoyment. Laptops, he points out, aren’t so easy to read in the bath. BlackBerries buzzing in your pocket all the time are also no fun at all. And of course if you want to find out "why men are shits" then all you have to do is read the Daily Mail.

The O’Reilly view of the simple facts about newspapers also range from extreme scepticism about some of the numbers bandied about by the online world, to absolute disdain for those who argue that the future of newspapers is inevitably about straight-lining all the way down to an eventual zero.

"I am very optimistic about the future of newspapers. People just need to look at the underlying statistics," insists O’Reilly, whose WAN organisation came out last month (June) with a welter of good news for the industry at the 60th World Newspaper Congress in South Africa.

There was research demonstrating that young people still found newspapers more reliable than new media and bucket loads of figures proving that, even in mature markets, newspapers were showing a "remarkable resilience" in the face of the digital onslaught.

Overall, the "good news" included a 2.3% rise in worldwide circulations last year and a 3.7% increase in advertising revenue.

The UK Market

But when the WAN president focuses his gaze on the UK national newspaper business, he becomes markedly more critical of current performance and a lot more pessimistic, unless things change.

Is the current decline of the paper copies of the nationals in the UK inevitable?

"It doesn’t need to be, but based on the modus operandi of most UK publishers it will be unless something changes," admits O’Reilly, whose company owns both the Independent and the Independent on Sunday in the UK market.

"Yes, because we have become a very short-term market in the UK. As an industry, we are not investing behind our brands and we are not investing behind our journalists. We are unfortunately trying to get short-term fixes, be it DVDs, CDs or wall charts," the WAN president argues.

The comments could be applied, among others, to the Independent itself, which is well known for its wall charts and CDs of bird-song.

But, warming to his theme, O’Reilly continues with the attack.

"The millions and millions of pounds that are being put in there with the illusion of propping up the circulation, when that money would be better used to restructure the business or investing behind brands: therein lies the opportunity," he emphasises.

If key Procter & Gamble or Unilever brands were losing either volume or market share, the response would be massive marketing campaigns, the WAN president argues.

"So, will circulation decline be inevitable in the UK? Yes, if the status quo continues," concedes O’Reilly.

Need for Quality Journalism

The newspaper executive totally accepts that people nowadays buy newspapers not for breaking news – that has long been the domain of TV and radio - but to get a perspective on the events that shape their lives. Increasingly, that boils down to the views of individual journalists - views that readers can share or disagree with.

"I think we are moving progressively to a realm where we have more star writers. We have got to be prepared to invest, not just in marketing but in hiring them in the first place," O’Reilly emphasises.

In that respect, it’s a great time to be a journalist as long as they have a perspective, be it amusing or controversial.

He is not however a fan of the sort of journalist who seems to take a very keen interest in the difficulties the industry faces.

"Journalists seem to delight on a monthly basis writing about who’s up and who’s down. Roy (Greenslade of the Guardian) seems to love who is up and who is down by 1%," says O’Reilly.

Away from the traumas of the latest ABC circulation figures, O’Reilly believes there are lessons to be learned from history.

After the war, the penetration of newspapers increased greatly and it happened because papers such as the Daily Mail and the Daily Telegraph went from door to door to build their franchises.

O’Reilly believes newspaper managements need to develop a modern equivalent today.

"Absolutely, and it can be done because I think all the constituent ingredients are there," he says.

Distribution however remains a chronic problem "because it sits behind unions and Teamsters and God knows what else."

But O’Reilly believes that the greatest savings could come from how newspaper content is generated because that is where the greatest costs lie.

Legacy Costs

"If you were setting up a new newspaper tomorrow, you wouldn’t do it the way we do it now. There are legacy costs and legacy issues," he believes.

"I find it amazing that we do an interview or a typical story and what gets written will be touched – depending on what newspaper it is - by between six and eight people," he added.

Some may call that quality control, but O’Reilly doesn’t see why university-educated journalists, for instance, cannot sub their own copy.

"It’s about trying to do the job right first time. Maybe we’re just bad at it, but we shouldn’t be re-writing that which should have been written right the first time," he emphasises.

There is also an unfortunate legacy to be addressed from the early days of the internet when newspaper sites provided some of the most popular of the limited fare on offer.

"Unfortunately, we created a generation of consumers who expect all this stuff for free. That’s difficult to move against," says O’Reilly, who nonetheless believes that gradually publishers will have to put more and more of their content "behind the wall".

He adds: "We will have to say that, just like any other product, if you want to read that story you will have to pay. The pattern in future is clear. Lots free but not everything," the newspaper executive added.

On a worldwide basis, O’Reilly and WAN have certainly launched a robust attack on negative attitudes to the future of the newspaper industry, whether this is best designated a fight-back, or merely challenging preconceptions with the facts.

TV in the Doldrums

It is television not newspapers, WAN believes, that has been the big loser in the explosion of media choice and fragmentation of media audiences.

While newspaper audiences have actually grown or remained broadly stable, 34% of internet users say they have reduced their television viewing, while 64% of internet users reveal that they have not changed their newspaper consumption.

Between January 2000 and January 2007, O’Reilly likes to note, EastEnders was the most watched television programme in the UK. But over that time, he says, its audience fell by nearly 50%.

In the perhaps more obviously relevant market for television news, over the seven year period the audience to the ITV Evening News fell by 37.3%, while the BBC’s Six O’Clock programme was down by 31.9%.

WAN argues that on readership, demographics and on money spent by advertisers, newspapers represent a mass market medium of the future as well as the past.

"It is no overstatement to say that newspapers are fragmentation proof," claims O’Reilly.

The Online Opportunity

At the same time, the combination of print and online can generate incremental volumes and revenues - an average of 7% for the US industry.

A study based on the top 25 American markets shows that the New York Times has achieved a 12% uplift in its total audience by combining print and online, and for the Washington Post there has been a 7% boost.

"Despite all of this, one still hears continually that the internet is damaging newspapers. Yet how do you reconcile the fact that where newspapers are strong so too is the internet. Higher internet penetration actually tracks higher newspaper consumption," argues O’Reilly.

The next argument up is that the rapid spread of broadband – 233 million connections worldwide today, 430 million by 2010 according to the OECD - will be the real nemesis for newspapers.

"As publishers, we only see broadband as good news because it allows us to present more rich media to consumers - audio and visual content," the newspaper executive says.

And as the internet turns into a more compelling audio-visual medium, it will mean more competition for conventional television.

In fact O’Reilly can scarcely stem the surge of positive information about the newspaper industry once he gets going.

Newspapers have a relatively variable cost mix compared to other media, which means you can get better operating leverage than the competition.

And of course the mix of advertising and circulation revenue helps to insulate newspapers from the advertising cycle.

There have also been more title launches over the past 18 months than in any period in newspaper history and more than $6 billion has been spent on new presses alone …

"When you put it all together, the prognosis for newspapers is actually quite different to the conventional wisdom. To use the parlance of the day, we see newspapers as the ultimate browser, ultimately portable, extremely convenient as to both time and space and a product that engenders loyalty to its own brand rather than the medium," says Gavin O’Reilly, president of the World Association of Newspapers.