Daily Maverick

South Africa’s newspaper owners claim their problems are part of an international trend – but they are not

When I was editor of Business Day, we had a weekly management meeting that I dreaded. The meeting discussed the nitty-gritty of the newspaper’s finances and performance, including the circulation.

First published in the Daily Maverick 168 weekly newspaper.

We had some of the most sophisticated circulation managers in the business, but all their brilliance was for nought. Nothing we did seemed to have any effect; it was just an endless battle. It was depressing because I knew declining circulation ultimately meant cost pressures, and that meant retrenchments.

In fact, one of my first jobs at Business Day was to fire 20% of the editorial staff, the fifth retrenchment effort in the newspaper’s history. Firing people is a gut-wrenching, bloody business. I still remember the sleepless nights.

Overall, my record on Business Day as regards circulation was bad but not cataclysmic. Circulation, when I arrived in 2018, was about 22,000 a day and, when I left two years later, was about 20,000.

Digital cataclysm

But there was a grand irony in all of this. While the print circulation was declining, the online circulation was exploding. When I arrived, our online readership was about 500,000 “users” a month; two years later, it had doubled. This trend has continued: print circulation is now 13,000 a day, but monthly readership is about 1.6-million.

Through this process, I learnt about the necessity to innovate and to do it fast. Here I give the then management of what is now Arena high marks because this was a grand joint effort.

We decided to put up what is called in the trade a “leaky pay-wall”, modelled on other financial publications around the world. The result was a new income stream and with that, the publication has a chance at a future. It still produces some of the best journalism in the country.

But much of the rest of the industry has stayed static, blinded by the lights of the oncoming digital cataclysm. That inactivity is about to culminate in a spectacular way. The latest circulation figures show not a decline but a bloodbath, almost across the board. The Star, which once sold more than 200,000 copies, is now selling 20,000 a day. The Pretoria News now sells about 2,000 a day. You could print it on a set of photocopiers.

When the owners of these publications are asked about this decline, they will no doubt claim this is an international phenomenon.

It is not, at least not to this extent. The Independent group took a hostile position toward their suburban readers, staunchly supported the Zuma government and generally failed journalism. Those decisions were not caused by any international trend.

It’s a crazy comparison but, for what it’s worth, The New York Times’ circulation is now about 50% down on its heyday, about 400,000 a day. That compares to the 74% decline since 2016 of, for example, The Star. But, the New York Times also has 2.3-million paid digital subscribers and in its last quarter made a profit of $250-million off a turnover of double that. It is, in short, flying. The company’s management backed its core product, good journalism, and the result is a spectacular business turnaround. 

The Star has zero paid subscriptions, and we don’t know whether it’s profitable or not, but I would guess not. This failure to recognise that the future of journalism lies online and to invest in trustworthy, reputable journalism has been a monumental management error, and it may cost us our newspaper industry. 

But there is also another problem: Google. News websites generally attract high activity because news is a very absorbing, constantly changing, high-value commodity. Google’s revenue is now about $180-billion a year, and advertising revenue amounts to about $146.9-billion. Its profit is about $90-billion.

A grand proportion of that comes from taking a slice of advertisements that appear alongside news articles. The producers of the news also get a slice if people visit the newspaper’s website. But Google’s slice is probably a lot bigger than the newspaper’s slice, and they don’t have to produce the content or take legal responsibility for what appears.

Obviously, newspaper proprietors are upset about this, and they are starting to lobby governments to force Google and Facebook to pay a tax. Google has responded to this with barely disguised panic.

The Australian government has proposed such a tax and Facebook has pulled the plug on all the news sites in the whole country. And here’s the funny thing: Microsoft, which owns a competing search engine, Bing, is supporting the Aussie government! Google has now suddenly frantically cut deals with newspaper proprietors it thinks have sway in government in the US and Australia.

The government and newspaper owners need to get on this train and do it fast, or else our industry is a goner. DM168

This story first appeared in our weekly Daily Maverick 168 newspaper which is available for free to Pick n Pay Smart Shoppers at these Pick n Pay stores.

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