Ten years before the death of the newspaper

The fact that the circulation of newspapers and magazines has been declining for years is widely known. But on closer inspection, one thing is surprising nevertheless: the speed at which this process is unfolding. If we extrapolate the trend into the future on a linear basis, trade journals will have lost half of their current circulation within ten years. The same applies to daily newspapers, with only popular and general interest magazines able to retain 50 percent of current sales up to the year 2045. In many cases the question of further viability and existence will arise well before this half-life has elapsed.

Nationwide, publishers are searching feverishly for ways out of this situation. One question should be permitted, however. What if there is no way out? What if – as some futurologists are forecasting – the last printed newspaper is tossed into the paper bin around 40 years from now?

From where we stand today, this appears to be almost impossible, but we only need to look back a few decades to realize the following: many things that are commonplace and perfectly normal today were just as inconceivable back then. At the turn of the century, when extremely expensive terabyte storage systems filled wardrobe-sized racks, who would have believed that ten years later more than double the volume could be stored on a single hard disk available for a modest sum at an electronics store? How many proud owners of one of the first cell phones 20 years ago would have imagined that this highly prestigious if rather chunky device would soon shrink to become a universal implement that people pull out of their shirt pockets with two fingers and then use to surf the Internet, play chess, navigate, take pictures, listen to the radio, count steps, save dates and schedules and set an alarm?

Now let us assume that we are actually witnessing the last few years in which print media exist. The next question is why this situation has come about. One key factor is obvious: Internet use has increased in inverse proportion to the decline of print circulation. During the last two years alone visits to websites monitored by the IVW have increased from 3 to 4.6 billion. In addition to this, a wealth of new communication platforms have been established such as blogs, wikis and a wide range of social media platforms.

So it is hardly surprising that many publishers have desperately seized the initiative and pumped huge investments into their Internet activities. But is this really the remedy? Some reasonable doubt may be entertained here. Of course, certain publishers have indeed been able to increase their online traffic: in 2009 Der Spiegel recorded an increase of 21 percent for its news website, while Bild.de attracted 58 percent more web users last year. Süddeutsche Zeitung’s 40 percent growth is also perfectly presentable. But this is only half the truth, because at the same time these internet winners are losing out on their print circulation at a breathtaking rate: between 2008 and 2009 Der Spiegel lost more than 38,000 readers, with Bild losing over half a million and Süddeutsche Zeitung almost 30,000. If the decline continues at such a pace, Bild would have half as many readers as it does today in just 12.5 years (for Süddeutsche Zeitung it would be 28 years, for Spiegel 56 years). So online success is clearly not arresting the decline of the print product - on the contrary: loss-making online trade is eating up money and resources at the expense of the printed edition, but is not generating any profit itself.

There are of course contrasting examples, such as popular magazines. Glamour, a magazine produced by CondeNast, has even been able to increase its print circulation, for example. And it has applied the very opposite strategy: a simple, straightforward advertising style is put to the service of the print product, acting as a kind of online table of contents. It uses its best advertising showcases for effective self-promotion. With this kind of exposure, the high-gloss magazine can generate significant turnover by featuring print advertising for premium brands.

But there is a question to be asked here, too: what will the role of such advertisements be in the future? For a long time now, Internet giants such as Amazon and Google have been working on algorithms which draw on online behavior, mails, chat forums and orders to make conclusions about our preferences and interests as well as our solvency, thereby enabling them to provide us with individually tailored purchase recommendations. Indeed, data mining has been perfected to such an extent that the subtlety of its insights even goes beyond our own conscious awareness as consumers. Here is an example: it is now known that women who buy expensive perfume on Wednesdays are especially likely to bring something home for their husband; so women will be more receptive to a recommendation to purchase a gentleman’s bath robe on a Wednesday. This is the kind of thing computer programs are capable of identifying.

These technical capabilities and insights have a name: Google. The company has worldwide data at its disposal. Every search query is at the same time an answer for the Google algorithm. Google has everything it needs to do business here:

• huge quantities of data which provide insights into the Internet user’s every whim
• he most talented researchers who collect the very latest insights of brain research and communication research
• the most highly talented developers who are able to turn all this into highly effective algorithms
• generous amounts of untied capital for investments

For many other potential competitors, including the publishing houses, this is a lost opportunity. Google’s technological lead is no longer within their reach. Consequently, the situation will result in a distribution of power between Google and the publishing houses. There are three ways in which the latter can improve their position:

Firstly: every increase in paid circulation scores a point for the publishers. This would be the proof that people still need publishing companies and printed products. Whenever one printed product less is sold, a point goes to Google.

Secondly: there are signs that the deluge of products overflow will and must decrease in all areas (including publishing). There are many reasons for this: climate development, the need for more prudent use of raw materials and the fact that people in the developed industrial nations are simply becoming tired of cheap, throwaway products. We might call this trend a trend towards sustainability. If more valuable, more highly priced and fewer products are selected for a long lifetime, consumers will celebrate such purchases. And it is unlikely that Google algorithms will be a good source of recommendations here. Instead they will want to exchange opinions in an appropriate community and perhaps obtain information and advice from a glossy magazine. This would almost automatically help publishing companies to survive by providing high-quality products that capture the spirit of the times.

Thirdly: publishers start to adopt a new approach to handling the flood of information. They learn to ask the right questions at the right time and look for answers in new ways. This would give them the opportunity to become established as knowledge bases - reliable partners who help us cope with the plethora of data. However, the organizational structures of publishing companies as they currently stand are entirely inadequate for this purpose. What is more, in seeking to achieve this end they face competition on another front, too. If you look around for a model of what will happened to many journalists in the future, you cannot help noticing Suite101.de. Here, journalists and non-journalists alike write without pay in return for a lousy share in the Google advertising sales generated by their articles. Some 500 euros a month in advertising revenue - these are the potential earnings as estimated by the "editor-in-chief" of Suite 101. And yet it is still incentive enough for people on a very low income in critical life situations to make the most of an opportunity.

How many cheap printed magazines will be put out of business by Suite101? How many employees of today’s publishing companies will end up there - possibly not by choice? It’s worth thinking about.

Dieter Reichert

Dieter Reichert is co-founder of censhare AG. In his function as CCO, he is responsible for the strategic development and worldwide marketing of the censhare publishing system. Over the course of 20 years he has acquired an in-depth knowledge and expertise in the publishing industry, and is a visionary and founder of various media specific IT companies.

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