Attendance Down 50% At The WAN-IFRA Congress In India Isn’t The Only Bad News There With General Agreement Advertising Alone Doesn’t Work Any More And Half A World Away Murdoch Calls Google A Thief

Philip M. Stone December 2, 2009 Follow on Twitter

Everyone seems to agree that the newspaper advertising model is broken and will never go back to where it was and with the added whammy that digital advertising revenues won’t come anywhere close in the foreseeable future in replacing lost print advertising revenues then is there any future except to pray enough readers will pay for their online news?

That’s the bleak assessment from a PricewaterhouseCoopers (PwC) study released at the annual World Association of Newspapers and News Publishers (WAN-IFRA) Congress being held in India. Even bleaker news for WAN-IFRA is that attendance this year is about half of last year’s record-breaking 1800 plus publishers, editors and executives who had attended the convention in Sweden.

WAN-IFRA was to have held its Congress in March this year but had to cancel because of a lack of sign-ups, and perhaps rescheduling for the Sunday right after Thanksgiving in the US was not the best of timing, but with countries participating down this year to 87 from 113 a year ago it would seem times are still very hard globally for “nice-to-attend” functions, no matter how much WAN-IFRA tried to transform the program into a “must attend” meeting. No doubt the lower numbers won’t do the WAN-IFRA budget any good, either. As Gavin O’Reilly, the group’s president, said in his opening comments, “The postponement decision had been, as you may imagine, very difficult and painful.”

Perhaps just as “difficult” and “painful” is what those who did attend heard on the first day, namely that search engines are getting by far the bulk of digital media advertising dollars with just a trickle going to newspapers themselves. Half a world away in Washington Rupert Murdoch was telling the Federal Trade Commission (FTC) that Google was profiting from newspaper stories but not sharing any revenue. Lumping aggregators and bloggers together Murdoch opined, “To be impolite, that is theft.” (More on Murdoch later).

PwC said that search engines take the largest slice of internet advertising revenues -- in a $182 billion press advertising industry, newspaper digital revenues were less than $6 billion dollars last year and are forecast to grow to no more than $8.4 billion by 2013. And PwC predicts that by 2013 the combined print and digital ad revenues will be less than print only ad revenues were in 2008.

"These PwC forecasts, similar to those made by Zenith Optimedia and others, demonstrate quite simply that at no time soon will digital advertising revenues come close to achieving the sort of revenues required, by many, to compensate for falling print revenue," said Timothy Balding, co-CEO of< WAN-IFRA.  "So that answer will have to be found elsewhere.”

His conclusion -- "If newspaper companies wish to maintain their strong content leadership, someone is going to have to pay. It looks like we have to solve the digital payment issue ­ and soon," he said.

One of Murdoch’s chief lieutenants, Les Hinton, Dow Jones CEO, laid it on the line to the delegates. “We are allowing our journalism – billions of dollars worth of it every year – to leak onto the Internet. We are surrendering our hard-earned rights to the search engines and aggregators, and the out and out thieves of the digital age. It is time to pause and recognize this – free costs too much.” And he warned, “The one thing free news sites have in common with online newspapers is that virtually none is making money.”

His solution, of course, is to get people to pay for online content. His problem is that unless everyone starts charging for news then people will just drift to those sites that remain free unless the paid-for site has something unique rather akin to Hinton’s Wall Street Journal’s site. “In the future, good journalism will depend on the ability of a news organization to attract customers by providing news and information they are willing to pay for. Free costs too much. Good content is valuable. That hasn’t changed. It never will. The question is who will provide the content and who will be compensated fairly for the value delivered.”

His boss, Murdoch, speaking at FTC hearings in Washington on whether government financial aid for the media should be on the table, said journalism can still prosper but three ingredients are necessary – to deliver news people want and where they want it, to convince consumers that they have to pay for news and information online, and that the only government aid necessary is to make media investment easier by reducing what he sees as unnecessary rules and regulations. His bottom line: “The future of journalism is more promising than ever -- limited only by editors and producers unwilling to fight for their readers and viewers, or government using its heavy hand either to over-regulate us or subsidize us."

He has little patience for news aggregators – “Those who think they have a right to take our news content and use it for their own purpose without contributing a penny to its production” – nor for others who, who under the “fair use” doctrine rewrite what his journalists produce with no attribution and no payment.

“There are those who think they have a right to take our news content and use it for their own purpose without contributing a penny to its production,” he said.  “Content creators bear all the costs, while aggregators enjoy many of the benefits. In the long term, this is untenable.”

He basically echoed the theme heard at the WAN-IFRA conference -- "The old business model based on advertising-only is dead," he told the FTC. His solution? Product innovation but ensuring consumers pay, and as for the aggregators, if they want to be in the news business then let them go get their own journalists!

His conclusion that printing newspapers on paper wasn’t so important any more was a little surprising coming from a man who just last year opened three state-of-the-art printing plants in the UK at a cost of around $1.2 billion and who also announced an Australian $52 million investment for a new state-of-the-art printing plant for Townsville, Australia's largest urban center north of the so-called eastern Sunshine Coast in Queensland. “When we think of the future of newspapers, we think of the future of democracy. It doesn't matter if we are reading our news from paper or on another device, but the basic truth is that to make informed decisions free men and women need news. If they come on electrons or dead trees is not that important.”

So much for the new printing plants?