Fairfax’s move to introduce paywalls on its websites, cut 1900 staff and reduce The Age and The SMH to tabloid size has sent shockwaves through the media landscape. Having borne the brunt of declining ad revenues and plummeting circulations in the past year, will the bold changes be enough to reverse the publisher’s dwindling fortunes?
Simon Davies, head of publishing, OMD - MAYBE
Fairfax does not have the option of sticking its head in the sand and ignoring the structural changes that are going on in the media market. Only time will tell us if these are the right decisions for them, but from an advertising perspective, the changes do seem to make sense. The broadsheet format is a throwback to a different time when people sat back in their armchairs with pipes and slippers to read the news and go through the classified ads. That world has changed. The compact format has already been trialled with success with the business and sport sections. Moving to this format will only improve the overall readability and portability of the paper. The AFR already using this format means we already know that the format works for an AB audience.
The metered paywall approach that maintains open access to maintain traffic numbers and then a pay approach for in-depth access to content would seem to make more sense than the pure paywall approach. If you are trying to build your brand online and convince readers you are offering something of value, it makes sense to let people see and sample it to know what they are missing.
Overall the format and paywall announcement make sense and should help build a stronger business for Fairfax in the future. How they manage the high human cost of these changes will have a major impact on their long term success or failure.
Lucy Formosa Morgan, head of trading, PHD - NO
There have been rumours for years that Fairfax would down-size their broadsheets to tabloid given that other broadsheets around the world were doing exactly this to profit manage their business models more efficiently (through reduced paper costs).
From an agency perspective we’re now just waiting to see what rates Fairfax come to market with given you can’t justify the same rate for a tabloid page to that of a broadsheet. Less columns and centimetres means lower page rates.
Fairfax also announced that they’ll be implementing their version of the New York Times paywall – nothing locked away, but rather your usage is metered. I can’t imagine it’ll be a big revenue earner for Fairfax. There are so many news sites offering free content, often using the same AAP, Reuters, AP and AFP wire services that Fairfax use to supplement their own reporting, so unless they’re providing something unique mid/late month, expect viewing figures to drop off.
Furthermore, 1,900 is a huge number of retrenchments. You can only hope though that by cost cutting, Fairfax isn’t damaging the level of journalism and feature writing for each of the publications as that’ll only hurt the brand further. Unless there is quality editorial, Fairfax will struggle with the paywall.
Despite the cost cutting measures, at the end of the day print sales will continue to decline and with that will come a continuing decline in ad revenue.
Peter Cox, media economist, Cox Media - MAYBE
Fairfax is caught in the perfect storm as a result of poor strategic decisions by the board and management, online digital growth and the down turn in the advertising market. The ‘rivers of gold’ for Fairfax from motor vehicle, real estate and jobs classifieds have largely gone spawning at least three new digital companies, each as large or larger than Fairfax, and are unlikely to return. Young people are either not interested in news or mostly interested in celebrity and pap that can be gained from free 24/7 online news services. This leaves the old and the baby boomers to support so called ‘quality’ printed journalism – a dying market.
Fairfax, in reducing staff but retaining the basic costs of paper, printing and distribution, which are half the costs of producing a newspaper, is in a death spiral chasing falling circulation and advertising. Advertising is four to five times the size of circulation revenue and is falling at about double the rate of circulation decline. The Fairfax regional markets have not declined as much with the advantage of local news and advertising but will decline with the growth of the NBN in the future.
Though online readers of Fairfax papers are growing, the combined potential is a finite number and the number who will actually pay will be limited. The advertising industry is going to determine whether Fairfax can survive or not.
Claire Richmond, Sydney trading director, MEC - MAYBE
With classifieds long ago having migrated elsewhere, Fairfax had to take far-reaching measures to survive.
Editorial control and quality will determine Fairfax’s future. Speculation is mounting that shareholder Gina Rinehart is pushing not only for three seats on the board but editorial control. Regardless of her decision to keep or dump her investment, the Fairfax ethos – that editorial control is independent and neutral – needs to remain intact in the interest of consumers, advertisers and the nation. The new editors of the SMH and Age have a big job ahead, steering a disillusioned ship, working to new tabloid formats while maintaining brand values and stretching staff further. Fighting for editorial control with the board should not be on the to-do list.
The change in format is a risky venture. Moving from broadsheet to tabloid has been known to indirectly target a less discerning audience, not traditional Fairfax territory. However, there is still revenue to be had in printed newspapers so no point getting out just yet. Introducing paywalls next year will drive incremental revenue slowly. All content will still be free if consumers subscribe to two print editions a week – a good approach likely to boost print circulation and curb ad revenue declines.
If the quality and integrity Fairfax has built its foundations on erodes, its consumers will engage content elsewhere, and will be followed by advertisers. If quality remains, it might just make it past its 200th birthday.
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