An industry in terminal decline

The business of news is broken. It has, as an industry, failed to keep with the times and its focus on creating profits for shareholders over delivery of quality news services is leaving the public short changed and has created a democratic deficit, a deficit which is increasing by the day.

The news industry has traditionally made its money selling newspapers and selling adverts in those newspapers, it was a model that was trundling along merrily for many years. Providing the public with news and information relating to the world and the communities in which they lived and providing shareholders with profits. Then along came the internet.

A generational shift saw people accessing news online and digitally. Newspaper sales started to decline, and companies struggled to pivot form print to digital.

The industry seemingly expected advertisers and consumers to convert their print habits to the digital world, they didn’t, and they were never going to.

This fundamental failure to understand changing audience habits and foresee how digital would revolutionise the way the public interacted with news content in a digital world has led us to a point where the industry as we know it is on the verge of imploding.

Newspaper circulation decline since 2000

What isn’t perhaps understood is exactly how dependent the news industry has been on sales of physical newspapers; the print side of the business has kept companies profitable as their efforts to pivot to digital has struggled.

The collapse in newspaper sales is evident in this graph. In September 2001 The Daily Mail, the most popular newspaper in Wales, was selling 2,590,000 copies a day in the UK. Today it’s down to 850,000 and falling month on month.

The current- digital business models.

There are fundamentally two business models for digital news services.

The first is subscriptions. Individuals pay a monthly or annual fee which allows access to a news providers content. This is basically a conversion from the traditional print model where the consumer pays for access to the pages of a newspaper. Many of these subscriptions allow access to digital versions of a physical print edition. A paywall stops people accessing this content for free and enables companies to fund their work. Although some people bemoan paywalls, they exist for important reason. Would people walk into a newsagent, pick up a newspaper, read in in situ before placing it back on the shelf?

The second is based on programmatic advertising. Under this model content is provided for free and is funded from advertising.

The problem with this model, and it is the fundamental issue for the industry, is it requires large numbers of page views to provide a financial return.

The failure of the industry to place a higher value on the advertising space at the start of the digital revolution is the reason they are in the mess they find themselves today.

The reality is news, real news, news about your local authority, news about Welsh government funding for private businesses to purchase farms, news about sewage being pumped into the sea off the Welsh coast doesn’t generate the required numbers to generate revenues.

This has led to free news sites focussing on generating content that has one purpose, to drive page views. News is taking second place to reviews of Fish and Chip shops, features on properties that are for sale and what’s on sale in the middle aisle of Aldi this week.

They are no longer news sites; they are content platforms that feature news.

The other issue with programmatic advertising is that publishers are more focussed on the placement and prominence of adverts, leading to terrible reading experiences. It can at times feel like you’re reading the news through the letterbox of a door plastered with adverts.

Reach Plc share price decline over 12 months

The biggest news company in Wales is Reach Plc, they publish The Mirror and the Daily Express “nationally” and the Western Mail and Daily Post in south and north in Wales. Their online service WalesOnline is constantly pilloried on social media for its lack of news coverage and its headlines designed to drive traffic to the website.

The nature of programmatic advertising also means that social media channels, where many people discover news stories are used as funnels to drive traffic. Publishers don’t care about the quality of their output; all they care about and demand from their staff is the delivery of numbers. This does everyone a disservice.

As I type this piece at 9am on the 2nd of September 2022, their share price has reached a new low of 70.56p, down from £3.39 just 12 months ago.

Newsquest the second largest news publisher in Wales, with titles such as The South Wales Argus, The Western Telegraph and The Leader in Wrexham recently closed The National Wales, the national digital news service for Wales launched in partnership with New Media Wales on the 1st of March 2021, due to a decline in both subscription and advertising revenue are owned by Gannett Media in the USA, Gannett published losses for the first time a month ago, an announcement which saw the company share price plummet and lead to the layoff of 400 staff.

The impact was felt in the UK where, following a reorganisation of management, saw two key managers losing their positions and their Wales operations being run from offices in England.

As the cost-of-living crisis deepens and energy costs and inflation rise there will likely be further consolidation as businesses attempt to cut costs.

This will lead to an inevitable reduction in the provision of news in Wales.

Local titles will disappear, likely to never return. Existing titles will slim down, carrying less news, staff will be laid off and the focus for online platforms will be on traffic generation. More clickbait, less news.

This is bad news for Wales.

The failure of existing businesses to adapt and in their attempts to rescue their value to their shareholders is a problem for them, but their likely demise as providers of news will create a democratic deficit in Wales and will see many talented Welsh journalists lose their jobs.

The answer isn’t simple, and simply trying to replace commercial news sites with non-commercial news sites isn’t the answer.

That’s why we’re developing something different, a platform that is designed with the needs of Welsh citizens and Welsh society at its heart. A service that reports the news objectively and without fear in relevant and accessible formats across a range of platforms.

A service that works collaboratively with other organisations in Wales that value the need for a strong independent platform for news and information in Wales.

One that is owned by the public, one that can provide work for journalists in Wales, one that serves the communities, whose parts make up the sum that is Wales.

Time is of the essence; the work has already started on making it a reality.

Want to be part of it? Sign up as a supporter today.


Huw Marshall

Project lead.

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