Page last updated at 12:58 GMT, Thursday, 5 February 2009

Media revolution: stop press?

By Graeme McAulay
BBC Money Programme

Newspapers are facing tough times.

UK newspapers in the 1990s
The UK newspaper industry is no longer as strong as it used to be

Over the last decade, the UK's favourite dailies have lost some 2.25 million readers.

Falling circulations mean less money through the till and newspapers' other main source of income - advertising - is also drying up.

In the last 10 years, ad revenues have fallen by about 20%.

In the struggle to stay profitable, newspaper companies are cutting staff, closing offices and, in the case of local papers, ditching titles.

Some within the industry predict that within the next 10 years we could even see one or two of Britain's best loved dailies go to the wall.

These problems are partly caused by the economic downturn.

Advertising is one of the first things companies cut spending on during a recession and cash-strapped consumers may see newspapers as a luxury they can do without when times are tough.

But it is our changing lifestyles that pose the biggest problem for papers.

Digital Difficulties

The internet has made it easier than ever for us to find out the news.

Rupert Murdoch
The world is changing and newspapers have to adapt
Rupert Murdoch, NewsCorp

At the click of a button, we can catch up on the latest stories in whatever form we choose - text, audio or video.

Newspaper proprietor Rupert Murdoch, chairman of NewsCorp, owns papers all over the world including The Sun and The Times in Britain and The Wall Street Journal in the US.

He says the internet has given readers much more power,

"Everybody wants choice and thanks to the personal computer, people are taking charge of their own lives and they read what they want to read or what they are interested in and young people today are living on their computers," he says.

"The world is changing and newspapers have to adapt to that."

After a slow start, most newspapers are now embracing the web as a platform for reaching readers, but it seems it is even harder to make profits from online publishing than from old-fashioned newsprint.

With so many free news sites to choose from, no one seems prepared to pay money to read newspapers online.

That means they have to rely on web adverts to generate income for their sites.

But it is not straight forward. Online, advertisers have many more spaces to choose from, making the market much more competitive.

Online opportunities

But it is not all bad news.

Sir Martin Sorrell
I don't think newspapers will die
Sir Martin Sorrell, chief executive, WPP

The web also opens up new opportunities for papers.

On the internet, newspapers are freed from the shackles of print, allowing them to exploit other forms of media, such as audio and video.

Papers such as The Guardian and The Daily Telegraph increasingly see themselves as online news providers first and news papers second.

This means radically new ways of working for journalists, but readers seem to like the results.

The Guardian's website, for example, now attracts more than 20 million users a month.

Surprisingly, two thirds of those hits come from overseas, opening up potentially lucrative opportunities in international advertising.

Guardian Media Group's Editor-in-Chief Alan Rusbridger has a long-term target to triple the Guardian's US-based readership.

"You then start getting on the radar of American advertising agencies, in which case you're into a very big market indeed; the biggest most wealthy market in the world," he says.

And Rupert Murdoch anticipates that new digital devices in the pipeline will provide papers with further opportunities to make money.

"I don't think it's available in England yet, but there's a wonderful new machine called the Kindle," he says.

"You can store six or 10 books in it or you can have a newspaper subscription on it and you get every word of the newspaper for a subscription rate.

"And it's mobile. You don't need to plug it into anything. It all comes over the airwaves."

Evolve and prosper

Newspapers are in a difficult transition.

They have to weather the economic downturn and at the same time find funds to invest in the digital opportunities of the future.

But despite the tough challenges facing the industry, it looks as if newspapers are here to stay.

"Many people say newspapers are going to die. I don't think newspapers will die because they are the best way, or one of the best ways along with TV, of reaching large sections of the population," says Sir Martin Sorrell, chief executive of advertising agency WPP.

"That's not going away."

Those papers that embrace change the fastest will be best placed to survive and prosper.

Media Revolution: Stop Press. Broadcast 1930, BBC 2, Thursday 5 February 2009.

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