Future of journalism looks pretty good

16:00, Dec 28 2012

What do power bills, politics, and journalists have in common? Nobody likes them much. But if there was no power, no government, and no news, people would miss them all terribly and would almost certainly invent them.

That's why, at the end of another year in which being a journalist often felt like being a chump for staying in a supposedly dying industry, I'm still an optimist.

Not optimistic about newspapers, or news websites, or 24-hour television news channels or any particular medium that delivers the news, but on the future of journalism as a craft that serves those various channels.

This may seem like madness, given the news earlier this month when Fairfax, publishers of the Dominion Post, announced it was flogging the remaining 51 per cent in Trade Me, arguably its most impressive asset.

That delivers Fairfax a capital lump of A$616 million (NZ$778m) from Trade Me, a non-traditional media business that proved an inspired acquisition by then-chief executive David Kirk. Lately, it has been something of a lifeline for the whole Fairfax empire.

The $300m NZX and ASX dual-listing of 33 per cent of Trade Me in December 2011 was the first time Fairfax took out some of its gain. It had another go in June and now has flogged what was left.


The proceeds will bolster the Fairfax balance sheet, the logical next step after a savage writedown in August, which saw the Fairfax board take a A$2.8 billion axe to the goodwill from Fairfax titles on both sides of the Tasman. Goodwill on its New Zealand titles plunged from $733.5m to $137.8m, giving some sense of the scale of value destruction.

The company took the hit in one year, roughly broke even on its trading result, and declared a loss of A$2.73b in August for the year to June, having lost A$401m the year before. It effectively pressed the "reset" button.

APN did a similar thing, writing off $485m from the value of New Zealand assets at much the same time on titles including the New Zealand Herald, which is for sale, the Listener magazine, and the New Zealand Woman's Weekly.

APN further disappointed investors by declaring recently that previous guidance on the size of this year's losses had not been apocalyptic enough. Its share price sank 35 cents after it warned net profit would drop by about a third to between A$51m and A$54m as advertising markets remained weak in the second half.

Both Fairfax and APN have now taken so much pain that they must be near rock-bottom if they're to survive at all. Fairfax shares today are worth around A55c.

They were three times that three years ago. In the same period the APN share price has gone from A$2.40 to just A28c on the ASX.

Yet ironically, they may now be better placed to survive than at any time since the internet arrived.

Around the world, traditional publishers are starting to fight back. Advertising revenues have been slaughtered by the internet and now they are either looking commercial failure in the face or realising the valuable thing they did all along was the journalism.

As a result, the age of the subscription is back, in the form of the paywall, and gives every sign of being ubiquitously adopted globally. It may be so swift as to look anti-competitive, but it equally may reflect mutual desperation among the once powerful news providers of old, who will lunge at roughly the same time for the paywall switch.

Best of all, subscribers pay ahead of time, permanently advancing cashflow, while capital and operating costs from physical printing and distribution of print media is falling away. There's the germ of a business model in that dynamic.

Meanwhile, software exists to build subscription-based news products on sites that currently give their news away "free", harnessing sophisticated online marketing techniques that can hook people who thought they never had to pay for news again.

In other words, the content needs to be valued again.

There's just one problem: providing that content requires journalists.

The flow of content that people consume as news doesn't come from the media company's sales department, PR shops, or bloggers, except for the few who can write.

It comes from journalism, an imperfect and recently somewhat eviscerated process, in which a group of people create a credible and interesting enough source of news and current affairs content to attract an audience.

For good journalists, that sounds like good news.

The Dominion Post