Change must be highly contagious

The Covid-19 pandemic has brought much-needed and urgent changes in journalism around the world, with more to come. New Zealand has so far been shielded from the worst effects of the contagion and this year will determine whether our media have been lulled into the same dangerous complacency that stopped the country’s shoppers from using contact-tracing scanners while infection rates skyrocket overseas.

No-one would wish on us the devastation that has afflicted a long list of nations but, in one sense, I might wish that New Zealand news media had experienced the full cathartic effect of wholesale disruption that will reshape journalism in North America, Europe and elsewhere.

Last week the Reuters Institute at Oxford University released its 2021 predictions on journalism, media and technology trends (you can access the full report here: https://reutersinstitute.politics.ox.ac.uk/journalism-media-and-technology-trends-and-predictions-2021 ). It was authored by former BBC digital journalist Nic Newman and drew on survey responses from 234 media representatives in 43 countries. Newman has been the lead author of the institute’s annual Digital News Report since 2012.

He says the pandemic ‘has comprehensively made the case for faster change toward an all-digital future’.

“2021 will be a year of profound and rapid digital change following the shock delivered by COVID-19. Lockdowns and other restrictions have broken old habits and created new ones, but it is only this year that we’ll discover how fundamental those changes have been,” he says. “While many of us crave a return to ‘normal’, the reality is likely to be different as we emerge warily into a world where the physical and virtual coexist in new ways.”

Newman believes this will also be a year of economic reshaping, with publishers leaning into subscription and e-commerce. While uncertainty has boosted audiences for journalism almost everywhere, those publishers that continue to depend on print revenues or digital advertising face a difficult year – with further consolidation, cost cutting, and closures.

Has that realisation been brought home to New Zealand publishers?

Writing on Newsroom last November, Tim Murphy (a former colleague for whom I have the utmost respect) said that “with just a modest prop-up from the taxpayer at the peak of the Covid and lockdown crisis, the media firms have stabilised and even thrived”.

He went on to list six factors that had led to that stabilisation (see https://www.newsroom.co.nz/nz-media-still-standing). I do not take issue with any of his argument but the stability that he ­– and others – have welcomed is finely balance at best.

It is only as stable as the border protections that are keeping Covid-19 and its virulent UK variant at bay. Community contagion and lockdowns (particularly if they are protracted as has been the case in the UK and Europe) fundamentally alter the media equation.

Even if we are blessed with maintaining the status quo, our media organisations cannot for long afford to chart a different course to their international contemporaries. Nor can they continue to ignore the structural and institutional issues that clouded their future long before coronavirus entered the general public’s lexicon.

Many of the moves being made with unprecedented urgency are in response to long-standing issues that Covid brought to a head.

For example, the international industry survey asked participants to rank the importance of various revenue streams. Last year, only half the respondents ranked reader revenue first. Now more than three-quarters put subscription revenue in first place. Display advertising revenue, cited by four out of five in 2019, is now ranked by only two-thirds of the participants. Sponsored content is also down to a little over 60 per cent.

Three-quarters of those in the Reuters survey said Covid had accelerated their plans for digital change. For many the increased speed was due to Covid being an ongoing issue with no clear end yet in sight.

The pandemic has already changed the dynamics of paid subscriptions. Research company Zuora has reported that it was the second fastest-growing segment after streaming services and that news subscriptions were more than double that of a year earlier. The New York Times added a million subscribers in 2020 (it now has more than six million digital subscriptions) and The Guardian has passed the million mark in premium subscribers and supporters.

However, the Reuters predictions contain a significant caveat on the role that subscriptions will play in the future of media companies. The Reuters Digital News report published last June predicted that a handful of national and international news brands would take the bulk of subscription revenue in what it described as a ‘winner take all’ contest. The latest survey shows that 41 per cent of participants agree with that prognosis.

The New Zealand Herald more than doubled its paid digital subscribers last year and leads the field but the total of 49,000 is not a future-proofing number. Stuff has (so far) shunned the subscriber model (apart from Press Reader) and our television broadcasters have missed the boat on streaming subscriptions. Frankly, New Zealanders are more likely to pay for foreign subscriptions such as the New York Times, Washington Post or Guardian than to pay for a local general news source.

Subscriptions are clearly the direction for the future for a select few but the Reuters predictions see wider promise in an eclectic mix of business activities. The report points a way to significant change and, in particular, the development of hybrid business models designed to protect media entities from the vagaries of a fast-changing environment. It gives the example of the Independent in London, which ended its print edition in 2016. Through a combination of digital advertising, e-commerce, licensing, premium subscriptions and contributions it has just posted record revenue and record profit. That, admittedly, is a relative thing. For years the paper suffered losses and, against that background, record profits are not hard to come by. Nonetheless, the Reuters report suggests it may be a model for hybrid businesses. 

I can hear you saying that NZME, Stuff, TVNZ and TV3 are already hybrids, but they continue to rely heavily on their traditional advertising revenue sources. Only the startups like The Spinoff, Newsroom, BusinessDesk and Politik have broken away from that model – because they had no choice. 

Excursions into streaming, events and e-commerce show New Zealand media are contemplating a hybrid future. And Covid gave them some experience of the distributed newsroom (with work-at-home journalists) that is expected to become the norm in Europe and elsewhere. However, their efforts are piecemeal and suffer from the limitations of a small market. Importantly, they do not display the sense of urgency that has gripped their foreign counterparts.

The Reuters report predicts further consolidation and closures in various markets as Covid-19 continues to create havoc. Avoiding becoming one of those casualties drove media organisations in the most-affected markets to embark on sweeping, innovative change.

“One consequence of the pandemic has been rapid innovation, as news organisations found new ways of remaking existing products or created entirely new ones in the face of changed demand. Companies have been forced to think outside the box on a range of issues, from online working to developing new formats. ‘We were able to move much faster and ignore bureaucracy … so we were able to push things forward’, says Alina Fichter, Head of Digital Format Development at Deutsche Welle. Others point to examples of emboldened decision-making, with CNN launching its coronavirus podcast in just a few days – a process that might previously have required months of analysis and a long series of meetings.”

The same sense of urgency needs to infect New Zealand media organisations if they are to future-proof themselves. Our insulation from community transmission of the virus has created a false sense of ‘normality’. However, pre-existing systemic issues plus the ongoing threat of lockdown economic shock means that, put simply, they do not have the luxury of time. They showed commendable innovative thinking when we were in lockdown and they need to maintain that mindset – crisis mode, even survival mode. In such situations, people are far more willing to shortcut processes and embrace sweeping, innovative change.

And, if they are unmoved by that argument, media organisations have a unique opportunity to capitalise on the public’s renewed positive attitude toward accurate information from trusted sources. The public flocked to mainstream media during Level 3 and Level 4. The Reuters report quoted Kaius Niemi, Senior Editor-in-Chief of Finland’s largest paid newspaper, Helsingin Sanomat: “One can call it a renaissance of the news. Corona has affected everyone, so fact-based reporting represents a lifeline for the vast majority of our audience.” That was no more true than in New Zealand.

This new public confidence in journalism resulted in almost three-quarters of the survey respondents expressing confidence in the state of journalism in their own organisations. Translated, that means they recognise how important journalism is to their business so they cannot continue to emasculate the resources producing it. Nor can this country’s media organisations do so. That means the emerging hybrid models predicted by the Reuters report must maintain the production of quality journalism as their core function, with other activities used to sustain it.

However, New Zealand is a small market with limited resources. If media organisations remain focussed solely on themselves, little headway will be made because they lack scale. They need to work on their common interests to achieve scale where it matters and use collective ingenuity to emulate the best of what will occur in other markets as 2021 progresses. To do so, they need a comprehensive common blueprint for the future.

Nic Newman summed it up well in his report: “The shock of Coronavirus has been a catalyst for much-needed change for journalism as for many other industries. In the coming year we’ll find out which new habits will stick, and which will prove to have been temporary. We’ll find out which publishers have the confidence and nerve to seize the new opportunities that have emerged.”

Indeed, we will.

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