The oversubsidized french press

Is the French press oversubsidized? No if you listen to the various press organizations who insist on the sorry state of most newspapers and magazines who suffer from both a loss of sales and of advertising and face a very difficult year 2013. Yes if you listen to the annual report of Cour des Comptes or if you read the parliamentary report of Mr Françaix, MP.

The real problem lies with the French budget which is harder than ever to balance. It seems obvious that the government cannot afford anymore to spend 1,2 billions euros for helping a fledging industry which is not so well treated in other European countries.

What Cour des Comptes and Françaix suggest is that it is not logical to subsidize at the same time the Post Office and the home delivery system. If newspapers and weeklies transfer the delivery from a costly and less efficient postal service to their own home services, there is no reason to keep a 300 million euros help to the Post.

Another matter is the fact that many magazines devoted to TV programs or people news profit from a benevolent and generous  French system. Françaix considers that only publications dealing with news i e dailies and newsmagazines contribute to a democratic debate and should deserve a public support.

The government has set up a commission to work on the reform of public aid. By the end of April, it will have to state a position on postal service and magazines, two very tricky topics. The various lobbies are very active and president Hollande will have to face very unpleasant choices.

The Google deal

So Google managed to extricate itself from an akward situation in France by signing a protocol with the French government and the newspaper industry. It will cost 60 millions euros to the giant of MountainVview plus an exchange of Internet technology with the print media.

Is it a good agreement? Probably yes. Will it solve the basic problems that the print industry faces as the digital news get more and more intrusive? Probably no;

The press managed for once to speak with one voice and benefited from the support of the Hollande administration. The fund will help to finance some improvements in the digital offer and the use of the Google platforms can be useful. However, Google partnership will not be enough to make for the lack of strategic vision of the dailies and weeklies which were involved in the deal.

The newspapers don't need the advice of Google to improve their offer on both the print and the Web. And yet, this improvement is the only way to keep the favour of a public which is slowly pulling out. Another big challenge is the growing use of mobile supports, smartphones and tablets. What kind of news, what ads can be provided through these very popular systems?  There again Google doesn't provide the answer.

And last but not least, the new protocol does not include the leisure and people magazines. In France they command a powerful lobby led by Lagardere. They will most likely push their case and embarass the government.

Lest wait for the next step.

The Washington Post quandary

In the last Sunday edition of the Washington Post ( January 27), the ombudsman stated the newspaper and newspapers quandary in just a few words. First, the cost of the daily. When I was staying in DC in the late 90's I marvelled at its low price, 25 cents for more than 100 pages of news and ads every day. Since 2001 the price of the Post has increased fivefold. Since last week it is 1.25 dollar. The reason is obvious. Advertising that contributed 80% of the revenue has gone down to 45%. Now the Post is not in any better position than the French newspapers which are so expensive and get hardly 40% of their income from the ads.

Internet is of course the main factor of this downward trend. Craigslist in the US or Leboncoin in France attract most of the ads that were the main source of profit of the dailies ten years ago. So it would be logical to ask Internet to help now the press to survive. However the ombudsman stresses that it is not very profitable due to intense competition between thousands of websites that each attract their piece of advertising.  The only way to move forward is to make people pay. The NY Times seems to be quite successful. Now, the Post must give up its free offer and start a paywall with no guarantee of success. No doubt it is a cultural revolution but is there another solution? The ombudsman doubts it.

Is the New York Times a model?

Margaret Sullivan is public editor of the New York Times. In the January 19 issue of the famous newspaper she stresse the major problems  of a daily in 2013. "A milestone behind, a mountain ahead" as she says.

The milestone is the fact that in 2012, for the first time, the circulation revenue, including the digital edition, surpassed advertising revenue. Its a landmark if one considers that until very recently, advertising contributed to 80% of newspapers income.

And yet, the Times, like every other daily gets still most of its money from the print. As advertising in the print edition fell by 11% last year, it is obvious that the proud newspaper is far from reaching a safe balance able to finance its newsroom with its 1100 journalists. That is the mountain ahead. One solution is to cut the staff and the executives of the Times are buying out some journalists but what of the investigative power that attract print and digital subscribers? it can only work with women and men both competent and highly motivated. For obvious reasons, Margaret Sullivan is worried.

The annual inquiry of la Croix on the opinion of the French on the media is not very comforting either. It is true that only 35% of the public trusts Internet against 54% for the radio and 49% for the press. However, 27% go to internet for getting the last news against 24% for the newspapers and 69% for television. The audiovisual media cope well; the print media suffer.

News on Le MONDE

The famous newspaper is starting 2013 with many questions and few answers. It has to find a new editor in chief to replace Erik Izraelewicz whose sudden death was a big shock for the newsroom. It is likely that his successor will be an insider, coming from the staff of the daily. No name is emrging yet.

Louis Dreyfus, the talented CEO will also have to cope with a sharp increase of the price that went up on January 1st by 12%, from 1.60 to 1.80 euros. According to Dreyfus, some members of the board would have been willing to raise the price to 2 euros, following the exemple of the N Y Times which is selling now at 2.50 dollars. It is obvious that to stop the fall of the sales it will be necessary to boost the number of subscribers. It is a top challenge for the sales management of the daily. They will have to be more efficient and follow the model of their sister company Telerama.

The last challenge is the digital policy. To make for the loss of circulation and the dark outcome in advertising; the digital branch must be more and more profitable. It is not so easy. Le Monde must cut drastically the free offer of its website to  attract a new population of subscribers. It aims to move from 45000 presently to 100 000 which would bring a welcome bonanza to the income of the daily. However, it will take a long time, maybe 10 years before le Monde digital can finance a 300 editing staff.

It is also obvious that the fate of Presstalis, which is slowly collapsing, will be of the utmost importance. Le Monde could easily be delivered by the powerful network of regional newspapers. It would be cheaper and more efficient, expecially if the daily becomes a morning newspaper. There again, one will have to wait for the death of the ailing system and a workable solution for its 2000 employees.

2013 The ultimate challenge

Happy new year for all my friends from the print news. 2013 will be a most perilous year but the challenge will be exciting. At the start of the year the big question looms over everything else: what can do the press industry to survive and fulfill the growing appetite for news the world over.

Lets have a look at France first. The outlook is very bad indeed. Advertising will reflect the poor shape of the economy. At best,advertising income will stay at the same level as 2012 which was not a good year. At worst, it could go down by 5 or 10%. It means that many dailies and magazines won't be able to survive. Libération and Marianne are the first to be mentionned by the doomsayers but the future is not rosy for le Monde whose budget is a bit optimistic. What is at stake is the good health of their websites that contributed albeit modestly to the profit of many dailies last year. However, the outcome this year is not so good. What will happen if the Web is also losing money due to a thankless competition from Google and social networks? It will be a very worrying for le Monde, le Figaro and several regional dailies.

Add to this dismal situation the crisis of the delivery system, ie Presstalis. The government missed the opportunity to settle the matter last summer. Now, it is too late to stop the suicidal strikes of the unions that sink the sales of national dailies and weeklies.

In the US, things don't look much better. The Washington Post, one of the best, is losing income and sales and has yet to deliver a proper strategy for its website.The fall of Newsweek shows that a certain way of delivering the news, on a weekly basis, to people who are already fully informed every day, is definitely gone. It is also obvious that intensive use of applications on mobiles plus Facebook and Twitter promotes the images of the press but brings no income. The American media have not found yet the solution.

And yet, top quality publications such as The Economist or the New Yorker, both weeklies, manage to work well. It should be the same with the French edition of Vanity Fair due for june 2013.  Our world is very complicated and people want to understand. A nice job for good journalists.

Are e-readers out of fashion?

The New York Times in two recent articles dated Dec. 20 and 24, delivers very worrying figures for e-reading observers.

Two years ago, it was common knowledge that e-books were going to bury by 2016 print books thanks to the immense success of cheap convenient e-readers.

2012 figures show that the success of e-books is not as obvious as it should be. Amazon, the leader in the field has delayed an expected move on  book prices that remain, in the US, stubbornly above 10 dollars. Moreover the sales are still growing, by 35% this year, a significant figure but much less that during the previous years. It seems that there is a saturation of the public which is probably also disturbed by the disparition of physical book shops, an ideal place to discover what is on in the publishing world.

Also, the sales of e-readers, including Amazon Kindle are going down: 14 millions worldwide as compared to 17 millions in 2011. This year, the sales of connected machines including tablets were 303 millions.

It appears that most customers prefer to buy a tablet which is more expensive but more useful than a only reading Kindle. Amazon has  assessed the danger and is promoting its touch Kindle fire. Other minor e-readers producers will probably be forced out of the market.

A big question remains unanswered: how is the publishing industry to survive if prices go down and bookshops vanish? It is obvious that e-books are not the solution.