Who reads newspapers anymore?

In India, still a growing number of people. Globally, a rapidly declining number. The steep fall in newspaper circulation in the United States has set alarm bells ringing in ‘old’ media companies in the West.

Over the past few years there has been a precipitous 33 per cent fall in the circulation of American newspapers. Many have closed down, downsized or been acquired. Some, like The Times, London, have changed size, style and format into ‘compacts’ — somewhere between broadsheets and tabloids — to stop readers fleeing to new media.

In the US, overall advertising expenditure grew by a mere 4.6 per cent in 2006 over 2005. But the growth of ad spend on the Internet leapt by 35 per cent during the same period. Rupert Murdoch, owner of News Corp., one of the world’s biggest media companies, saw the writing on the wall two years ago. In April 2005, he delivered a speech to the American Society of Newspaper Editors on “Digital Natives vs Digital Immigrants”.

The digital immigrants, of course, are the millions of (mainly young) people who are deserting newspapers in droves for online news sites. Among under-25s, who have literally grown up with a computer in their lap and the Internet a mouse click away, growing numbers simply don’t read newspapers at all anymore. They get their primary news online, surf the net on community and social networking sites (myspace.com, orkut.com) and switch on television for entertainment in the evening. For American media companies, the most alarming trend is the fall in TV viewership: the Internet has hit major television networks almost as hard as it has hurt newspapers.

The biggest worry is the flight of classified advertising from newspapers to online sites. As a result, former blue-chip media stocks like News Corp. and Time-Warner are
being hammered down on the New York Stock Exchange (NYSE). Their comeback strategy? To go online themselves. Murdoch has been especially aggressive and has over the past two years acquired over 10 websites, including the popular social networking community forum myspace.com, for just over $500 million (Rs2,150 crore).

In India things are, as always, somewhat different. There are still only 50 million Internet users in India and newspaper circulations are continuing to rise in double digits every year for two India-specific reasons. First, literacy is growing at roughly 0.50 per cent a year (from the current level of 59 per cent). That adds up to over 5 million potential new newspaper readers every year across languages. Second, purchasing power is rising rapidly. The number of those who can afford to buy a daily newspaper is thus expanding. Combine the two factors and you have the explanation for India’s contrarian newspaper circulation and advertising growth. With rising purchasing power, too, comes more cable and non-cable TV homes, delivering an ever-rising television audience.

In five years, however, online communities will be a force to reckon with in India as well. Currently, India’s media and entertainment industry generates total annual revenues of Rs42,000 crore. Of that the Internet accounts for just Rs800 crore, or a bit over 2 per cent. Expect that to rise to 10 per cent in five years as total media revenues move towards Rs80,000 crore. That would translate into Rs8,000 crore spent online every year by 2012-13 — enough to make every major Indian media company scramble to mine this new stream of revenue and protect its turf from standalone online companies.

Newspaper writers will also need to tweak their content and approach for a new generation bred online.  No longer are readers willing to be lectured to by editorial writers. They want a conversation, not a monologue. Forceful opinions will still count — especially if they are backed by fact, originality and conviction. But be prepared for a robust, interactive dialogue with your readers. The new breed doesn’t want to be talked to but talked with.

Email: minhazmerchant@business-leaders.com