Central European publisher Axel Springer recently recorded the most profitable first quarter in its history. The profit margin on its German national newspapers is a startling 27%. The firm is expanding into Poland.
Steep cover-price rises have helped. But for the most part newspapers have cut their way out of crisis.
Another unexpected boon is that spending on paper—the second-biggest expense at many firms, after staff pay—has plummeted by as much as 40%. A global commodities slump depressed prices. Newspaper companies are using less of the stuff, printing fewer words on smaller, thinner pages. Particularly on Mondays, papers are often so light that they are hard to fling from a car or bicycle to a doorstep.
Outside America newspapers have fared better, as a report to be published by the OECD next week shows (although there are exceptions: see article). Japanese newspapers, the world’s biggest by circulation, are slowly losing readers. But they have an enormously long way to fall, and ought to be cushioned by the media conglomerates of which they are a part. Outside the English-speaking world newspapers often face less competition from online news aggregators and other Silicon Valley wheezes. In countries like Germany they have suffered what Paul Zwillenberg, a partner at Boston Consulting Group, calls a “single whammy”—recession, but not rapid structural change.
In emerging markets one must look hard to find any sign of crisis at all. In Brazil advertising wobbled only briefly during the recession. The total circulation of Brazilian newspapers has expanded by 1m in the past ten years, to 8.2m. Brazil’s growing middle class is hooked on a clutch of inexpensive new papers that are heavy on murders and bikinis. In 2003 just three of Brazil’s top ten papers were tabloids. Today five of them are.
That emphasis on giving readers what they want to read, as opposed to what lofty notions of civic responsibility suggest they ought to read, is part of a global trend. Newspapers are becoming more distinctive and customer-focused. Rather than trying to bring the world to as many readers as possible, they are carving out niches.
In America many newspapers have plumped for local news and sport, leaving everything else to bigger outfits or to wire services like The Associated Press. Several of them now refuse to deliver papers to readers far from the urban core.
The survival of newspapers is by no means guaranteed. They still face big structural obstacles: it remains unclear, for example, whether the young will pay for news in any form.
Read more at The Economist.
