Publishing in the Knowledge Economy - DTI Home Page

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Publishing in the knowledge economy The industry today 13.5 Newspapers Strengths • Strong brands • High reach • Authoritative content (qualities) • Established distribution channels • No tax on information and knowledge in print • Strong newstrade distribution reduces costs of reaching customers (compared with overseas counterparts) • Relationships with advertisers • Trust (regional and local) • Role of papers within economy and society well established and understood • National daily papers are mainly insulated from international competition • Many local papers do not compete directly with others in same market • Ad sales force has unparalleled local relationships with businesses • Portability • Competitive price • Low staff turnover Constraints and weaknesses • Mature market • Declining circulation • Special competition regime on mergers and acquisitions limits ability to respond quickly to deal opportunities • Cross media ownership constraints limits scale and cross-platform exploitation of assets compared with books and magazines • High cost of production and distribution for physical product • EU employment and working time regulations make it more difficult to recruit and retain delivery workers • Greater reliance on advertising than a decade ago, especially recruitment advertising Threats • Newspaper reading habit dying out in younger generations • Growing competition for readers’ attention • Growing competition for advertising • Classified advertising may migrate to Internet rivals or be disintermediated i.e. advertisers separately or in groups reach customers directly via online or other interactive media • Inequitable taxation of electronic information • Public sector recruitment direct via Internet • Online media brings other sources of news to consumers • News becoming a commodity • Advertisers may continue to shift budgets towards below the line campaigns • Privacy laws could begin to follow European model • Paper prices may rise faster than ability to raise cover prices • Price wars could recur • Decline in CTNs threatens home delivery and frequency of purchase • Advertising restrictions could increase Opportunities • Further consolidation • Print format changes, partly enabled by digital printing (more colour, more supplements, regionalisation and special editions) to drive advertising and purchase frequency • Use of e-business technologies increases ability to realise economies of scale (local papers sharing content) • Use of e-business technologies increases ability to reuse editorial content across different platforms • Use of e-business technologies allows papers to make maximum use of their advertising content and data about advertisers and customers 78
The industry today Publishing in the knowledge economy • E-commerce in supply chain (from advertising to distribution) cuts costs, increases efficiency • Use of interactive and supporting technology to gain a closer relationship with customers and build loyalty/subscriptions • Remote printing and other means of access to markets too distant to be cost effective currently • Local papers can become local info providers via interactive media – brand extension • Local papers can acquire radio stations in their markets if regulation is loosened • Advertising in newspapers papers may become more attractive as TV audiences fragment • Transactional possibilities through Internet (referral, e-commerce) • Broadband will increase functionality of online classifieds (double-edged sword) • Polybagging presents an opportunity for increased sales Figure 13.4 Newspapers: perceived opportunities and threats over three and 10 years Opportunities Launch of new products and services Extension of existing products and services to overseasmarkets (including sales of formats) Acquisitions, mergers or alliances in the UK Overseas acquisitions, mergers or alliances Growth of high speed networks/broadband Growth of digital television Growth of 3G wireless networks Improved exploitation of rights Use of e-business technologies to create new products and services Use of e-business technologies to optimise editorial and production processes Use of e-business technologies to optimise ordering,sales and marketing processes Closer relationship with end customer Price discounting • 3 years 10 years Other 0 50 100 150 200 250 300 Threats Economic recession Technological change eg development of broadband and 3G wireless networks Piracy/copyright infringement Retention of rights by authors/agents/institutions New entrants to your market Disintermediation by parts of the existing value chain Competition from existing customers Overseas competition, including imports Shifts in consumer spending patterns or changes in consumer behaviour Changes in the distribution of advertising expenditure (eg from print to TV, direct mail or online) Stricter regulation Taxation changes Price discounting Government as information provider/publisher • 3 years 10 years Other 0 10 20 30 40 50 Source Pira survey 79
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