There is room for optimism in the newspaper industry, but how can journalism flourish in a market where nobody wants to pay for news?

The trends of the industry have been reported many times: UK newspaper circulations are declining faster than most in Europe. Newspaper audiences are not transferring to digital as fast as in other markets. These relativities are having a consequential impact on newspapers' share of traditional and digital advertising, and therefore on profitability, which no longer delivers the previously high levels of return on capital required by shareholders and results in demands for reduced staffing across all departments. But rather than dwell on why we are here, let me focus on where we are going, relative to the three components of media companies – content, marketing, and technology – which are increasingly overlapping.

In terms of “consumer” demand, a number of trends are evolving:

• Reduction in time to absorb traditional news media, across all outlets.



• Significantly different consumption behaviour patterns between digital and print media, with print retaining strong though reduced loyalty, while digital audiences are proving disloyal and illusive, in terms of content consumed and time spent, and have a propensity to visit more alternative services (see below).



• The emergence of citizen participation as a strong force, demonstrated by blogging, commenting, texting, Twitter, “new entrants” and a wide range of other web media platforms. Today everyone can be a medium and an increasing number of people want to be heard, either informally or through serious ventures. To them the cost of entry is zero.



• Social networking is revolutionising interaction. Teenagers spend hours sharing and debating. Facebook now has the world's most website traffic. Google has more visitors, but most are simply passing through.

• A clear unwillingness to pay for content. This is strongly demonstrated in the online world, but there is also some evidence to suggest that this is accelerating into the print world. While specialist publishers – e.g. in finance – might succeed in opposing this trend, current experiments in the populist world, particularly in markets with strong competition, are likely to fail.
  
  
• Revenues are shifting fast from traditional “above-the-line” concepts to direct-marketing approaches. Again this is a long-term trend that existed long before the internet.
  
  
• What was originally speculative communication – placing an advertisement and hoping to attract customers – has been replaced by accountable marketing, where advertisers will pay only for results.

Obviously technology is now central to media development. The internet is not a medium as such. It is a distribution system, which allows a range of processes, channels and devices to cohabit. News is only a small user of this distribution method. Convergence is a misnomer. It is a term that applies to a technological concept. In reality consumers and communicators are seeking divergence: a whole range of solutions reflecting time, place and context. New devices will continue to drive adoption. Hence the success of the iPod/MP3 player with music, and the eReader/iPad in terms of readership. Many newspapers are reporting that while their internet audiences are low (see Table 1), their eReader audiences show similar reading times and higher conversion and retention levels relative to their print products.

The reduced level of time spent with news media underlines how vital it is for society that people remain engaged. For a time, polling levels and other indicators suggested that citizens' sense of involvement was plummeting, yet during the recent elections in many countries, voting levels have risen considerably, suggesting a new interest or, perhaps, concern.

A second issue is that while attracting new, young news consumers is important, it is equally important to focus on retaining them as they grow older. Contrary to popular belief, people's news media consumption is highest when they are younger and their consumption declines as they get older. This is true of newspapers, but also of TV, and will prove true with social networks. Facebook will attract fewer of the next generation as new concepts take over. Meanwhile the current generation will lose their enthusiasm.

The life cycle of newspapers to date has been 400 years. TV is declining after 70 years. Google is nearing its peak after around 10 years. MySpace's audience has halved in the last year. ITV paid £175 million for Friends Reunited and subsequently sold it for £25 million. Tomorrow's society will devour each innovation – then spit it out before feasting, temporarily, on the next big idea. News media's challenge is always to provide that next innovation.

So what does all this mean for journalism? In theory, all these changes in consumer demand and behaviour, and the upsurge in participation and comment, should require a higher level of journalism, both in volume and in quality. An editor can rely on, say, 100 well-trained, experienced journalists to produce a good paper every day. But how can contributions from, perhaps, 10,000 enthusiastic amateurs, reliably be policed and interpreted?

In press freedom, in Western Europe, Britain lurks in the bottom quartile in terms of delivery, according to independent watchdogs Freedom House. In addition, in Britain today four times as much money is being spent in commercial and institutional PR than is spent on media journalism. In the last year, the UK Government spent £540 million on so-called “communication” – up 50 per cent on the previous year; more than the value of the radio industry and not much less that the entire salary bill of all UK newspaper journalists. And this doesn't include the spending by the devolved and local governments.

If the transparency to which society is entitled is not going to be spun into oblivion, then we need more journalism and journalists. But, of course, the issue has nothing to do with need, but everything to do with money. And as we've seen in the past two years, when the going gets tough, the cuts keep coming.

This issue needs to be tackled at a number of levels. The first question is whether the future of journalism can be sustained within the current industry model. My own forecasts suggest that newspaper revenues will recover. There will be some shift to digital, but not as much as many people envisage, with it possibly accounting for 12 per cent of all revenues and 23 per cent of advertising revenues. While costs will fall, much of the savings will be in newsprint as paginations continue to decline.

So for the moment it can be assumed that the pain has been absorbed, but this in itself does not indicate a future of improvement and development at a time when society needs better, and certainly not less, journalism. So let's examine what journalists can do for themselves to enhance their role in the industry.

As already outlined, the pointers were apparent long before the digital era. One historical observation might be that journalists were slow to accept responsibility and accountability. This writer's 2002 report on “Editorial Measurement” for the World Association of Newspapers was met with horror when it suggested that newsrooms and their staff could be measured in terms of quality, performance and efficiency. But with some notable exceptions, all this has come to pass. Great strides have been made in terms of improved workflow and far better product-quality in terms of relevance, presentation and flexibility.

What if in 2002 our newsrooms had responded positively and not so defensively to this report and asked, how can we make things better? Let's ask that now. The key to revitalising news lies in the statistics of the difference between print and online audiences and, inevitably, in measurement. The news media's biggest problem lies in our customers' fickleness (this is also true of advertisers and the message is the same for advertising staff ). Our future fortunes lie not simply in attracting and retaining our audience, but in making them choose to come more often and then hang around. This is one reason why Facebook's value to turnover ratio is four times that of Google.

The issue of re-attracting readers and encouraging them to look at more material lies firmly in the newsroom, yet most newspapers continue to ignore this. In print there is little attempt to communicate future content. The average level of linkage between print and online remains lamentable, and in the online space, as the statistics show, newspapers are doing very little to gain traction retention and repetition. Every journalist should be tasked – and arguably measured – on their ability to service, retain and continually attract their audience. The argument for this is compelling. Such is the geometric effect of getting online users to come back – and hang around longer – that a 10 per cent increase in each of the measures in Table 1 delivers a 40 per cent improvement in page impressions. A 20 per cent increase would double the impressions.

In the digital world, eyeballs are everything. Double your audience, double your revenue. And if it is measureable, then it justifies further investment. Applying the same principles to the world of conventional print could significantly reduce the rate of circulation decline. This can partly be enhanced by better marketing and technology, but 90 per cent of the opportunity lies in the hands, and accountability, of the newsroom.

Perhaps the most encouraging aspect of journalistic “self-help” lies in the willingness of staff now to embrace and adapt the digital world. The historical culture of suspicion has been replaced with excitement. Early on, the internet was seen as a threat to circulation. This was largely unfounded – having only recently become a measurable factor that, it could be argued, reveals more up-side than downside. Then there was the threat of citizen contributions, which has turned into an opportunity far more than a threat.

Many editors and publishers around the world have anticipated that their younger staff would embrace change, only to find that older employees were keener to learn new skills and rejuvenate their careers. This sense of future excitement is central to encouraging innovation and newspaper owners need to create room for this innovation and ensure that Research and Development (R&D) is a definable asset on their balance sheets. Google spends 12 per cent of its turnover on R&D. Yet with some notable exceptions – The New York Times and Telegraph Media Group, for example – newspapers spend virtually nothing.

Papers to preserve community values

So, what is the difference between newspaper businesses and journalism? The answer lies in accountability, both to society and to the business itself. Left on the current trajectory, the business will make a recovery, due to the opportunities in advertising. But journalism will suffer. The solution must be for journalists to realise they have a valuable role to play in improving the performance of their business. By setting objectives in terms of audience engagement, the news media will not only see quality journalism being retained, but flourishing to the levels it deserves – and our society demands.