The living dead are among us. The trouble is there are hundreds of them in shopping malls and nobody notices. Piled up high on a newsstand to be returned to pulp at the end of the week.
The Leveson inquiry was a catalogue of horror stories but one in particular was a shocker for the local news industry. The testimony of Claire Enders brought to wider attention what has been common knowledge for some time – things are really, really bad for regional newspapers. A decline of close to 50% in both revenues and staffing since 2005 in an industry with a high fixed cost has been, and continues to be, devastating.
The result has been that an increasing proportion of this sector has become zombie-like, not really alive, not really dead, staffed by demotivated, overworked, poorly paid and inexperienced journalists who often don’t live in the areas that their papers cover. The declining trend is not over and with higher print prices and a continued economic downturn 2011 has been bad and 2012 may be worse.
Based on anecdotal evidence at this stage over two thirds of the local newspapers in the UK are totally dependent on spending from their local authority. Since 2008 the discretionary spend (job ads, public information campaigns etc.) of borough authorities has declined but the bulk of public sector spending has always been the statutory notices.
One of the reasons this has become so overwhelmingly important is that there has been no price elasticity. This is down to the way public sector accounting works. Most departments form their budget based on last year’s spending so the assumption is that procurement prices remain unchanged or rise with inflation. Since 2005 ad rates on local newspapers have declined sharply – in some cases they are down by about 75% but these are the rates paid by the commercial sector. The public sector pays a far higher price – often three times as much. The papers justify this by saying that the premium is for guaranteed inclusion and that the cheapest rates are for last minute inserts. This premium seems to be paid whether or not a Council employs a media buyer. Notionally they are there to secure the best rate but it doesn’t seem to have occurred to anyone that paying people a percentage of your total spend gives them a big disincentive to drive rates down.
This is a backdoor public subsidy to an industry that would go into an even more rapid tail spin if it was taken away. It wouldn’t be just a case of even more local newspapers closing – most of the publishers are so heavily weighed down with debt that it would send them into administration.
There is an increasing recognition of how dire the problem is and solutions are starting to be put forward but they range from half-baked to deluded. Writing off the debts of newspapers, putting them into ‘community hands’, local journalism ‘hubs’ are complete non-starters. It has to be recognised that it is probable that the reason that no sensible, viable plan for the future of this industry has emerged is because their simply isn’t one. The assumption has been so far that Jeremy Hunt is a half-wit for his local TV scheme which is generally recognised as daft but it does have the merit of making him appear to be doing something plus the success or failure will only really be measurable when he is in another job and genuinely trying to tackle the massive problem of local news would be fruitless and unpopular.
The hawks in the independent digital news sector argue that the only solution is to oblige local authorities to put their statutory notices in the most popular media regardless of platform. Theoretically this would mean that investment would flood into the sector and the public would benefit because quality of content would start to matter again. The reality is, however, unlikely to be that simple. The proportion of existing hyperlocal web sites that get any meaningful traffic is minimal and although many, armed with dubious unique user stats, claim to have a bigger readership than the local newspaper they generally don’t even when the print equivalent is very much of the ‘living dead’ variety. Measuring the most popular form of media across different platforms in every local authority area in the country would be prohibitively expensive and there would never be any agreement on the methodology.
Whilst there aren’t easy solutions to this problem there are some easy predictions as to what happens next. The Government will let this sector drift until one of the major publishers goes under – this could happen tomorrow or in three years time but there isn’t any doubt it will happen. Large swathes of the country will be without a local newspaper.
At this point they will have two policy alternatives: try to rescue the print sector with more subsidy or try to restructure the industry to encourage digital. You can’t do both. They could retain and extend the statutory obligation of local authorities to advertise in print and loosen the guidelines on ‘town hall pravdas’ to allow them if no print alternative exists. A system of licensing could be used to ensure that only one print start up was allowed in each area which would guarantee them a minimum revenue. The question would remain as to whether independent print publishers without economies of scale but also without a heavy debt burden could fill the gap.
The digital alternative might seem to be the more progressive way to go but at this stage online has been singularly unsuccessful in filling the gap created by declining print. Right now only a handful of local web sites in the more prosperous parts of London are commercially successful so there is a clear danger that the road we are going down is one in which local news is confined to the relatively wealthy. It doesn’t necessarily follow that the subsidy currently going to print should be transferred to the ‘hyperlocals’. In a time of public sector austerity a very large amount of money could be saved by simply saying that local authorities can use their own platforms to fulfill their statutory obligations to communicate with residents. This would have the benefit of requiring more investment in online services by Councils which, if properly implemented (big if!), would lead to further savings. It would also be cataclysmic for local news in the United Kingdom.
So like most zombie movies we are looking at a very downbeat ending for this sector. We are lurching towards a society in which the only knowledge or contact citizens have with local government is a Council Tax bill or a parking ticket, in which, despite an every increasing volume of information, less and less of it will be about things that we could walk to and where even significant local news will be processed by the imperfect filter of social networking sites rather than a professional journalist.