Local UK media at a crossroads: from incremental to radical innovation

Report Overview

Local UK media at a crossroads: from incremental to radical innovation

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Local UK media at a crossroads: from incremental to radical innovation
  • Local newspapers are often identified as the most disrupted of all media. The impact of declining news media has widespread implications: for the healthy functioning of democracy, community and social cohesion as well as for local business and trade
  • In this report we look briefly at the existential state of local news media, and spell out a radical new approach that would require a complete rethink of local journalism and its commercial and operating models. We reimagine local media as a start-up would, rather than as incumbents with expensive models to maintain
  • Some context:
                   –Industry executives obsess about the 20-year heyday—1985-2004—forgetting that for the previous century their   
                      predecessors had been operating community-centred businesses with limited advertising
                   –Building digital audience scale has been a chimera for most local media:
      • It is detrimental, at best neutral, for business valuation (it was positive 10 years ago);
      • Online advertising per user is sub-10% of print;
      • Search and social are better marketing “mousetraps” for small and local businesses than news media
  • Most publishers have tried to address these and other issues through incremental innovation: what can we do better, what can we add to the current model? This approach has failed
  • Few publishers have been more radical, and asked: what if communities have no interest in an “online newspaper”; what if how we value journalism is at odds with how people, including younger people, see it?
  • If the internet has one success rule it is that specialist services trump general services. Too many media suppliers are competing with exceptional specialists—Google, Facebook, Amazon, Rightmove—with a set of general content and commercial solutions that cannot ever hope to win
  • The critical issue, though, is simple: publishers have not put the citizen—and her/his community—centre stage. This approach worked for more than 100 years, and has been steadily dismantled since the 1980s
  • Reimagining the industry provides new opportunities, but will cost time and cost money to deliver—a different investment and innovation approach, and a different service mindset, than the industry has used for decades

Contents

Introduction: the most important media question of them all

1. Local media provision in crisis

The challenges for local press are not slowing

Google and Facebook dominate digital advertising

Much of the UK’s new business and marketing growth is bypassing local media

Estimated local and SME spend on Facebook, Google and the local press, 2008 to 2018

2. Radical new model

We propose a much more radical approach to innovation

We propose a community centred model, with very different trade offs from an advertising model

What elements might such a model include….?

What “back end” elements are likely to matter….?

Local media needs to lobby for a more benign environment

Company and industry culture is the biggest challenge

3. Further rationale

Local traffic growth is not the same as local traction

Traction is not the focus of publishers, who are concerned to drive online advertising revenue

Local media started to misread their two sided model between 1985 and 2005

Society is evolving and a compelling local thesis is re-emerging

People trust local media, though relevance is a challenge for all traditional news supply

Roughly 5m people are willing to pay for online news, about the same as buy a daily newspaper

The critical role of print and the benefits of radical transformation

List of charts/tables

Annual circulation of regional newspapers (m)

Regional newsbrands print advertising (£m)

Estimated gross UK online ad spend by media owner in 2018

UK net new businesses added (000s) and online ad spend (£bn)

Google and Facebook share of US online ad spend (%)

SME advertising spend on Facebook, Google and the local press (£m)

Global monthly unique browsers H1 2009 - H2 2018 (m)

Central Scotland: local sites monthly visitors August 2019 (000)

Central Scotland: average minutes per monthly visitor August 2019

UK local & regional news advertising spend (£m)

How local news media executives have thought about their two-sided model since the mid 1980s

How local news media executives thought about their two-sided model for the previous 100 years

Proportion that agreed with each attitude towards the news

Trust in local media (%, GB adults)

Number of UK SVOD HHs (000)

Likelihood of paying for online news (%, 18+, 2017)

Enterprise Value/EBITDA of publicly listed companies