Jude MathurineNew Media Laboratory

http://nml.ru.ac.zaPresented on 2 September 2013 @ launch of Media Management in

the New Age: How managers lead media in Southern and Eastern Africa

‘New’ strategies for ‘old’ media

Media convergence approaches in SA

‘Convergence’ generally describes the coming together of parts that were formerly discrete to constitute a new whole.

Media convergence occurs in the areas of content, technology, business models and professional activity (Jenkins 2006).

Media convergence describes the processes, phenomena and consequences that often follow from the digital and networked nature of contemporary media production, distribution and use.

Some of these are cross media collaboration, media consolidation, integrated newsrooms and multiplatform publishing

Convergence

‘Convergence’ is NOT SOLELY TO BLAME FOR NEWS ORGANISATIONS HAEMORAGGING MONEY, SACKING JOURNOS OR CLOSING.

Other reasons include recession, unemployment, poor content, high debt, increase in cover price, inept management, increased local competition

However, convergence poses large threat for media managers who fail to understand its manifestations, or who fail to act on opportunities to adopt convergence strategies that will suit their organisation, consumers and customers.

The convergence challenge

USA - newspaper circulation dropped by 30 per cent from 62.3 million in 1990 to 43.4 million in 2010 (Grueskin et al 2011).

USA network TV news audiences fell by half since 1980 (Guskin & Rosenstiel 2012).

USA newspaper advertising revenue less than half of what it was in 2006 United Kingdom - circulation of paid-for local and regional newspapers in the

UK plummeted by 20 per cent (2007-2009). UK communications regulator Ofcom found that Great Britain’s Internet

advertising expenditure (ad spend) exceeded television and print advertising in 2011

Turkey newspaper circulation declined 6 per cent (2007-2009) Greece newspaper circulation down by 18 per cent (2007-2009)

Why convergence?

South Africa - Audit Bureau of Circulations indicates SA daily newspaper circulation down over 5% per year since 2008

Old economics of media production and distribution were dependent upon

aggregation of a large number of consumers (mass audience), obtaining economies of scale in production and distribution of content, and provide of scarce commodity (e.g. news journalism) to the market

at a cost relative to input expenses, market demand etc. However, media’s principal income based on connecting

consumers (audience) to the market (advertisers). The traditional media were the primary mediators of trusted

news and information due to specialized access to sources and technologies of media production

The traditional economic model

Certain groups and classes in our societies migrate attention to DVDs, satellite TV (Africa has an estimated 7.6 million pay TV subscribers [Balancing Act 2012), PCs and mobile phones and online channels like YouTube, Facebook, online newspapers and blogs.

Limited traditional media content has been devalued by almost infinite supply of competitive professional and amateur produced content

The new media economy is an attention economy. In SA, for example, 22% go online everyday while only 17% of

population read a daily paper (de Lanerolle 2012)

The new model

African print circulation actually grew (up 4,9% in 2009) One in four Africans own a radio receiver 15% of Africans had access to Internet in 2012 (ITU) but

greater number had access to mobile phones. Among young audiences we see generations growing up

without the desire to use traditional media. In many African countries we see hybrid audience media consumption patterns at top LSMs which creates new competition for traditional media for attention and adshare.

Audience flight

Advertisers realise that digital and networked advertising distribution is more targeted, customisable and measurable than traditional models

Facebook, Google connect the market directly to consumers through sophisticated tools that help target advertising at users based on their social graph, geographic location, buying habits and other online behaviours.

In 2012, the South African online advertising market had an estimated value of R1.52 billion with annual average growth of 30-40 per cent. However, some estimate that companies such as Google may account for at least half of local online revenues

Ad flight

Slash costs: Retrench Close loss making printing presses juniorise newsrooms, hire interns; hire more contract staff, fewer tenured staff, outsource reporting

Try to sue Google Charge for online content through paywalls Fund content production through sponsorship or

donations

Industry response

Source funds through state subsidies e.g. Sarkozy gives €600m in emergency aid to troubled newspaper industry. Every 18-year-old gets a year's free subscription to the paper of their choice

Harness free User Generate Content including citizen media to provide more content

Push for tax breaks for news industry (USA) Media organisations convert status from commercial to

not-for-profit service organisations

Industry response

A convergence strategy helps media cos cope with fragmenting media consumption, and helps make content and online brand ubiquitous by being where your consumers are – consequently opening opportunities for digital advertisers and new revenue streams

For top LSMs (Living Standards Measure) convergence channels may include search and social optimisation and marketing, app and mobile website development, blogs etc.

For low LSMs convergence channels might include outdoor advertising and SMS advertising

Convergence: The long game

Structural convergence may involve consolidation (merge operations and increase ownership of content, production and delivery (eg. Naspers, Nation Media Group)

However, it may also involve strategic partnerships for content sharing between traditional media (e.g. local newspaper tie-in with a community radio station to combine ad sales)

Save costs by consolidate editorial roles across large media group e.g. sub-editors, sports reporters report and work for multiple titles e.g. Media24 Afrikaans newspaper titles.

Convergence responses

Classifieds markets decimated by free online classified companies like Gumtree or Craigslist. Recruitment advertising lost to LinkedIn, PNet, jobs noticeboards etc. Media organisations create or buy own classifieds websites for dating, jobs (CareerJunction – Times Media Group), classifieds (OLX-Naspers)

Premium SMS revenues (although mobile companies may take up to 50% for premium SMS line).

SMS used as circulation builders e.g Daily Nation & Star classifieds

Build aggregator websites to house content from all group titles e.g Independent Online, News24

Convergence responses

Create or buy out new digital platforms for publishing and revenue generation e.g. Caxton buys up mobile business Foneworx. Purchase may be used to leverage mobile enabled discounts

Be the bank – Kenya’s Nation Group’s N-Soko and Nation Hela card allows international money transfer

Convergence responses

Become the store. Convergence between online shopping and magazines (see Media24’s Spree)

Convergence responses

The future of journalism as a public service and as a commercial pursuit is dependent on the strength and viability of its organisations

Media managers require an in-depth understanding of convergence and local and international online markets and marketing to adapt strategies that will ensure future viability of the organisations they manage.

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