For centuries, traditional print has been society’s primary conveyor of information. But much has changed since the advent of broadcast radio and television. Today, the internet presents print media with arguably the biggest disruptor the industry has ever faced. The issues include:
- Technology and the internet have changed how people consume news.
- Publishers in the news and information industry are now competing with online news sites.
- The fallout of the economic crisis has led to decreased marketing budgets and declining subscriptions.
In order to maintain competitiveness, traditional publishers have had to evolve and adapt. Whenever a business model changes, so does the risk landscape. This article explores some of the changing exposures faced by publishers enduring the print-to-digital transition.
Changing business models
The Independent has published its last edition in print, and publishers such as Johnston Press, Fairfax Media and The Guardian Media Group have recently announced shrinking print sales. These companies, which traditionally relied on print advertising, subscriber fees and single copy purchasers, have all been forced to diversify their revenue sources by creating digital content, digital archives, news syndication, rental income and commercial printing. They have even begun to sell branded materials.
But have they changed their risk management and insurance programs in line with their business models?
In the past, a publishing company may have considered its largest exposures to lie in its considerable printing operations and finely tuned supply chains. However, with the decline of printed materials, a publisher’s value is far more likely to lie in intangible assets in the form of its intellectual property and human capital.
Publishers must ensure their business continuity plans are updated in line with their new business models. The ability to publish online could decrease business interruption levels; however, increased liabilities to third parties could increase exposure levels. In an era where publishers have dramatically changed their business models, they should consider comprehensive business interruption and continuity reviews.
Publishers in the M&A world should also apply sufficient due diligence to make sure they don’t unknowingly inherit potential liabilities as a result of a merger or acquisition.
New work force issues
Publishers must also consider the type of journalist they need to attract. There is a stylistic way online journalists report news. Publishers must attract these journalists as well as the designers that bring the digital content to life. They must ensure they are offering competitive salary, benefit and talent and reward schemes to their employees.
As well as retaining and attracting talent, publishers must be equipped to deal with issues caused by the streamlining of their current work forces. While reduced print and labor costs can result in large savings for publishers, care and sensitivity must be applied when reducing work forces, since much of the labor in printing and distribution is organized in unions. The National Union of Journalists has spoken openly about how future business decisions may result in reputational damage.
Another issue facing companies with historically large printing operations is the liability attached to industrial disease claims such as deafness. Although this is likely to decrease, how to effectively manage existing exposures and increased modern ‘industrial diseases,’ such as repetitive stress injuries and stress-related illnesses, should be considered.
News aggregators and the need for quality content
The internet has also led to the growth of news aggregators, i.e., websites that collect content from multiple sources. Readers have become accustomed to consuming information at zero cost. As a result, publishers must produce unique content that consumers are willing to pay for.
George Brock, Professor of Journalism, City University LondonOne, believes that the need for accurate and reliably independent information is still deeply embedded in the elites of developed societies, and those communities will eventually solve the business problems that currently afflict the production of news.
Supporters, such as Highfield, note that the industry can “learn” from i — “a 21st-century newspaper” for the internet age — because it is “a concise quality read.” His research found that readers feel short-changed by broadsheets they don’t have time to read, and there is no “sense of completion” on the web: “People love the i. There’s no buyer remorse. People finish it and they feel sated.” He concludes:
I think the pendulum will swing back to quality. Advertisers want quality audiences in print and online, and that is what we can deliver. Our strategy of moving ever-more upmarket has got to be the right one.
This means that publishers must invest in developing valuable news experience across all digital platforms. Part of this investment will include attracting and retaining the absolute best journalistic talent.
Digitalization and news aggregators have also contributed to the expectation for news 24/7. This could lead to journalists churning out un-researched articles to meet increasingly unrealistic deadlines and demands, a practice referred to as churnalism. Publishers must have stringent editorial compliance procedures in place to mitigate publishing errors and omissions.
As mentioned above, the internet has facilitated distribution of information faster than any mode of distribution before. Consumers now expect news to be delivered immediately and breaking news and alerts to be available on demand; this content can go viral within a matter of seconds.
This increases media liability exposures. If a publishing error or omission, or a libelous comment is made, the geographical reach and speed at which the comment could be distributed means that damage to reputations can be swift and far-reaching.
Again, publishers must have a proactive cross-border media strategy in place to mitigate any damage caused.
There is also a trend for consumers to be more interactive and make their own contributions to news. There are specific laws that must be adhered to in respect to user-generated content, so digital publishers must make sure they have systems, such as stringent take-down procedures in place to meet these requirements.
The need for accurate and reliably independent information is deeply embedded in the elites of developed societies and those communities will eventually solve the business problems.
Publishers must also safeguard their intellectual property. In print, newspapers rarely had any issues of copyright or piracy of content — digital has no system that recognizes original news contributors and compensates them for their content. It is recognized that the fair use doctrine needs to be reinterpreted to fit digital platforms. There needs to be fairer compensation splits between news generators and aggregators, but these developments are still evolving.
Digital publishers face new cyber exposures from online subscription model implementation and will have to consider what personal and financial information they are processing.
Due to the large media exposure and political nature of their businesses, publishers can often be specific targets for hacktivist and terrorist groups. It is important that they put in place appropriate security measures to safeguard their data and prevent hackers from compromising their systems.
It is clear that publishers need to engage in a mix of communication mediums in order to enhance their brand and appeal to mass audiences. In changing their publishing techniques and business models, they must fully understand their current exposures and ensure available mitigation measures are being taken.