UK news industry could lose £500m in revenue to online platforms over next decade, report warns

Picture: Pixabay

The UK news industry could lose up to £500m in revenue to online platforms such as Facebook, Twitter, Google News and Apple News in the next decade, new research warns.

The figure is equal to 10-15 per cent of the industry’s revenues, according to the “Is Content King After All?” report, published today by Global consulting firm OC&C Strategy Consultants.

It says “online disruption” has already cost the industry an estimated 46 per cent in revenue within the last ten years and warns online platforms are set to become “more powerful in controlling the flow and consumption of news traffic”.

The report claims 41 per cent of UK millennials now rely on social media or shared content for their news, hitting digital subscriptions and advertising at established news brands.

Figures are based on an international survey of about 10,000 people as well as analysis on the impact of platforms across multiple industries.

The continued growth of news distributed on social media was one of three trends revealed in June’s 2016 Digital News Report by the Reuters Institute for the Study of Journalism.

Reuters said it was already putting “severe pressure” on existing media business models.

Last month, Facebook revealed its advertising revenue was up by 63 per cent to £4,740m ($6,239m) for the second quarter of this year, compared with the same period last year.

Cuts to staffing have been rampant across the newspaper industry as it reels from the loss of revenue from classified advertising and newsstand sales.

But today’s report warns cost savings are “unlikely to be a radical enough strategy to offset this predicted loss in revenue, most of which will hit the bottom line directly”.

Toby Chapman, associate partner at OC&C Strategy Consultants, said: “It’s already a familiar story in other industries such as music, and now the news industry looks next in line for platform disruption.

“The reaction of incumbent brands will be critical to what happens next. There are strategies that can be taken – by news and other industries vulnerable to the threat of online platforms – to avoid a similar fate.”

Chapman has proposed a “collaborative, industry-wide response” to the growth of online platforms in order to “retain control” of the market.

“It needs to happen fast, have broad industry support and, in order for it to work, focus on the consumer,” he added.

A feasibility study into how newspapers including the Sun, Guardian, Daily Mail and Daily Express might work together to find a solution to the decline in advertising revenue is said to be already underway.

Dubbed “Project Juno”, it is being chaired by former advertising chief executive Steve Booth.

Picture: Pixabay

Comments

2 thoughts on “UK news industry could lose £500m in revenue to online platforms over next decade, report warns”

  1. The thirst for high quality, hyper-local news continues, and the news on printed paper must still have value. We started 10 years ago, printing 1,600 copies very locally delivered door-to-door. Now we distribute 30,000 free copies a month across South Wilts and North Dorset, and we are frequently asked why we don’t charge for it, as readers like the editorial coverage we give to this huge rural area.
    David Parker
    Valley News

  2. All publishers are aware that finding an effective solution to the “walled garden” conundrum is a priority, but there are two fundamental points which need to be remembered. Firstly, Facebook doesn’t create news content. Without publishers, there would be nothing to share or like beyond your friends’ personal lives.

    Secondly, as the Guardian’s editor Katharine Viner pointed out in a piece for the title last month: “Algorithms such as the one that powers Facebook’s news feed are designed to give us more of what they think we want – which means that the version of the world we encounter every day in our own personal stream has been invisibly curated to reinforce our pre-existing beliefs”. These “echo chambers” narrow our view of the world by filtering the information and viewpoints we are exposed to.

    Neither of these points are a remedy to the issues which need to be resolved between Facebook and publishers, but they do highlight the essential role that newsbrands play – recognition of which is central to a solution.

    It’s worth noting that while the report states that 41% of those under 34 years old use social media or shared content as their primary way of getting news, latest NRS PADD also tells us that 15-24 year olds are the biggest consumers of newsbrands across platforms (not including social media), with 97% picking up a paper or accessing an newsbrand app or website every month. Not only does this tell us that young people have a huge appetite for informed and verified journalism, but that they are also aren’t solely relying on social media for their news fix.

    Similarly, while the Reuters 2016 Digital Journalism Report highlighted the growth of news content distributed on social media, it also found that “social media is just one way of accessing online news – the vast majority of which still ends up being consumed on a news website”.

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