Whilst I hesitate to add to the plethora of words dedicated to the saga of Fairfax, from the stupidity of “Young Warwick” onwards, it seems to me that there are a couple of points that nobody has made.
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- Consumers of media have not changed. They still want to see the news, sports, political analysis, and the latest fashions and foibles of the rich and stupid, and they still want it delivered, and are prepared to pay for it, but they now have options about the delivery not available 15 years ago. Your $60 a month broadband costs are just a different means of delivery of content, the stuff newspapers used to deliver exclusively, for about the same price.
- Newspapers revenue comes from advertising, the literal “Rivers of Gold” that flowed from the classifieds, not from consumers. The price paid at the newsagent (another anachronism of an older world) would not cover the costs of printing and delivering the paper, then disposing of the excess. Newspapers disengaged from the primary source of their revenue and profits, advertisers, whilst their consumers still want, and obtain their news fix, it is just that they can get it elsewhere.
The disruption in the newspaper industry is from the new competition for advertising dollars coming from new channels of content distribution, not from consumers of content turning away.
In all the fluff written about the Fairfax share price, the stalking by Gina, the so called “code of journalistic conduct” and the failure of the Chairman to come to terms with the competing views around the board table, I have seen nothing that points out the basic failure to recognise who is your customer, and who pays the bills and why, outlined above.
The real reason Fairfax is stuffed is that it deserves to be.
P.S. (after 5 years)
It is now April 2017, and Fairfax is saving another 30 million by chopping costs, which means journalists. There is still no recognition of the simple fact that the distribution channels may have changed, but the consumers ares still out there, still consuming media, the challenge is articulating a value proposition that makes it worth their while to part with some money.
