Addressing the Sydney Institute, Scott discussed the need to secure more online classified advertising and spoke of the demographics of newspaper readership. For example, surveys show that only 8% of consumers gain their news from the ABC and broadsheet publications. Justifying the Herald's coverage of Australian Idol, Scott said: "Of the 3.3 million who watched the final episode, very many were the affluent and influential core of Herald readership."
Online news pointed to the need for newspapers to be unique online and in print, Scott said. Referring to the content of the SMH, he said: "Our readers want good strong news, politics,
investigations and international affairs. But they also want pop culture and fashion and lifestyle journalism as well. Younger people in particular see entertainment as news. And all our readers want their news produced in a way that it can be easily read and understood, with clear graphics, strong pictures and a good mix of content.
This is the transcript of the speech by Mark Scott, Editor in Chief, Metropolitan Newspapers, Fairfax, as delivered to the Sydney Institute.
Ladies and Gentlemen:
It is good to be able to join you to discuss the future of our newspapers and
the issues facing quality journalism in Australia. But first I can give you the
words of reassurance you want to hear….Gerard Henderson has filed for
tomorrow morning’s edition.
It wouldn’t be fair for me to give you any more details than that – and run
the risk of ruining what is sure to be a highlight of your morning – but let me
assure you, it is worth the Herald’s $1.20 purchase price in its own right.
And on that comforting note, let us move to the issues of the hour: the
nature of the newspaper business and the future of papers like The Sydney
Morning Herald.
My responsibilities at Fairfax cover the editorial side of the business at the
Herald and the Sun-Herald in Sydney and The Age and the Sunday Age in
Melbourne. My comments tonight, given that they are being made at The
Sydney Institute, will inevitably emphasise the Sydney Morning Herald,
which enters its 175th year of publication next year. Discussions about The
Age, experiencing readership growth and generating genuine excitement
under its new editor, Andrew Jaspan, will be for another time, in another
city.
The Herald, of course, plays a vital role in the life of this city. It reaches
more than 1.2 million readers each Saturday and 900,000 each weekday. It
attracts a readership coveted by advertisers – as the Herald aggregates an
audience that is difficult for them to reach: the educated and the affluent;
the informed and the influential; the intellectual and cultural constituencies
in Sydney.
In a pure business sense, the Herald takes that audience and sells it to
advertisers who want to reach them: the department stores, the banks, the
travel industry and the advertisers who use the classifieds – the rivers of
gold – for real estate, employment and motoring.
But of course, when we think of the Herald, we don’t think of it as a forum
for bringing together buyers and sellers – we think of that remarkable
compendium of news and information delivered at your newsagent and to
your driveway each morning.
We think of ground-breaking investigative journalism; the courage of Paul
McGeough’s reports from Baghdad and the relentless coverage of issues
like the railway crisis, the Norma Khouri fraud and the James Hardie
scandal.
In sport, readers turn to us, not because we buy sports and sporting
venues like our competitors, but because we love sport and because
people like Peter Fitzsimons and Peter Roebuck can report on it in a way
that is intelligent and passionate.
Most people would think of us as a great public institution – a public good –
making our democracy safer and our lives richer. And they are right. This
is the pivotal role we play as a leading newspaper publisher and media
company in our democracy. And whilst at some times it may annoy or
disappoint some readers – Sydney and Australia are better places because
The Sydney Morning Herald is there covering our city, our nation, and the
world – and chronicling our life, our times, our challenges and our
aspirations.
When I think of our journalists, it is certainly this role that attracted them to
the paper and keeps them at the paper. While they understand that the
Herald has to take advertising of course – their pride and passion is in the
great journalism at the core of the paper – and the paper’s place in the
heart of the city.
One of the unique features of providing leadership at Fairfax is that in a
sense, we do produce a public good in a public company. Our owners, our
shareholders, I assume, enjoy reading the papers we produce each
morning. But they own our shares because they want us to grow the
company to be stronger, to play a more prominent and influential role – and
to generate strong earnings growth so that we, as a company, have a
stronger ability to control our destiny.
To succeed, therefore, we must meet our responsibilities in providing
Australia’s best journalism whilst at the same time, meeting our corporate
responsibilities to our owners.
Some have argued that there is an incompatibility between a broad open
public share register, like we have at Fairfax, and the ability to continue to
invest in quality journalism.
But I think the experience at Fairfax over the past decade would indicate
this has not been the case with us.
On a corporate side, we have had to manage our costs and grow our
revenue and earnings – and we came through a major advertising
downturn because we managed the company more tightly than had
previously been the case.
The Sydney Morning Herald and The Age are healthy with strong revenue
and earnings growth, in both absolute terms and in comparison with other
metropolitan newspapers worldwide. The AFR remained profitable
throughout the last advertising recession – unlike the Wall Street Journal
and the Financial Times.
Our effective management through the cycle allowed us to make a major
investment in New Zealand, where we successfully purchased the INL
mastheads to make us the largest newspaper publisher in Australasia.
But what about on the journalism side? Despite an independent board of
business and media executives, despite pressures to grow revenues and
manage cost – we have passed every test of independent journalism. Our
papers have won every award there is to win – many of our reporters are
acclaimed for their courage and tenacity – and if you watch the path of
stories through the news media on a daily basis you will see that it is
Fairfax papers that consistently break the stories the matter, that have
significance and that set the news agenda in Sydney.
Our journalism does not pander to certain corporate interests. Our
reporters do not receive any riding instructions on what their reporting must
find. Our editors are not told what views are right and what views are
wrong; who should be given a hard time and who should be ignored. There
is no expectation that the Herald’s news columns will be used to further
specific business interests. Our journalism today in an openly-held public
company is every bit as independent as it was under the ownership of the
Fairfax family.
Our track-record on these things is better than any of the media dynasties
that work in our market – and it causes immense frustration to our
competitors.
All media outlets can point to pockets of excellence that can be used to
justify a label of editorial integrity: low-rating news programs that are kept
on the air, or high-brow, loss-making newspapers or magazines kept in
business.
But the real test in media isn’t the niche products you keep producing…it is
the stories you allow to run – particularly stories that might cause some
harm to yourself and your interests or those of your friends – because you
understand the value of free and independent journalism. And Fred Hilmer
and other board members would be the first to tell you that they are not
protected species when it comes to hard-hitting, independent journalism by
Fairfax reporters. Indeed, the paper’s reporting on the company is as
tough as coverage by any of our competitors.
At Fairfax, we insist our editors produce papers that pass tests on fairness,
accuracy and balance – but in doing so, allow reporters to write the stories
as they find them. And when pressure comes to bear on Fairfax editors and
Fairfax management from the high and the mighty – threatening legal
action and corporate retribution – the company has been steadfast and
resolute in defending our journalism.
That is not to say our journalists run amok and our editors fail to edit. “The
inmates are running the asylum.” It is a line our competitors use -
whenever we run stories about them that they don’t like. But our editors are
accountable for every word in the paper. The difference with our
competitors is the way we see our papers. Our papers’ financial strength is
based on brand values that are generated from credibility, independence,
excellence and quality. Our publications are not just another tool to be
utilised to further a broader corporate interest.
Our CEO leaves next year and despite his track record in strengthening the
company, he is still subject to the criticism that he is not of the media – that
he did not spend his entire career working in newspapers, magazines or
television. But I can tell you from my unique vantage point, Fred Hilmer has
upheld the highest possible standards of editorial integrity and been a
champion of independent journalism. He has never flinched, never buckled,
never taken a backward step in defending the rights of our editors and
journalists to find the news and report it in a fair and balanced way.
The best things in life are not always free. And there is a price for this
independence – and that is – we have to keep performing well as a
company. Our investors are not shareholders because of an act of
corporate generosity. They expect us to manage well and to have
pathways to further growth. And if we can do that by practicing strong, fair,
independent journalism – that’s all the better.
So, for the journalists who work at Fairfax because it is a haven for
independent print journalism that has impact in this country – the future is
in their hands and the hands of all who work in the company.
If we cannot manage Fairfax as a growing media company – with increased
shareholder returns and pathways to further growth – then the rejection of
the company by the market puts independent journalism at risk.
The business of journalism faces many challenges. At Fairfax, part of the
obvious challenge is that our journalism has been underwritten by
advertising support, particularly classifieds. It is not widely understood
outside the business that less than 20 per cent of the revenues at the
Herald comes from people buying the paper – the rest comes from the
display and classified advertising.
Of course, we are seeing more classified advertising on-line and Fairfax
has a strong position in the key classified on-line markets. And we are
creating new products to reinforce our strength in print – like the new
Domain East real estate section each Wednesday for our Eastern Suburbs
readers, to be extended in a Domain North edition early next year.
We have also seen growth in display advertising and have enjoyed the
retail war being slugged out in our pages. May it be long, bitter and
protracted. A Hundred Years’ War.
But despite these challenges, we are confident that there is a strong and
prosperous future for newspapers supported by advertising and there is
some evidence that the future looks much more rosy for newspapers than
for free-to-air television.
But they are smart in TV – and slick at spin. So you read reports about
audiences in terms of marketshare, not market penetration. And you hear
about Channel 9 news rating a 27 pipping Channel 7 that rated a 25 – and
those figures are about marketshare – not about the number of people
watching.
And the number of people watching has been dramatically falling. Over he
past ten years, the free to air television stations' share of all TV viewing has
fallen from 97% to 83%. Since 2001, the total daily average readership of
Fairfax newspapers in Australia has increased by 2.5%. Over the same
period, free to air television has lost 5.9% of its audience through the day.
The future for free-to-air looks even more threatened when Foxtel inevitably
moves from 100 channels to 500 channels in the next decade – and when
personal digital recorders allow people to watch what they want, when they
want – and bypass the ads as they do so.
But we can be confident that at least for newspapers like the Herald – we
will continue to be a unique aggregator of a large, quality audience –
attractive for advertisers and hard for them to reach outside our papers and
the magazines we also carry in their pages.
We face real challenges to preserve and build on our position – and those
challenges will impact on the way we produce the paper, the news and
information we carry and the nature of our journalism.
Without doubt – the biggest change to newspapers in the past decade has
been the impact of on-line information. Previously there were massive
barriers to entry in the information business. If you wanted to reach a mass
audience you needed a radio or television licence – or fork out for your own
printing press.
On-line means you only need a computer and a modem – and as we all
know – everyone is moving into the on-line information space. You don’t
need to kill a single tree to be famous – or notorious.
This is not bad news for newspapers – at least – not newspapers like The
Sydney Morning Herald. Our site, smh.com.au is the #1 online leader in the news and information sector in Australia and is experiencing rapid
growth in profitability. Coupled with the readership of our print edition – the
350,000 unique visitors to the site a day means the reach and the impact of
the Herald on a daily basis is larger than it has ever been before.
Particularly amongst younger people – on-line gives us the ability to build
our news brand of the Herald as a reliable source of information you can
trust – in a powerful way.
But the on-line reality means the print edition is changing and will continue
to change. We do not edit The Sydney Morning Herald with the arrogant
assumption that we will be the first to tell our readers what happened
yesterday. Most of our readers will have caught a TV news bulletin – or at
least checked out the headlines on-line. They listen to radio and may have
breaking news sent in an SMS to their mobile phone.
In this changing media landscape – there are three clear areas of
opportunity for a paper like the Herald in a journalistic sense, and I would
like to address each in turn.
We must develop papers that are more closely attuned to the interests of
our readers and fit more easily into their lives.
We must ensure that what we are offering to them is compelling and
unique.
And we must ensure that we are delivering this information in a way that
generates trust, respect and commitment from our readers.
Then perhaps in conclusion, I might speculate on whether you get all this is
the current broadsheet format – or whether you might be reading a
compact edition Sydney Morning Herald.
We know from our research that many of our readers are time-poor – they
lead busy lives – and the answer for them is not to make the paper bigger
and bigger. If anything – the paper will get smaller in terms of total pages
and tighter in terms of editing in the years ahead – particularly the Monday
– Friday editions.
Less needs to become more – by having more utility and value. Part of the
challenge of designing the newspapers of the future will be to ensure that
readers can extract the level of information they need in the time they have.
If it is 10 minutes, 30 minutes or three hours – the reader’s experience of
the paper will need to be rewarding and fulfilling. That requires a strong
design, demanding editing and content that is distinctive, unique and
engaging.
The interests of Herald readers are very broad. From Australians in Iraq to
Australian Idol: from the Government’s plans for the Senate to the
expansion plans of Sass and Bide. Our readers want us to cover the field.
And in covering these stories, we need to apply the same news values and
standards to our lifestyle sections, arts reviews and business columns as
we do for the page one story. We attempt this now – but the expectations
we place on ourselves will rise even further.
And whilst some readers may turn up their noses when they see Australian
Idol on the front page of the Herald – twice – in one week – at the paper,
we simply have to understand that Australian Idol proved to be an
important part of the lives of very many of our readers. Of the 3.3 million
who watched the final episode, very many were the affluent and influential
core of Herald readership. It is important that we cover stories like
Australian Idol – but we need to cover them in a way that appeals to our
readers – hopefully with wit, insight and wonderful pictures.
It can be a challenge for journalists. Australia Scan research suggests that
the percentage of the population that consumes media primarily from
broadsheet newspapers and the ABC is only 8% - but the target audience
of The Sydney Morning Herald is much higher than this – probably closer to
30 or 40% of Sydney’s population. We need to make sure we are not the
8% writing for the 8%.
It is not an exercise in dumbing these papers down. It is a case of
sharpening them up.
But there is no future for the Herald in providing a worthy dose of news up
to the readers, with a mindset that if the readers know what is good for
them – they will consume it. Our readers want good strong news, politics,
investigations and international affairs. But they also want pop culture and
fashion and lifestyle journalism as well. Younger people in particular see
entertainment as news. And all our readers want their news produced in a
way that it can be easily read and understood, with clear graphics, strong
pictures and a good mix of content.
We are researching readers intensively – not so we can simply give back
to them what they ask for – because part of the pleasure of a newspaper is
the surprise that it brings – but so we can more actively understand how
they use the paper and the needs they want it to meet. The better our
understanding of our readers – the more effectively we can meet their
needs.
This leads us to the second issue – which is a greater focus and intensity
on delivering a unique media experience in terms of content.
We need to be unique in print and on-line.
News that you have not seen anywhere else. Hard-hitting investigations,
authoritative reports from our team of foreign correspondents, wittier
journalism, better writing, analysis from commentators you follow and can
trust.
It will be us investing in the journalism that makes the Herald different every
day. It is quite rare that a newspaper breaks an individual story that drives
circulation sales. But create a culture that says every day you are breaking
stories – every day you are setting the news agenda – that is the kind of
newspaper that generates a buzz that drives readership. We already do
this and will need to do it more.
Part of the unique experience is having unique voices writing for the paper.
Our readers are clear what they want. The want straight news reporting
with no bias or commentary – and then they want the best analysis and
commentary clearly labelled and identified in the paper.
In the Herald – some of our commentators have fierce followings. Alan
Ramsey’s election pieces generated a storm of debate which broke nearly
50/50 between the appalled and the devoted.
Many of our regulars have their own loud followers and critics. The best
columnists and commentators break news in their columns – they talk to
real people, dig into history, explain context and engage their readers.
They bring genuine insight. Their subjects and their conclusions may not
always be predictable as a consequence.
In a sense, our team of commentators help the paper not to explain what
happened yesterday, which was perhaps once the paper’s role – but to
explain why it happened, what will happen today and what may happen
next.
Now a major challenge for newspapers that can assemble the talent and
create the well-edited and engaging newspaper – is the challenge that this
can be purchased every morning – or read on-line free each day.
Newspapers around the world are now examining carefully the model that
has emerged over the past 10 years of putting most of the content up on
line for no charge. There is a tension within newspaper organisations about
putting nearly all of the paper on-line to drive traffic and as a consequence
generate on-line advertising.
We are in fact doing that, with our online news and classified sites
profitable and enjoying annual revenue growth of 40-60%. The challenge
is whether you also encourage readers to simply read the paper on-line,
without purchasing the print edition.
It is of interest that quality newspapers around the world have suffered
steeper circulation declines since last year’s war. The drop-off has been
steepest in weekend papers, where many readers only purchase a paper
once or twice a week rather than have a daily habit. The war generated
extraordinary on-line traffic – and coupled with the dramatic roll-out in
broadband coverage – may well have helped the on-line sites become a
stronger habit in the lives of our readers. Which is a good thing.
But it may mean newspapers like the Herald have to change their approach
to news gathering and where it reports news. It may be that over time our
site is less an on-line depiction of today’s print edition, but more a dynamic
breaking news site, where as best we can, we make Herald news reporting
standards and values continuously available for our readers through the
day.
Indeed, the net has already emerged in offices as a replacement for radio
through the working day. More and more of us turn to the net first – and
smh.com.au first – at any random moment of the day, as opposed to the
radio news.
Already some big exclusive news stories that will not hold until the morning
are being put on our on-line sites immediately. I can see that in the future
there would be fewer stories transferred from the print edition to the site,
but more updates, greater immediacy and increased rewards for logging in
every hour during the working day.
Rather than simply being a newspaper, the Herald would be the most
authoritative news brand, with more resources available to throw into
supporting 24 hour news coverage than any other media outlet in the city.
And of course, our on-line performance would be the best advertisement
for the print edition – and the print edition would highlight what updates
readers could expect on-line during the day.
The Herald’s on-line opportunity – our ability to move our credible news
values into an on-line environment – highlights what I believe is our other
key opportunity is for the future.
As I said earlier, anyone can be a publisher these days. There is so much
to read, so many outlets jostling for a place in the limited time people have
available to consume media.
And such a crowded marketplace provides the Herald with another strong
opportunity. How does the Herald compete in such an environment? By
being the most trusted source of news. I believed we are well positioned
now – and we are taking steps to further improve our performance.
Our readers have an expectation that the Herald’s reporting will be fair,
accurate and balanced.
Putting the paper out on a daily basis is an extraordinary enterprise. Over
an 18 hour period, we create something with as many words as an average
book – with stories breaking, new information emerging and politicians and
CEOs ducking for cover as the deadlines loom and our presses warm up.
Which brings us to the issue of accuracy under the pressure of publishing
deadlines. I am the first to admit that, notwithstanding the best efforts and
most talented staff, we get things wrong.
If we get something significant wrong, readers want us to correct it. We run
more corrections in the Herald than any other newspaper – certainly more
than our News Limited competitors. That is not to say we make more errors
– I would contest that we don’t. But we don’t fight to keep corrections out of
the paper – we willingly put them in. When we run a correction, we
demonstrate we take accuracy seriously.
We have also benchmarked our papers on basic spelling and grammatical
errors against leading newspapers in the United States – and against each
other.
And following a process implemented at The Chicago Tribune, we now
have a central reporting of all errors detected at the paper. Editors can
have a clearer understanding of the scale of errors, which parts of the
paper are generating errors and whether there is anything in our processes
that is stopping us detecting them. We need to understand if particular
reporters are having trouble with accuracy. The initiative is working well
and helping us to put out more accurate papers.
Issues of fairness and balance are harder of course. Our reader feedback
suggested that in the last election campaign, about half of the readers who
complained suggested our coverage was biased towards the Coalition –
and half said we were biased towards Labor. There was stronger
consensus in support for our editorial position at the Herald that we would
no longer endorse a political party in our pre-election editorial.
Whilst accuracy is often an issue of black and white, there can be real
nuance in issues of fairness and balance – what you see is often framed by
the perspective you bring to the story. But at a senior editor level, we are
becoming quite obsessive about trying to eradicate opinion that can enter a
news story and slant it. And we are alert to excessive coverage of any
issue that is of great interest to journalists but limited interest to a broader
readership.
We will also be implementing some new programs to further test our
performance in these areas. This will involve audits of some editions of the
paper after publication – including checking back with some who were
interviewed for stories, to discover whether they believed they were
accurately quoted and the story was balanced.
We are also reviewing our processes for the use of ‘off-the-record’ sources
for articles. The Herald will still use anonymous sources for articles, but we
will have robust internal tests for verification and cross-checking. As has
been demonstrated in numerous, high-profile cases overseas, the
extensive use of anonymous sources leaves the newspaper open to fraud
or manipulation and can work against accurate and truthful reporting. We
want to get the news and break the story – but we also want to be
absolutely sure that we have the whole story, that we have it right, and that
the paper is not being used to slant or spin a story in a particular way for a
particular interest.
All of which is to say we are raising the bar higher on fairness, accuracy
and balance. We take it very seriously. We intend to be, unimpeachably,
the most trusted source of news in this city.
And finally, will you, one day soon, be reading a tabloid or compact edition
of The Sydney Morning Herald?
Of course, tomorrow morning, one of the most popular elements of the
Herald will be in compact form – the Good Living section. The evolution of
the paper over the past 20 years has seen our readers become very
comfortable with the mix of broadsheet and tabloid sections.
I don’t subscribe to the view that readers in this market equate broadsheet
with quality and tabloid with trash. The Murdoch tabloids in Australia are
hardly red-top screamers and of course, there is no more respectable
tabloid paper than Fairfax’s Financial Review.
I suspect that many of our readers are comfortable with the broadsheet and
would not welcome us tampering with it. And they would be suspicious that
a compact Herald would be headed down-market.
But other readers, particularly younger ones and those who catch public
transport would probably welcome the portability and convenience of the
Herald they love in a compact form.
There are a few things we do know from the international experience. What
is really important is what is in the paper, not the size of the pages. A bad
paper is still a bad paper, no matter how convenient the format. And papers
that are struggling to survive as a broadsheet have usually not found
salvation in a compact format. Tony O’Reilly’s Independent in London has
found increased circulation after converting to the smaller form, but the
path to sustained profitability reportedly remains elusive.
A particular challenge is on the commercial side of the business. Most
papers currently sell ads based on their size in the paper – a full page in
the broadsheet is double the size and arguably the cost of the full size in
the tabloid.
I have heard it likened to TV stations charging advertisers based on the
size of the TV on your wall rather than the number of people sitting in your
lounge room – another example of how TV has been smart.
What it means is that nearly all newspapers have sacrificed some
advertising revenue when moving from broadsheet to tabloid, as
advertisers taking full page broadsheets have usually not converted to
taking double page tabloid ads.
The papers that are most likely to convert in the short term are those
struggling for circulation, trying to find a viable audience – and those with
less advertising to convert and therefore less revenue risk. In an Australian
context, that means the most likely candidate is…The Australian.
But maybe one day, the Herald. We will watch our former reporter, Robert
Thomson, now the editor of The Times in London, as his brave, bold,
tabloid experience unfolds. We know everyone at News Limited in Australia
is watching closely also.
All of which adds up to an overview of the business of great journalism.
These changes will put demands on our staff. At Fairfax, we have
Australia’s finest team of print journalists. Well-educated – and often –
schooled and mentored at the papers by wonderful veterans committed to
the craft. They are the best paid print journalists in the country and very few
leave to go and work elsewhere in the industry. They are passionate about
their papers and are proud of their work. And as last week’s Walkley
Awards show – they set the standards in Australian journalism.
22
I believe there is a path our papers can follow which will continue to
strengthen the financial performance of Fairfax whilst improving the quality
of our newspapers in a changing media market. It is a future based on
providing high quality, compelling exclusive news in formats designed to
help readers extract the level of information they need in the time they
have. And this information will be delivered around the clock, with readers
assured we are working to ever higher standards of quality, independent
journalism.
Fairfax is a fascinating and a rare place. A public company that produces a
public good. Creating newspapers that generate such passion and loyalty
and commitment in their readers. Newspapers that have a profound impact
on our readers and our leaders, working in an industry facing such worldclass,
ferocious competitors and undergoing rapid technological change.
And helping to serve our democracy by questioning, challenging and
uncovering the truth, being captive to no-one.
Great journalism is a great business, with a great future.
