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Local journalism

Horst Röper

Horst Röper is a qualified journalist and head of the Formatt Institute for Media Research. The media researcher's regular analyzes of the German newspaper landscape provide a comprehensive picture of market developments, power relations and concentration movements in the industry.

Infographic

Everyone is talking about the newspaper crisis. In order to understand the background, one has to know the economic structure of the newspaper: How are income and expenses distributed? In addition to the newspaper, which branches of business do the media houses also focus on?

Graphic: How a newspaper finances itself - Click on the graphic to open the PDF. License: cc by-nc-nd / 3.0 / de / (bpb)

The business model of the media industry differs significantly from that of other industries. Normally, the customer pays for a product and its manufacture (raw material plus processing). The media industry, on the other hand, often provides customers with products free of charge: it delivers advertising papers to the mailbox, puts out regional magazines to take away in pubs and cinemas, or broadcasts private radio programs free of charge for listeners and viewers. These media are financed exclusively through advertising. Another part of the media industry works with a mixed model of sales and advertising income. B. Most magazine and all newspaper publishers.

The share of advertising income varies greatly and, particularly in the case of magazines, depends very much on the respective readership. The advertising industry, for example, has a particular interest in the higher-income sections of the population and in young people, as they are particularly responsive to advertising. Therefore, youth magazines like "Bravo" can have a relatively high price z. B. request for a full-page advertisement.

The daily newspapers in Germany usually have no readership that can be determined by gender, age or specific interests (hobbies). Only for the few national daily newspapers such as "Süddeutsche Zeitung" or "Frankfurter Allgemeine Zeitung" is this less true. Three quarters of all newspaper copies sold in Germany come from local or regional subscription newspapers. These newspapers do not have a specific readership but appeal to all sections of the population, albeit with varying degrees of success. The similarities within such a readership are so few that the publishers in the advertising industry cannot offer any readership whatsoever - with one exception: local or regional newspapers reach readership in a certain area. Therefore, newspaper advertising is carried out in particular by local retailers and local service providers. Branded articles (from detergents to cell phones) are mainly advertised on television or in magazines.

Loss of classifieds business

Advertising is a major contributor to media funding. It can be fine with the reader, because the advertising acts like a sponsor and ensures relatively low prices. In the case of daily newspapers, the advertising business still accounts for almost half of the total turnover. For decades it was completely different: advertising in newspapers was booming. Two thirds of the publisher's income came from advertising. This great demand for newspaper advertising continued until the year 2000. It was the best year for the newspaper publishers, which achieved a turnover of € 6.6 billion with advertising alone.

After the turn of the millennium, the advertising market as a whole - and not just for newspapers - literally collapsed. Revenue from advertising in the media fell from € 23.4 billion to € 18.9 billion in 2011, according to figures from the Central Association of the Advertising Industry. The economy slowed down and accordingly less was spent on advertising. For the newspaper publishers, a second problem arose almost at the same time. The Internet was increasingly taking shape in the advertising market and grew to become a competitor to newspapers, particularly in the real estate business and motor vehicle trade. Today, used cars, whether by private individuals or by retailers, are predominantly sold over the Internet. The same applies to the housing market. The search functions on the Internet play an important role here. The newspapers have largely lost this so-called classifieds business. Accordingly, there is a lack of income in the cash register. Newspaper publishers - operating regionally and nationally - were only able to achieve sales of 3.5 billion in 2011.

All publishing houses in Germany have tried in recent years to at least partially compensate for this loss of income by increasing sales prices. The individual price for kiosk sales and - more importantly - the monthly subscription price for delivery by messenger has been increased. In 2000, a subscription to a local / regional newspaper in West Germany cost an average of € 17.44 (East Germany: € 13.89). In 2010, subscribers had to pay € 26.85 (Eastern Germany: € 21.77). However, price increases are not without risk for publishers because not all subscribers accept them. Some cancel the subscription. In addition, at least in those areas in which there is still competition between different newspapers, publishers must also consider the competitive situation. The publishers act accordingly cautiously, but are forced to increase prices. The newspaper product is still cheaper for the reader through advertising, but no longer to the same extent as it used to be.

Farewell to the monomedial corporate orientation

On the cost side of the publishers, according to the Federal Association of German Newspaper Publishers (BDZV), the home delivery service, which is familiar in Germany and often unknown abroad, accounted for almost 24 percent of expenditure in 2010. The editorial costs are slightly higher at almost 26 percent. The technical production is similar: it costs a total of 25 percent (6 percentage points of which are used for paper). 16 percent is spent on advertising and 9 percent on administration (average values ​​for subscription newspapers in West Germany)

According to this, 52 percent of the revenues in 2010 came from the reader market and almost 48 percent from advertisements. In terms of advertising revenue, the brochures attached to the newspaper are now also important in addition to traditional advertisements. The shares of this supplement business made up just under 8 percent of total revenues. The lion's share is still earned with advertisements. The price for these advertisements depends on the size of the advertisement and the circulation of the newspaper. In addition, the publishers work with different base prices. Commercial ads are the most expensive. The price is reduced for the classifieds markets (job, real estate and acquaintance advertisements). The prices for family advertisements (weddings, births, deaths and the like) are even cheaper.

Unlike in the past, newspaper publishers are no longer mono-media companies. They have long been active on the Internet, and maintain their own portals there, mostly under the name of the newspaper, and often others as well. These portals are also mainly financed from advertising income. Most newspaper companies also publish or participate in advertising papers, which are typically delivered to households in a given area once or twice a week. Many newspaper companies are also involved in private broadcasting, mostly with radio broadcasters, less often with television broadcasters. Since private postal companies have been approved in Germany, many publishers have also been working in this sector and using their sales know-how. Ultimately, not only are newspapers produced in newspaper printing plants, but also outside orders are carried out. Above all, publishers of high-circulation newspapers also sell their own book or DVD series.

The digital business field is being expanded step by step by the publishers:
  • You offer the customer digital versions of the newspapers as ePaper for daily use;
  • Internet portals are being expanded and, in parallel with technical developments, audio and video files are being added;
  • More and more paid apps are being offered for smartphones. Apps are also offered for use with tablets, but only in small numbers.
The publishers are therefore trying to make multiple use of the editorial services that are still primarily created for the newspaper today. Multimedia tasks are assigned to the editorial staff: interviews are also processed into (short) audio files; the newspaper photographer is now on the move with digital cameras in order to produce a video report in addition to the newspaper photo, which is then marketed via digital distribution channels.

The newspaper publishers have thus increased their reach in recent years. The editorial services are perceived by more people today through the various channels. Nevertheless, the publishers have economic problems. The free use of journalistic content has also established itself on the Internet. Priced offers attract very little interest. The financing of these offers through advertising alone is insufficient. At the same time, there is less and less demand for paid newspapers. The circulation of the daily press has been falling steadily for years without any end to this development in sight. Young readers in particular are absent. They buy newspapers much less often than previous generations. For years, intensive attempts have been made to make the newspaper medium popular with young people. Nationwide, for example, there are dozens of models for using newspapers in schools. However, all these efforts have so far not led to the slow but persistent loss of circulation of the newspapers.