News / 15.11.2013

Newspapers in search of a financial model

By Linus Atarah

It is a twist of irony that as Finnish and Swedish participants were about to discuss the future of newspapers in a seminar two weeks ago in Hanasaari, near Helsinki, Sanoma News had earlier that morning announced probably the biggest staff restructuring in its history.

Sanoma News, Finnish biggest media house and publisher of the biggest daily Helsingin Sanomat, had entered into negotiations with its staff which would lead to about 70 journalists losing their jobs.

Sanoma New’s plan to layoff journalists is the most recent addition to a long line of several Finnish media houses which have been shedding journalists due to economic hardship. This year alone 180 journalists have lost their jobs, while over one thousand altogether have lost jobs since the financial crisis began in 2008.

Swedish newspapers are in a similar dire situation, said Mats Bergstrand, a former editor in Swedish largest newspaper, Dagens Nyheter. According to him, Swedish newspapers are losing advertising revenue as well as subscribers, with some newspapers having lost up to 40 per cent of subscribers within the last six years.

Not yet able to lever sufficient revenue from online advertising and losing customers in their thousands, newspapers are in a pickle. In the light of such a situation participants in the Hanasaari seminar made up of Swedish and Finnish media experts tried to explore the basis of a sustainable financial model to keep newspapers afloat.

An issue debated at length was whether a lifeline by way of public financial support could be thrown to newspapers.

Denmark, Norway and Sweden provide public financial support to newspapers unlike in Finland where newspapers are not given such support and are instead shackled with a ten per cent value-added tax, the highest in any European country.  

Bergstrand was however, not in favour of such support because according to him, it could even be counterproductive. It would only make the newspapers to remain steeped in the old model of printing on paper.

“What financial support does, if it does it anything at all, is to sustain the newspapers in the old order by paying for cost of paper printing”, he said. Instead, public financial support should be provided to newspapers to enable them make a transition to the digital phase, which is their core problem right now.

At the moment the state provides financial support to the tune of about SEK 600 million (about 68 million EUR) a year in Sweden.

All that money, Bergstrand suggested, should be placed in one pot for each newspaper to apply for and be given on the basis of “the best idea it presents on how to make the digital transition”.

If newspapers are able to create a model which makes it easier for consumers to buy, then they will survive because consumers are prepared to pay for the digital version but at the moment it is too complicated, he said.

Bergstrand did point out that newspapers made a mistake ten years ago when they placed all material online for free. Now it has become difficult to persuade consumers to turn round and pay for something they have long used to getting for free.

“Internet is not a crisis of journalism rather it is a crisis on how to make money with journalism”, said Juha Rekola Ombudsman at the Union of Journalists in Finland.

Rekola said he doesn’t believe the current turmoil in the media and the financial crisis would mean the disappearance of journalism. Rather it would unleash a phenomenon whereby interesting and quality journalism would be produced elsewhere other than in big media houses.

In that connection, Rekola floated an idea of providing support not to the publishers per se, but rather to the production of quality journalistic content which in the final analysis enhances civic awareness of the citizenry and promotes democracy.

An example was drawn from Denmark where such a support already exists in the form of “journalistic production support”.

But Erja Ylärvi, chief editor of Kouvulan Sanomat, Kymen Sanomat and Etelä-Saimaa who rejected out of hand public support to newspapers, torpedoed that suggestion saying that quality shouldn’t be determined by outsiders. “Quality journalism. What is it?”, she queried, implying it cannot be objectively defined.

At the end of the day, in whatever form public support is provided, said Rekola, it would not determine the fate of commercial media; rather they would have to determine their own fate.

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