Japanese Newspapers: Losing Out Online

September 23, 2014 • Business Models, Media Economics • by

To a visiting European, Japanese news organisations appear to be thriving. Newspaper circulations are high, print subscriptions are strong, and newsrooms are hiring ever more journalists.

Yet, things may not be as good as they seem. I’ve just returned from a brief visit to Tokyo, to visit a range of news organisations there. One aim was to answer some of the many questions raised by the Japanese data, gathered as part of the 2014 Reuters Institute Digital News Report. Foremost was why a country that has one of the highest levels of newspaper readership in the world is also the one where the news environment was the most disrupted by new digital players. Japan was the only country, of  the ten that we surveyed, where a news aggregator – in this case Yahoo Japan – had more than 50% of online weekly news use.

First the positives. Japanese newspapers are still incredibly strong with circulation levels that many in the West can only dream of.  Quality newspapers like the Asahi Shimbun and Yomiuri Shimbun have circulations of seven and nearly 10 million respectively.  And these figures are not because Japanese newspapers are catch all products maximising reach through occupying safe, centre ground.  In fact the biggest ones tend to have clearly identifiable positions. As in the United Kingdom, this can lead some newspapers to battle against others. For example, at the moment several on the conservative end are attacking editorial mistakes in the left of centre Asahi Shimbun, mistakes that cost their Executive Editor his job earlier this month.

Also, similar to the UK, Japan has a very popular public service broadcaster, NHK. It attempts to offer impartial news, but is criticised by those on the right as being instinctively attached to the left.

Even in business news, an organisation like the Nikkei has huge print sales, approximately 2.7m daily in their case. After allowing for Japan’s population of roughly twice the size of the UK that would be equivalent to the Financial Times selling  around 1.4 m copies in the UK – or roughly six times its current UK print sales.

For print journalists this all looks like good news.  I met five news organisations employing between 1-2,000 journalists and which are still hiring. One newspaper we visited is hiring 100 journalists this year. It is hard to think of any long-established western news organisation recruiting on anything like even a fraction of that scale. And most are still offering jobs for life.

So why are such successful Japanese newspapers doing so badly in the online space? What seems to have happened is that for years newspapers did not focus on the internet, either for lack of interest or for fear of cannibalising their print sales. Some didn’t bother with their own websites or put out very little information on them. Those that did have websites were happy for years to give very cheap access to their content to Yahoo News and other aggregators.

The result is that these businesses have helped build up very successful web portals to a point where no individual newspaper websites can hope to match the reach of the aggregators or the range of news content they offer. The public broadcaster, NHK cannot fill the gap because it has severe regulatory restrictions on its ability to offer services online.

Today, according to the Digital News Report, Yahoo News has 59% share of weekly online use. Google News is a long way behind with 17%. The top three newspapers and NHK, have just 10-14% of weekly online news use.

What is unique about Yahoo Japan is that they don’t just aggregate, they also seek to add value to the newspaper content they syndicate, by revising headlines to maximise usability and linking to further reading and explainers at the end of articles. They try to cover the important issues, not just entertainment news, and they employ journalists to curate their 4,000 articles a day but not to create original content.

Even as some Japanese newspapers are reflecting now on how to deal with the first wave of disruption led by Yahoo – and at least one has recently withdrawn their content from Yahoo – a second wave is underway which is threatening to disrupt things again. With the move to mobile consumption new operators are coming into the market and stealing market share from Yahoo.

This is bad news for Yahoo, but its also potentially bad news for established news organisations if they cannot offer mobile apps that provide speedy access to the news online, to compare with new mobile providers such as Smart News and Gunosy. Once again the new tech companies seem to benefit from both the best user interface, and through syndication of mainstream news content, the widest range of news to appeal to all tastes, politics and passions.

So where does this leave those powerful legacy news organisations? For the moment most are profitable, some very much so. But longer term the worry must be that if they can’t innovate fast – very fast in digital. As older people, who favour print, die off, they will be left without a new digital business to replace it.

Some media organisations are working hard on how to adapt, but large legacy costs make adaptation slow. Others are still pretty half-hearted about digital, as long as print delivers healthy profits. But that situation could change very fast. There is no shortage of digital players in place to benefit.

As a European visiting Japanese news organisations one’s initial response is one of envy, for the size of their newsrooms, their strong print subscription model and massive sales. But after a while it’s hard not to think that Japan demonstrates that there may be something worse than living in a country whose newspapers are in crisis.   That’s living in a country where print sales and profits are so high that there are precious few incentives to innovate.

This article has been slightly amended: in paragraph five the number ‘six’ was ’15’ in the previous version.

This article is available on EJO also in Italian, Latvian, and Polish.

Photo credit: Elvin / Flickr Cc


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