Tuesday, January 18, 2011

Tough times for SA community media

By Steven Lang

GRAHAMSTON, South Africa -- Grocott’s Mail, like most other community newspapers in South Africa, has been going through a rough period for the past two years or so. No exact figures have been produced, but it has been reported that up to one third of community newspapers in South Africa have had to close since 2008.

There are two main factors undermining the financial viability of these newspapers -- the economic downswing that has affected almost the entire planet and the growing importance of online media.  The economic crash, precipitated by large scale bankruptcies in the United States, has adversely affected spending on advertising across all media, but has had a particularly devastating effect on smaller businesses that do not have cash cushions to soften bumpy landings.  

In Grahamstown, retail outlets have complained that while the number of customers in their stores and the number of sales made have remained relatively static, the monetary value of these sales has declined. In other words, customers still go to the shops and make their purchases, but they are buying cheaper goods (less profitable from the retailers’ perspective). The net result of this situation is that retailers have less money to spend on advertising in Grocott’s Mail.

The economic downturn has had a significant impact on estate agents, who are selling fewer houses, and at lower prices, than they did three years ago. As newspaper advertising for estate agents is absolutely essential, they have been reluctant to cut their advertising in Grocott’s Mail, but due to their own financial difficulties, they are taking longer to settle their accounts. This has predictably had a negative impact on the cash flow at Grocott’s Mail.

The second factor affecting the way we do business in community newspapers in general, and at Grocott’s Mail specifically, is the growing importance of online news. In most industrialised countries, the internet has all but put community newspapers out of business, but in emerging countries such as South Africa, online readership is still fragmented.

Rhodes University students have easy access to computers and the internet and therefore they read most of their news online. They do not feel a need to supplement their online reading with print editions. Consequently, although most students can afford to buy a newspaper, they prefer not to.
On the other hand, the overwhelming majority of residents in the Makana Municipal area do not have access to the internet, and cannot afford to buy the print edition of the newspaper. This peculiar dichotomy presents serious challenges for the pricing policy of the newspaper and for a rationale to give priority to an online version of the newspaper.

This complex situation is exacerbated by the reluctance of advertisers to increase their adspend to include online platforms, or to potentially move their advertising from the print to the online edition.
We believe that Grocott’s Mail has already overcome the most difficult period brought on by the economic downturn and the stuttering migration to online news. However, the storm is not yet over as this newspaper will still have to weather difficult moments in the transition to new media platforms. 

n  Steven Lang is editor of Grocott’s Mail.
n  Visit Grocott’s Mail Online at  http://www.grocotts.co.za/


Robert G. Picard said...

High dependence on any one source of revenue is dangerous for any firm, but especially for community media which tend to have less cash and fewer assets.

The best situation is to have funds from advertising, commercial printing and other services, supporters and foundations, and government advertising or grants, but with none providing so much you can't live without it or without it being reduced.

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