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The European Newspaper Market
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by DG Enterprise, European Commission
09 the future of Media & Entertainment
This report on the European newspaper industry is the first report for the Publishing Market Watch 2004, a twelve-month project analysing the competitiveness of the European publishing industry sector-by-sector. The key to competitiveness of industries is their ability to provide “a sustained increase in real income and the standard of living”. This is distinct from the more specific concept of the competitiveness of individual enterprises.
Newspapers covered by this report include national and regional daily papers, non-daily newspapers (often local), Sunday newspapers and free newspapers (both weekly local “shopping” papers and daily “commuter” papers). All EU member states are reported in detail, and New Accession States where information is available.
Overall, the newspaper industry remains an important one in all member states, making a valuable contribution to GDP and to culture. It is highly unlikely that newspapers will cease to be published in the foreseeable future, but the industry faces challenges that may transform it.
2.1 Statistical report
is either static or falling in most EU member states, and has been for some years. Declines are steady rather than dramatic. Other media are growing in reach; this may leave newspapers at a competitive disadvantage.
European newspapers have among the largest circulations in the world, outranked primarily by papers in Japan. Nearly half of the twenty highest-circulation papers in Europe are in the United Kingdom. The differential between the largest and the 20 th is nearly an order of magnitude.
The number of
is though declining over the long term. This is part of the same structural trend. Average
circulation per title
is stable as both are declining, suggesting that attrition or consolidation is taking place.
grew steadily until 2000; it declined in 2001 in most major markets in the EU under the impact of recession, a trend that continued in 2002 and 2003. However, it continued to grow in some New Accession States as a function of their overall economic expansion.
share of advertising revenue
captured by newspapers is closely related to their circulation per thousand population, and in many EU states newspapers have been maintaining or increasing their share despite the decline in absolute revenue. However, they have failed to maintain their share in the New Accession States as television develops as a medium. Most newspapers in the EU depend on advertising for more than half their revenues, and this has risen slowly over the years. If overall advertising revenues are falling, newspapers will have more at risk.
in newspaper is stable or rising in most member states. Employment costs are in general rising.
has risen for newspapers until 2000 and declined in 2001.
followed the same pattern, but
are more erratic.
(value added per employee) grew until 2000 but declined in 2001.
The newspaper industry in the United States shares many of the same trends: circulation has been falling steadily, and advertising revenue peaked in 2000. The US newspaper industry is much more dependent on advertising, which accounts for 80% of revenues.
2.2 Diversity and sustainability
Consolidation is a feature of the newspaper industry, but is not always thought desirable by competition authorities if it has a negative impact on cultural diversity. It is regulated at the national level. In some EU countries, newspapers can be subsidised in order to maintain plurality and freedom of speech, and in most member states newspapers receive some form of VAT concession. However, at the regional or local level many de-facto monopolies exist. Foreign ownership is a feature of the newspaper industry in most of the New Accession States.
The newspaper industry, as any other, must be sustainable environmentally, socially and economically. Environmentally, the industry creates waste but is taking steps to ensure that newspapers are printed on recycled paper and discarded newspapers are themselves recycled. Newsprint for the European newspaper industry comes mainly from recycled products and renewable resources. In some countries, the newspaper industry faces “producer pays” regulation that will compel newspapers to contribute towards the costs of collecting newspapers for recycling.
Socially, the ageing European population is likely to read newspapers more than their younger compatriots. However, newspaper readership in all segments is declining and the ageing population is less attractive to advertisers at present.
Economic sustainability is challenged by falling circulation revenues and falling advertising revenues as other media become more significant. Television is the main threat, but online services are also threatening both readership (as they provide an alternative source of news) and all aspects of advertising, including classified advertising and particularly the important “situations vacant” category. Newspapers have launched impressive online services but have generally not been successful in monetising them either through advertising or content charges.
Consolidation will be increasingly attractive to newspaper owners and this may give rise to some tensions between the industry and competition authorities.
2.3 Key business issues
This report was prepared at a critical time for the newspaper industry in Europe: recovery from economic recession has started, and forecasts for advertising expenditure are more optimistic for 2004 than for 2002 and 2003. However, newspapers have a challenging commercial environment that presents them with structural challenges as well as difficult short-term operating conditions and it is possible that they may not recover the position they held before the start of the advertising recession in 2001.
The business issues facing the industry arise mainly from competition with other media rather than from competition between newspapers, although such competition is an important factor for national daily newspapers in particular. Although the newspaper industry is also affected by general trends in business and the economy, it is these structural issues that will have the longest-term effect on the industry.
In most countries in Europe, as well as in North America, newspaper circulation has been falling for several years, irrespective of economic conditions and the penetration of newspapers. This is a long-term worldwide trend that arises from changing habits in media usage: there are many alternative news sources available, especially television. There is a specific problem with attracting younger readers of which the industry is very aware.
Falling circulation is accompanied by a fall in the share of advertising revenue commanded by newspapers. Between 2001 and 2003, this falling share was compounded by an overall fall in advertising revenue generally, affecting all media. Advertising expenditure in general may be changing its pattern, with a shift in favour of various forms of direct marketing. This may further reduce the pool of revenue available to newspapers.
Newspapers are also subject to a variety of regulatory activities designed to protect consumers from monopoly, protect social and ethical values and ensure access to a diversity of newspapers. Ongoing initiatives that may affect newspapers include harmonisation of VAT practice, potential restrictions on financial journalism arising from the Market Abuse Directive and initiatives that might regulate the content of advertising in areas such as foodstuffs and advertising to children. National-level regulation may also affect issues such as distribution. Regulation may also affect newspapers ability to consolidate where consolidation would make a newspaper or group more competitive.
However, governments in some member states have also provided financial support to the industry to ensure political plurality of newspapers.
Newspapers have launched online services, and a few of these are now profitable. However, many are still cost centres and newspaper the same problems as other websites when it comes to raising revenues from online activities. Newspapers continue to experiment with online services, and collaborative ventures are helping to create efficient platforms for the delivery of classified advertising in particular.
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