There’s one less newspaper revenue stream out there. This as Publisac ends its 45 year service in Montreal.
A long running argument for the Online News Act (formerly Bill C-18) is that dropping revenues was exclusively the fault of platforms. Because platforms allow the posting of news links, they’re somehow sucking the newspapers revenue streams dry. No, that doesn’t make any sense at all, but numerous positions by the supporters of that particular law were equally nonsensical.
So, what is really happening in the newspaper industry that is causing the shutdowns? Well, prior to the Online News Act strangling the news industry to death, there were numerous factors contributing to the decline of the newspaper industry. The most obvious was the gradual move online by its readership. Why get a series of wire service articles that are at least a day or two old when one could get the news faster on broadcast television, radio, and, of course, the internet?
To make matters worse, there was a huge amount of media consolidation. This meant that things like hedge fund managers were basically handed the keys to the treasure rooms of the media companies, sometimes pilfering the fruits of the labour of newspapers of old. This while saddling the newspapers with huge debt and hacking and slashing the jobs, making bone deep cuts to the teams that were keeping the newspapers afloat. This meant that the quality of original reporting largely disappeared, giving people fewer reasons to read a newspaper in the first place and driving those readers to other sources.
Revenue streams also started drying up. Once upon a time, newspapers distributed coupons. It gave readers an incentive to purchase items while giving the newspaper a kickback for helping to drive sales. Those largely disappeared and were replaced with rewards programs that were entirely controlled by the stores – cutting the newspaper out of the system entirely.
As readership plummeted for newspapers, it became clear to flyer distributors that the most efficient way of penetrating the market wasn’t through a newspaper. Fewer and fewer households were actually receiving that newspaper in the first place, so an alternative source that reached more households were needed. The postal service was a natural organization that fit the bill. Though households may or may not get a newspaper, almost every household receives the mail. The mutual beneficial relationship gradually moved to the postal service, cutting off newspapers from another critical revenue stream.
To make matters worse, classifieds, another major revenue source, moved online. Apartments could appear in online services like Facebook Marketplace. Buying and selling ads also moved to services like Kijiji and Craigslist. Want to announce a wedding or a funeral? You could shell out money for an ad in a newspaper or just tell everyone immediately for free on Facebook. As a result, classifieds simply dried up because there were more attractive and effective alternatives.
So, what are you left with? A newspaper with a low quality product, a mountain of debt from higher up the corporate food chain, and revenue streams constantly drying up. Though some newspaper bosses will constantly claim that they are being innovative and adapting to modern times, the regular news rooms shutting down makes a powerful counterargument. If the newspaper in question is so innovative, why aren’t people flocking back to them in sufficient numbers to keep them afloat?
This is hardly the scenario that supporters of the Online News Act would have you believe. For them, everything was all bright and peachy for things like newspapers until the platforms came in and stole everything (whatever the heck that means). Well, technology changes and platforms like Facebook happen to be a platform a lot of people ended up using. If it wasn’t Facebook, it would be another service that came along. It’s more of a case that Facebook happens to be a convenient scapegoat to obvious structural problems in the newspaper industry.
Recently, a development happened that lends support to what we are saying is really going on in the newspaper industry. Publisac, a major flyer distributor in Montreal, has said that it will no longer be distributing flyers through newspapers. From Global News:
The owner of Quebec’s main flyer distributor announced on Friday it will end the 45-year-old service, forcing more than 50 beleaguered local newspapers to rethink their strategy as well.
Starting in May, the Montreal-based packaging and printing company TC Transcontinental plans to scrap the flyer bundles, known in Quebec as Publisac _ distributed to 2.5 million households outside the city as part of a shift to a thin leaflet delivered by Canada Post.
Weekly newspapers across the province have depended on the door-to-door Publisac service to bring local news to Quebecers’ doorsteps, packaged in a plastic bag alongside grocery store flyers.
Renel Bouchard, president of Icimédias, which owns more than 20 print and online papers across the province, says he now aims to overhaul the company’s distribution plan by delivering editions to select drop-off points — such as local businesses and nursing homes — rather than houses.
Publisac suffered a major blow earlier this year after Montreal Mayor Valérie Plante said flyers would be delivered only to residents who request them, marking a win for environmentalists and prompting criticism from TC Transcontinental.
The move also became the last straw for Métro Média, which declared bankruptcy in September, permanently ending hyperlocal coverage by its more than 30 publications in the province’s two largest cities.
TC Transcontinental said its new leaflet, dubbed Raddar and already in circulation to one million households in the Montreal area, will greatly reduce the volume of paper used and include a digital version.
“At the same time, we regret the impact of the end of Publisac on several weekly newspapers as well as on our distribution partners” — the company has 140 — said Patrick Brayley, a vice-president at TC Transcontinental, in a release.
So, another service looking towards the internet, leaving the legacy newspaper behind. That will easily have a negative impact on those newspapers.
The timing of this really couldn’t be worse. Facebook has already dropped news links in Canada earlier this year. Google has said that it would do the same before the end of the year. The platforms were forced to make these moves because of the Online News Act, Canada’s link tax law. The damage that law is unleashing on the news sector is already significant and is expected to be even greater once Google pulls the plug on news links as well.
It’s entirely possible that Publisac saw the writing on the wall and is jumping ship before things hit the fan in the news sector as part of the reasoning for this move. Regardless of reasoning, though, it’ll make the affected newspapers more vulnerable to going under in the months ahead. After all, no revenue and audience on a legacy medium and no audience on a new medium isn’t exactly a promising mix for an industry dependent partially on eyeballs.
Drew Wilson on Twitter: @icecube85 and Facebook.
