Declining classified advertising for Fairfax mastheads

Report from Eric Beecher on Crikey about classified advertising decines at Fairfax. I doubt if the problem is largely cyclical.

Here's a story you won't read in The Age or The Sydney Morning Herald tomorrow:

This newspaper is publishing 50 fewer classified advertising pages each week than it was a year ago, according to the latest research by Goldman Sachs JB Were. This reduction in advertising translates into at least $1 million off this newspaper's profits every week compared to a year ago.

That is the picture that emerges from the latest Goldman Sachs JB Were page-count statistics of Fairfax's major newspapers, released today. They present difficult reading for anyone who cares about the future of newspapers, and raise further doubts about the competence of the Fairfax management and board as trustworthy custodians of Australia's two greatest newspaper mastheads.

According to Fairfax CEO Brian McCarthy, speaking three months ago, the problems afflicting newspapers are purely cyclical.

"I have been around long enough to know this is only a short-term thing," he said.

"The law of economics will take place ... It's just a matter of working through the cycle."

He also argued that Australian newspapers are not affected by the same structural problems afflicting US and UK newspapers because Australian newspapers are better managed.

Today's page-count numbers -- continuing a trend that has been unfolding throughout this year -- show that average classified advertising pages in The Age, SMH and Financial Review were down 55% year-on-year in April, following declines of 47% in March, 41% in February and 40% in January. At the SMH, employment ads fell 60%, real estate 50% and autos 80%. At The Age, employment and auto ad pages declined by around 65% in April, while the decline in real estate pages fell 65% compared to last year. At the AFR, display classified property ads fell 62% and employment fell 49% on a year ago.

Another alarming trend to emerge from today's Goldman Sachs research is a large reduction in the total pages being published by the three Fairfax flagship newspapers. Each paper is running around 100 fewer pages each week than it did a year ago -- supporting the anecdotal evidence that as well as lopping off pages they no longer fill with ads, The SMH, Age and AFR are cutting hard into editorial pages to save costs (and deprive readers).

Every stakeholder in Fairfax -- readers, staff, shareholders and Australians who value their newspaper institutions -- should be praying that the company's CEO is correct in his thoughtfully historic analysis that the collapse in profits at his flagships "is only a short-term thing". And that he is also right about his contention that great management will save Australian newspapers from the maelstrom that is decimating the American press.

They should also be praying that Rupert Murdoch was wrong in his prognosis of newspapers last week:

There is no doubt the traditional newspaper business model has to change, even though the present situation I think has been greatly exaggerated by the current recession ... classified revenues are undoubtedly migrating to the web, probably not to return.

If Murdoch is right about classifieds never returning to newspapers, the $100 million+ that has evaporated from the annualised profits of The Age and SMH will also never return -- and that would raise a troubling question about the viability of the two newspapers that used to be the best in Australia.

Smoking for the Economy

In Hubei Province in central China, local government issued a regulation determining quotas of cigarettes to be consumed by all public employees. They must be local brands to stimulate the local economy. It is estimated that quotas requiring consumption of 230,000 additional cigarettes a year will generate 4 million RMB for the local economy.

For more read here.

African mobiles from Chungking: Low-end Globalization

One of the world's fastest growing mobile phone markets is sub-Saharan Africa. But apparently 15% of mobiles that find their way to the continent pass through the Chungking Mansions in Hong Kong.

Anyone who has been to Kowloon knows the foreboding, chaotic presence of Chungking on the Nathan Road. May a backpacker has stayed there - the cheapest, and seediest, accommodation on Hong Kong. And the 1994 classic Chungking Express was of course a worldwide film hit.

This facinating global "grey market" for phones made in China going to Africa has even been tracked by an anthropologist. Professor Gordon Matthews of the Chinese University of Hong Kong has looked at this phenomenon as a case study in what he terms "low-end globalization".

This work can be checked out at:

2008 “Chungking Mansions: A Center of ‘Low-End Globalization.’” Ethnology XLVI (2): 169-183.

(Apologies for lack of a link. Journal web site not up to date at time of posting).

Britain's Tories take to creative industries?

Hmm. Not sure what to think here. There will be a change of government in Britain in 2010, so knowing where the Tories are on the creative industries is of interest. At the same time, interestign to see where the Britart generation are ending up.

Are the Tories having their Cool Britannia moment?

5 May 2009: The Guardian

Reports that Tracey Emin may declare her support for the Conservatives could finally give them the cultural credibility they crave.

For more see here.

Will Higher Education be a GFC Casualty?

Professor Simon Marginson from the University of Melbourne predicts that Rudd Government promises on higher education will be a casualty of the budgetary deterioration from the global financial crisis (GFC), and the worsening budget deficit. Marginson points out how this involves a significant breaking of promises, and a failure to reverse the patterns of the Howard years.

He also points out how underfunding of Australian universities has driven behaviour, espeically

in relation to research and international student enrolments.

The real story is the education export industry and what drives it. This is a key weakness in policy, that began in the Hawke and Keating years, worsened under Howard and has now trapped the Rudd Government.

Since the late 1980s, when there were 25,000 international students, Australian education exports have grown by leaps and bounds. Last year there were 543,898 international students, half in higher education. They generated $15.5 billion in export earnings through tuition fees, accommodation, food, living expenses and entertainment. Education was our third largest export sector in dollar terms, behind only coal and iron ore.

Education earns more than wheat, beef, wool, gold, tourism and other staples. The growth of commodity exports has been slowed by the recession but education exports will grow in 2009 and look recession-proof, for the time being at least.

The Government does not want to do anything that would hurt education exports. Therein lies the problem.

What has driven the remarkable growth of education exports is not the fabulous quality of Australian education but its under-funding, the very under-funding that Kevin Rudd has promised to correct.

Australia was the only OECD country to reduce total public spending on higher education in 1995-2005, while student numbers grew by 30 per cent. Rudd used these facts repeatedly in the 2007 election campaign.

In universities, only about 70 per cent of the real costs of government-supported research projects are funded. Teaching is also funded below real cost levels. And the Government's subsidies for teaching are not fully indexed for cost increases.

Three things follow from this "structure of financial incentives", as the business management literature calls it. One, universities lose money on every local student and on most of their research. Two, each year the gap between funding and costs gets wider. Three, each year the universities need more non-government revenues to fill the gap.

For more read here.

E-democracy strikes

Interesting how the use of the Internet, You Tube etc. by governments can bite back, as they seek to open up. This being the latest to strike the walking corpse that is Gordon Brown's New Labour government in Britain:

There have been many joyous postings on the Downing Street website in recent weeks to show the world that No 10 is a happy place.

Scores of pictures of the Downing Street garden in bloom have shown that staff are enjoying the wonders of spring. And of course there are lots of pictures of Gordon Brown holding earnest meetings with world leaders as he works hard to save the world economy.

But what is this? A suggestion has slipped on to the website that all may not be well beyond the iron gates of Downing Street. In fact there is a demand that the prime minister should be evicted.

By 7.00 last night nearly 10,000 people had signed a petition on the Downing Street website calling for the prime minister to resign. The petition, only posted five days ago, simply states: "We the undersigned petition the prime minister to resign".

The petition was posted by Dr Kalvis Jansons, an academic mathematician, who describes himself as a disillusioned "traditional Labour supporter". The "final straw", which persuaded him to post the petition, was the prime minister's initial reluctance to apologise for the emails by his former special adviser Damian McBride smearing the Tories.

Jansons, from Hitchin, Herts, who has taught at University College London, deliberately worded the petition in simple and brief terms to avoid it being blocked by No 10. In a message on the site, he wrote: "There are many reasons why we might want Brown to resign, but rather than having lots of narrow petitions on this topic (most of which have been rejected), I wanted one for all of us."

Jansons told the Press Association: "I wanted a simple, clear, generalised petition which would cover all the bases and comply with their rules. I wanted it to be something that could unite the country."

For the full story, link here.

Governance as Social Networking

Lee Rainie from the Pew Internet and American Life Project on the Internet and news, politics, governance and citizenship.

Governing as social networking

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