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Tuesday, March 3, 2009
Newspapers here soldiering on
Readers, ads off but slump yet to stop the presses
Japan's newspaper industry caters to a nation of avid readers and has thus enjoyed a healthy business environment when compared with other developed countries — but times are changing.
Although not yet reeling like their overseas counterparts amid the worsening global recession and growing tendency of people to shun newspapers in favor of the Internet as a news source, Japanese newspapers, too, are feeling the pinch as circulation declines along with advertising revenue.
The recession, which has deepened since late last year, is expected to further discourage large corporations from investing in huge advertising outlays.
Following are questions and answers about Japan's newspaper industry:
What is the current situation?
Total Japanese newspaper circulation peaked at 53,765,074 in 1997 and afterward started a moderate downtrend, falling 3.2 percent to 52,028,671 in 2007, according to the Japan Newspaper Publishers & Editors Association.
Ad revenues have been dropping faster, down 25 percent to ¥946 billion in 2006 from ¥1.26 trillion in 1997, after peaking at ¥1.34 trillion in 1990.
All five major national newspapers experienced financial difficulty last year and the situation hasn't improved this year.
Operators of the Asahi Shimbun, the Mainichi Newspapers and the Sankei Shimbun, the world's second-, third- and 14th-largest newspapers, have posted net losses due to weak figures in subscriptions and advertising revenue in the first half of the business year that ended last September.
Net profits at Nikkei Inc., which runs the world's eighth-largest paper, the Nihon Keizai Shimbun, in the January-June period were down by half from a year earlier.
Net profit for the world's biggest newspaper, the Yomiuri Shimbun, fell 6.3 percent in the 12 months to last March. It does not disclose interim earnings.
What is the situation in the advertising industry?
The latest statistics released by Dentsu Inc., the nation's largest ad agency, show that advertising revenue fell 4.7 percent to ¥6.69 trillion in 2008, marking the first drop in five years as corporations cut spending.
Ad revenue for all four of the traditional media — newspapers, magazines, radio and television — slumped. Newspapers took the worst hit, tumbling 12.5 percent to ¥828 billion. Internet ads meanwhile jumped 17 percent to ¥537 billion.
What is the circulation situation at the major papers?
The Yomiuri has 10.02 million subscribers, followed by the Asahi with 8.11 million and the Mainichi with 4 million.
The Chunichi Shimbun, the world's fifth-largest paper publisher, with the Chunichi Shimbun, the Tokyo Shimbun and the Hokuriku Chunichi Shimbun under its belt, has a circulation of 3.47 million, and the Nihon Keizai has 3.03 million, according to the encyclopedia Ima ga Wakaru Jidai ga Wakaru Sekai-Chizu 2009 (The World Map that Lets You Know the Current State of the World 2009 Edition), whose data come from the World Association of Newspapers.
The Seikyo Shimbun, owned by the lay Buddhist group Soka Gakkai, says it has a circulation of 5.5 million.
Bild in Germany, the world's fourth-largest paper, and The Sun in Britain, the seventh-largest, are the only non-Asian newspapers in the top 10.
The top U.S. paper, USA Today, ranks 13th with 2.27 million subscribers.
How does Japanese readership stack up to other countries?
The world's second-largest economy, also the 10th most populous, had an average of 632 newspapers in circulation per 1,000 adults in 2007, making Japan in per capita terms the fourth-largest market, after Iceland, Denmark and Liechtenstein, according to the encyclopedia.
In the United States, the Tribune Co. media conglomerate, which owns the Chicago Tribune and the Los Angeles Times, filed for bankruptcy in December. Other newspapers in the U.S. and Europe are folding or cutting jobs to cope with their deteriorating financial situation. Why are Japanese newspapers not suffering to the extent of their foreign counterparts?
Japanese papers, whose newsstand price is relatively high, depend less on ad revenue. Advertising accounts for about 30 percent of their revenue, compared with about 80 percent in other developed countries, an official at the Japan Newspaper Publishers & Editors Association said, noting the plunge in advertising sales is deeper than that of global circulation.
Also, circulation in Japan is not declining as much as in the U.S. and Europe, he said.
Why have Japanese dropped newspapers at a slower pace than their counterparts in other developed countries?
Newspapers here have gone to great lengths to make sure they deliver before most households start stirring in the morning.
People have consequently become used to subscribing, instead of buying the papers at newsstands or convenience stores, he said. Of overall subscriptions, deliveries account for about 94 percent in Japan, compared with 74 percent in the U.S., 86 percent in Iceland and about 20 percent in France, he said, adding there is no universal formula for deriving these figures.
How are the newspaper distributors faring?
Because fewer people are subscribing, distributors are hurting.
Their major sources of revenue are fees from subscriptions and inserts. Flier fees change in correlation with subscriptions. Insert fliers typically include supermarket sales, notices on the opening of new pachinko parlors and real estate rental and sales information.
Newspaper distributors are numerous nationwide, employing, for example, students and other part-time and full-time employees to deliver morning papers to households normally no later than 6 a.m. and evening papers before sunset.
Publishers have invested great amounts of time and money to create this network.
Why are Japanese newspapers suffering sales losses and what are they doing to cope with the changing environment?
Newspaper industry sources say young people are increasingly disinclined to read the paper. In an unprecedented move, newspaper companies are beginning to integrate and share distributors with their rivals to cut costs.
The Yomiuri, Asahi and Nikkei on Jan. 31 opened a joint Web site that shows only their news articles.
The Sankei shocked the newspaper industry by presenting its entire paper in the same layout as the print version for free for iPhone users. A Sankei official said the company receives no ad revenues from the service and has yet to decide whether it will charge subscription fees or solicit advertisers.