The upcoming shake-out of the media – The WTO column

(Later also at Chinabiz)
The media scene in China has been a rather remarkable one in the past five years. Titles and broadcasting channels have exploded in numbers, only matched by soaring revenue from ads, a market that grew last year 25 percent, much faster than the overall economy.
No wonder foreign media conglomerates have been watching the industry with a watering mouth, despite the occasional misgivings about government interference in the news industry.

But hold your breath for a while as suggestions from the market indicated that despite the sensational growth a first major shake-out in especially the print media is in the making. Since an authoritative auditing system for print media does not exist, we do have to believe their sales managers on their word when they tell us how many eyeballs there products are actually seeing. As the US experience shows, having an official auditing system does not stop print publications in a desperate need to cheat, but having no checks at all is rather troublesome.

Changing from the mouthpiece of government departments to more market-driven publications is a tough challenge for the current publishing houses and obvious has to lead to some casualties. Rumors from the media market suggest that panic is rife at several editorial desks. “We discovered we are writing for a target group that does not exist,” grins one of the participants in such a discussion. Most of the newcomers in the media market have not done even the most basic market research before they were launched but based their papers on a wild idea that emerged in one of the wealthy state-owned news machines. Calling them clueless would be an understatement.
The emerging media in China developed quite different from their already existing counterparts in other parts of the world, especially in the US. In their effort to optimize profits, news publications in the US focused on mainstream audiences with a combination of local news, sex, crime and sensation. Very few cities have more than one daily paper. In China many of the newcomers in the market actually focused at the top end of the media market.
With a combination of reporters who or had a basis in government-run media, or were newcomers from the expanding schools of journalism, they could not offer the establishment the paper that audience perhaps wanted. Developing a market could be possible, but needs resources – both in money and people - and time. Any new print publication has to face at least four to five years of losses before they can be established. When it takes you more than a year to discover that your target audience does not exist and that makes you panic, you do have a problem.

You do not have to be a clairvoyant to see what is happening. Print publications can make money, but just like in the rest of the world that works better when they focus on the lower end of the market. Developing the media as the fifth estate, like in the US where most Chinese publications take their inspiration from anyway, is tough, also because of its ongoing limitation on what media can publish.

TV media are still far away from such a shake-out, since they are able to generate more revenue and are more important for the government to get their message out. But the dilemmas of the print media are not limited to them.
In the US statistical evidence shows that by April 2014 the last news paper reader will disappear, unless something is being done. In China that might happen much faster.

Fons Tuinstra