Can millions be made again from the Net?

With the UAE media sector under extreme financial pressure due to a collapse in advertising revenues this year, there have been a number of articles recently pointing to the Internet and mobile media as the future of regional publishing.

These media have the advantages of being largely free, instantly available and universally accessible. It is amazing how long the legacy media have persisted with out-of-date content (even newspapers are a day old), cover prices and unreliable distribution.

Losing readers

Yet it is obvious that the old media is losing readers in droves to the Internet, and mobile devices that generally access a cut down version of the Internet websites. How many magazines and newspapers are left completely unread or piled up, unwanted on local doorsteps? How many newspapers or property magazines does anyone actually read?

However, it is not going to be the lack of readers that proves the important tipping point, although local marketing departments for major brands ought really to be paying more attention to whether their adverts are actually being seen or not in all these publications.

The tipping point against the legacy media is the huge squeeze in advertising budgets, coming on the back of the local real estate crash and the associated general business slowdown. This lack of money to spend on advertising forces a reappraisal of spending priorities, and for the reasons just given the old media is going to lose out to the new media.

Media companies that are reliant on glossy adverts to fund free distribution magazines are in particular trouble. Without these revenues the business models of the weaker players is clearly unsustainable.

Even the government-owned media houses will have to put their thinking caps on and focus on the income producing areas of their empires. For the problem is that once lost, this old-style of advertising will not be coming back.

Global trend

Across the world newspapers and magazines are closing, and the best dematerializing onto the Internet, usually in much reduced form. Net advertising rates are usually much lower than legacy media, another reason for their inevitable success, but this is also challenging to publishers looking for a profit.

It is clearly going to be a long haul for media houses to adapt to new technology during the financial crisis. On the one hand, this new media is highly reader friendly and will win a bigger audience. On the other hand, it is just not currently very profitable for publishers.

To make it profitable there need to be far fewer publishers and editorial staff, and far more advertisers. But then who needs thousands of versions of the same story on the Internet from dozens of sources?