In 2009, the Japanese newspaper industry suffered a large drop in ad revenues and a decline by more than 1 million copies in combined circulation.

In a worsening environment in which many newspaper companies are finding it increasingly difficult to sustain their business solely through newspaper publication, their biggest challenge in the new year will be determining how to develop or ensure new revenue sources, including raising earnings in so-called digital business activity.

Newspaper firms are set to increase their efforts to cut spending by entering into production tie-ups with other firms. A number of newspaper companies have already launched early retirement programs, sending a signal that staff reductions are likely to spread across the newspaper industry.

Advertising

Newspaper companies are counting on the Vancouver Winter Olympics, soccer’s World Cup 2010 in South Africa, and Japan’s upcoming Upper House election as chances to boost ad revenues. However, the Democratic Party of Japan (DPJ), in its election pledge for the 2009 general election, promised to lift the current ban on using the Internet for election campaigns. The newspaper industry is closely watching DPJ government activity in this field, which might greatly affect election-related advertising in print newspapers.

Newspaper firms are aiming to attract new advertisers through a cross-media approach, while prodding editorial, circulation and event-business departments to team up with advertising department staff for sales promotions. Many regional newspapers are concentrating on sales promotions with local businesses as their target.

Circulation

In order for newspaper companies to maintain their door-to-door newspaper delivery systems and to resolve their financial problems, they need to develop fair sales competition. Taking the successful restoration of fair sales conditions in the Kansai region as a model, the newspaper industry now aims to promote such efforts in other regions of the country. Another upcoming challenge will be how to attract new subscribers at a time when an increasing number of young people are not reading newspapers at all.

Production

This year, even more newspaper companies aim to outsource the printing of their newspapers to other newspaper firms in order to reduce expenditures on the outsourcing side and to make more effective use of their own facilities. The Asahi Shimbun will in April assign the Minami-Nippon Shimbun, a regional newspaper based in Kagoshima Prefecture, to print its editions for distribution in Kagoshima Prefecture and in the southern part of Miyazaki Prefecture. The Yomiuri Shimbun is to consign the printing of its editions in the Joetsu and Chuetsu areas in Niigata Prefecture to the Niigata Nippo, a regional newspaper based in Niigata Prefecture, starting in the fall of 2010.

Kyodo News and the Sankei Shimbun are planning to introduce content management systems (CMS) this year with the aim of effectively delivering news contents via a multimedia platform.

Electronic Media

While ad revenues continue to fall, many newspaper publishers are expected to make serious efforts to launch news sites on the Internet, and to attract paid subscription as a new source of revenues.

This spring, the Nihon Keizai Shimbun (Nikkei) is to launch a full-fledged electronic newspaper project. The Nikkei’s plan is expected to trigger moves in the Japanese newspaper industry toward a shift from free news Web sites to paid-subscription sites. In December 2009, the Wall Street Journal from the United States launched a paid-subscription news Web site in Japanese. The monthly subscription fee is 1,980 yen.

Portable e-book readers are expected to debut in Japan this year with the capacity to download a multitude of publications ranging from books to newspapers, while also offering simple, direct Internet access. The U.S.-based Internet retail giant Amazon plans to market its own e-book reader, the Kindle, in Japan. Amazon has a policy of setting the prices for e-book and e-newspaper content on its own. As a result, newspaper publishers and other content providers are pledging to remain prudent when considering whether to make their contents available for the Kindle.

In addition, Apple Inc. is introducing new high-performance iPhone models and other makers are marketing smart phones capable of browsing page images of newspapers. Newspaper companies are exploring possibilities for ensuring revenues by supplying contents to such mobile terminals. There is also a possibility that the growing dissemination of smart phones will provide newspaper firms a chance to generate new revenues, beyond their current paid subscription model, via the development of new forms of advertising corresponding to the sophisticated functions of such mobile devices.

Some software development firms have already started providing a common platform for the distribution of page images from newspapers over the Internet. The companies say newspaper publishers could enter the digital content distribution business without any front-end payments or maintenance fees, merely by signing people up to try using their services. If many newspaper publishers were to implement such services, end-users would be able to search articles from multiple newspapers in a cross-sectional manner while additionally benefiting from the improved usability of such Web sites.