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'Candy or broccoli?' The choices facing media companies in crisis

New Zealand's news organisations must seek innovative change in their business model and product to sustain a future audience, Punakaiki Fund director Lance Wiggs said.

The media industry has no choice but to innovate if it wants to survive the audience shift to Google and Facebook, an expert says. 

Punakaiki Fund director and former digital strategist Lance Wiggs said media organisations should reinvent their strategy and funding model as readers gain more choice over what news they consume and how they consume it.

"You have got to create something that destroys what you are … It is going to hurt, but if you do not do that then you are not going to exist."

The Commerce Commission this month declined a proposed merger between Fairfax New Zealand and NZME.

But, the media should preserve quality journalism which would underpin their success, Wiggs said. 

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He said Facebook and Google made the competition for online audience "eyeballs" increasingly difficult for New Zealand media organisations and had resulted in more tabloid-type content on news websites to attract readers.

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New Zealand media organisations are competing with Google and Facebook for online advertising attention.

"Where it leaves journalism is in this beautiful tension between candy and broccoli where the candy is going to drive traffic to your online mastheads, but the broccoli is actually what underpins the value of your business." 

Nielsen Online Ratings said Google had New Zealand's largest unique audience of more than 3.2 million people in April. Facebook was second with an audience of more than 2.7 million.

TVNZ and Yahoo recently announced restructuring of their newsrooms to cut costs, with some journalist redundancies.

Mark Jennings (left) and Tim Murphy joined forces to fill a perceived quality journalism gap in New Zealand.

A proposed merger of Fairfax New Zealand and NZME, the publisher of The New Zealand Herald was declined by the Commerce Commission this month. 

Wiggs said: "I have always said that journalists will be fine if they produce quality content, but I do not know who they are going to work for".

Former MediaWorks​head of news Mark Jennings and former New Zealand Herald editor-in-chief Tim Murphy started the Newsroom website because they were concerned about the falling quality of journalism due to greater commercial pressures.

Fairfax New Zealand's group executive editor Sinead Boucher said the company was an innovator, not a victim of change.

The site was funded by subscriptions , corporate sponsors, audience donations and its video content arm, Jennings said.

Jennings said a variety of income streams was a more sustainable funding model for online news websites than relying on digital advertising.

Fairfax New Zealand group executive editor Sinead Boucher said Fairfax launched ISP provider Stuff Fibre and added community social network Neighbourly and online marketplace Indexed to diversify its income beyond digital advertising. 

Boucher said news was the "heart and soul" of Fairfax's strategy because it would attract the audience to sell the other businesses to.

The company had worked to innovate its print business by reducing publication of the Marlborough Express newspaper to three days a week and offering daily email newsletters to its subscribers, Boucher said.

Wiggs said audiences should expect to see more niche paid-subscription news websites in the years to come.

Jennings agreed that pay walls and niche news websites would become more popular, but he said he did not expect a rush of competitors entering the market because it was expensive to set up a news service.

Newsroom had received three times more audience donations than it expected earlier this year, but it was not enough to pay one journalists salary, Jennings said.

Boucher said while pay walls had gained popularity internationally, it was a "hard ask" in New Zealand because the audience size was small.

"There is a renewed focus on paid-content overseas but we are not The New York Times."

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