No-one would deny that times are tough in the newspaper business at present. But where there's fear there's often opportunity and APN NZ's chief executive Martin Simons believes the company is well-placed to adapt and prosper. And the most obvious example of that adaptation is its decision to change the size of the weekday Herald from broadsheet to tabloid.
There will always be those who rail against change, even if those changes make things better, but in some ways the rather emotive response to the initial speculation about the change in size is indicative of the place the Herald still has in many readers' hearts. As Simons says, it's "their paper, and we're basically holding it in trust" and he is adamant the quality—or amount— of content won't be lowered as a result of this decision.
"We have to think like it's their newspaper," he says. "The consumers are our arbiters and we have been very buoyed at how open they have been to change [during the consultation phase]—provided we meet their criteria [around maintaining quality]."
Internationally, he says things are moving away from broadsheet (in the US the Berliner style tends to be favoured and tabloid—or smaller—is favoured in the UK, with the exception of The Guardian, which is printed in Berliner style). But he admits the perception of many in New Zealand is still that tabloid equals trash. And because of this, Simons says they're calling it a shift to compact format rather than a shift to tabloid.
He says the decision to change format is based purely on the reader experience and he says the smaller format will be particularly appreciated by its female readers.
He believes a large reason for the success of the Herald on Sunday can be put down to its format. And while he says the Weekend Herald would remain as a broadsheet because the Saturday version is more of a "reader's paper" than the HoS, he says "never say never" when asked if it might eventually follow in the footsteps of its fellow APN papers.
As well as the decision to go tabloid, he says it is also redesigning the nzherald.co.nz website in an effort to better connect its print and digital products.
"There will be a lot more integration of the content across those platforms," he says. "It's not just about the newspaper, it's about the whole media organisation."
But when asked if that integration might eventually lead to a nzherald.co.nz paywall, he appeared to offer a glimpse into the future.
"I believe it's an inevitability for society that consumers will have to pay for content," he says.
Consumers already pay for news in print format, he says, so for him it's a fairly simple equation: if publishers aren't making enough money to pay their journalists, it will either lead to a thinning out of journalism (some might say that's already happened) or a requirement to find another way.
At present, business and financial titles like the Wall St Journal and Financial Times are among the few that have made paywalls work, but Simons says that's often funded through corporates, rather than consumers. General news is an entirely different kettle of fish and, after what some have called 'The Original Sin', where publishers started giving away their content for free online, it's proving very difficult to change that mindset.
He says they're watching closely to see how News Limited's paywall around the Herald Sun works out in the very competitive Melbourne market (its editor Simon Pristell departed last week) and it will also be watching closely when Fairfax erects its paywalls in Australia, which is set to happen in the middle of next year.
State-funded media like the ABC and BBC, or not-for-profit set-ups like The Guardian, which has said it will never charge for content, make it even more difficult for today's commercial publishers to charge for content, so it comes down to the attraction of what's behind the gates and whether readers believe it's worth paying for.
Another issue is that there is a big gap between the number of eyeballs news websites attract and the amount of advertising money they garner. Simons believes online advertising is under-priced in New Zealand, but that mindset is also difficult to shift. The gap is closing, but it's not closing as quickly as many publishers hoped to make up for advertisers' big migration away from newspapers.
New Zealand does appear to have been insulated from the ructions in Australia, perhaps due to a combination of more regional papers, less unionism, less impact on print from digital and more efficient processes already having been implemented. Added to that, he says APN owns a lot of its infrastructure and has a business model based more on home delivery than news agent sales.
Of course, that still doesn't change the fact newspapers lost $42 million of ad revenue in New Zealand in 2011 and came in with a total of $582 million according to the ASA figures. The sector has lost around $250 million in ad revenue since 2005, and in August last year, APN wrote down the value of the newspaper by 20 percent due to tough advertising and circulation conditions.
But while he says there's no denying it's a very challenging market at the moment, Simons says APN is preparing for the future and moving into different, often more transactional areas by purchasing the likes of GrabOne or, more recently, an 82 percent stake in Australian shopping club brandsExclusive for AUS$66 million.
"News will not sustain us as a business," he says, frankly.