The rise and rise of digital newspapers

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Readers are embracing quality journalism online and willing to pay for it, according to the latest data released today by the Audit Bureau of Circulations (ABC).

150,000 people use The Age and the Sydney Morning Herald (SMH)  iPad apps each day, while more than 2.8 million people visit the SMH website each month.

Combine average sales for major newspaper mastheads rose 13.4% in the three months to December 2012, compared to the previous quarter, while Saturday digital sales were up 19%. That throws up visions of couples sitting around the breakfast table, coffee or tea in hand, reading the papers on their tablets and laptops.

The Australian – owned by News Corporation (NWS.AX) posted a 27% climb in subscriptions compared to the September quarter. Fairfax Media’s (FXJ.AX) The Age, also grew strongly, up by 18% on weekdays, while the SMH continues to boast the highest digital subscribers, although it had modest growth of 3.4%.

Tony Hale, chief executive of newspaper industry body The Newspaper Works, has told The Australian that it was still early days for paid digital sales. Reporting of audited digital sales will become compulsory for all ABC publishers from the September quarter this year.

“In coming months we will see the rollout of digital subscriptions across more and more mastheads, supported with enthusiastic marketing by the publishers,” Mr Hale said. “Given that the newspaper industry has only just begun reporting digital sales, these latest ABC numbers are very encouraging.

Print circulation continues to fall dramatically, with the SMH and The Age posting falls of over 14%, while The Australian saw falls of 8.4%. Seven West Media’s (SWM.AX) The West Australian, was the only major paper that managed to post an increase in circulation, posting a 1.3% rise on its Saturday edition.

Foolish takeaway

While digital subscribers have yet to overtake physical newspaper sales, it doesn’t appear that it will be too long before they do, with both converging at a rapid rate. How that affects the revenues of the media companies will be interesting.

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The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King owns shares in Fairfax.

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