Evidence of meeting #16 for Canadian Heritage in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was journalists.
A recording is available from Parliament.
Liberal
The Chair Liberal Hedy Fry
Yes, but I think we have all been asked to go to vote, and I'm sure you've been asked to go to vote.
Liberal
The Chair Liberal Hedy Fry
The orders of the day do require everyone to be there; we saw what can happen when everyone is not there. I just think that we have to do this. If we can stay here and give this particular person a half an hour, is everyone in agreement with that?
Liberal
Liberal
The Chair Liberal Hedy Fry
We'll begin now. We have 25 minutes. There is a PowerPoint presentation, which is not bilingual, so I am going to suggest that our witness speak to it and send it to us.
Is there unanimous consent to show the PowerPoint presentation in French only?
Liberal
The Chair Liberal Hedy Fry
You can proceed, because we have a very short period of time. We must go to a vote, so we may have to cut short your part of the question and answers, Mr. Crevier.
Guy Crevier President and Editor, La Presse
Thank you very much.
I am very happy to be here today.
I basically want to talk to you about the newspaper business model and how we managed to majorly transform our industry with La Presse and La Presse+.
I would like to begin by saying that business in the newspaper industry is rather simple. There are two components: advertising revenue and readership revenue.
Over the past seven years, newspapers printed in North America have lost 63% of their revenue or $29 billion. During that entire period, newspapers only managed to generate $700 million in additional revenue on the Internet. We are talking about a loss of $29 billion on one hand and revenue of barely $700 million on the other. It is therefore easy to see that this industry is experiencing a serious crisis. I do not think that any industrial sector, even the traditional textile sector in Quebec, has ever run into so much difficulty so quickly.
The second important fact is that people have less intention to read the news. In a Canadian survey that began in 1998, people are asked whether they intend to read a newspaper, either paid for or free, this week. Results indicate that, between 1998 and 2011, there was a significant drop in intention to read a newspaper, whether it was free or paid for. We are talking about a 45% drop among people aged 16 to 24, a 54% drop among people aged 25 to 34, and a 33% drop among people aged 35 to 54. Only baby boomers, those aged 55 and over, are still interested in reading a daily newspaper.
According to the latest results of the survey from 2011, there has been tremendous growth in technology, namely, increased penetration of smart phones and more application development. If the same question were asked today, the numbers would be completely astounding.
The definition of post-boomers varies. If we interpret it broadly, we see that, today, that generation makes up 47% of the Canadian population. These people, who are between the ages of 20 and 40, have no interest in reading a newspaper in print or written format. That means that this industry not only needs support but that it also needs to be completely overhauled.
At La Presse, we created a new type of media. We started from scratch and tapped into the full potential of the tablet. We wanted to preserve the DNA of La Presse. I strongly believe in democracy. When we see everything that is happening today in the Middle East and other parts of the world, we understand just how important democracy is. In my opinion, having a quality newsroom and a large number of journalists in a market like Montreal is a guarantee of democracy. I believe that newspapers and journalists play a very important role in democracy. By changing our structure and making use of the tablet, we managed to create a new type of media. You will see that the results are quite encouraging.
Basically, we want to be a mass media outlet, an appealing media form. As you can see, people spend a rather large number of minutes per day with us, which allows us to obtain a high CPM. I am talking here about the amount that we ask advertisers to pay to run an ad on our tablet-based product. We were looking for a younger, more desirable readership and we wanted the tool for advertisers to work better. We also wanted to change our business model, which we did. We invested $40 million in developing an application. Of that amount, $2 million went to research on consumers and advertisers.
This year, the print edition of La Presse will celebrate its 132nd anniversary. Circulation of the newspaper hit a record high in 1971. People say that print newspapers are a baby boomer product and that is true. We are talking here about 221,000 copies sold.
Since then, there has been a gradual drop. We changed rotary printers in early 2000, mainly so that we could print more colours. We did some outsourcing. Circulation rose slightly to 207,000 copies. We then launched La Presse+ on tablet. An average of 260,000 tablets log on to La Presse+ each day. That means that, in its 30 months of existence, La Presse+ on tablet has managed to displace a newspaper in the same market that has been around for 132 years. That shows you just how quickly technology is progressing and how patterns of use are also changing.
Interestingly enough, giving people a high-quality technological product that allows them to get the information in a different way is a winning formula. People want to continue to be informed and consume cultural products. We see it with television. There has been a rather large drop in the number of hours of traditional television that people watch. It is not that people no longer want to be informed or entertained. What people are saying is that the traditional way of doing things no longer meets their needs.
Look at what happens when you offer a product that has been adapted to the needs of consumers. People spend an average of 40 minutes reading La Presse+ on weekdays, 60 minutes reading it on Saturdays, and 50 minutes reading it on Sundays.
We made significant gains when it comes to our readership profile. Look at the right-hand column and you will see that 46% of readers of the traditional print version of La Presse were between the ages of 25 and 54. It is important to note that 52% of Quebec's population is between the ages of 25 and 54. La Presse+ is a high-quality digital product for tablets that is well laid out, and 63% of readers are between 25 and 54. Today, we are one of the rare traditional media outlets that has managed to increase its penetration into the market of people aged 25 to 54. It is the same thing with family income. We are reaching a category of people who have an income, are active in society, and want to participate and work together.
That is the end of my presentation.
I will answer any questions you may have.
Liberal
The Chair Liberal Hedy Fry
Thank you very much.
We now go to a question and answer period. Because we have a vote pending, I am going to suggest that we have not a seven-minute but a five-minute round for everyone. We will begin with Mr. Samson for the Liberals.
Liberal
Darrell Samson Liberal Sackville—Preston—Chezzetcook, NS
Thank you very much.
Mr. Crevier, thank you for your presentation and for being here today via video conference. Other effective forms of digital communication are also appreciated.
That is a rather interesting story. Your newspaper is well known and you eliminated the paper version. You really took some risks, but your results show that it was a profitable investment.
I am wondering what you are doing with all those profits. From the information we have, it seems that your revenue has increased. Since that is the case, it would be good to know whether others should follow this model.
However, the more important question is this: what impact did these changes have on local media or local and regional content outside the major cities?
President and Editor, La Presse
There are two factors. I will give you a very broad answer, but I will still help you to understand what I believe is at the heart of the industry.
Earlier, you saw the tables on intention to read the news. Young people no longer want to read a paper copy of the newspaper. Regardless of the quality of the newspaper we give them on paper, they will not read it. In the long term, in the next 10 years, the print copy, black and white newspaper that is not interactive or updated every minute will inevitably cease to exist. Young people are growing up with tablets, iPhones and smart phones. We started from there.
It is also important to understand how the distribution network works. I will give you an example. We deliver La Presse to remote areas such as La Tuque. A truck cannot make more than 65 stops. That is the method of distribution. Fifty years ago, the truck made 50 stops. It would arrive in La Tuque, which is quite far from Montreal, and would leave about 100 copies of the newspaper. Just before we made the transition to tablet, the truck was making the same trip but was only leaving five copies of the newspaper in La Tuque. The distribution costs were enormous.
At La Presse, we managed to cut our shipping, printing, and ink costs by $80 million. Those are not value-added elements. In the media, value-added elements are the people who make the news and those who sell advertising. They generate revenue. The rest is an industrial approach. The industrial approach is changing.
To answer your question about the regions, I have to say that all of the studies have shown that local newspapers will survive a little longer than newspapers in major markets, but that the same fate awaits them. They need to move toward digital platforms.
The competition between the major digital players in the regions is much less than in the large markets with Google, Facebook, and other Internet sites, but it is still inevitable. The regions will experience the same thing as the big cities.
Liberal
Darrell Samson Liberal Sackville—Preston—Chezzetcook, NS
That is interesting.
I am not familiar with advertising revenues. Have you nevertheless managed to increase advertising sales on your digital network?
President and Editor, La Presse
The Saturday paper edition, which we kept, accounts for 8% of our revenue. Today, the digital platform accounts for 88% of our revenue. We are the first media outlet in the world to achieve this result.
I am going to give you some information without naming any companies, because I do not want to talk about our competitors or other Canadian players. I have a table in front of me, which we could put up on the screen. This table shows the revenue of La Presse since 2011. Daily newspaper A is the largest newspaper group in Canada, and daily newspaper B is ranked second. These are public companies. Consequently, the figures I am giving you are not confidential, except for those of La Presse.
We launched our digital strategy in 2010. At the time, the three players mentioned had total advertising revenues of $100 million. In 2015, La Presse was able to retain $73 million in advertising revenue. Player A, the largest in Canada, had $50 million, and player B was able to retain $41 million. Those amounts are for the year. That means that we were able to keep $32 million more in annual revenue than our competitors.
We are very satisfied with this performance. This year, we are starting to make gains over the previous year. I believe it is the first time. In my opinion, even as traditional media our performance was better than the other television and radio media in the Montreal market in the previous year.
Liberal
Liberal
The Chair Liberal Hedy Fry
Sorry, Mr. Samson, that's it.
We are going to have to go to Mr. Waugh, for the Conservatives.
Conservative
Kevin Waugh Conservative Saskatoon—Grasswood, SK
I just want to congratulate you. When you decided to print on Saturday only, that sent shock waves through the newspaper industry. You were the first to do so. You started in 2010, so it took you five years to roll out the model you are at right now. Maybe just talk about that, if you don't mind, because you are only printing a paper on Saturday.
President and Editor, La Presse
First of all, when we decided to adopt the tablet model, no one in the world was publishing a daily newspaper on a tablet. There were some tools available for tablet layout, but they were used more by magazines or weekly papers.
Producing a daily paper is a big job. I will give you an example. In Canada, we really love hockey. When a hockey game ends at 10:30 p.m., you have to be able to see all the information on the same screen. I do not know if you are familiar with the La Presse+ format. There are screens with multiple functions. You have all the results on one screen. You press on different buttons. The paper has to have a journalist who writes, a columnist who writes, a videographer who puts together a montage of the videos of goals scored, a photographer who works on the montage of photos, a statistician who provides the statistics. There were no such tools before. However, now, this tool lets five or six different people work on a screen at the same time.
When we embarked on our project, we had to develop five important pieces of production software from scratch. Some we developed in-house and others were developed for us by Canadian, U.S. and even European companies. One of our important applications was developed by a German partner. It took three years to develop it. It was a very long process.
Today, an organization could do it much faster. For example, the Toronto Star started a product similar to ours with our application in nine months.
That is what the first three years were like.
There is another aspect. We had a relationship with the readers of our paper edition for 132 years. We did not want to upset people. Thus, every six months we looked at improvements and at how people were doing. At the very end, the only people who had not migrated to the tablet edition were those who were averse to technology. We established programs to help these people buy a tablet, configure it, and make the leap. We were very respectful of our readers. In fact, communication about our project was so good that, at the very end, when we stopped printing the paper version, there were almost no complaints or raucous protests. We really supported people. We did a good job.
Conservative
Kevin Waugh Conservative Saskatoon—Grasswood, SK
A lot of national newspapers in this country don't publish on Sunday, and yet that seems to be when people in this country have time to relax and read.
Can you comment on that? It has baffled me for years why national newspapers don't roll out a Sunday edition.
President and Editor, La Presse
Your question is interesting. Sometimes there are large gaps between what we want and what the market can bear. You are absolutely right.
What is fascinating about our application, La Presse+, is that it allows us to know exactly how people use the time they spend on reading.
Earlier, I mentioned that we had a circulation of 221,000 in 1971, and 207,000 a little later. As an editor, I would not be able to tell you who reads the paper version every day. Even when it comes to the Saturday edition, I do not know who reads what, which pages, and what sections. With La Presse+, however, I can find out exactly what people are reading and how much time they spend on it.
Sunday is the day with the highest readership, that is, the largest number of readers and the most time spent on this activity. People have time to read on Sunday. However, the advertisers are absent. We do not know why. They have not figured out that this is a fantastic market for them because people have more time to read as a family.
Conservative
Kevin Waugh Conservative Saskatoon—Grasswood, SK
Yes, that's right.
Larry, do you want to add something ?
Conservative
Larry Maguire Conservative Brandon—Souris, MB
Could you expand on that? I'm just looking at it from the point of view of the advertisers that you mentioned. Why aren't they there? Have they just not had enough experience with it yet?
President and Editor, La Presse
I do not know. Laws are not the same from province to province. I will give you an example. In Quebec, car dealerships are not open on Sunday, at least for the most part. However, the law is changing. Some dealers have decided to open on Saturdays and Sundays.
I think that is an old habit. Let us compare the Canadian and U.S. markets. The biggest U.S. newspapers publish on Sunday. In Canada, historically and for practical reasons, it has always been Saturday. At present, with a product like ours for tablets, we can publish the news 363 days a year: Christmas and New Year's Day are the only days we do not publish. La Presse+ is published every other day of the year. The paper version was not published on Sundays or statutory holidays. I believe that our product is creating a different cycle.
Liberal
