Japan’s thriving newspaper industry slow to learn from Western collapse

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It's a cool 2 a.m. in a downtown Tokyo back alley washed in orange street light. A small truck pulls up to the Ebisu office of ASA, a newspaper delivery service, loaded with morning editions. The still of night vanishes in a flurry of quiet activity. What ensues is the kind of scene news executives the world round drool over: A vibrant effort to get news to tens of millions of readers still hungry for newsprint.

After stuffing the papers with advertising inserts, the workers meticulously load them onto bicycles and scooters. Then they disperse, leaving for three hours of running up and down stairs to deposit papers at the doors of each subscriber. It's an extraordinary effort at personalized attention that has long under– pinned Japan's newspaper industry, which has remained the strongest in the industrialized world.

It may all be about to come crashing down, as the factors eroding newspapers the world round threaten the industry here, too – a stark warning that even in the most newspaper-mad developed country on Earth, the fate of the printed page is a matter of serious question.

But none of that, for now, can dampen the early-morning spectacle of an industry still near its prime.

Every morning, the country's top Yomiuru Shimbun newspaper lands on nearly 10 million doorsteps. Number two Asahi Shimbun lands on 7.5 million more. Later in the day, both newspapers send out millions more in secondary afternoon editions whose circulations alone dwarf any publication in North America. It's a highly reliable process: even on the day of the earthquake and tsunami that caused the Fukushima disaster, the newspapers arrived on doorsteps. "I think that's one of the reasons Japan has been able to maintain such high subscriptions. No matter what happens, we deliver," says Toshinori Yokomachi, ASA's owner and president.

A peek into Japan's newspaper industry is a peek into times long past for the rest of the world, with its thinned-out newsrooms, red ink and quests for Internet-rich saviours. At the Asahi headquarters, meanwhile, a black bow-tied butler delivers coffee (iced, if you'd like) to meetings. The company's public relations man can't remember whether its private jet fleet numbers two or three. The president of the Japan Foreign Press Center can count exactly one newspaper that has gone under, but even that was recently revived.

Those, at least, are the cheery outlines of the Japanese newspaper industry. Less cheery are the numbers. In fact, they're downright ominous.

In 2000, Japan bought 1.13 newspapers per household. It's now 0.86, after years of steady declines that have eroded national newspaper circulation by 12.5 per cent. In little more than a decade, advertising revenues have fallen exactly in half. Overall newspaper revenues, however, are down by just 22 per cent, in part because six of every 10 revenue dollars come from subscriptions; less than two come from ads.

"So that makes us more resilient against bankruptcy," argues Kazutomo Hatao, a decades-long Asahi employee who now serves as senior assistant to the managing director for circulation.

But a single statistic shows the weakness of that model: At Asahi, people 50 and above subscribe at rates of 70 to 80 per cent. But those 40 and below it's between 10 and 20. Among university-age students, it's within spitting distance of zero.

Takashi Kawachi calls them "dinosaurs. Lonely and sad dinosaurs." A former Washington correspondent, columnist and editor at the third-ranked Mainichi Shimbun newspaper, Mr. Kawachi has become an outspoken critic of Japan's newspaper industry, which he accuses of being laggard in finding new business models.

"There are huge problems emerging. They want to shut their eyes to the course of history. But it will come very soon," he says.

Among the problems he sees is the very distribution system that has kept the newspaper industry afloat. Each newspaper tends to use its own distribution companies in the same areas, a major inefficiency. Japanese newspapers have also been digital laggards. Some have refused to place more than brief summaries of news online. Others have only recently begun charging for digital subscriptions. Those efforts haven't been going well. Asahi has 120,000 online subscribers, but about 90 per cent are also print subscribers (who pay a small premium for web access). That leaves roughly 12,000 digital-only subscribers. The New York Times Co., by contrast, has 727,000 digital-only subscribers.

"Our basic business will continue to be the print-based newspaper, which we consider important," says Mr. Hatao, from Asahi.

That's not to say that there's much risk of financial failure. Japan's top newspapers boast large real estate holdings worth so much they could easily keep the industry afloat for a decade, Mr. Kawachi says. "They have the time. They have the money" to transform their business models, he says, although he warns: "It's almost too late for them."

Already, the top source for online news in Japan is Yahoo!, whose comparison to the newspapers themselves is "incomparable," says Massaki Arai, who works in the newspaper division of Dentsu, Inc., Japan's top advertising firm. "They get so much more traffic."

Newspapers need to "improve the content so that people read more newspapers," urges Mr. Arai, though he acknowledges he has no idea what might work. "Also," he adds, "we need to increase the youth readership." There have been efforts at change: some companies have started publishing weekly kid-friendly papers – with bigger fonts, more pictures and more manga comics – distributed in schools, and intended to hook print readers young. But, "there's not much evidence that it has actually led to an increase in circulation," he says. Dentsu is a corporate goliath, with 7,000 workers in a giant downtown Tokyo building. Newspapers are a fraction of that, and falling: just 133 now, down from 180 at the peak.

Still, there have been some successes: newspapers have found a surprising source of new revenue in ads for mail-order health food and travel companies. It's all directed at an increasingly grey readership. "It's really big and they get a lot of response," says Mr. Arai. "People in their 60s and 70s read the newspaper, call and order."

But in other parts of the industry, the only bright spots in the future involve no newspapers at all. Take the delivery companies. For them, 2 a.m. doorstep delivery is possible, in part, because they are trusted enough to receive electronic swipe-cards for numerous apartment and condo buildings. It's access few companies have, and now, they're finding ways to profit from it. ASA, the company delivering from the Tokyo back alley, has begun offering to distribute other goods and services: tickets to opera and Cirque de Soleil; Hokkaido potatoes; Fukushima peaches; air conditioner cleaning; election signage. Newspaper subscribers "trust us, and therefore we can refer some companies," says Toshinori Yokomachi, ASA's owner and president . His family has delivered newspapers for 80 years. Now, that's changing. And though the new lines of business offer some hope, it's tinged with sadness.

"I still have a sense of crisis," Mr. Yokomachi says. "Because I, too, access the Internet for news sometimes."