Anyone who thinks that newspapers are going the way of the typewriter has only to cast an eye on Brazil, where a booming economy has helped turn print mediainto a growth industry. The number of daily newspapers has grown by more than one-third in Brazil since 2001, bringing the total to nearly 700, and overall circulation has climbed by about one-third in recent years.
A variety of factors are fuelling the trend, including a readership base with more disposable income. Many new readers are coming from a growing middle class, in which households earn between R$1,000 and R$4,500 (US$600 and US$2,700) a month and represent half of the country’s 198 million population. Given the size of this class, “when they enter the market, they are such an important factor that they can have a big effect,” says Wharton management professor L. Felipe Monteiro, who is a native of Brazil. “This is true of whatever they spend money on, be it clothing, white goods or entertainment.” To tap into these consumers, anew breed of low-cost tabloids has emerged and the traditional leading papers have been adapting their strategies as well.
Big winners of the spending are the country’s popular tabloids, which feature bikini-clad women along with crime and entertainment news. Emblematic of these papers is Super Noticía, launched in 2002 in Belo Horizonte, Brazil’s third-largest city. With splashy photos, regular prize giveaways and a newsstand price of about 15 US cents, the tabloid has rocketed to a circulation of more than 290,000, making it the country’s second-largest newspaper, according to the Instituto Verificador de Circulação (IVC), Brazil’s publishing audit bureau. As a result, three of the country’s 10 largest newspapers in terms of circulation in the first half of 2010 were popular tabloids, a category that barely existed five years ago.
Meanwhile, Brazil’s traditional broadsheet papers are also focused on the emerging middle class, having rolled out slightly more upscale tabloids of their own. These dailies attract readers falling between the very low-cost popular tabloids and the higher-end broadsheets. A frontrunner in these new publications back in the 1990s was Infoglobo Comunicações, the media conglomerate that publishes O Globo, the largest newspaper in Rio de Janeiro. In 1998, it launched a colorful tabloid called Extra, which now sells for 65 US cents a copy on weekdays, compared with about US$1.15 for O Globo.Even though O Globo’s circulationhas dipped slightly in recent years, from 257,000 in 2004 to about 251,000 in the first half of 2010, the growth of Extra has offset the decline. Extra and O Globo are Brazil’s third and fourth-largest newspapers, respectively.
If publishers like the owner of O Globo had not foreseen the demand for a lower-cost paper, says Monteiro, they would have been left behind. But now they could be heading to their biggest test yet. Though there are growth prospects aplenty on the horizon, these publishers also know that their industry is an increasingly crowded one, requiring far deeper knowledge of their fast-changing readership’s likes and dislikes than was once needed, while also laying the foundations for a new digital era.
Healthy Circulation
It’s not just a growing middle class and the launch of the low-cost papers that have helped Brazilian newspapers. Setting the stage for growth were government policies in the mid-1990s that broke a long-standing inflationary spiral. This marked “a huge movement in our economy,” which boosted consumers’ purchasing power, says Ricardo Pedreira, executive director of the Associação Nacional de Jornais (ANJ), Brazil’s national newspaper association.
The country’s constitution has also helped the industry. It requires newspapers and radio and television broadcasters to be owned by private companies controlled by Brazilians. “This makes a very large difference,” says Pedreira. “Brazilian publishers don’t feel pressure from the stock market to cut their news investments. They have a different orientation” than in other countries.
Another powerful factor is thatInternet use — the bane of print media in the many other countries as more and more readers get their news for free online — is relatively sparse in Brazil. While some 77% of the U.S. population spends time online, only about 32% of Brazilians do, according to the CIA World Factbook. That is likely to change over time, with more Brazilians able to afford computers and broadband services.
All this has added up thus far to growth for Brazilian newspapers that parallels circulation gains in other emerging markets and is in sharp contrast to trends elsewhere. In a report published in June, the Organisation of Economic Cooperation and Development (OECD) found that average daily paid circulation grew 35% between 2000 and 2008 among the non-OECD members of the BIICS emerging markets (Brazil, India, Indonesia, China and South Africa). At the same time, paid circulation fell 2.7% for the OECD’s 33 members, which are mainly developed countries. Among the big losers were newspapers in the United States, where circulation declined some 12%.
Not all Brazilian newspapers have been successful. In September, Jornal do Brasil, a 119-year-old daily that once was among the industry leaders, abandoned print and is now only available online. The move capped a decades-long decline for the publication, which has been hobbled by financial woes, vanishing circulation and shrinking newsroom staff numbers. “By the end of the 1990s, the paper had collapsed,” says Rosenthal Alves, director of the Knight Center for Journalism in the Americas at the University of Texas and a former Jornal correspondent. “Those of us who had been part of the paper have already cried.”
Most of Brazil’s newspaper business has blossomed in tandem with the nation’s economy. Circulation grew 32.4% and advertising revenue gained 35% as the economy expanded from 2004 through 2008, according to the IVC. The industry slumped when the global recession struck Brazil last year, but has since resumed growing along with the economy. The IVC forecasts a 5% gain for newspaper circulation this year. Meanwhile, ad revenue has grown 7.8% in the first half of 2010 compared with the same period a year ago.
Upmarket, Downmarket
The middle class has, and will continue, to be an important part of that revenue stream. After Infoglobo’s launch of Extra in 1998, Groupo RBS, a media conglomerate in Porto Alegre, launched Diário Gaúcho in 2000 as a middle-market tabloid for about 45 US cents a weekday copy. The daily is a sibling of RBS’s flagship paper, Zero Hora, which costs around US$1.15 on weekdays and is the sixth-largest paper in Brazil. Diário Gaúcho now is the eighth largest paper.
Diário Gaúcho complements, rather than competes, with Zero Hora, according to its publisher. Both papers boast colorful photos and catchy graphics. But the 46-year-old Zero Hora is aimed at upper middle class readers, while Diário Gaúcho is more for middle and lower middle class. “Let’s say there’s a huge traffic jam,” says Marcelo Rech, editorial director of RBS’s eight newspapers. “Diário Gaúcho would cover it from the standpoint of the people in buses or trains, while Zero Hora would write from the perspective of drivers, who have their own cars.”
Zero Hora is in a tabloid format but is targeting upscale readers, and 42% of its readership is younger than 30. “Our goal is not to give information but to explain it and make things easier for the readers,” says Rech. “We give them a tool to face daily life, and that’s why we can charge so much.”
Quality papers attract the bulk of advertising. The popular tabloids get as much as 50% of their revenue from ads, compared with 70% for the quality papers, says the ANJ’s Pedreira. The differences in ad prices reflect this. A full-page color ad that costs about US$20,670 in Super Noticía sells for about US$183,750 in O Globo. “The lion’s share in advertising still belongs to the quality papers,” says Ricardo Vezo, O Globo’s business director.
But the Internet has begun to nibble at advertising revenue. Its share of media ads grew from 1.6% in 2004 to 4.2% in the first half of 2010, according to Projeto Inter-Meios, which monitors advertising spending. Newspapers’ share of ad revenue fell from 16.6% to 13.4% over the same period. While publishers have been increasing their online efforts, “newspapers on the Internet don’t have a sustainable model yet,” says Pedreira. “We know that we will probably have the same [migration of readers and advertisers to the Internet] that newspapers have in the United States. But we don’t expect it to happen soon in Brazil and we hope to have time to create a sustainable model.”
While the number of Brazilian dailies with online editions slipped from 133 in 2009 to 132 in 2010, online readership has been growing. Unique visitors to these sites rose from 12.8 million in January 2009 to 15.6 million in January 2010, according to the ANJ. Meanwhile, newspapers’ online advertising is projected to jump from US$54 million this year to US$129 million in 2014, according to consulting firm PricewaterhouseCoopers (PwC). The consulting firm also predicts a 20% gain for newspaper print advertising over the same period, to US$1.6 billion, and nearly 10% growth in overall daily paid newspaper circulation during the period.
Experts say that with or without the Internet, prospects for Brazil’s newspaper market look promising. Newspaper penetration is still very low, says Pedreira, “and this gives papers a great deal of room to grow.”
