Songs from the digital news campfire

Johnston Press, owner of The Scotsman along with more than 250 other titles around Britain, has announced more grim figures for the third quarter of the year.

Advertising revenue is down 8% on last year, when it was already falling. That's not as sharp a fall as the 10% at the start of this year, but it's still a big gap in the company's finances.

Job advertising in its papers has been particularly hard hit, down by 30% on last year in the first half of this year, and 19% in the most recent quarter.

Digital ad revenue is on the rise, but by less than 5%, and that's nowhere close to closing the gap left by declining newsprint revenue.

It would be reassuring if those lost job ads were being placed online instead. But because they're not being attracted into the print editions, neither are they being sold in what's called "digital upsell".

Story of decline

While total revenue has fallen by more than a third between 2006 and last year, the big pressure is to get debt down, declining to £357m by early this month. But that remains a focus, particularly as the company renegotiates its bank finance for renewal early next year.

That helps explain why the share price has fallen from £3.60 less than five years ago to bounce around the 4 and 5 pence mark. The total market valuation is around £30m, which ought to make Johnston Press ripe for takeover, except that there's not much appetite for taking on either its debts or its assets.

The headline figure that advertisers watch is in circulation, and that continues to tell a sorry story of decline. The audited industry figures for The Scotsman were down to 38,800, the third month they've been below 40,000.

The average circulation for May to October this year was nearly 9% down on the same period last year. Not good, but not as bad as the decline for The Guardian, The Times, the Financial Times and The Herald. The Glasgow title was down nearly 11% to a six-month average of 47,900, with a 2% dip in October to 45,800.

For The Scotsman's stablemate, Scotland on Sunday, circulation is down 7.8%. It's not much consolation that the magazine-style re-design of the Sunday Herald, published in Glasgow, has been a circulation disaster. It continues to fall, with the October figure just below 29,000, and the six-month average is 27% down on the same period in 2010.

Highfield high five

The decline will surely force change to the market at some point, though none of the papers has yet found the solution that makes adequate money out of online news journalism.

But Johnston Press has one new source of optimism - its new chief executive.

Ashley Highfield, aged 46, is not from a newspaper background. He's been big in Microsoft UK and was director of new media at the BBC when it brought us iPlayer - rather successfully, too.

A couple of weeks into the job, he's not talking to the outside world just yet, but he has talked to Johnston Press's in-house website, with much talk of apps and targeted online advertising.

"I'm not one of those who subscribe to the theory that we are on an inexorable glide path into oblivion," it quotes him as saying. "There's no reason to believe we have to accept ever-declining numbers of readers. There comes a point at which you become relevant to a new audience. One of the exciting challenges is how you educate a younger audience, who only consume online, and get them to fall in love with newspapers."

He's citing the way cinema survived despite the arrival of videos and DVD, reinventing itself as a place people wanted to go, to get new experiences.

Local voices

What of the vast stable of local papers, and a couple of national ones for Scotland? "The big question is what could they be?" Highfield is asking his workforce. "How can they be more of the digital campfire around which the voices gather in a community?"

"We've hardly started down the road of apps and one of the reasons I took this job is because I see local media becoming more important, not less important. As more and more people access the internet through devices like iPads and smartphones - which know their users' location - I think we're at the beginning of a point in history where really local content becomes more relevant, more useful and more used."

That's also the area where the BBC has retreated, under pressure from local publishers.

And here's someone with a vision, that goes beyond cost-cutting, of how publishers can exploit that local niche.