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Business Trends

Digital media upstarts step up assault on Japan's news business

Traditional papers still boast big subscriber bases but numbers are shrinking

Yahoo Japan, BuzzFeed, Line and other players are changing the Japanese media landscape.

TOKYO -- Since the dawn of the internet, Japan's newspapers have maintained large readerships even as their counterparts elsewhere have struggled. Now, at last, digital technology is beginning to crack open the country's media market.

Today's Japanese commuters are more likely to take out their smartphones in crowded trains to browse Facebook or play games, rather than trying to juggle a broadsheet. Newspapers are also grappling with the rise of aggregators, which are steadily changing the way the country consumes news, much like they have in the West.

"Maybe Japan is different from the United States. Maybe the time frame is long. But eventually it's going to be the same process," said Martin Fackler, former assistant Asia news editor at The New York Times.

Yahoo Japan's emergence as a media force exemplifies the shift.

"When something happens, Yahoo Japan is where people come for news, especially video news," CEO Kentaro Kawabe told a news conference in July. When a major earthquake struck Osaka on June 18, the number of views of Yahoo's video news tripled, he noted.

Yahoo Japan pulls together stories from 450 sources. The site analyzes users' search histories and shopping records to recommend content that is likely to match their interests. Its advertising revenue attests to its growing popularity: The figure climbed 8% on the year in the April-June quarter.

The pace of change has been slower in Japan than in the U.S., which is home to a host of purely digital media organizations like Axios, Business Insider, BuzzFeed, the Huffington Post and Politico. Traditional American newspapers have also shifted their focus online: At The New York Times, digital-only subscribers account for three-quarters of the subscriber base.

One reason for the enduring print media market in Japan is the aging population: Nearly half of the country is 50 or older, and many readers are set in their ways. This, combined with well-established distribution systems, has helped to keep home newspaper delivery alive.

The danger, Fackler warned, is that the newspaper industry is "going to become increasingly irrelevant to younger readers" and end up becoming "a little mini Galapagos."

Nearly half of Japan's population is aged 50 or older, and many people still get their news in print.   © Reuters

Newspapers' strategy of "relying on the distribution system makes them focus on a certain demographic -- a much older demographic."

It was always a matter of time until the digital wave that has shaken the auto industry and other sectors hit Japan's news business, too. The writing has been on the wall for a while.

From 2007 to 2017, the circulation of broadsheet newspapers declined 17% to 38.7 million copies, according to the Japan Newspaper Publishers & Editors Association. Over the same period, newspaper advertising revenue fell 46% to 514.7 billion yen ($4.63 billion at the current rate), while internet advertising jumped 2.5 times to 1.5 trillion yen, according to ad agency Dentsu.

A survey by Hakuhodo DY Media Partners this year found that digital platforms -- smartphones, tablets and PCs -- accounted for more than half of all media contact time for the first time in the study's 12-year history.

Even so, Japanese newspapers have yet to truly transform their business models, despite their efforts to embrace the change.

"Print newspapers are holding up relatively well in Japan, as evidenced by their large subscriber bases compared with other countries, but a stronger sense of crisis is shared by newspaper publishers," the Asahi Shimbun, a major Japanese daily, said in a statement from its public affairs section. The Asahi, which has about 300,000 paid digital subscribers, said the role of online media is bound to increase but added that digital publishing has only proven to be a viable revenue source in the last few years.

Nikkei said the number of paid subscribers to its digital edition has been growing by 50,000 a year -- a pace it aims to accelerate. The total currently stands at about 600,000, compared with around 2.4 million print subscribers.

Most of Japan's newspapers now have online editions, but few have made digital their main publication platform, since online advertising and subscriptions fees tend to be lower.

"People do want news," said Yahoo Japan's Yuji Nozaki, who is responsible for editorial operations. He said his company's news team has a staff of 150, out of which 30 to 40 handle editorial tasks while the rest are mostly engineers.

Yahoo Japan mainly provides short and straight news stories. The original sources are mere footnotes, much to the chagrin of the newspapers that supply the articles.

Yahoo Japan's rival is Line, operator of the popular chat app of the same name.

Line News was launched in 2013 and now distributes 4,900 stories from more than 250 media outlets a day, attracting 63 million users per month. These numbers make it the country's most popular social media news platform.

Like Yahoo, Line also uses data about individual users -- age, sex, location, shopping records and reading habits -- to personalize its news delivery.

Line offers a wide range of services via its instant messaging app, including voice calls, mobile payments, travel bookings and online games. But news is the second-most-cited reason users give for accessing Line, after sending messages, said senior executive Takeshi Shimamura.

NewsPicks, another player, is a rare breed: a homegrown Japanese media startup.

Set up in 2013, the company's online social platform lets users read and comment on business news. The venture was established by Uzabase, a 10-year-old financial data company in Tokyo.

NewsPicks is unique in that readers are asked to give their real names and affiliations when commenting on stories. This stands out in a media market where information is often provided anonymously, making it difficult to ascertain reliability.

"People were looking for a venue to voice their opinions, both positive and negative, and NewsPicks has provided that," said Shunsuke Kanaizumi, chief editorial officer. NewsPicks has professional commentators who lead off and set the tone for discussions, while others can comment once.

"It feels like you need a homegrown champion to appear"

Martin Fackler, former assistant Asia news editor at The New York Times

NewsPicks' paid subscriber base has been growing fast, though it still comes to only about 74,000. The venture has been profitable since 2016, but the acquisition of U.S. media company Quartz is expected to push Uzabase's after-tax balance into the red this year.

Most new entrants to Japan's media market are American.

BuzzFeed set up shop in the country in 2016 and has quickly built a major presence, attracting 23 million unique visitors a month and 150 million monthly video views.

The company focused on a young audience from the start. At BuzzFeed Japan, reporters in their 20s take the lead in crafting everything from offbeat stories to more informative pieces and long features.

The founding editor is Daisuke Furuta, who came over from the Asahi. Such career changes are common in the U.S. but unusual in Japan. Often, in the U.S., veterans of big news organizations will establish or take jobs with media startups, before eventually returning to their old employers armed with valuable digital experience.

The infrequency of moves like Furuta's is part of the reason digital journalism has been slow to take hold in Japan. Not only is talent more readily available stateside, so is money. Venture capitalists and philanthropists are eager to fund media ventures in the U.S., and advertisers are easier to find.

For now, Japan's media startups are still just "nipping around the edges" of the business, while existing players remain reticent about digital technology, Fackler said.

"It feels like you need a homegrown champion to appear," he said. "And it hasn't appeared yet."

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