Wednesday, March 03, 2021

A turning point for news media in Korea

Jan 10. 2021
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By The Korea Herald

In recent years, newspapers in South Korea have struggled to stay relevant for mainstream readers, many of whom consume news on major portals instead of media websites.

The dominance of portals in the news market, mostly led by two heavyweights Naver and Kakao, is unlikely to change in 2021. Rather, they are very likely to strengthen their influence further, an outlook that poses more questions for the embattled print newspaper companies.

In an ideal situation, an individual newspaper runs its own website and maintains a solid user base for shoring up its online ad revenue or paid content sales. In reality, many Korean online users are not drawn to individual news media sites since there is a much better alternative.

The primary alternative is the news section run by Naver, the country’s biggest portal. Naver collects a large amount of news articles from both national and regional papers and curates the latest and most popular articles based on an algorithm powered by artificial intelligence.

From the perspective of online readers, Naver’s news section offers far more news than individual news media sites. In addition, as most news readers are already registered members of Naver, it’s more convenient to read a selection of news articles and post comments on the Naver app or website, as opposed to visiting a smaller media site, which requires an additional sign-up process in order to post comments.

Aside from Naver’s unrivalled scale and user-friendly interface of its news service, a major change is now underway and local news media have to navigate a fresh wave of challenges to safeguard their position.

At the heart of the issue is the changing rule governing the news ecosystem of Naver and its news content partners. Previously, Naver had paid license fees to its news partners on a monthly basis to run its news section, but this system -- favored by newspapers which run small websites – is now gone.

Last year, the portal scrapped the license fee system and instead switched to a “performance-based” payment system for news media. Each media outlet is given a spot on Naver’s PC and mobile app, and gets a slice of ad revenue in accordance with the traffic and subscribers it attracts.

Naver claimed the new system is designed to “offer more revenue-making opportunities to media partners,” but it seems likely that newspaper outlets will find it more difficult to run and upgrade their own websites since Naver’s profit-sharing scheme is more attractive and realistic than their online advertisement system.

In short, Naver’s control on the local news media will accelerate as its news partners are now required to compete with each other to generate more traffic and subscribers to make money.

The dominance of the news market by big portals cannot be rolled back, especially after their influence has gotten bigger and more powerful following the outbreak of COVID-19 that prompted many people to embrace an online-centered lifestyle.

Without a drastic policy change on the part of the government, portals will continue to set the rules for local media and the challenge for individual newspapers to set up a viable website will become greater.

Several years ago, there was a time when local newspaper companies rushed to build their own mobile apps in the hopes of attracting a great number of paying subscribers. Their attempts turned out to be too ambitious and misguided since, even then, Korean users were unwilling to pay a dime to read news articles. The widespread perception about online news here is that it’s free and always available on portals. It is hoped that Korean newspapers should change this perception by pushing for an innovative breakthrough in the year 2021 -- to stay relevant for a growing number of news readers favoring online news on portals.

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