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Q&A with Ken Doctor: Lessons learned from Europe

Q&A with Ken Doctor: Lessons learned from Europe

From East Coast business practices to Silicon Valley technology, European publishers have long looked to the US as a source of inspiration. But now, as media companies everywhere are seeking different ways to adapt to the new digital era, some European firms are coming up with smart solutions, which American news organisations could well learn from.

This is the argument made by media analyst Ken Doctor in a series of articles for Nieman Lab. Doctor, who is the author of Newsonomics: Twelve New Trends That Will Shape the News You Get, highlights examples of media companies that are thriving in Europe, including Schibsted in Norway, which has diversified into digital services and online classifieds, Gossweiler Media in Switzerland, which has created a successful community news model, and Sanoma in Finland, which has successfully persuaded print readers to pay more for digital access.

What else do American companies have to learn from Europe? And what more can European firms learn from the US? Doctor provides more detail in the following interview.

WAN-IFRA: In one of your recent articles you wrote that, while European publishers look to America, American publishers rarely look to Europe. Why is that the case?

DOCTOR: I think that 1) Americans tend to be myopic. We’re over here on the other side of the Atlantic, it’s a big country and oftentimes, not just in the news trade, people think more internally than they think externally. And 2) a lot of the early news innovation on the Internet did come out of the US. For both of those reasons I think, Americans have not looked that strongly at Europe.

WAN-IFRA: The successful European companies you focus on have done a good job of monetizing digital. Are there any US strategies for making money from digital content that you think Europe should learn from?

DOCTOR: One of the main ones would be on the sales side – the notion of local news companies being digital ad agencies. What a lot of companies are doing - Gannett and Hearst and Media News - is saying, we’re not just going to sell space on our own sites or in our newspapers, we’re going to offer you search engine marketing, we’re going to offer you mobile couponing, we’re going to offer you Facebook sites. And because we’re a trusted brand, we’ll be a trusted advisor in addition to being a publisher and an ad seller. There are a few publishers doing this in Europe, but for the most part they are behind the curve.

I think that I’ve seen less development in general in aggregation. The lesson of Huffington Post has also been exploited by a number of other American news companies. In general, the techniques of aggregation are underdeveloped in Europe. And I think those are very important cost questions because the cost of content is an important consideration going forward.

WAN-IFRA: You point out that Gossweiler Media forces advertisers to buy across different platforms and Sanoma’s Helsingin Sanomat makes it difficult for customers to buy only print. Should US media companies be equally pushy when it comes to getting customers to transfer to digital?

DOCTOR: You can only be pushy if you’re offering enough value. That’s the way of business, right? So in the case of Gossweiler, the fact that they are a must-read in local news and a must-have in terms of local commerce allows them to turn their system to an all-platform buy.

In the case of Sanoma, I think it’s similar to the New York Times in that there’s enough value in that newspaper [Helsingin Sanomat] that the customer is sold on the daily utility, or the weekly utility, of the newspaper. Once they’re sold on that continuing relationship, then to go to them and say “we know your habits are changing, we’re now making it easier for you to get this across platforms, just pay us another 10%”, isn’t hard to do. But the critical piece of it is that the unique selling proposition that a news medium has is fulfilled. That’s what’s really important.

WAN-IFRA: You’ve used Sanoma as an example of a company that’s been successful at charging extra for digital access, on top of a print subscription. Do you think this model could be transferred to the US?

DOCTOR: There are a number of large American dailies that are charging extra. There are really two models. There’s the New York Times model that says ‘one price, all access’ but then will price up over time. The other one, used by a number of dailies, is to say you’ve got to pay a little extra for digital access. I think that it can work. The product has got to be good enough so that when people are confronted by an additional price, they don’t say “no, I’m not paying that”. The non-print presentation has to be state of the art. If you have that relationship and you price smartly, maybe you go 5 – 10% up, and you do what Sanoma did which is to thoroughly integrate it in your marketing – which very few papers do either – if you do all those things, yes, it can be done.

WAN-IFRA: Is there a danger that some models that are successful on a small European scale could not be easily transferred to the US market – for example Piano Media, which has created national paywalls in Slovakia and Slovenia?

DOCTOR: I think there’s two ways that the Piano model could be applied. It could work on a regional basis, where people have a strong sense of state news or regional news being very important. It wouldn’t work on a national basis because there are clearly way too many national news players.

It could also work on a niche basis. Food sites for instance. If Epicurious got together with say a half-dozen top, gourmet recipe sites and charged one fee for it, that could well work. And you could take that metaphor to include certain kinds of sports, business, technology and health, if you had a critical mass of niche content in any area.

WAN-IFRA: With Gannett announcing it will erect paywalls on its 80 titles (except USA Today), it would appear "Paid Content 2.0", as you have referred to it, is in full swing in the US... Do you expect a similar trend in Europe soon?

DOCTOR: We’re already seeing that more than a tenth of US dailies are charging in one way or another for digital access. When I look at that strategically, it’s not a huge winning strategy in itself. What it does essentially is give you 5-10% extra circulation revenue, if you do it really well. And 5-10% plus circulation revenue is nice, it’s better than negative circulation revenue, but it’s not a huge amount of money. So it’s helping them a little in the short term, and that’s good, but the problem is that it’s mainly tapping their current readers, and current newspaper readers on both sides of the Atlantic are about 60 years old. Too many newspapers are trying to get more money out of the same audience, which is fine, but they’re not putting enough effort into getting new audience that they can monetize either through circulation or advertising.

WAN-IFRA: So how can news organizations court a new, younger audience?

DOCTOR: One of the most promising things right now is Facebook. The leaders here – the Wall Street Journal, the Washington Post, the Guardian and NPR – are saying, ‘we don’t care if new people come to our own site, or our own apps, we want them to come to our own content. And presumably our own advertising…’ They have essentially built out “site-lets” on Facebook and the Journal is monetizing that with advertising; Facebook at this point lets them keep 100% of that revenue. Facebook looks like the major way today to draw in new audiences who are not familiar with your brand, who can be definitely monetized with advertising and they may pay, if not for a subscription, then for a special product or special issues.

WAN-IFRA: You’ve written that media companies are becoming increasingly global, for example the Financial Times or the Wall Street Journal. Is this going to lead to further consolidation of media worldwide?

DOCTOR: I think yes, it will, but the timeline is really uncertain. One of the interesting combinations that’s come up recently is, if Rupert Murdoch is forced by investors to get out of the newspaper business, what about a combination of the Wall Street Journal and the FT, for instance? They’re serving a very similar market, and are both trying to be global business news players.

I think that we’re likely to see more roll-up within countries first. The nature of the technologies and cost reductions driving efficiencies mean that – as Digital First Media is doing – you can operate far more efficiently with greater centralization of technologies, finance and some national advertising on the web and really concentrate your unique resources, if they’re owned by one company, on content production and sales.


Hannah Vinter


2012-04-10 16:43

Shaping the Future of the News Publishing

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