First Healthcare and now, newspapers?
The New York Times recently reported on European newspapers finding creative ways to thrive in this economy. While many European newspapers are facing the same problems as those here in the States, there are a few standouts that have found creative ways to stay afloat and even profit, in what seems to be a dwindling industry.
What’s the Big Idea?
Making money on something other than newspapers!
Here is the jist of it: German publisher, Alex Springer, owner of Bild, the biggest newspaper in Europe, reported their highest profit in 62 years. And instead of looming talks on how to survive this recession, they are looking to expand by searching for acquisitions in Germany, Eastern Europe and possibly even here in the United States. Instead of trying to protect existing publications, they acquired or created new ones, some of which distribute the same content to different audiences.
In the online world, the top European performer is VG Nett, a Web site loosely affiliated with Verdens Gang, a tabloid newspaper that has reported a profit margin of more than 30 percent and rivals Google as the most popular Web site in Norway. VG Nett generates most of it’s revenue from advertisers but is now starting to raise money from it’s users. About 150,000 people pay up to 599 crowns (about $90), a year for a weight-loss club and they recently started charging up to 780 crowns a year for live streams of soccer matches. Additionally, a social network connected with VG Nett charges users to upgrade their profiles, but access to news on the website, remains free.
A Few Points That Stand Out
I am fairly fond of Alex Springer’s acquisitions and creations of new publications. As a culture, we always like ideas that are new and fresh. And this is an opportunity to break apart a large, failing publication, and give it an opportunity to recreate itself and reach out to new or different readers.
Selling added-value services to readers as VG Nett has done is a creative way to rework the standard business model. These don’t seem to be your typical added value services that are mostly for the benefit of advertisers. Instead, they are to benefit the reader. But during a recession are we willing to fork out the extra bucks for such trivial things? Again, it is all about being creative and I like that the added value focus on the reader, the core of any newspaper, not the advertisers.
These points seem so simple and embracing of the fact that the industry has changed. Did the American publishing industry see this coming for a long time, but fail to recognize it? The American newspaper business model has been set it stone for so long, while digitalization has clearly been the stronger force over the past decade.
Thinking Out Loud
One major problem here in America is that we have already dug ourselves in a hole and need to figure a way out. The previously mentioned European publications were able to nip it in the bud in order to keep themselves out of the dilemma we see ourselves in, so will their business models do us any good?
As I write and research this topic, many thoughts come to mind…
How do Americans value newspapers verses Europeans?
What about branding? The most valuable thing that many Newspapers own is their brand. If they start branching out they could drive some profit from the use of it.
Should the government subsidize ailing media? Or does this vastly interfere with our freedom of press? French president, Nicolas Sarkozy, announced in January that €600million in emergency aid for his country’s troubled newspaper industry and declared that every 18-year-old in France would get a year’s free subscription to the paper of their choice to boost reading habits. Sarkozy instructed publications to improve the content of their articles, bring in younger readers and transform business models in exchange for emergency aid worth €600m over the next three years. Sounds like our government’s relationship with the car industry.
And what role does internet advertising play? While internet advertising is not growing as fast as it once did, it is still outpacing more traditional forms advertising channels. The newspaper industry saw its print ad revenues drop by 17.7 percent last year, while online advertising only dropped by 1.8 percent, according to a report by TechCrunch based on numbers from the Newspaper Association of America. I realize that internet advertising does not make as much money as more traditional forms did in their heyday, but the numbers say it all. American publications did not seem to adjust to the internet as well as some of their European counterparts. The internet has always been secondary to the hardcopy, while it has clearly been the stronger force.
Again, these are all just thoughts, and I would love to hear yours.
Personally, I think that we need to stop dwelling on the fact that “print is dead” and restructure business models with that in mind, which I am sure (or rather, I HOPE) is what is going on behind closed doors. And just like any major change, it will take adjustment but I think that if we can take some of this into consideration, it will put us in an even better position 5-10 years down the road.
