"What happens in the U.S. publishing landscape will happen here — we just don’t know how quickly"

Niemandlab talked to the Europeans and Brits and the conversations parallel those in the States: shrinking print circulation; declining classifieds; print ad revenues dropping steadily. “What happens in the U.S. will happen here — we just don’t know how quickly,”

They looked at three European news companies taking the lead in developing new business models to maintain and increase revenues.

1. Sanoma: success in paid digital circulation

Sanoma is a highly diversified media and learning company, with about 16 percent of revenues coming from newspapers, the rest in magazines, broadcast, education, and B2B. What sets Sanoma apart is the success it has had with upselling its print subscribers. In the U.S., most newspapers that have dared to charge for digital content have bundled it for free with a print subscription. But even print subscribers of Sanoma’s Helsingin Sanomat must pay an extra €36 a year (about $48) to get digital access — online, iPad, and mobile.

The price point is €340 a year for all-access, print and digital, versus €304 for seven-day print only. Of the 390,000 subscribers to the print edition, 130,000 — a third — have taken the upcharge. That’s resulted in a substantial new revenue stream. “There is no reason to buy print only. It’s a fantastic value proposition.” That message has sunk in. The company makes a point of the upsell “in every possible way,” including outbound telesales, mail and email offers, and print and banner campaigns. “We sell mainly hybrid packages (print + online + tablet + mobile). If you really insist on having print only, you will get it,” says Tuomola. But you have to really insist.

2. Schibsted: online classifieds

Schibsted, now the eighth largest news company in the world by revenues, just behind The New York Times Co. It’s online classifieds revenue that has enabled Schibsted, once an old-fashioned Norwegian newspaper publisher, to generate 36 percent of the company’s total revenues from digital sources. That’s more than three times the average of the newspaper industry worldwide. While Schibsted’s core newspaper business is only a tad above-average — now deriving 11 percent of newspaper revenues from digital — it’s that major online classified push that is paving the way to a sustainable future.

The transformative accomplishment here: reliance on print advertising and circulation money to support Schibsted’s journalism has been significantly reduced. While Schibsted won’t claim to have found a model that will sustain current-sized newsrooms indefinitely into the future, it’s farther along in building that model than anyone other news-focused company.

In online classifieds, one of the lessons Schibsted learned is that being less than the market leader isn’t worth much on the web. Dominance takes time to build, but it pays off. It leaves little room for others to compete. Remarkably, given its premium position in so many marketplaces, online classified revenue is growing at a 20 percent annual clip.

Also in line with reducing dependency on print advertising and circulation revenues is the focus on online services. Schibsted is stepping up from being a provider of current news, information, and advertising into a role as a life-cycle and life-stage supplier of useful commerce-aiding content. These businesses require an increasing segmentation of the marketplace — some rooted around traditional customers, and some not. Real estate, for instance, doesn’t stop at the traditional listings business, matching buyers and sellers. Schibsted’s loan-lending comparison site, Lendo.se, is a moneymaker, one of the many services found around the real estate buying and selling experience. One key to the online-services success is the “systematic building of traffic” to, again, claim a dominant position.

3. Gossweiler : Small Community news model

Urs Gossweiler, CEO of Gossweiler Media AG, is the grandson of a newspaper founder. Running the company out of Brienz, a large hamlet in Switzerland, Gossweiler’s newspaper/news site Jungfrau Zeitung has become well known in European newspaper circles. Their hallmark: focusing on news creation and community service first, divorcing the news business from the means of distribution. Their model: low costs, high margins — a model that Gossweiler is now franchising.

Their mikrozeitung example gives traditional businesses a path of thinking and acting differently about their own transitions. Thinking differently includes everything from press ownership to ad selling to staff responsibilities:

  • Jungfrau Zeitung is profoundly local. “We have no local section,” says Gossweiller. “We are purely local, with separate sections for politics, sports, arts and classifieds.”
  •  it sells advertising in a totally integrated way. When advertisers buy ads, they’re forced into a combination of print, online and, newly, mobile inventory. That inventory is allocated by formula. “It used to be they’d say ‘we’re buying print, and we’ll take online.’ Now they say, we’re buying online, and we’ll take print,” says Gossweiler. While its print circulation (now around 8,800) is in decline, its overall reach has grown, now including 57,000 monthly unique visitors.
  • the company sold its presses way back in 1994 and began outsourcing that work. “A lot of publishers are not publishers,” he told me. “They are printers.”

Given the new economics of the business, Gossweiler says he earns more than a 30 percent profit — a number that’s led him to begin franchising the business to other communities.  The company launched its first licensee last year, in a neighboring town, and the company is now actively pitching other potential publishers in Austria and Germany.

Here’s how it works. Each local media site, serving a population of about 45,000, would run an annual budget of 3 million Swiss francs. (A Swiss franc is worth about US$1.08.)

  • How the budget gets allocated: 1.5 million Swiss francs for people costs, 1 million for tech, print and delivery costs, 250,000 for “general costs.” Each licensee also pays 250,000 Swiss francs annually for the license/technology/marketing services package.
  • Gossweiler says revenues come in at 4 million francs, which would leave franchisees with a profit of 1 million a year.

Source: Niemanlab