Newspapers and magazines continue to suffer from falling advertising and circulation revenue. No change there. But, as the paywalls go up all over the world of newspapers, it is becoming clear that the big “legacy” winners will mostly come from two groups:
1. The largest. In newspapers, national and nearly-national media with international reach; and the magazine winners will be principally international brands like Vogue, Cosmopolitan, Elle and GQ.
2. The smallest. In newspapers, hyper-local, multimedia operations; and magazine-centric media for hobbies, sports and technology, especially those with worldwide franchises.
In between, are the myriad of medium-sized newspapers and magazines for whom survival will depend on a complete change of business model.
It has long been easy to predict the print-to-digital trend but impossible, crucially, to forecast the pace. Many publishers are finding that hard copy revenues are holding up better than expected, in line with academic assertions that the ultimate impact of market-changing, new technologies tends to be greater than expected – but slower to take hold.
And it’s a jerky pattern. But most publishers urgently need to reinvent themselves as digital providers of news, information and entertainment not merely tweak and adapt existing operations. Even though many will indefinitely maintain a hard copy presence, failure to create competitive “digital first” services will ensure they lose out to the growing army of low-cost, baggage-free ‘natives’ in social media (Facebook, Twitter, Buzzfeed and LinkedIn) and aggregation (Flipboard, Zite and Pulse). The natives are fighting to earn profits from personalising the output of the very newspapers and magazines that must themselves now get seriously digital. And at a time when the remorseless growth of mobile provides yet further challenge for traditional web sites.
The digital reinvention of traditional media must now include the substantial use of video. So, just as too many publishers were thinking they had found tablet-like ways in which digital success looked, well, rather like hard copy, the stakes are being raised dramatically.
Online video is exploding, through YouTube channels, and the web sites of newspapers, magazines, broadcasters and corporates. US research shows a that a large majority regularly watch online video, and Cisco predicts that it will account for 57% of all consumer web traffic by 2015 – four times that of regular web browsing and email.
Video is increasingly all over the web sites of major newspapers. In the UK, the digital-savvy but loss-making The Guardian recently reported that most
of the 86% of UK consumers who regularly access news online say that video “brings a news story to life”. Already, 89% of tablet-owners say they watch news video on the device. In the US, the Boston Globe‘s epic seven-part video-and-text series on the late Edward Kennedy scored 2.5million page-views in its first month. And The Wall Street Journal is achieving more than 20million monthly video streams. The paper’s managing editor told Nieman Journalism Lab: “From a business point of view, we cannot generate enough video streams. We are sold out. There is no shortage of demand to generate more video views.” Last year, WSJ added WorldStream to its web site, with news video clips by reporters.
Many readers simply consider that watching a video is a faster way of getting the news than reading a story, according to US research which shows that visitors to newspaper sites increasingly go first for a video clip and only read the text afterwards – if they have time. In March this year, hundreds of millions of people tuned into the Vatican’s “chimney cam” to watch the smoke turn white at the Papal conclave.
Much of the footage on newspaper sites is shaky “citizen” clips by readers or by reporters on their phones. But major papers like the UK’s Daily Telegraph, the Financial Times, the Washington Post, and the Wall Street Journal are investing in high-quality video. It is also increasingly seen as an incentive for newspaper readers/ users to migrate to digital services. Rupert Murdoch, who famously built pay TV audiences from scratch in the UK with exclusive Premier League coverage, will use football video to attract paying online readers to The Sun. And Europe’s biggest-selling newspaper Bild in Germany has a matching strategy with Bundesliga football. The New York Times is offering web-only 10-15 minute video clips of investigative reporting as the Retro Report.
But it’s not just about newspapers.
Conde Nast, whose new Vogue TV offers online viewers a world shopping tour through the lens of its editors, recently announced 30 new video series to
accompany its glossy magazines, played through their web sites and YouTube channels, including GQ, Wired, Teen Vogue, Glamour and Vanity Fair. Backed by sponsorship from fashion and beauty advertisers, the collection of 2-7 minute “webisodes” will be released weekly.
The company says: “We’re trying to take content that magazine brands already publish and start to expand the reach. Video is where consumers are heading.” And so are advertisers. U.S. digital video ad spending is forecast to increase by 41.3% to $4.1bn in 2013, according to research firm eMarketer. It is expected to double to $8bn by 2016. One finding not lost on publishers is that advertisers increasingly believe online video is more effective than television advertising.Wow!
Conde Nast is now talking about producing full-length movies for online viewing. But this swing to video is not confined to the largest magazines. Innovative UK-based specialists Dennis (Auto Express and Men’s Fitness), and Future (T3, Future Music and TechRadar) are increasingly active. Their growing video output ranges from Future’s nerdy-chic tech coverage of Apple product launches to Dennis’s footage of a car auction shot on smartphone.
The growth in video content shows how the most agile publishers can create new business models and do so much more online than merely replicate their hard copy publications. It also foreshadows the melting together of different types of digital media. Soon enough, many web channels for newspapers, magazines, online TV, broadcasters – and YouTube – will carry a broadly similar mix of video clips, live streaming, online information, ecommerce and social media.
These major new opportunities for reader/viewer engagement and revenue will, therefore, require increasing levels of innovation and investment by traditional publishers. Smartphone videos might always have a place in eye-catching, as-it-happens “citizen journalism” but the promotional dollars will increasingly follow well-funded channels with regular audiences and cookie-fed data.
And the size of the prize will drive the intensity of the competition: ‘digital immigrants’ (publishers) will be competing with smart ‘natives’, unencumbered by history and hard copy. The digital success of even the best newspaper and magazine companies might, therefore, increasingly depend on their willingness to cannibalise traditional businesses in order to build strong new ones. That might mean sacrificing current profit. Not easy.
More important, it will involve a break with past practice in ways that reflect the fundamental need to become a provider of media services rather than published products:
The fixed frequency of ‘packaged content’ belongs to a hard copy history of noisy printing presses and time-consuming distribution. Readers/users increasingly expect ‘live’ information or frequent updating. Some newspaper ipad editions across the world currently ‘close’ at 11pm (presumably when the printing presses start to roll) and do not ‘arrive’ on readers’ tablets until, say, 6am. How’s that for being constrained by the hard copy past? Publishers serious about digital must get used to ‘live’, or something approaching it.
Brands and bundling
Apple introduced the world to internet ‘unbundling’ when iTunes first empowered shoppers to buy single tracks instead of the whole CD/album. It helped define access to
content in the digital age, where pricing increasingly becomes transparent – and where customers only pay for what they actually want. So, why haven’t most newspapers and magazines yet learned those lessons? The multi-supplement weekend editions of newspapers should give readers the opportunity to download (and pay for) only their chosen magazines, supplements or sections.
Whether publishers like it or not, media is becoming unbundled, with news stories being consumed separately from the magazine, newspaper or blog that created them. Stories from multiple sources are reassembled by personalised aggregators like Flipboard (the free app with 50million users). Personalized news readers – like CNN-owned Zite and LinkedIn’s newly-acquired Pulse – aggregate stories based on readers’ interests.
Publishers would be crazy to fight against unbundling and, instead, should see the app-like profit opportunities in ‘micro-priced’ content. That’s the view also of Greg Golebiewski, founder of micro-payment provider Znak, whose tests (principally in Eastern Europe) show that readers (especially occasional or new ones) prefer micro-payments to paywalls.
New services and unbundled sections, supplements and features can help create new business. It’s time for newspaper sections like Sports Monday, Business Day, Media Guardian, You, and Domain to become brands in their own right. They are the opportunity for newspapers to build new, magazine-like digital businesses.
The unbundling is a similar opportunity for magazines themselves. The marketing of ‘Roadtesting’ – whether of cars in What Car? or kitchen equipment in Good Housekeeping or ‘Love & Sex’ in Cosmopolitan – could prove the point about the ultimate profitability of unbundling. Premium content can attract premium prices – and focused advertisers.
Archive material can be marketed to attract readers/ subscribers for features as diverse as profiles, health or homecare – to compare with the compelling reference material in ‘magbooks’ or ‘bookazines’ produced – in hard copy and digitally – by specialist magazine companies especially in the UK.
The whole process of unbundling would help traditional publishers compete in the emerging world of personalised media.
Aggregation and engagement
Now more than ever, newspapers and magazines need to offer readers the opportunity (especially in digital) to create their own content, engage with their peers, and access a variety of complementary information sources including blogs, and social media. It is something with which newspaper-centric operators have, to say the least, so far been much less comfortable. But the future will belong to digital services which give readers/users a ‘comprehensive’ view of, and relationship with, their chosen subjects – and 1-2-1, bespoke media. This level of engagement would ultimately create powerful data to captivate marketers and drive new revenues.
Although hard copy advertising is gravitational in many countries, online display ads are not doing that much better – probably because readers find
the messages intrusive. Publishers should learn from YouTube (whose 1 billion ‘viewers’ arguably makes it the world’s biggest media operator). The Google-owned video patchwork knows how to turn traditional practice on its head. It’s been at the forefront of developing a business that seeks to confront viewers only with the adverts they actually want to watch.
Viewers can skip some 65% of the ads on YouTube. Advertisers only pay when a user chooses to watch their ads. The ads, therefore, are seen only by engaged and interested viewers. The pay-off is that the cost per thousand views (according to UK consultant Enders Analysis) is often more than $15 – 2-3 times the rate for other ads. The future of media success so clearly belongs with ads that are well-targeted, even addressable, and whose impact can be measured. It is not exclusively about direct response, but the price of “flat” non-engagement advertising will keep falling.
Publishers everywhere are wondering how to profit from ecommerce. Magazine publishers in the UK and US are investing in the online fashion sector which is directly and indirectly draining revenue and readers from monthly magazines. Operating as a click-through retailer poses obvious challenge (and promise) for advertising revenues. But it can also change the entire relationship with readers. The distinction between editorial, advertorial and advertising is set to become as blurred as that between media and retail. Substantial partnerships with retailers are an inevitable development for publishers everywhere but ecommerce may also bring together magazine and newspaper brands.
This fast-changing multimedia environment emphasises the sheer scale of upheaval facing traditional media owners which need to move from creating a product to providing a service. The best newspaper and magazine brands can make it. But it is easy to feel that, beyond all else, the future will belong to those companies which are able to forget the glorious past. It really is about revolution not evolution.