The Global Media Weekly for executives and entrepreneurs

Is this little Swiss company the future of newspapers?

What’s wrong with newspapers? We could spend the next year struggling to answer the question, while traipsing through the undergrowth of the internet, of consumer tastes and news appetite, and of the competition for time, money and advertising. Newspapers are, of course, a format not a media channel. There are many different types of newspapers. We might just reflect en passant that one of the (many) failings of Britain’s sad and sorry  Trinity Mirror Plc is that it was a merger of two quite different businesses straddling the Daily Mirror and the Liverpool Daily Post et al, which merely shared the descriptor “newspapers”. The resulting shotgun merger has depressed shareholders across a decade, vainly trying to unlock synergies dreamed up by the deal’s long-departed promoters.

Power rises as sales fall

When it comes to daily newspapers, the debate can become more complicated. And nowhere more than in the UK. The country’s “nationals” rest in the British national consciousness somewhere between football, the Monarchy, the BBC, and Shakespeare. Daily newspapers have dominated UK public life for almost 150 years, courtesy of a pioneering rail network that made national papers possible.

Even now, when sales are falling by some 1m copies a year, the famous mastheads are everywhere:  the country’s TV news channels devote hours of evening airtime to discussing the  following day’s front pages. That’s why the influence of the popular newspapers over which politicians have fought for favour, seems hardly diminished by their decline in sales. When Rupert Murdoch’s The Sun called  ‘time’ on the last UK Labour government, its front page screamer was seen much more widely than the newspaper ever was. A neat trick that partly explains how the Aussie-born mogul’s influence had been rising, even while his newspaper sales (like most others) were falling calamitously.

It is that scale of profile and influence that arguably gives newspaper proprietors (in the UK, Australia and elsewhere) confidence that, somehow, they will find their prosperous future role in a changed media world. It gives them a sense of entitlement.

It is ironic, then, to conclude that the daily newspapers actually trashed their own prospects. Let me explain. The major obstacle to daily newspapers everywhere being able to find a new economic model online is the simple fact that readers are no longer (mostly) willing to pay for online news. That situation was sparked more than 10 years ago when newspapers panicked about the growth of online, built web sites – and offered free access, while they continued to ‘prosper’ from hard copy sales. Thus began the pervasiveness of free online news whose lasting effect will be that only the very best national and international news organisations will ever be able to charge meaningful prices for their content.

The answer for some daily newspapers in the UK must now be to forget about news as a way primarily of earning profits and, instead, use their current promotional power to build strong ecommerce businesses. Which is why the major ‘bricks n clicks’  retail chains should also start developing ‘sticky’ online content to occupy the same ground – or, alternatively, establish powerful alliances with the media companies themselves.

One answer is in the Alps

Given these trials and the death spiral of so many regional newspapers and their debt-laden owners, it might seem surprising to identify realistic new growth opportunities. But, deep in the Swiss Alps is a business which may point the way to a profitable future for newspaper publishers everywhere.

The town of Brienz is in the shadow of the Jungfrau mountain, near Interlaken. It is home to a population of 45,000 and a pioneering family-owned, local media business built round a 100-year-old newspaper Jungfrau Zeitung. This is now a multi-media ‘hub’ which delivers local news and content via mobile, web TV, and a twice-weekly newspaper. All content goes online as soon as it is written and, crucially, advertisers cannot choose the platform but must book their ads across all media.  The business model has been developed by Urs Gossweiler, CEO of Gossweiler Media and grandson of the company’s founder. This is a very local business: the newspaper sells 9,000 copies and the web site has 60,000 page views. But Gossweiler is not a media experiment: the company makes profit margins of 30% and plans to roll out its model across Switzerland and then across Austria and, perhaps, Germany.

The engaging Gossweiler has been busy regaling industry audiences across Europe with his Swiss recipe. The key ingredients are simple enough: strictly local content of the kind which doesn’t appear anywhere else, multi-media channels, and multi-platform advertising bookings. A strong emphasis on local content and media platforms. This integrated media business has some echoes of Leo Laporte’s Californian tech TV hothouse, adapted to the needs of a regional newspaper audience.( And there can be no doubt that the “web TV” element will grow in importance as broadcasters switch their focus to the web in coming years. But it is easy to see that, for Gossweiler, the hard copy newspaper plays a vital, supporting role in delivering readers and advertisers in a way that can beat the Google onslaught. It is similarly, easy to identify the opportunity to cover localised news and information that has been neglected by “bigger” media.

Going ‘hyper local’

The Gossweiler success is prompting regional publishers everywhere to use phrases like “hyper local” to drive their strategies. And there are all kinds of micro-newspaper activities being developed in the UK and US, where such small local markets have often been less ravaged by the loss of classified ads and copy sales that have decimated regional press profits. But one interesting sidelight is how far ahead of the curve some European publishers have been, compared with the newspaper-obsessed UK.

The ultra-smart Schibsted’s powerful cross-border online classified business began in Norway way back in 1999 and now accounts for more than one-third of the group’s total revenues Sanoma, of Finland, was one media group to eschew the free online model and now has almost 30% of its newspaper readers paying an annual subscription. In the UK, where newspapers are seemingly a source of national pride, it’s time to catch up. Will the legacy publishers be up to maximising the opportunities? Or will the true promise of regional media in the 21st century await a new wave of  ‘hyper local’ entrepreneurs?

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