The daily newspaper best known for its ‘salmon pink’ newsprint wants the world to know it is unique in other ways too. The Financial Times (FT) is feeling pleased with itself. It is celebrating its 130th anniversary with 910k paying readers across print and digital in what is now “a majority digital content business”. Even the financials have never looked so good. Revenue in 2016 was £310.8m – almost 40% up in 10 years. It also made a (small) profit of £6.6m after years of persistent losses.
Those results were a first-year gift for Nikkei which, in 2015, had bought the FT from its long-time owner, the troubled UK education group Pearson. Nikkei is publisher of the eponymous 3m-circulation Japanese daily, whose dizzy £844m bid for the FT was reported to have been preferred ahead of an expected, even higher offer from Axel Springer.
Nikkei is delighted with its purchase of a news brand whose digital subscriptions now account for more than 75% of its paying audience. Last year, it claimed “a record paid-for print and digital readership”, boosted, perhaps, by the Trump and Brexit news frenzy. The FT said content revenues were almost two-thirds of total revenues in 2017, which is “double the share of five years ago”. It increased branded content revenues by 64% and continued to grow its global portfolio of events, business information, corporate education, research and consulting services.
CEO John Ridding said: “Despite the constant disruption in the media ecosystem, the Financial Times has had another strong year. The demand for our quality, independent journalism has never been greater and this business performance underlines the dynamism of our global business and brand.”
This unfamiliar optimism from a daily newspaper has been the mood music for a slew of industry awards for the FT and for its 13-year editor-in-chief Lionel Barber whose polarising anti-Brexit crusade has given it a greater prominence in stormy UK politics.
Understanding its audience
The FT was one of the first major daily newspapers single-mindedly to push readership revenues to compensate for the cataclysmic loss of advertising, using analytics exhaustively to understand what its audience wants, who’s reading what, when to charge and when to give content away for free. At the time of the Nikkei takeover, US news media guru Ken Doctor described the FT as “the best example of a journalism company that has seized the advantage of the digital age…and is really figuring out its customers. They’ve got more than three dozen people in analytics. They’re a knowledge farm as well as a publishing company. And putting those two together have put them in the forefront of global journalism.”
For almost five years, it has been measuring everything from the sign-up of trial users to the speed of its mobile site against the effect it will have on converting new subscribers and minimizing churn. Like Jeff Bezos at the Washington Post (and many others since), the FT found that slower web site loading speeds affect the amount people read as well as subscriber retention. By artificially slowing down the site for some readers, it managed to calculate precisely how much an increased page-load time affected engagement and retention.
But it is also working hard with newsletters and video including a substantial YouTube presence through which the FT is growing reach and referral traffic, where it can point the viewer to additional relevant text or video content through links to related articles. High-traffic videos tend to be those explaining dense topics, like blockchain or cryptocurrencies especially for female and younger audiences. It operates vertical channels on YouTube including FT Life, FT Transact, FT Industrial Tech, many of which are sponsored.
Like so many quality dailies, the FT’s readership has traditionally been 80% male and it is thinking more than most about how to fill the gap: “Women tend to use business publications and financial journalism as personal development and career networking tools. They want more of a catch-up product, something accessible when they’re commuting, that they have access to on demand. In general, women are more time-poor, and being time-sensitive was one of the principal barriers to having the time to read the FT or the news in general.” A new newsletter subtly aimed at women reportedly has the highest open rate of any FT newsletter but the publisher knows that is only the start.
The FT’s current experiment with many text stories being converted into audio illustrates how this hyperactive news brand is leaving no stone unturned in its search for more readers. Staffers say there’s no reason why all the FT’s 300 daily articles can’t, eventually, be converted into audio when users want to listen to them. And it is giving high school students around the world free web access, expansion of a scheme rolled-out previously through 1,400 UK schools and colleges.
A work in progress
So the Financial Times is in the early stages of proving that the success of print-centric news brands depends on consistent investment in technology, analytics, understanding the audience and meeting their requirements via print, online text, video, audio and events. In doing so – like its globally-focused counterpart the New York Times – the FT has substantially increased readership revenues and sharply reduced its dependence on advertising.
But it’s hard work. The FT’s trumpeted return to profit was an operating margin of only 2%, after years of losses. The global trends are, though, more reassuring. Almost 60% of revenues now come from outside the UK, compared with 45% just three years ago. But only time will tell whether the FT’s high subscription prices (now £754 a year for print-digital combined in the UK) are sustainable. The price is more than double that of the Wall Street Journal. Then there are the FT’s high costs which may partly reflect the rising price of being a worldwide digital player. It is, however, surprising that the company’s 1,300 headcount has been rising (not falling) for the past five years.
The FT – for all the plaudits – is still wrestling with the systemic challenges faced by newspaper brands everywhere:
The inexorable decline of print: Ironically, as quality newspapers condition their readers to pay more for print, publishers become more dependant (not less) on print profits. The FT – with print editions in the UK, Continental Europe, Asia and the US – is a classic case. After five years of selling for £1 in the UK, the weekday newspaper is now priced at £2.70, having increased almost three-times in little more than 10 years. But newspapers still need all the advertising they can get, and some 50% of the FT’s 58k average weekday circulation in the UK and Ireland comprises “multiple” free copies distributed at airlines, rail stations and hotels – in order to boost ad revenue.
The success of the “FT Weekend” edition is even more telling. Its single-copy UK sales, at 62k, are almost three-times those of the weekday edition – at an audacious £3.90 cover price which has almost doubled in seven years. But the latest audit shows that, even this edition, with its advertising-packed magazine sections, is now padding its weekly circulation with 28k free copies. The FT Weekend has almost three-times the total revenue of all the newspaper’s UK weekday editions combined. More than that, this single weekly edition – devoted much more to leisure, personal finance and property than business – generates substantially all of the FT’s profit. It demonstrates that the Financial Times is actually more dependant than ever on a newspaper whose underlying copy sales decline is masked (and maybe even boosted) by aggressive pricing and all those free copies.
The eventual need to ‘unbundle’ content: Newspapers everywhere have eschewed the idea of allowing digital readers to pay only for the categories of content they actually want. Instead, the traditional ‘department store’ approach of the printed newspaper has been largely transported to digital media. For now. This bundling of digital content allows publishers to avoid the tough questions about the distinction between exclusive coverage (like columnists, data and opinions) and the (more or less) commoditised general news which is freely available elsewhere. This traditional business model obviously still supports whole newspaper companies. But, in the long run, it must become competitively unsustainable. For all the assumption that it largely publishes exclusive high-value, must-have news and information, even the FT could one day be disrupted by the trend towards the unbundling of content.
The FT sees itself as a global ‘total’ newspaper for people in business. That is the message of the two-section printed newspaper. The smaller second section is Companies & Markets, a good slice of which is padded with stock market prices, a legacy of times before they were freely available live and online. The FT is high-quality journalism and a serious contender in the ranks of news brands which cover everything-that-matters globally. But the pink newspaper has sacrificed some of its traditional (and, arguably, exclusive) territory as a commentator on the financial results of companies. Even disregarding the relatively small amount of space given to company results in print, the online coverage of quite significant businesses sometimes seems arbitrary. But that’s what you get when such ‘core’ content has to compete for space with world news events. The newspaper’s own PR even describes its transformation into “a multi-channel global news organisation”.
It leaves you to speculate about how much the FT will have to change its approach when readers everywhere are able to get into the habit (through some kind of intermediary channel or technology) of paying only for the categories of content they want and cannot get anywhere else. The FT may relish its long-term chances of competing with the New York Times, the Washington Post, The Times of London and – of course – the BBC, CNN and CNBC. But it might one day regret not being able also to depend on those readers who once relied on it principally for business and finance. That’s what Axel Springer (which bought the powering, digital-only Business Insider on the rebound from the FT) is surely hoping.
But that’s for another year. The FT in 2018 is a reminder that most newspaper companies still depend on print for their profits. Its assertion that “our print business continued to defy industry trends, seeing especially strong performances in the US and Europe” is a bitter-sweet reality. But it must push towards a sustainable future by continuously:
- Building content that readers really can’t get anywhere else
- Using data to deeply understand readers
- Evolving continually in line with technology and reader appetites
- Managing costs to cope with future price pressures
The 130-year-old Financial Times is a great newspaper and, unarguably, one of the most digital-savvy. It is fortunate to have been acquired by Nikkei, an employee-owned financial news company that’s even older, is solidly profitable, gently long-term, and will never be sold to private equity. Those may be the precious conditions that will allow the FT time to turn its investment into long-term success, despite the systemic challenges. But it’s a long journey that has only just begun.