Letter from New York: words of encouragement for those working in the world's most disrupted industry - media
If you are in media and feeling light-headed, take a deep breath - you have been working in the most disrupted of industries. You deserve a beer or something harder.
Now sit down. Because I have encouraging news for you - as well as same trends to consider from my recent sabbatical in New York.
What you do not want to hear is that the pace of change will continue as it has been. It won’t. It will multiply - that’s according to everyone at the forefront of change.
The good news for media is that clear paths have emerged.
The fog of uncertainty has lifted around paywalls, on how best to fund journalism and on where Facebook and Google fit into the media equation - well, sort of.
Media folk also have a lot to thank Donald J Trump for - because he has re-stoked the fires of quality journalism.
In short, for the first time in years, the media has reason to feel optimistic.
I spent two weeks in New York visiting established and new media players, as well as attending the International News Media Association (INMA) world congress. During an INMA-run study tour I visited iconic media, including The New York Times (NYT), Dow Jones, Bloomberg and Google. I visited start-ups Playbuzz and established digital companies such as Chartbeat and Nativo.
Some of the deepest insights came from talking with media executives. I spent time with delegates from the US, Germany, China, India, Latin America, South Africa, Finland, Norway, Sweden. Gee, even Australians and Kiwis.
What were the themes? I shared a bunch in a blog aimed at communications teams and those wanting to craft their own DIY Newsroom™.
Here I zone on what is of relevance to the news industry and those keen for solutions.
So let’s roll.
Here’s my baker’s dozen top themes from New York City. I start with the media context, work through to the modern business model and then head to the coalface - where the magic happens.
1. Disruption: Dow Jones Chief Innovation Officer Edward Roussel kindly noted for us we in the media have been working in the most disrupted industry. He was quoting a Russell Reynolds report, Digital Pulse. The 2017 release highlights the tumult about to hit those in technology, and financial and consumer services. That is not to say media can take the foot off the accelerator, just that the winds of change are about to buffet the rest of society. Roussel’s mantra: “Get going. Move fast. Break silos”.
2. Purpose: Media companies, for long on the teat of print revenue, accept that source will dry up. They are emphatically moving outside of their core and into transactional or allied businesses. INMA CEO Earl Wilkinson, summing up at the conference, asked the simple question: “What is your primary purpose for existing? Journalism? Audience? Advertising? Technology? Influence? Profitability?” He was not suggesting an answer. Rather, media’s top brass needed to be able to state, for instance:
3. Funnel of love: Once upon time, funnels were just for sales; in newsrooms, we spent money and did our own thing. Today, editorial operations and outcomes are deeply embedded in the transaction model. It was a recurring theme from presenters, be it The Wall Street Journal (WSJ), NYT, News Corp Australia or Fairfax New Zealand. It amounts to this: prospects are brought in at the top of funnel, progressively the business entices them through delightful experiences until they convert to a sale (such as a subscription) and, over time, maximum revenue is extracted from the user as they opt in for add-on services or experiences. Voila! How this works, though, is utterly dependent on …
4. Data: Say data three times. Now with an American accent. Day-ta. Day-ta. Day-ta. Data is the intel, the oxygen, that suck prospects through the funnel. This personalisation has never been more important. But it is the ability to hit the trigger points for each customer that results in targeted conversion. Technology solutions are helping publishers collect, warehouse and understand data. Big players like the WSJ and NYT have put data at the centre of their business. They are unashamedly driven by the numbers and have the skills, technology and resources to bulls-eye potential audiences. But there is a huge gap between them and everyone else trying to join the dots - to connect what the data is saying with an auto-reflex that boosts business in the operational day-to-day. Advice? Start building the capacity.
5. Subscriptions: Data and funnels serve a purpose - that is to retain and create business. The advertising revenue model is dead, which is the reason why everyone is moving to a subscription-first or membership business. Again the big players have something to crow about. The NYT has boosted its digital subscriptions 62 per cent year-on-year and is pushing towards 2 million in total. Digital advertising is up 20 per cent YOY. In all, 60 per cent of revenue comes from subscriptions. The WSJ has experienced a surge too. There was consensus among others across global media that memberships, if the offering was right, are the future. The aim is then to maximise total annual revenue per user.
For smaller publications, offer content initially for free and then stand-and-deliver messaging for them to subscribe - at the right pricepoint
6. Dynamic paywall: The money question for many publishers is do we institute a paywall and, if so, what does it look like? It is agreed people have to pay for content - at some point. That means keep asking those who value content to sign up. Frequent visitors on many sites, now hit a paywall, especially on premium content. Less frequent or occasional visitors get more free content, particularly commoditised content that can be obtained from anywhere. What publishers want is to identify those consumers most likely to buy content. The WSJ can score customers across 46 data points, which means they can then deploy the smarts and prompts to entice users to subscribe. Non-global brands are moving away from metered paywalls. For smaller publications, that might mean offering content initially for free and then stand-and-deliver messaging for them to subscribe - at the right price point. But this is predicated on providing quality content. Even under a freemium model, publishers can still provide a member experience - and get sign ups in the process. As NYT CEO Mark Thompson put it, there is “a delicacy in the model”. The encouraging news is that there is a greater propensity in the market today to pay for content. Yet it will remain a challenge for local publishers if they do not get their entire funnel down pat, base what they do on data and have the tech to facilitate a seamless user experience.
7. Funding journalism: Earning a Walkley or Pulitzer costs money. All the above (reinventing the paywall off the back of laser-like targeting) represents putting the genie back in the bottle. There are other revenue sources. Branded or sponsored content is one. Companies willing to hitch up the skirt and show a bit of leg on this are pulling new revenue. We know ad revenue will not sustain smaller publishers into the future. Paid content through subscriptions and memberships will help, but partnerships and allied businesses will be what supports the journalism of the future. Singapore Press Holdings is doing this through its involvement in events, health and education. ProPublica’s business model is to commercially leverage its investigative data-based journalism.
8. Facebook’s friend request: Please like us. Facebook’s mission is “to give people the power to share and make the world more open and connected”. Having gobbled up the lion’s share of digital advertising along with Google, it has made a foe of media. On the back of controversy around Fake News, it is wooing media partners. Media must consider, like an alliance with China, whether to keep the behemoth at arm’s length (some like Melbourne Business School’s Mark Ritson wants to take them on) or to work collaboratively with the platform. My clients include publishers diametrically opposed on this point. Some have embraced social, others have shunned it wanting to control their own platforms. My view? With Facebook chastened, see what joint opportunities exists. But be careful about putting any part of your business totally in its hands and at the whim of constantly changing algorithms.
9. Collectivism: Ritson made the point strongly about taking no prisoners when competing with Facebook and Google. Media organisations in some countries have become organised, forming alliances with traditional competition to fight the new common enemy. The battlefronts include display and programmatic advertising (digital and print), serving branded content and marketing their huge, loyal and trusting audiences.
10. Trump Bump: The President’s image literally loomed large above the INMA stage. As we know, his attacks on media have served to prove the need for ferociously independent, quality journalism. He has also opened up a global conversation about the value we place on journalism and has been the catalyst for news brands to work together. The NYT added 276,000 digital subscriptions post-Trump and the WSJ increased subscribers threefold the day after the presidential elections. Who knows how long that will last, but it is a wave worth riding.
Norway and New Zealand just seem to have the right scale and culture for experimentation
11. Nor-zealand: Where is best practice? Norway took the honours at the INMA awards with publisher Schibsted leading the way with its aggressive digital transformation. Fairfax New Zealand received attention too. I am proud to say it is one of our clients. Fairfax has diversified its business, setting up a fibre-optic company Stuff Fibre among other initiatives. Its ad-exchange KPEX has been an unmitigated success. With a population of about 4 million people each, Norway and New Zealand seem to have the perfect scale and the right culture to experiment and succeed. And, hey, they are two of the most stunning places on the planet.
12. Mojo: There was a good bit of bewilderment as CNN senior reporter Yusuf Omar gave execs a lesson in mobile journalism. He calls it “jeans journalism” because the tools of his trade, mainly a cell phone, can fit in his pockets. I am told he rattles the cages of some of his broadcast colleagues who look down their noses at this raw, and relatively inexpensive, form of journalism. But that denies the growing movement of “mojos”. It is a perfect model for any newsroom keen to move boldly to a fluid, digital footing. Investment is moderate, training is hands-on and this puts journalism back where it should be - on the streets where stories happen. What could mobile journalism do for your newsroom?
13. Premium print: Poor old print. It hardly gets a mention today. But, as those on the sub-continent will testify, it still has tremendous value and currency. HarperCollins put a smile on this hack’s face, essentially declaring print is the new digital. Amazon.com recorded a 15 per cent YOY surge in online print sales. Independent bookstores are fighting back too. After the digital disruption, we can see that print has a premium place in the market. Research has found print holds attention, feels permanent and facilitates sleep - in a good way. Now that’s books - but the message stands for newspapers to set a premium price for print in your media ecosystem. While it may not be the continued epicentre of your business, print brands are the front door to your other offerings. Advice? Make it easier, make it as profitable as possible, but commit, innovate and make it great.
Smaller publishers need to find resources to skill-up and the right technology solutions that will propel them in this data-driven economy
I could have mentioned video (keep at it but understand there is a clear video and non-video audience). I could also have mentioned the growing distinction between a good search story (Google referencing) and a good social story (Facebook engagement). I could have emphasised mobile, with even the Old Gray Lady, the NYT, glamping its storytelling up around this “first screen” for audiences.
That aside, it is refreshing to be talking positively about the steps media can take towards new prosperity. In recent years, media has not done itself any service by talking down its stocks.
However, what was apparent to me in New York was the big gap between global brands and the rest of the media. The latter needs to find resources to skill-up and the right technology solutions that will help them to survive and thrive in a data-driven economy.
Bridging that chasm will involve smart thinking and creative partnerships - but thankfully the path is more clearly defined in 2017. And the Fourth Estate is striking back.
* Stuart Howie is the executive director of Flame Tree Media, an Australian-based communications consultancy. He is a member of the International News Media Association and former editorial director of Fairfax Regional Media, Australia.
Stuart Howie is a communications and media consultant. He runs Flame Tree Media, which specialises in setting up newsrooms for organisations wanting a better return on communications. Stuart has worked in media and publishing for more than 30 years as an executive, editor and strategist.