by Rolv Erik Ryssdal 26 June 2012
In 11 years, Schibsted Media Group’s digital revenues increased from 1% of the bottom line to 35%. Here’s a look into the strategy that has guided this global media company during a period of transition.
In 2001, only 1% of Schibsted’s revenues came from online activities. Today, the online share accounts for 35% of the revenues and 55% of our EBITDA (earnings before interest, taxes, depreciation, and amortisation). The digitalisation of the media business continues at breathtaking speed.
The trends are clear:
Our response to these challenges is continued commitment to quality content and products combined with increased collaboration across the group and strict attention to costs.
In September 2008, Lehman Brothers collapsed. Because the newspaper business is cyclical and largely dependent on advertisement, the effects of the financial crisis hit us immediately. When we look at the world today, we still see the effects of the crisis. The macro-economic environment is fragile and uncertain. Nation states are riddled with public debt, some are on the verge of bankruptcy. In several of our most important markets, millions of people are unemployed. Social unrest may follow. There is no quick fix in sight.
At the same time, our media houses are faced with the biggest strategic challenge in our industry ever: How do we manage the continuing migration from print to digital platforms in the best possible way?
So far, the online media have not been able to fully compensate for the income generated by print. Nor have they been able to replace all the important work performed by the newspapers´ editorial departments. Like many other publishing executives, I am worried about the consequences for the funding of serious investigative journalism.
Unfortunately, the resources that most newspapers have available for investigative journalism are declining.
The free press is a cornerstone in our democracies. The burning issue of finding sustainable revenue models to finance important journalism must be resolved. This is a challenge not only for our own industry, but for our societies and governments, as well.
Realism and opportunities
We must be realistic and prepare ourselves for a continuing negative volume development for print. Almost from month to month, we witness substantial decreases in the circulation figures for our single-copy sold newspapers. For subscription, the trend is slower but still downwards. Our free newspapers will probably not face the same challenges on circulation for some time.
But, we have to keep in mind that, while circulation has declined, our digital audience is larger than ever before in history. Just look at VG, one of our largest titles in Norway. Less than four years ago, VG online overtook print in terms of daily audience. Now, online is twice the size of print! And VG Mobile has surpassed most of Norway’s printed newspapers in terms of reach — never before has one platform grown so rapidly during such a short time as the mobile.
We must therefore look at developments from the opportunity perspective, as well. It is important that we are able to produce quality newspapers more efficiently without jeopardising the quality of our content. The aim is to make the best possible newspaper to keep circulation as high as we can.
So, how can we achieve this?
First of all, we must be more efficient in areas where we see that we can build stronger units and common systems. Media Norge (Aftenposten, Stavanger Aftenblad, Bergens Tidende, Fædrelandsvennen, and Finn.no) has been a front-runner here, a position strengthened by the inclusion of VG and the establishment of Schibsted Norge in the spring of 2012. The last few years, Media Norge has been very successful with almost 30 common projects. Some achievements:
Of course, Schibsted Sweden focuses on the same issues. Some projects are:
Such achievements help us focus our resources on quality journalism, sales, and product developments. We need to be more efficient in order to have available resources for a rapid and ambitious digital development! This will secure more income from digital sources and is absolutely vital for our future.
It is necessary to combine efficiency with a high degree of cost control. Now, I fully understand that people and departments with ambitions think they will be able to improve their products with more employees or resources available. Unfortunately, we have to be realistic: Circulation and income will hardly move upwards. Costs must therefore be kept under strict control.
The way we update ourselves on the news is changing fast in a digital age, whether we look at smartphones, tablets, traditional media, or social media. Consequently, how we work in our newsrooms must also be looked at carefully to find the best solutions for tomorrow.
Within the Schibsted Media Group, I would say that Bergens Tidende and Svenska Dagbladet (SvD) are in the forefront of what we call “planned journalism.” Svenska Dagbladet has set a target that 40% of all domestic, foreign, economic, and sports articles must be submitted to editing at least one day in advance. That gives more time to work on in-depth journalism, presentation, creative solutions, and more thorough quality control. Front pages are considerably sharper and visually stronger with a longer planning horizon. Of course, we have kept the flexibility to replace it in favour of a major, breaking story — this happens on average once every three days.
The benefits are many:
Contrary to traditional fears and beliefs, this has actually resulted in better content, more major news stories, better production procedures, and more satisfied readers. The number of awards SvD has received the last year on both news coverage and design proves this. We are not delivering yesterday’s news; we are setting the day’s topic of conversation even more firmly. The results so far, measured in every possible aspect, have been tremendous. In doing so, the daily newspaper becomes more future-oriented and of more benefit to the user who needs to stay informed.
Other media houses like The Financial Times and The Guardian have visited Svenska Dagbladet to learn more on planned journalism. We are happy to provide insight and inspiration to newspapers that struggle with many of the same structural challenges as we do.
Innovation is a buzzword, but nevertheless one of the most central characteristics of Schibsted. Innovation is a core value for us. There must always be a desire for product development, improvement, and experiments.
Schibsted Media Group now derives more than one-third of our revenues from digital sources. We are well-positioned to face a new year in which technology development — particularly in mobile — will accelerate at an even faster rate.
Our Web sites have seen an impressive growth in traffic volumes for their mobile services. For our media houses, it is positive to see that VG and Aftonbladet are well ahead in this area. We want to become even better at mobile services in all areas — news, advertising formats, and classified services. A growing number of our readers and users want to engage with us via their mobile phones — and we must make sure that we take best possible advantage of this trend.
During the horrific terror attack in Norway on July 22, 2011, a record 34% of the traffic to our Web site, VG.no, came from mobile devices. Now, less than a year later, we see this level of mobile access regularly.
At Blocket, more than 25% of visits and page views now come from mobile platforms.
We will continue our effort on mobile, in regard to developing better products, creating better advertisement opportunities, and better understanding how to get paid for content on this platform.
We all know that in the long term, we cannot continue to give away all our content for free. Naturally, we are also exploring editorial content user payment models. Some examples are:
Fædrelandsvennen, a regional media house in Kristiansand, Norway, has now introduced user payment for its digital content. The main idea is that once you have paid, you get full access to everything the media house produces everywhere on all platforms. Within the first week, about 50% of all subscribers signed up for the digital version. That really exceeded our expectations!
Local content is exclusive — the most valuable asset and the kind of content consumers are most willing to pay for. This type of content is put behind a paywall in the new model. Content offered in common with other media or that uses few resources is placed outside the wall, available for everybody.
A central point is to develop a community of subscribers to the brand Fædrelandsvennen. The customers will be moved from being traditional newspaper subscribers to brand subscribers.
At the same time, Fædrelandsvennen’s journalism on digital platforms is strengthened by providing more resources. This will give paying subscribers more value. Therefore, this is also very much a journalism project.
Fædrelandsvennen is so far the largest Norwegian newspaper to take such a big leap in this direction. I am proud of their bold step, and I admire the enthusiasm they show in doing so. It is too early to speculate what further consequences this might have, but I think it is important for all that they succeed.
The apostle Paul was surely not thinking about digital challenges when he wrote this sentence in the Bible almost 2,000 years ago: “Test everything. Hold on to the good!”
But as an old wisdom, I think it has a good message even today. All our companies are encouraged to continue experimenting on user payment for their digital content.
Schibsted Media Group has a very strong position in online classifieds. This is a business area that is growing rapidly across many countries and continents. The profitability is high for those who succeed and, therefore, the competition is also tough.
We aim to be the leading global player in this market. This is a demanding goal to reach, but I am convinced we have what it takes to succeed in the form of good products and extremely high level of employee competence. Our strategy for becoming the world’s No. 1 player will continue along familiar lines. We will:
We have all heard about the success of Blocket (Sweden), Finn (Norway), and Leboncoin (France). Now, we are delighted to see that some of our other international sites are establishing themselves firmly as definite leaders in their national markets and becoming profitable, for instance:
Successes like these confirm our belief that this is an area in which we excel and where we have the capacity to take leading positions. Our modern, digital marketplaces make everyday life easier for people and facilitate increased reuse and recycling — good values on their own.
News, advertising, and classifieds have always been central to Schibsted. It is our DNA. That has not changed even though the platforms are shifting from print to digital. Our focus is the modern media consumer and her needs, both regarding news and digital services. Hence, our mission is, “Empowering people in their daily life”.
We see that we have considerable advantages and synergies by keeping media houses and classifieds together in Schibsted.
We have several extremely powerful traffic machines. Take Sweden as an example: Here, Aftonbladet, Blocket, and Hitta are three of the country's four largest sites. Millions of people use our sites on a daily basis. That provides us with an enormous force, which we can use to find and produce new winners.
Our strong traffic machines online, therefore, promote promising ideas and projects to a larger audience. We have developed a model that allows small and promising companies to gain heavy exposure on our larger sites. This makes it possible to capitalise on our traffic. We are in a unique position to do this in our strongest markets – so far in Sweden and Norway.
This work is now most advanced in Sweden under the umbrella of Tillväxtmedier. Some of their concepts are:
The model is getting constantly better, the results are improving, and their importance is growing. Such is their success that it has been exported to Norway under the name Schibsted Vekst. The knowledge we possess about the interaction between established and new media forms much of the basis for our ambitions for future growth.
Being at the forefront of the Scandinavian market gives us a good opportunity to export concepts and expertise to other markets in and outside Europe. This is an increasing part of Schibsted’s growth strategy.
Shaping the media of tomorrow … today
Rapid technological change has placed the media industry in a far-reaching and demanding phase of reorganisation. For a company like Schibsted Media Group — which has relied on printed products since its conception in 1839 — it was a tough call to embrace the changes brought by the Internet revolution.
With the benefit of hindsight, we have made some right decisions along the way. The development and steadily increasing reach of our media houses and online classifieds proves our relevance, usefulness, and importance — even as we are continuing into the digital era.
Yes, print circulation figures are declining. But with the new digital platforms, we are reaching more readers and users than ever before. Change should not, therefore, be regarded with fear. With positive thinking and high-level competence, we now have a unique opportunity to be, as our official vision statement says, “Shaping the media of tomorrow. Today.”