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Mecom and Schibsted pave way for content that is digital, local, paid

06 October 2010 · By Earl J. Wilkinson

Mecom and Schibsted are two of Europe's top newsmedia companies, both leading the industry transition of business models.

Mecom and Schibsted are two of Europe's top newsmedia companies, both leading the industry transition of business models. Two of their top executives spoke at last week's INMA/OPA Europe Conference in Krakow, Poland, about opportunities in content that is paid, digital, and local.

The common thread: business as usual is dead.

Mecom strategic focus: digital and local. Mecom CEO David Montgomery believes that “the elusive young audience” that has “suddenly turned up online” provides a way to reach that lost generation and rejuvenate a news industry where paper is losing its prominence.

The U.K.-based Mecom is that rare European entity that owns newspapers across the continent: Edda Media in Norway, Wegener in The Netherlands, Berlingske Media in Denmark, and Media Regionalne in Poland.

Montgomery said 15- to 29-year-olds are consuming news online unlike anything previous generations did in print. He believes journalists have finally embraced multi-media delivery of content as the great opportunity to “make a difference in people's lives.”

He celebrated that “local content makes the world go 'round” and said “unique content is the engine for paid content.” Exploiting local content and audience offers news companies a “rebirth.”

Across all newspapers and divisions, Montgomery said Mecom is focused on six modules of activity:

  • Print.
  • Online newspapers.
  • Local social networks.
  • E-commerce.
  • Mobile.
  • Paid-for content.

The Mecom CEO lavished particular praise on Edda Media, saying this unit is taking the lead in switching resources from print to online and acknowledging the Norwegian company is “thinking about reducing its print frequency” among other tactics to expedite the culture change toward a digital focus.

Aftonbladet's alternative revenues. Like most European single-copy popular newspapers in the Digital Age, Aftonbladet has seen rapidly declining circulation. Yet thanks to its powerful brand and editorial quality, the newspaper and its sister properties have come to dominate the Swedish Web.

Kalle Jungkvist, senior advisor for Schibsted, looked at the ways Aftonbladet had navigated this transition in business model. Critical to success has been adoption of “the pay way” — gaining revenue from consumers in passion niches. Among the initiatives:

  • Web TV: A pay-per-view model is not a profitable business yet, but it's close to viability.
  • Weight Club: A successful weight-loss club attracted 200,000+ paying members and has now been exported to six other European countries.
  • Insomnia Club: A club for insomniacs launched in June 2010.
  • Others: Travel guides, tax lists, and more with margins of up to 50%.

Some 20% of Aftonbladet revenues today come from paid content, while 50% of profits come from paid content.

Strategically, Jungkvist said there are key principles for success:

1. You have to be No. 1, first-to-market, or “the best.”

2. Traffic equals revenue.

3. Pay walls for content are good, but not great.

Conclusion. It seems to me that Mecom has stumbled onto a print-to-digital model with Edda Media — a broad brush stroke that could be applied at its other properties. (Postscript: Four days after Montgomery's speech in Krakow, the Wegener CEO resigned in The Netherlands and replaced by the CEO of Edda Media in Norway.)

Schibsted's approach appears less broad-brush and more surgical. Using a scalpel, Aftonbladet is carving out passionate niches and burrowing head-first in an effort to be first, best, or No. 1. It seems Aftonbladet is the new model for alternative revenue streams.

So much is happening in Europe that can be applied elsewhere in the world. Content that is local, digital, and paid appears to be the emerging model from these two leading publishers.

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About Earl

Earl J. Wilkinson is executive director and CEO of INMA. In his interactions with INMA members worldwide, Earl has one of the broadest views of newspapers of anyone serving our industry today. He is a trendspotter and a leading advocate for cultural change, transformation, and innovation. This blog represents his unique view of the emerging global news media industry.

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