Axel Springer shares its 3 pillars of growth in the digital age as INMA European Conference begins

Transformation from print to online has already taken place in Germany. For Axel Springer, this is a problem executives speak of in the past tense.

Axel Springer is the largest newspaper publisher in Europe and No. 3 in magazine sector. In addition to its print business, the news media company also owns 160 online services, 120 apps, and many holdings in entire Europe.

Jan Bayer, INMA board member and president of Axel Springer’s WELT Group and printing, spoke Wednesday in the pre-conference executive briefing at the INMA European Conference about the strategy of Europe’s largest newspaper company in the digital age.

The strategy is based on three pillars, Bayer says.

  1. Market leadership in German-language core business.

  2. Internationalisation.

  3. Digitalisation.

Axel Springer’s profitable growth is based on three values: creativity, entrepreneurship, and integrity.

Digital is an important platform for Axel Springer, Bayer explains: Since 2006, the company has averaged creating or acquiring one new digital activity every other week.

In 2012, Axel Springer brought in earnings totaling €3.2 billion — and 40% of that came from digital activities. The company’s digital growth continues this year, as well. Since 2011, ad revenue has grown from 23% to 34% in digital, whereas print revenue dropped from 24% to 17%.

The company knows there is still decent money to be earned in print, but feels no more growth in that sector is achievable, Bayer says.

Axel Springer’s flagship newspaper, Die Welt, is one of the leading innovation media companies in Germany and the first to introduce a pay model. Romanus Otte, general manager of Die Welt Online, spoke about Welt’s paid content initiative, sharing the three reasons behind it.

  1. Pure economics. Otte believes that if someone wants to sustain a business model for journalism in digital age, it has to be built on more than one pillar. That other pillar is, of course, paid content.

  2. Content should be a matter of pride. There is no reason publishers should not ask for money for their work. This builds positive attitudes in the companies and helps employees and customers believe in the product. Putting a price on your product also makes a difference to building a product targeting everyone for free or a product targeting the ones most interested in it (which has more of an appeal to advertisers).

  3. Times — and attitudes — about digital content have changed. Even if publishers wanted to sell something in 2008, they just weren’t able to. The sad thing about giving content away for free for a decade is that publishers also gave up their relationships with customers and audience. Paid content can help bring it back.

Die Welt based its model was based on The New York Times, Otte explains, believing it would work best for what the company wanted to achieve. This model allows the company to build reach and subscriber base at the same time without putting the reach at risk.

Die Welt has numbers to prove its model is a brand subscription model, Otte says. Since it was introduced in December 2012:

  • Print subscribers have unlimited digital access to the Web site for free; only new subscribers have to pay.

  • 6 months after the implementation of the paywall, Die Welt had 47,000 new digital-only subscribers. Another 30,000 were print subscribers who registered for access to digital.

Employees at Die Welt worked hard, doing quite a bit of market research and studies about pricing. But the best research was its own experience — trying the price on the market itself, Otte says. The price varied from €7.99 to €19.99 per month, but the sweet spot proved to be in the €12.99 to €13.99 range.

Otte said one of the most important lessons was that it is possible for a publisher to raise the price for digital products without specific risk, just like the price of apps in AppStore.

The New York Times, however, does not experiment with price anymore. The news media company is creating new products in search for new audiences. This is also what Die Welt has in the works.

There is not enough data to compare which paid content model — Die Welt’s or Bild’s, Axel Springer’s tabloid that also introduced a paywall — is more successful and works better for publisher, Otte says. But even if the data was available, it would be very difficult to judge due to the lack of common denominators, as both titles have different audiences and create different kind of journalism product.

Both reach and numbers are encouraging for Die Welt, according to Otte. Die Welt mobile is growing, with its highest reach recorded in January. The paywall started in December of 2012, with a meter just like New York Times, offering 20 articles per month for free. Most readers just read less. The meter was lowered, and because the reach is stable, the advertising revenues are rising as well.

Die Welt is not calling its model a success, Otte says, but believes it is encouraging with a lot of work to do: optimisation, product development, partnerships between product development and editorial. At the same time, the company has not forgotten about its printed product, which still has a 200,000 daily circulation and 400,000 Sunday circulation.

About Marek Miller

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