The coronavirus crisis is a media crisis, but it could be worse

By Eirik H. Winsnes

Aftenposten

Oslo, Norway

Many Norwegian media houses are in a crisis. The coronavirus pandemic and Norway’s lockdown caused significant financial losses for many businesses. Financially distressed businesses are spending less on advertising their goods and services, which in turn means reduced revenues for the media.

This is serious and must be addressed with tough measures. But it could actually have been far worse — for example, if it had happened 10 years ago.

Those publications relying on digital advertising suffered during the coronavirus pandemic. Media houses that had adopted the digital subscription model fared much better.
Those publications relying on digital advertising suffered during the coronavirus pandemic. Media houses that had adopted the digital subscription model fared much better.

From free to paid

The development of Norway’s digital media economy can be roughly grouped into three phases.

When the initial experiments began in the mid-90s, the general rule was that all digital journalism should be free. Online news sites earned their money primarily from advertising. In a business model like this, it was the number of pageviews — how many times a Web site carrying advertisements was viewed — that determined the size of digital revenues.

No matter how watertight the relationship between the editorial and business sides, such logic will have some bearing on the overall editorial profile. Consequently, in an advertising economy, there were incentives to create products that reached as many people as possible. This was the prevailing paradigm for around 10 years. Advertising revenues are still vital for most Norwegian media.

Facebook transformed distribution

In 2006 and 2007, two digital products revolutionised the way people consumed news. The smartphone shifted reading from desktop to mobile. And for many, Facebook became the new newspaper front page. With finely targeted products, the big platforms began taking large shares of the advertising market that media previously had. Additionally, they also influenced the media’s strategy for distributing journalism.

The newspaper carriers who delivered the right newspaper to the right address in the physical world were replaced by a new, digital newspaper carrier in the form of Mark Zuckerberg’s algorithms. Many editorial newsrooms began producing stories specially designed to reach as many as possible via the social media platform and thereby rank even higher in Facebook’s news feed.

The success of a story was often measured by the number of times it was shared. Revenues depended on getting as many Facebook users as possible to click into the media’s online stories and thereby view their advertisements. These years also witnessed a rapid growth in many viral Web sites with stories designed to trigger our primal emotions in the shortest possible time. Very few of these Web sites are still around today.

Journalism becomes the business model

Since 2013, Aftenposten and many other Norwegian media have dared to charge for their digital journalism. This move ushered in the third phase, the one in which we find ourselves today. It has proven to be a blessing for both journalism and the media economy, first and foremost because it provides the media with new digital revenues in addition to advertising revenues. Additionally, subscribers generally reward quality, depth, and relevance. Users are willing to pay for content they feel gives them good value.

With such a business model, the financial incentives lie primarily in producing journalism that is so good and so relevant subscribers will continue paying for it over time. In this way, journalism in itself can become a profitable business, which in turn can finance new great journalism.

Today, most Norwegian media have achieved a good combination of advertising revenues and revenues from their users.

Hope for the news media in a post-print world

Digital user revenues do not yet fully compensate for the advertising revenues that disappeared to the platforms and the dwindling number of print readers, but the alternative would have been far, far worse.

In a digital economy based entirely on advertising revenues — as was the case 10 years ago — the coronavirus crisis could have proved fatal. After all, the risk today is lower and many media are seeing strong growth in their subscriber numbers. Many have reason to believe in a sustainable digital economy the day print revenues disappear for good.

The strong growth in digital subscribers is driven by a number of structural changes. Norway has a highly digital population, excellent Internet coverage, and a high level of smartphone use. Subscription services such as Spotify and Netflix have made users used to paying for digital content, and the industry has managed to renew itself in a critical time.

Although many fail, there is reason for hope

The coronavirus crisis has, unfortunately, revealed the vulnerability in a media economy based primarily on advertising. In the United States, many pure digital companies rightly seen as role models made huge cuts in their workforce due to declining revenues. Several of them have probably been too late in introducing digital subscriptions and are now paying the price for depending too heavily on advertising revenues.

To say it could have been worse is poor consolation for all the struggling media outlets. But these developments also give reason to hope and believe we will have vigorous newsrooms in Norway in the future, too. This is primarily because more users are now willing to pay for digital content, which in turn means we can create the journalism and debate that are so vital to a viable Norwegian society and democracy.

About Eirik H. Winsnes