Digital transformation has been a reality for newspaper companies for more than 15 years, with the dramatic effect on newsrooms and circulation felt by everyone in the industry.
We’ve long known that our business model was failing. But in all that time, I never saw a reliable framework that explained not just what was happening, but what to do about it.
I left the industry in June last year to join a data company. I now work for CoreLogic, the world’s largest provider of property data – an innovative company full of data geeks, sales guns, entrepreneurial thinking, and people who really love property.
My role is head of real estate solutions, which, in media terms, is the equivalent to being publisher for the “vertical.” I set the strategy for our business which, last year, brought in A$45 million in revenue in Australia alone.
I am also responsible for understanding the property industry and how we as a company communicate with real estate agents, our largest client base.
Upon arrival, I learned something that surprised me immensely: Real estate agents are experiencing digital disruption as well.
Unlike media, however, real estate agents are looking outside their own experiences to understand what they should do. (At least the smart ones are. Let’s be honest, there are laggards in every industry!)
Deloitte’s Centre for the Edge has been discussing disruption for years and how it will affect a variety of industries. It notes that nearly 50% of the behaviour within media companies has been fundamentally — and somewhat violently — changed by digital behaviour ... from writing for online first to things as simple as fact checking online.
There’s no surprise there. We’ve all lived it, right!? But what is interesting when you stick your head up from your own parapet, you see how the world and industries around you are changing, too. That gives us insights into where the next round of disintermediation is likely to be. (Because you didn’t think that it would just end one day and life would settle down, did you?)
But my favourite framework — the one that gave me a huge “aha!” moment and feel vaguely nostalgic (and terrified) for media — is the one above presented by Peter Sheahan at an exclusive real estate conference that was also addressed by Rupert Murdoch.
Let me interpret it a bit liberally. Under this model, when disintermediation (disruption) hits, there are three main ways your business model can go.
The first is to Go Niche. We can see this in media in the success of brands such as the Financial Times and The Wall Street Journal, where they have access to a unique audience and brand proposition based on “read us and we’ll help you make money — or at least avoid losing it.”
Such a niche model allows you to charge a premium, both for your advertising and your subscription prices.
The second end of the spectrum is Go Mass. This is where the online media/entertainment sites have been successful — Facebook, BuzzFeed. It’s all about free cost of entry, low rates for advertising — mass audiences that can be monetised if you can attract enough eyeballs.
But under this model, there is no space for expensive newsrooms. News is completely commoditised.
The third option is to Deliver Services, which, in media terms, means you no longer rely on simply subscriptions or advertising as your main revenue drivers. Rather, you look at other ways you can monetise your audience by offering them services that either solves a problem for them that they will gladly pay you to fix (ideally) or offers them an experience they would not be able to achieve any other way.
Some newspaper companies have dabbled in this through the creation of events.
But under this model, there is one thing that you must never, never do. The one thing that ensures complete and utter failure is to sit right in the middle and do bits of some or even each of these models half-heartedly.
The middle is where death lies. To quote a larger-than-life real estate friend of mine, Peter Brewer, the middle is where you are “excellent at average and the cream of the crap.” My aha! moment in Peter Sheahan’s lecture was to wonder whether that is where too many newspaper companies are still sitting today. No wonder it hurts.
In a digitally transformed economy and industry, you can’t be half-pregnant to one of these models. There is no longer room for low-cover prices to attract a “mass audience” that is one-tenth the size of your online competitors while claiming premium ad rates.
There is no place for expensive print “exclusives” that fuel the news agenda for only a few hours when it relies on advertising that wants its audience cheap, targeted, and measurable. The model for top-heavy newsrooms can exist only for premium quality, niche publications that deliver expertise, insights, and an exclusive audience.
The entertainment-did-you-know-discuss-it-around-the-water-cooler factor of news has been completely commoditised by digital. No one mourns this more than me, but the time for crying and any kind of grief or hopefulness about the good old days returning is over.
Here’s the bright side to this framework: It identifies how the business model is broken. That would be the business model of how journalism has always been traditionally funded. And, in doing so, it helps us focus on what we need to fix. But it is not the journalism model.
Sadly, I don’t know what the framework is for the journalism model — yet. But I’ll keep my eyes open. Sometimes the best way to understand an industry you love is to leave it and see it from afar.