The news publishing industry is changing but the opportunity is there for brands to take advantage of this upheaval, writes Stuart Ells, managing director, Alvarez & Marsal (A&M).
Newsweek recently announced it will publish its last print edition on 31 December, after 80 years in circulation, and go exclusively online. Rumours persist that other publications may follow suit.
Time Out magazine meanwhile, has gone free, following the mark set by the Evening Standard in 2009. When the Standard made the move, it joined the likes of City AM and the Metro as a free newspaper aimed primarily at commuters - a very large, and captive, audience.
Distribution is key
As publishers battle for the all-important readership numbers, the moves by Time Out and the Evening Standard are particularly interesting. Essentially they embrace the fundamental concept that wide distribution is key.
The term ‘disruptive technology' was coined for the idea that an established business fails if it is unable to compete with the technological advances of its rivals. Professor Clayton Christensen at the Harvard Business School expanded upon this, and noted that good firms are usually aware of innovations, but their business environments are not conducive to following them, largely because, at first, they are not profitable.
This particular phrase has exemplified the worries in the news publishing industry. From the current standpoint, going free simply isn’t profitable, at least at first.
Although deemed bold, these moves embrace the need for wide distribution. This in turn opens them up to new readers and new advertising opportunities.
It’s not just wide distribution that a platform needs. Paywalls, essentially narrowing the distribution, have been proven to work in some cases, though only where the content is unique. A paywall containing content easily re-produced will not be successful.
What can companies do?
These changes are all reflections of the evolving media audience. People are reading fewer hard copies, instead turning to various news outlets across the internet. In addition, social media ensures that breaking news can be received without even touching news platforms.
Clearly, the publishing industry faces challenges. While the death of print publishing may not happen tomorrow, it’s important that businesses prepare.
The first stage is to create new business models that fit this new way of consumption. Mass market content that needs wide distribution will be either freely available, or close substitutes will simply be free on the internet.
As such, people subsequently won’t pay for it; instead, ad-supported Freemium - where a product is free of charge, though a premium is charged for advanced features - will be the way forward.
The trick will be to create cases where a small percentage of people will pay for a derivative premium service, and use this offer to create a funnel. This is what the major publications need to think about. It’s easy to believe your content is unique, and therefore deserves payment, but soon you will be outdone by providers of good content who freely distribute. Think the encyclopaedia v Wikipedia.
Two things are happening: content is being freely distributed to readers, and even if the quality isn’t great, it’s good enough for them to switch their reading patterns. And meanwhile, people are consuming media differently.
It’s not like TV killing radio; it’s more about a step change in the type of content consumed, because it can be personalised in real time, and on different devices.
The opportunity is there for brands to leverage their existing market position and take advantage of the industry upheaval. Companies need to prepare to cut costs and become leaner, figure out what they can charge for and, crucially, get smart about ways they can continue engaging readers.
Those quickest to act, and therefore those who are currently re-thinking the mass market, will be the ones that prevail.