The Newspaper Outlook Big Trends and Big Ideas Worldwide
Earl J. Wilkinson Executive Director INMA www.inma.org Creation of Value
Shareholders
Readers
Advertisers
Employees
Geographic communities
Demographic communities
Virtual communities Newspaper Market Caps Publicly Traded Newspaper Companies
25% 20% 15% 10% +25% 5% 0% -5% -10% -15% -21% -20% -25% U.S. Newspapers Non-U.S. Newspapers
Sources/Notes: U.S. newspapers, Yahoo, 2005-2006; non-U.S. newspapers, Bloomberg (April 2007), 2006 Value Levers Storylines of Publicly Traded Newspaper Companies
Inside United States
High profit margins
Continued earnings growth
Moving toward multi- media Value Levers Storylines of Publicly Traded Newspaper Companies
Inside United States Outside United States
High profit margins Embraced digital revolution
Continued earnings Expanded beyond its growth geographic market
Moving toward multi- Medium, stable profit media margins World’s Value Leaders
Schibsted Singapore Press Holdings
Market cap: US$2.8 billion Market cap: US$6.9 billion Norway’s top publisher Saturated newspaper market with 14 dailies in 4 languages Norway’s top search portal Moving from “Singapore Inc.” 40% of profits from online strategy to “Regional Footprint” strategy: 20 Minutes free commuter Protect core business daily launched in Europe Create adjacencies close to core as launch pad into Southeast Asia (magazines, classifieds, outdoor, Minority partnerships with internet) global media players Wrong Storyline Market Isn’t Buying What Newspapers Are Selling: Stock Performance, 2005-2006
20% 15% 10% 5% 0% -5% -10% -15% -20% -25% U.S. Newspapers S&P 500 Strategic Choice
Become larger businesses with smaller profit margins
OR
Become smaller businesses with higher profit margins
If companies have to accept lower margins in the short-term to sufficiently invest in content and audience aggregation, so be it. -- Freedom Communications CEO Scott Flanders How did we get to this fork in the road? Global Newspaper Industry 11,207 daily newspapers circulating 500,000,000 copies each day
Europe North America Newspapers: 2,398 Newspapers: 1,577
Middle East Newspapers: 272 Asia Newspapers: 5,071
Africa Newspapers: 400 South Pacific Latin America Newspapers: 89 Newspapers: 1,400 Value Disruptors
Technology: Creates alternative access points for information, creating a concierge class for news-feeding
Abundance: Creates a disconnect between news and success (relevance), especially among lower middle class Technology and Abundance
U.S. households have more television sets than people
Threshold crossed in the past 3 years
In this environment, is there really demand for another newspaper section? Newspapers Amid Abundance: Case Of Libération
Upscale, legendary Paris tabloid
Single-copy in nature
Editors wanted to add value for readers
Added 24-page supplement to 72-page daily format
Top-flight journalism, highest quality Newspapers Amid Abundance: Case Of Libération
Circulation dropped 30%
Research conducted on what went wrong
Answer: Nothing, traditionally speaking
Readers maintained high opinion of Libération Newspapers Amid Abundance: Case Of Libération
Circulation dropped 30%
Research conducted on what went wrong
Answer: Nothing, traditionally speaking
Readers maintained high opinion of Libération
Readers felt guilty about not being able to read cover to cover (no time) Value Levers
Audience Brand Content
Value Levers
90%
5% 5%
Audience Brand Content Value Levers
50%
25% 25%
Audience Brand Content Complexity Accelerating
Source: Mediaedge:CIA Backvertising, Assvertising, Nailvertising Lipvertising, Teethvertising, Headvertising, Fruitvertising The Big Picture: Chasing Fragments
Consumers Fragmenting: Technology and abundance disrupting information consumption Advertisers Chasing Fragments: Advertisers shifting to multi-media Newspapers Regrouping: Newspaper business model changing as a result Fast Change Rewarded: Companies changing faster rewarded, those changing slower punished Goals For This Presentation
Link value creation to big trends at newspapers
Share global best practices
The transition from mono-media to integrated multi-media Circulations Down 8% Paid Dailies in Western Democracies During Past Decade Usage, Engagement
100% 5% Engaged have become more Junkies 8% 90% engaged; disengaged have 15%Loyalists 12% become more disengaged 80%
70% 25% 28% Specialists “No time to read” Engagement 60%
Fast consumption: looking 50%
at, not reading 30% Upper Mass 40% 26% Simultaneous media use 30% 20% 20%Lower Mass 21% Place shifting (print 10% newspaper at home, free Disconnected 0% 5% 5% daily on train, internet at 1995 2005 work, Blackberries in transit) Source: Urban & Associates data on U.S. newspapers U.K.: Qualities, Populars
12,000,000
10,000,000
8,000,000
Down-Market 6,000,000 Mid-Market Up-Market
4,000,000
2,000,000
0 '70 '72 '74 '76 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 U.S.: Mornings, Evenings
50,000 45,000 40,000 35,000 30,000 25,000 P.M. 20,000 A.M. 15,000 10,000 5,000 0 1940 1950 1960 1970 1980 1990 2000 2006 U.S. Population vs. Daily Newspaper Growth
350,000,000
300,000,000 Population up 118% 250,000,000
200,000,000 Readership Gaps Working women 150,000,000 Single-parent households First-generation immigrants 100,000,000 Daily newspaper circulation up 33% 50,000,000
0 1940 1950 1960 1970 1980 1990 2000 2005 Circulation Winners, Losers
Circulations decrease, 1996-2006 Circulations increase, 1996-2006 Others: unaudited, incomplete So Goes the Middle Class
Circulation and readership trends are consistent worldwide within ABC1 demographics Print circulation performance mirrors the middle class If middle class grows, circulation grows If middle class stagnates, circulation stagnates What Readers Value What Readers Value
Expectation of “always on,” customisation
Looking for connector of ongoing conversation
Sense of community: from geography to interests
Consuming more media, smaller bites
Faster consumption: looking at, not reading
Value “best at,” not “sort of good at” The Newspaper Macro View
Diabetic News Consumer: Consumers reading more than ever before, but in smaller “bites” throughout the day as technology allows
Search For Value: Print newspaper content package has been commoditised by internet, mobile, readily available free print products
Acceleration, Not Discovery: Trends been going on since 1950, internet is simply accelerating trends for all traditional media News Diet Changing Evening News Buffet, 1945-1970
6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00 News Diet Changing Morning News Buffet, 1970-2000
6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00 News Diet Changing Diabetic News Consumer, 2000-Present
6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00 Advertiser View
Chasing consumers anywhere they live and breathe Battle for attention spans Growing preference toward measurable media over mass media as technology allows Will continue to associate with media that produce quality, exhibit creativity Moving from product focus to “marketspace” focus Owning “Space”
Procter & Gamble Oral Care: Selling different things to the same customer (owning “toothspace”)
Amazon.com: Selling different things to different customers (owning “internet retailspace”)
IDG: Selling the same thing to different customers (owning “knowledgespace”)
Federal Express: Selling more of the same thing to the same customers (owning “shippingspace”) Newspaper “Marketspace”
Young
Old Poor Rich 1988 Newspaper Marketspace
Young
Print Daily Newspaper 75% household penetration 23% advertising share
Old Poor Rich 2008 Newspaper Marketspace
Young
Print Daily Newspaper 48% household penetration 15% advertising share
Old Poor Rich 2018 Newspaper Marketspace
Young
Print Daily Newspaper 35% household penetration 12% advertising share
Old Poor Rich 2018 Newspaper Marketspace
Young The Newspaper Dream Single print product Keep the old and rich Attract the “young and rich” Flirt with the “wannabe young and rich” Monetize for advertisers
Print Daily Newspaper 35% household penetration 12% advertising share
Old Poor Rich 2018 Newspaper Marketspace
Young
Entertainment Magazine Weekly
Free Daily “Lite” Daily
Print Daily Newspaper
35% household penetration Luxury Magazines 12% advertising share
Business Weekly Old Poor Rich The push for “marketspace” means multi-media Multi-Media Future
Television
Radio
Mobile
Web
Publications Total Audience
Print Web
Mobile Total Audience: Aftonbladet, Sweden Unduplicated Audience
Print Web
Mobile Unduplicated Reach: VG, Norway
Print Newspaper: 1,356,000 daily readers
Total Mobile/SMS: Unduplicated Web Site: 58,000 daily readers Daily 926,000 daily readers Coverage: 1,847,000 (47% of population) Duplicated Audience
Print Web
Mobile Duplicated Reach: Asahi Shimbun, Japan Emerging models to manage audiences Pricing Value Tiers
Light Medium Heavy
Allow 30 free Annual online Subscriber to print FT.com articles per subscription newspaper month to be £100/year Maintain average consumed free daily rate of £1.00 Single-copy buyer – lower than single-copy price of print newspaper Increased from £0.30 to £1.30 “What our business will be about going forward is the skillful management of the slow decline of the printed product and the accelerated growth of the internet.” -- John C. Mellott, Publisher, Atlanta Journal-Constitution Target Market Segmentation
Print = Older Readers Online = Younger Readers Future of Print
Philadelphia Model (Quality) Norway Model (Quantity)
Audience migrates from print Audience migrates from print to online to online
Raise print circulation prices Lower print circulation prices and sell “quality audience” to to maintain mass audience “quality advertisers” until inflection point …
US$3 cover prices OK daily Convert paid dailies to free dailies to maintain quantity audience Extraordinary Creativity Marketing With Emotion, Empathy “Mozaic” Het Nieuwsblad: Print Brand Campaign Using Reader Photos “Mozaic” Het Nieuwsblad: Print Brand Campaign Using Reader Photos “Words Matter” Slogan Celebrates Written Word, Importance of Reading Newspaper Meine Kleine Kleine Zeitung, Austria: Showcasing the Power of a Multi-Media Brand Advertising Experiments
Irregular Ads Irregular Ads Irregular Ads Digital Slivers Hyper-Local Content Vorarlberger Nachrichten: Blogs Covering 96 Communities Hyper-Local Content Gannett Local Information Centers: Help Desk For Community Weight Club Aftonbladet Generates Millions From 200,000 Paid Club Subscribers Podcasts, Bluecasts London’s City AM: Taking Technology Further Social Networking Bakersfield Californian: MySpace Meets Yellow Pages Dagbladet on Playstation Expressen TV Online Video: YouTube Style With Quality News, Sports, Entertainment Digital Slivers Individually, Nothing. Together, 3%-7% of Revenue
RSS Videocasting Podcasting Blogs Social networking SMS/MMS Mobile web Defying Description Drive-Through Classifieds El Universal Creates Escape From Urban Chaos, Generates Revenues Private Treaties Times of India: Trades Advertising Space for Equity Stakes
Times of India growing faster than advertising market
To attract revenue from up- and-coming companies, trade Times of India advertising for equity stake in companies
Since 2005, invested US$300 million cash equivalent with 80 companies Breast Cancer Awareness Sydney Morning Herald: Printed In Print to Draw Awareness Toward Magazines? The Power of Canada’s Globe and Mail Front Pages Valentine’s Day Editions Poland’s Gazeta Pomorska: Male and Female Versions of Newspaper Conclusions Hidden Assets
Highest success rates from legacy companies that have discovered “hidden assets” previously not central to past strategy
De Beers: From mines and diamond stockpiles to unique customer relationship
Marvel Entertainment: From comic books to character licensing for movies Since founding in 1939, Marvel’s value proposition was comic books Shifted from comic books to licensing Marvel characters for film distribution Hidden Assets for Newspapers
Audience: Brand-loyal readers who have never considered themselves a community Journalists: Valued journalists trained only for broadcast communications Money: Immense cash flows and capital budgets Distribution: Infrastructure second only to the postal service Advertising Sales Force: “Feet on the street” that even scares Google Service: Making “smart” the “help desk” concept INMA: Harvester of Ideas Constantly In Search of Global Best Practices
Europe North America Newspapers: 2,398 Newspapers: 1,577
Middle East Newspapers: 272 Asia Newspapers: 5,071
Africa Newspapers: 400 Latin America South Pacific Newspapers: 1,400 Newspapers: 89 INMA: Harvester of Ideas Constantly In Search of Global Best Practices
Know your value proposition and sell it; don’t equivocate
Other industries going through the same value search
About positioning your brand amid technology, abundance
Change is a constant moving forward
Look around the world for best practices to apply at home
Draw inspiration from knowing successes are everywhere The Newspaper Outlook Big Trends and Big Ideas Worldwide
Earl J. Wilkinson Executive Director INMA www.inma.org