Digitalization in the media industry

August 29, 2017

Digitalization in the media industry

Publishers: Remove the blindfold and take a good look at your digital readers!

After two decades battling with online content, newspapers clearly have fewer readers and lower revenues. While publishers have survived and are still up and running, it’s too early for media managers to lean back and relax. Reader behavior has changed dramatically, attracting new subscribers has never been more difficult, and earning significant money with paid content is the exception, not the rule. It’s about time publishers take a good look at their readers: What do they want, need, and cherish – and what are they willing to pay for?

Insights
After first making the cardinal error of giving away online content for free, coming to terms with digitalization has been an uphill battle for this traditionally high-margin industry. Technical possibilities and commercial necessities induced many changes: multiple online offers were created, print publications got smaller and thinner, Sunday papers were added, editorial offices were reorganized into newsrooms, and classifieds moved almost completely to online platforms. Maybe most importantly, the industry’s heavyweights started to gate their precious online content behind paywalls. Even though the resulting revenue effects are mediocre at best, many publishers are starting to feel comfortable again. They’ve been busy transforming themselves in recent years, and despite a marked reduction in revenues and profits, the downturn seems to be more manageable than initially feared. But this abating sense of urgency is both deceptive and dangerous, as most publishing houses are far from ready for the next level of digitalization.

Gone are the days when every household had a longstanding subscription to at least one newspaper. But instead of taking a strong interest in what their (potential) readers want and need, too many publishers are still working the same way as before: They write and push content for their print products (and maybe website) without thinking about innovative digital features, interactive infographics, or videos that could enrich or even replace traditional text. The digital paradigm of creating products that fit to the customer is still largely unknown in the media industry, and consequently innovative products are few and far between. Adding a crossword app to the portfolio may sound very digital, but is hardly the courageous leap that’s required. Specialist publishers are one step ahead, offering databases and seminars that complement their very specific content. This is an approach that some business papers are successfully applying to their audience, with business clubs organizing exclusive networking events and conferences for their members.

But product innovation doesn’t have to stop here. Redesigned news products could include hyperlocal content, contextual news based on GPS data, or individualized selections such as the Guardian’s “Make It Yours” feature. Their app allows users to tailor their home screen by selecting and customizing the categories most important for them. Another innovative example is Bloomberg’s scan app that automatically analyzes any news article to reveal background data and information related to the companies and people mentioned in the text. And as demonstrated by the success of Netflix, Spotify, and amazon prime, even the younger generation are willing to pay for subscriptions – the trick is knowing what they value.

Selling efficiency is another reason for the media industry to get to know their users. Despite centuries of experience in using promotions to attract new subscribers, almost no newspaper manager knows what discount works best for which product or customer. But as the fight for each new reader intensifies, these knowledge gaps are turning into pain points. Managers need to know the ROI of their promotions, and cannot afford to shy away from topics such as customer lifetime value. This all requires a working CRM system that enables pertinent data analyses – be it small data to get started, or big data for the digital pros.

At the forefront of digitalization

The German daily Die Welt has one of the most comprehensive and holistic digital approaches in the media industry. Their integrated newsroom produces all types of content (texts, videos, pictures, interactive graphs, etc.) for all channels (print, online, app), stepping completely away from the traditional silo mentality. This allows the publisher to reach all types of users with high-quality journalism across the board. A further asset is their agile responsiveness to changing user behavior. Based on detailed analyses of their users’ reading habits, they recently adapted their website to the needs of mobile users and added more fast-loading videos. This upgraded value to the reader was coupled with a change in their paid content strategy to better monetize the additional content, switching from a metered model to a “freemium” approach where only real premium content is gated behind a paywall.

Advice from our experts

The worst isn’t over yet! Yes, there have been phases more difficult than today, and print is likely to be around for some time, but current online media offers don’t fully tap into the potential that digital technologies bring. Here are three things every media executive should put on their agenda to benefit from new digital possibilities:

  1. Remove the blindfold! Create an infrastructure that enables you to analyze your readers. Only then will you be able to understand their needs and more efficiently use promotions and other campaigns to attract and retain paying customers.
  2. Be courageous! New products that users are willing to pay for may look very different from the current digital offers you have. Making only minor and gradual improvements will not be enough to stop the decline of established publishing houses, especially regional and local newspapers.
  3. Know what you want! Last but not least, you need to set a clear strategic direction, and consequently follow it. For example, if you decide to really go for paid content, don’t allow your readers to circumvent your paywall via Facebook or other social media. Once you have set your course, stay on it!