On the internet, promiscuous consumers are demanding ever more content from mainstream publishers across more platforms, while remaining stubbornly unwilling to put their hands in their pockets to pay those who create the content they ravenously consume. Words like “reward” are used, as if compensating a journalist for his day’s work is somehow generous, or to be congratulated.
The media industry has responded to these public demands uncharacteristically: by giving in to them. Thus we have witnessed the depressing spectacle of the Guardian and the New York Times in a frantic, futile race to the bottom for page views they have no hope of, or strategy for, monetising. Other groups are making money elsewhere in their businesses, but looking on in horror at evaporating print revenues.
But, elsewhere in Europe, old media behemoths are investing in the future in surprisingly enthusiastic ways – and with some success. Axel Springer, publisher of Bild and Die Welt, is already making €1 billion a year in digital revenues as a result of its start-up acquisitions. That equates to over a third of the company’s €2.9 billion annual turnover.
Aggressive engagement with the German start-up community is paying dividends for the publisher. Today, it is laying on a one-day conference called Media Entrepreneurs Day in a converted pumping station in east Berlin. On the back of that cluster of workshops and panels will come, uniquely for a media group in our experience, a credible start-up pitching session at which Axel Springer will garner a peek at the most promising new media businesses long before its rivals.
It doesn’t come cheap, but the couple of dozen purchases Axel Springer has so far made, and the company said today on stage that it intends to do more early-stage acquisitions in the future, has positioned the group strongly in the marketplace. Nothing is for certain in the modern media landscape – not even survival – but at least one incumbent is pouring cash and energy into investigating how it will turn a profit in the new internet economy by buying in expertise from the grass roots.
Contrasted with the comical ineptitude of British media groups and the hubris and hopelessness across American media, the extent to which this German big beast is investing in the future of its business is little short of remarkable. So too is how much the company has learned in a few short years: on stage this morning, board level executives were talking about scalability, agility, investing in people and not companies and “not hugging acquisitions too close”.
These are not phrases you would hear uttered with any seriousness or credibility by British newspaper executives, with the possible exception of those at News International.
Axel Springer seems to have grasped what smaller media start-ups have known for some time: that the only thing consumers will pay for is focused, high-quality content – normally comment and analysis – professionally produced and attractively presented. (We would add to that summary: humour.) All else is noise, commercially speaking.
The publishers who have embraced this attitude are seeing their print and subscription numbers rise quickly, and their revenues from digital products grow many times faster than their competitors: the FT, the Economist, the Wall Street Journal, Private Eye and the Spectator are examples of journalistic products that have a chance of survival. (Note too that not all of those are digital products.)
What publishers can learn from the internet industry is not the proceeds and promise of rapid scaling, attractive as the prospect might sound to publishing executives whose profits have traditionally grown linearly, rather than exponentially. (They look on enviously at the likes of Facebook.) Content businesses don’t expand in the same way, or at the same rate, as platform technologies can.
Instead, they should look to Apple’s blind confidence and audacity: stop listening to what their customers say they want, which is always more, more, more of the same old valueless drivel, and instead look at how their customers actually behave when presented with engaging, professionally-produced content. Because the problem isn’t that there are too many eyeballs and not enough content: it’s that there are too many discerning readers, ready and willing to pay, and too few sources of quality writing on which they can feast.