“The alchemy of media business model innovation” - François Nel at news:rewired

Martin Belam by Martin Belam, 13 February 2012

The panel session about paying for content at news:rewired earlier this month bought together Alex Watson of Dennis Publishing, Tom Standage of the Economist, and academic researcher François Nel. I’ve already blogged my notes from the talks by Alex and Tom, and here are my notes on what François had to say.

His talk about media business models drew a massive contrast between the fortunes, financially, of the Mail and the Guardian, and sparked a discussion about the Guardian’s digital strategy which made for some uncomfortable listening for those of us in the audience involved in trying to implement it.

“The alchemy of media business model innovation” - François Nel at news:rewired

François started his talk with a defence of the stereotyped figure of the alchemist. Whilst many of us will not be able to think of the word without imagining Lord Percy Percy discovering “Green”, François reminded us that it wasn’t all about the quest to turn base metal into gold. Alchemists were serious chemists and scientists, intrigued in understanding the world around them by conducting experiments. However, he went on to say that there were more than a few people these days who appeared to resemble the cliché - attempting to turn our “dusty old newsprint into shiny new digital dollars.”

He showed some of the findings of the World Newsmedia Network Global Digital Newsmedia Trends Yearbook 2011, which suggested that businesses seemed to have their focus on two areas - saving money, and making new “new media” products. Two conflicting aims if you are not prepared to invest in digital projects which might fail.

He then went on to compare and contrast the digital fortunes of the Mail and the Guardian, the UK’s two most successful, or at least “most highly visited” UK newspaper sites. The Mail, he said, has one of the smallest declines in print circulation, and is at the point of being declared the most read newspaper on the web (give or take a little bit of griping by the NYT). DMGT made a profit £75.8m. In contrast, whilst lauded for digital innovation, the Guardian has seen a steeper drop in circulation, and despite a massive digital audience and presence on a range of platforms, made losses of over £50m.

“While their output might be admirable, the question we have to ask ourselves, if we are interested in the sustainable business model of media innovation is what is going on there?” - François Nel

He went on to argue that whilst the Mail’s digital offerings complement the print product, the Guardian’s digital efforts substitute the paper. Even the marketing strap for the Guardian iPad app, he said, “Today’s paper. Beautifully delivered”, positions it as a replacement. The Facebook app, he argued, cannibalised traffic that would have been heading to the website, and delivers the advertising revenue to Facebook instead.

[The latter isn’t strictly true - page impressions within Facebook count for our ABCe figures, and the revenue from the adverts delivered on our portion of the pages belongs to us.]

Illustrated with images of his two year old nephews learning to share and co-operate as they play with an iPad, François argued that “reciprocity” was destined to be at the heart of any successful media business model. He suggested to news:rewired that in a relationship, sharing “a simple thank you, a smile, some attention, even sometimes cash” isn’t just polite, it is essential.

He thought that the issue with the Guardian was that, aside from substitution, there was no “reciprocity” here - even people who value the brand are still able and willing to circumvent paying for it. As a Guardian reader himself, François said he wouldn’t pay the £9.99 to subscribe to the iPad app when the same content was available in Flipboard or Zite. “Where is the love?” he said.

Asked in the Q&A afterwards what he would do if he was in charge of the Guardian, François said he would try and take an approach of “we are going to show you love, you need to show that love back to us” - not just in terms of cash, but in terms of reader interactivity.

The question provoked a lively debate. Tom Standage of the Economist argued that the Guardian could probably make a success of the current strategy, but only with some more serious cost-cutting measures in the newsroom. “I think you can probably produce a newspaper with less than 1,000 journalists” he said. He thought that people needed to realise that the Guardian’s audience was mostly overseas now, and that there possibly was space in the global market for one ad-supported liberal news source. With the New York Times opting for the metered-paywall, the Guardian could fill that space.

One aspect of the conversation worth noting though was that, yet again, a discussion about the relative sizes and merits of the business models of news providers in the digital space had a focus on the businesses that historically owned printing presses. Yahoo! News, CNN, the BBC, MSN and others were conspicuous by their absence. They clearly have a big role to play in the mysterious chemical formula that is the alchemy of making news businesses sustainable in the digital future.

This is personal blog. The views expressed are my own, and do not reflect the views of Guardian News and Media Limited, or any current or former employers or clients. Read my blogging principles.

Next...

One of the most interesting sessions at news:rewired was Nicola Hughes talking about using social media as a search tool. It raised some fascinating questions about the intersection of social media, investigative journalism, ethics and security. I’ll be posting my notes from that session tomorrow.

This is one of a series of blog posts featuring my notes from news:rewired:
“Did we get something of journalistic value?” - Liz Heron
“The Guardian’s Facebook app” - Martin Belam
“Great for users. Great for publishers. And great for Apple” - Alex Watson
“The Economist’s shift to digital”- Tom Standage
“The alchemy of media business model innovation” - François Nel
“Social media, investigative journalism, ethics and security” - Nicola Hughes
“Less is more - social media at the BBC” - Chris Hamilton
“Watch this (social) space...” - Darren Waters
“Me and my big photo of Mark Zuckerberg” - Nate Lanxon
“Social media optimisation” - Q&A

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