Friday, August 31, 2018

The News Media Transformation Has Only Just Started

"We are at the beginning of this transition, for all that we have seen, we are at the beginning."

This is the view of Rasmus Kleis Nielsen, Director of Research at the Reuters Institute for the Study of Journalism.

Rasmus argues, correctly in my view, that as news consumers we have never had access to better journalism from a wide range of sources. We have never had the opportunity to be better informed. The key question though is who is going to pay for this journalism?

It has been a turbulent time for news media companies and the impact of the internet, mobile devices and platform companies has been significant. Over half of the time people are engaged with news media is with digital news media. Over half of this digital time is on mobile devices (which is growing) and a third of this digital time is spent on the platforms of Google and Facebook.

For over twenty years Rasmus argues that news organisations have provided digital news online but in nearly every case they lose money. "Very, very few organisations make a profit on their online news."

Rasmus jokes that the BBC has the best revenue model "you pay them or you go to jail". For most news media organisations though advertising revenues are declining and increasingly they are looking to subscriptions and other sources of revenue.

Some news organisations have been successful in developing paid subscriptions such as The New York Times and the Financial Times. However, Rasmus argues in a world full of free content "people will only pay for truly great and distinct content."

Strategies to Survive

Rasmus offers five suggestions for news media organisations in this increasingly competitive and changing environment:
  1. Produce truly distinct and valuable content. 
  2. Develop more diverse revenue sources e.g. events, ecommerce, sponsorship and services. A good example I believe is Politico's sponsored daily email, the Playbook.
  3. Restructure to create leaner cost structures. 
  4. Be flexible. Experiment and try new things
  5. Operate a portfolio of different activities, do not be a single product company. 
I am less sure about this last one. You are clearly at risk if the one thing you do is disrupted but from my experience of running businesses, it is easy to get distracted from your core by shiny new things. Often a better strategy is to be the very best at what you do, which in many ways goes back to the first point of producing truly unique and valuable content.