At the end of 2019, a number of international publishers sat down at the FIPP World Media Congress in Las Vegas to discuss the state of cross-border business. Jonathan Wright, then at Dow Jones, Tim Hudson of Immediate Media Co, Emma Radford, then at Reach, and Yulia Boyle of National Geographic discussed ways of extending brands internationally, the changing nature of licensing and the dawn of a “new era of partnerships”. Then Covid happened.
Three years after that discussion, assessing where we now stand when it comes to cross-border publishing is tricky. What’s clear is that some turbulent times – both the pandemic and cost-of-living crisis – have forced a reassessment among many publishers of how quickly and far media businesses should branch out overseas.
“As pressures have got higher on publishers, priorities have changed,” says Alastair Lewis, Principal and Managing Director of FIPP Consulting. “When it comes to cross-border publishing I don’t think the wind is blowing in one direction, but rather in a bunch of different directions around the world.
“If there’s a trend it’s that there aren’t many trends at the moment. That’s manifesting itself with media companies focusing quite rightly on their own models and what is going to work best for them and their particular set of products, audiences and territory.
“Publishers are trying to get their house in order by focusing on digital subscriptions, paywalls or membership – a selection of diversified revenue streams, whether that’s advertising led or e-commerce and affiliate-led. They’re focusing on where they can win territory in the sector they publish in.”
Given the uncertain times we find ourselves in, the media groups that are looking to expand further afield over the next few years are likely to adopt a measured ‘Incremental Model’.
“In these cases, a publisher delivers for their home market while recognising an opportunity to generate an incremental revenue through syndication, licensing and cross-border deals,” says Lewis.
While an Incremental Model could prove to be increasingly popular over the next few years, a number of iconic titles will stick to a ‘Core Model’ – where being a global brand is a core strategy. “Clearly there are still big media brands out there, like National Geographic, Elle and Vogue, that have international strategies and continue to develop global media properties,” adds Lewis.
“The Core and Incremental models suit publishers in different ways. Arguably, given the current situation, I wouldn’t be surprised to see more publishers taking a more incremental approach rather than planning for global domination.”
Moving on from a print model
Some pre-Covid cross-border trends have only accelerated over the last few years, in particularly a decline in print deals and a move towards digital-led or digital-only transactions.
In 2019, FIPP President and CEO James Hewes noted that “talking about international business a number or years ago would have been a print licensing conversation. But now all brands cover multiple types of media and multiple types of activities, whether it’s print magazines, digital websites, mobile solutions, apps or social.”
In the past, working in print meant adopting a pretty straightforward operating model. Once you reached a certain size and scale it made sense to expand internationally and seek opportunities to licence your content and find partners overseas. It’s a successful business model publishers would dearly love to recreate digitally.
“The holy grail really is finding a cross-border business model that is as affective digitally as what we used to achieve with print,” says Lewis. “That’s not an easy challenge because the biggest obstacles companies face when growing a cross-border strategy is first and foremost the technology that’s available in the new territories.”
Another emerging trend we are seeing is fewer boundaries by territory and more integration by language. “We are seeing a move around being slightly more strategic around language rather than territory,” says Lewis. “ A publisher might say: ‘We want to own and operate global editions in English, Spanish and Mandarin, but with other languages they will adopt a more incremental approach. They will enable partners to run editions in certain languages, and if they make a success of it that’s fine, and if they don’t, they’ll move on.
“So, you can publish a site in English and if the content is broadly relevant across, say, South Africa, Australia, Canada and North America – which, in the case of a brand like National Geographic, it is – you want to similarly own the same sort of experience in the Hispanic language, which is next biggest language, certainly on the web.
“You might follow a strategy where you say: ‘We are going to own the publishing of our content in Spanish, English and Mandarin, and when it comes to other languages, we’ll let licensed partners take that on a territory-by-territory basis.”
What are the pros of cons of going for a Core or Incremental model?
Adopting the right cross-border model for your business is very much a horses for courses decision. Both the Core And Incremental models have pros and cons that have to be carefully considered. First, though, let us look at the main characteristics of the two global models.
With a Core strategy, going global is central to the overall business strategy. It’s a clearly defined business model and has targets that apply across territories. It’s often based around ownership of techstack or a platform, core content and key languages.
Global partners help to drive the central strategy and are incentivised to do so. The media business with a Core Model also has a defined path to future growth.
With the Incremental Model, going global is a by-product of the core brand strategy. Revenues are incremental and costs low, but marginalised from core business. Expansion is opportunity-led, and the model often lacks a coherent approach across or between territories. Brand and user / advertiser experience can vary hugely, and the strategy faces uncertainty on all fronts.
Going all in
So, what are the benefits of adopting a Core Model? In the long term, taking a core approach means a business is going to be able to command a much higher percentage of the revenue available.
“It’s a long-term play which should have much higher returns,” says Lewis. “You have greater control over that activity and can forecast opportunities and threats more accurately than with a more incremental approach. That’s what you get when investing in the control and ownership of the tech platform and the user experience.”
On the downside, the Core Model is expensive and, just as importantly, requires substantial alignment
within what is most probably a big business. Product, marketing, audience development, content, commercial and senior management teams all have to fully buy in to deliver a global strategy.
“That can be difficult to achieve especially in the current climate where there are constant pressures on the home territory,” Lewis points out.
“The core approach is definitely not for everyone, and it’s not necessarily the right way to do it – but it’s one of the ways to do it. It comes with high costs and needs full commitment and alignment across the business.”
A lighter touch
The pros of talking an incremental approach are clear – you don’t need as much involvement from the centre and costs are lower. You’re taking the opportunity to leverage what you can from content, while being a bit more relaxed about how that plays out on a local level. So long as you are receiving an equitable share and/or fee in return for the content.
“You can move a bit faster in some cases because you are not hindered by a lot of decision-making back at base,” says Lewis.
“You can take a much lower risk approach going into new territories because you are not putting boots
on the ground. As a company you are essentially putting that liability onto your partners. So in terms of potential, you are a more agile than the Core Model.”
On the flip side, the Incremental Model is far more unstable and unpredictable. “You are very much reliant on the success of failure of your partner in that territory, their ability to monetise and their willingness and ability to pay you the right share,” adds Lewis.
“So, you are exposed to that fluctuating performance at local level, and you are potentially leaving yourself open to a partner that could damage your brand – or indeed take it on and over-deliver, but not necessarily give you a share that you should be getting.”
This insight article is part of the FIPP report Expanding horizons – the state of cross-border publishing. You can download the full report here.