Lucy took the delegates through some of the main findings from her Innovators In Digital News book which was published a year ago- in which she spoke to senior execs in a number of innovative media companies including The Guardian and Vice Media. From seeking new revenue streams to building large digital and mobile audiences all have undergone major strategic shifts.
Here we quiz Lucy about what has changed since published her book, and how she thinks the next the next six months could present new challenges for publishers.
It will interesting to see how much the media world has evolved six months from now at the 2017 Digital Innovators’ Summit.
What do you think are the main changes and challenges in news media since you wrote the book?
Three big developments stand out. The most arresting is the rise of Facebook, powered by the launches of Live Video (April) and Instant Articles (May). When I wrote the book, Google was the wolf in the woods. Since then, Facebook, in combination with WhatsApp and Instagram, has evolved into a single-stop context for the consumption and distribution of media (and note also, its cash reserves in 2015 stood at US$592m).
Facebook’s rapid rise seriously derailed the strategy of at least two cases in the book, BuzzFeed and the Guardian – both missed income targets, and BuzzFeed reputedly lost around 10 million unique visitors in a year. Their reactions however were markedly different. BuzzFeed doubled down on video, notably with the launch of Tasty (which reputedly shot from zero to 360 million views in just one month) and Nifty. Both are pure Facebook brands.
BuzzFeed also executed a(nother) fast organisational pivot, this time to reshape itself into a multi platform, multi market ‘intelligent network’. The Guardian’s response was more measured. With its April financial results it announced goals to ‘address the balance of costs and revenues …, build new revenue streams, create a deeper set of relationships with Guardian audiences’. By the time Guardian had announced its new priorities, BuzzFeed was well on the way to having executed its strategic shifts.
Of course I’m not comparing like with like here. BuzzFeed is a digital pure play with one and a half feet in the Silicon Valley pivot culture and venture capital funding. The Guardian is an august legacy brand with all the constraints this status brings. But the comparison neatly pinpoints the opportunity costs of:
(1) having to compete in two sectors at once – classic media and digital (a challenge that all established media organisations face), and
(2) of not getting the organisation in shape while legacy revenues are still solid and before the forces of disruption really take hold. As the Chinese proverb runs, you need to fatten your pigs (in classic media’s case, get costs under control, acquire expertise, build a culture that’s agile) before you go to market.
Classic media companies are not alone here – their digital peers will also need to rein in costs soon, but the broader message is never underestimate the deadening grip of organisational inertia. Change projects always take much longer, are much more complex and painful than planned. Start before you need to.
Facebook’s rise belongs to a bigger underlying shift, the dominance of hype-scale digital platforms. This was a clear trend when I was researching the book, but is now firmly entrenched. The platforms bring huge challenges for news media – loss of control of distribution, loss of access to/relationship with audiences, overall, the loss of strategic sovereignty. Apple, Alphabet, Microsoft, Amazon Facebook are now the largest players (by market capitalisation), and these are the established media industry’s new competitors. The media industry is going to need to engage in some very smart strategic thinking to master this strategic environment.
The last change is the explosion in digital video on the social platforms. This is an extension of the shift to social/mobile evident in the book research. Online video is the hot area right now, but incredibly messy – everyone from the Economist to Al Jazeera seems to be in there – but doing very different things, and I suspect with differing levels of success.
One last point, looking forward we can expect a wave of corporate disruption when the investors in the new digital players decide they want to make an exit. That will lead to a new regrouping in the industry, and will also be enlightening – no one really knows how profitable the new digital pure plays really are.
Was there something in particular that took you by surprise?
Broadly, no, I’m relieved to say. All the companies I profiled seem to be moving along on the trajectories I described. I was surprised at the extent of the convulsions at the Guardian since I did my research, and by the astonishing numbers for BuzzFeed’s Tasty, which seems to comprise the majority of its Facebook video views. I’ll be curious to see where Vice ends up. With its rollout of TV networks in Europe and Asia, in part in conjunction with legacy broadcast partners, it’s continuing on its counterintuitive trajectory of ‘reversing back’ into classic media. Signals from Shane Smith seem to be that he’s anxious to sell, which can be interpreted in a number of different ways.
Which of the main news organisations do you think has been most innovative in the past year? Which other media company that didn’t feature in your book, has impressed you the most recently with their digital innovation?
Yes – it’s not all doom and gloom. There is a lot of innovation underway. I’m currently planning the next research project so this is a really salient question.
I continue to be impressed with The Financial Times’ and The Economist’s absolute commitment to transforming themselves into digital media businesses, and using digital storytelling to refashion quality journalism. In these cases we can see the payoff from an early start coupled with a clear digital vision, as well as the benefits of melding tech, journalism and data. Similarly, the BBC is developing some fascinating formats for younger demographic groups on mobile-social platforms.
The renaissance of CNN, and indeed Turner’s digital strategy overall is worth following. CNN’s digital performance is right up there with the New York Times and Washington Post. On the corporate side there are equally interesting strategic investments in digital pure plays like Bleacher Report and Refinery29.
Vox intrigues from many perspectives: its storytelling approach, it’s content verticals and the tech stack that underlies them, it’s early synthesis of tech with editorial (it led the way here with Chorus), and its innovation in terms of exploring income streams.
The Washington Post is probably the most fascinating case of all. Who wouldn’t want an architect of the digital economy bankrolling and advising on the shift from legacy to digital? Notable there is the high speed integration of tech and journalism, as with Vox, and with Medium (also one to watch, especially for its emphasis on long-form content and its role in supporting small and mid-size publishers).
At a corporate level I continue to be impressed with Schibsted – serially innovative and a trailblazer for many strategic moves that are later echoed around Europe, and also with Axel Springer’s bold acquisition-driven strategy.
There are some very bold predictions about the future of native advertising. One report said it could account for as much as two thirds of newspaper revenue within five years. Do you think this is accurate?
At the end of the day it’s all about revenue, and this crisis is not going away. Publishers need to develop new revenue streams, and native will certainly be one of those. Sponsored content will grow, but it’s a revenue source that requires substantial investment up front in terms of setting up content studios and developing different marketing relationships with brand partners. Publishers are probably in the best position of all players to seize the potential here (and indeed it’s not a new concept for them at all).
But sponsored content can clash with a journalistic culture if not set up properly and handled sensitively inside organisations. So yes, more players will move in this direction, but it’s not an option for everyone.
I see comparable growth in events and membership schemes, in e-commerce, and interesting moves to licence software as with The Washington Post and Medium. Like native, this looks like a no-brainer on the surface – a way of amortising investments in media tech – but it represents a shift into services, and brings with it substantial set up and support costs.
Which innovation from a social platform in the last 12 months do you think is the one that has the most potential for newspapers?
Snapchat, which has been around for longer than 12 months but has emerged as the platform to access younger viewers. Fascinating but really difficult to research if you are over 15.
What are you up to personally? Is there another book in the pipeline?
I’ve just kicked off a new research project) as Google Digital News Senior Visiting Fellow at the Reuters Institute, Oxford University. This will build on the last book, (indeed on the last three books). I hope a book version will be available in a year.
The goal is to develop a roadmap for mastering media disruption by deconstructing best practice. Through close analysis of companies that are succeeding I want to sift out the approaches, tactics, tools that lead to success, and hopefully create some kind of playbook, roadmap, that will allow more companies to seize the growth that is currently going to new players.
My basic premise is that the big challenge is now organisational. I don’t doubt that publishers, the media industry as a whole, can master the content challenge, but the organisational challenge is far subtler, more critical, and, I feel, neglected. The digital disrupters are formidably well-run organisations – just look at BuzzFeed’s serial pivots, or Facebook’s shift on to mobile only months after its IPO.
My conviction is that legacy media, faced with an extremely challenging competitive position are instinctively defaulting to focus their change efforts on the content arena. But there’s an equivalent imperative to re-envision and re-tool the organisation, and my goal with this research, and the book that ensues, is to help with this task.
Lucy Küng is Google Digital News Senior Visiting Research Fellow at the Reuters Institute, advisor on strategy and innovation, and non-executive board member. She is author of Strategic Management in the Media: From Theory to Practice (January 2017) and Innovators in Digital News (2015).
Many of the themes Lucy discusses in this article will feature prominently at the 2017 Digital Innovators’ Summit in Berlin. For more information and a pre-agenda booking rate that can save delegates €600, click here.
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