Innovation is one of the keys that can help publishers survive and prosper against the considerable challenges the industry continues to face. Many are focusing on reader revenues via subscriptions, membership models, micropayments, e-commerce, events and so on. But new challenges continue to present themselves. For example, the looming threat of subscription fatigue which can derail publishers’ strategies to generate revenues in a sustainable way.
We all know the background: The media industry is being disrupted. Readers move from print to digital channels. Our advertisement revenues are threatened by global giants like Facebook and Google. In short, the media industry needs to change and come up with sustainable business models for the future.Frida Kvarnström, Head of Next Media at Schibsted
“Is there a credible business case?”
Sensing the risk of depending on a narrow and familiar set of revenue drivers, many publishers have branched into areas that are not traditionally associated with the industry. For example, Condé Nast, which publishes Vogue, expanded into the education business with the Condé Nast College of Fashion & Design in London.
Dennis Publishing, which owns automotive magazines and websites like Auto Express, entered e-commerce with its website BuyaCar.co.uk. It started selling new and used cars in 2014 and has steadily grown since then.
Pete Wooton, Chief Digital Officer at Dennis, said at the Advertising Week Europe earlier this year, “In 2014, we bought a small business with five employees and turned over £500,000. That is now £65m a year and we think it can be £250m. It is a large addressable market. You can do £250m with 60,000 car sales in a year.”
Speaking at the same event, Hamish Nicklin, Chief Revenue Officer of The Guardian said, “The focus of our three-year breakeven plan has made us think in a more commercial fashion [when plotting new parts of the business] we are not asking ‘will this make us loads us a lot of money?’ but instead asking ‘is there a credible business case?’
A “future hub” to find new business models
One publisher taking a distinctly methodical approach to figure out new opportunities, and asses whether they make business sense, is the Schibsted Media Group. It’s the largest media group in Scandinavia, with 8000 employees in 22 countries. The publisher has created a department called Next Media which serves as an internal incubator—a “future hub” to find new business models.
We see ourselves as an incubator – a start-up for internal innovation.Tobias Calminder, Product Lead, Next Media
Next Media explores ideas outside the scope of Schibsted’s established news brands. Its goal is to eventually scale these into independent future media businesses. Fanny Chays, Product Manager at Next Media says, “Our ambition is to find the next generation of media companies for Schibsted.”
Although it’s a part of a big corporation, Next Media functions like a startup and follows the lean methodology, with small and agile steps of experimentation. It has experts from different domains including product managers, business developers, UX and software engineers. This is deliberate, as the company believes that the best value is created within cross-functional teams with different competencies.
The team tests ideas early and expects to fail more often than not. What’s important is that they keep moving forward. Kvarnström comments, “Failing is part of a necessary learning process in order to achieve success stories we later can scale.”
The innovation process begins with identifying “bets.” These are problem areas worth exploring for future business opportunities. A problem area could have limited scope, says Kvarnström, like exploring whether Schibsted should start a platform for dog owners. It could go wide as well, like say when looking at the future of content.
The innovation process takes over after the bet has been locked. It has four steps:
- Frame the challenge: In this phase, the team tries to define the bet further.
- Problem-solution fit: Ensure that the problem actually exists and they have a solution.
- Product-market fit: The team launches a minimum viable product to test the market’s reaction.
- Scale: If successful, the product will be scaled.
Next Media already has a couple of initiatives in operation. These are Omni Next and UpNext. Omni Next is a platform for smart curation of content. It is currently used by four news brands in Norway and Sweden. UpNext creates customized newsletters for corporations.
“Dare to be ambitious enough”
Looking ahead Kvarnström hopes to see new media businesses grown from Next Media in the next couple of years. She says, “The media industry is still full of opportunities and we must dare to explore ideas in new ways.”
She echoes Schibsted Media Group’s CEO Kristin Skogen Lund who said at the INMA World Congress of News Media last month, “You have to dare to be ambitious enough.” Lund shared a couple of business lessons which she thinks would serve other publishers as well.
She said that publishers needed to be able to distinguish between “a passing storm and what is fundamental climate change.” She added, “We have a tendency to act upon the storm because that’s what we see and what we feel. But you really need to understand that it’s the long-term digital trend that you have to act upon. I would say we have lots of bad weather and climate change going on here now.”
The second lesson was to act on the fundamental change before it became obvious. “When it’s obvious and when it’s uncontroversial, then it’s too late. Someone will have taken that position. This is true despite the fact that acting early is controversial, more difficult, and less profitable in the beginning,” she concluded.
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