Stig Ørskov, CEO, JP/Politikens Hus, Denmark, and vice president of WAN-IFRA, stressed the important role played by content in successfully pivoting from advertisement-based revenue to a digital subscription-based one, in his keynote address at the third edition of WAN-IFRA’s Indian Media Leaders eSummit (IMLeS). Susan Philip reports
Speaking at the WAN-IFRA’s Indian Media Leaders eSummit held virtually from 28 to 30 June, Stig Ørskov, CEO, JP/Politikens Hus, Denmark, and vice president of WAN-IFRA, outlined the JP Politiken Media Group’s journey in this direction over the past two decades, including the way it negotiated, and is continuing to negotiate the difficult economic situation in northern Europe. Sharing the recipe for growth of the news media organisation, he described how two decades of transformation had laid the foundation for double digit growth and had also thrown up an unexpected benefit – raising the north European readership’s trust in media.
Giving the background, Ørskov said JPMG is the leading media group in Denmark. Before the turn of the century, the business model focused equally on both content/ sales and advertising. There were no serious competitors, and both revenue and profits were stable. With the growth of the Internet, the assumption was that everything would simply get bigger and better. “In the first couple of years, we saw reach translate into ad revenue. Digital spend experienced unprecedented growth. Those were exciting years,” he said, adding that there were so many ad dollars in the market that it resulted in what is known as The Danish Freesheet Wars. At its peak, in 2006-08, there were four major free national papers in Denmark, with a total readership of two million, in a country with four million grown-ups. But all that changed when the financial crisis came.
In 2010, the tech giants arrived – Google and Facebook established a dominating position in the digital market. A whopping 96 per cent of all Danish Internet searches is on Google and 80 per cent of Danes have a profile onFB. “Apple, Google and Facebook today dominate the digital ad spend. Print subscription is in structural decline, and so is print ad revenue” said Ørskov.
Responding, the Group launched a B2B vertical as an experiment in 2010. An expert team of three to five journalists was set up, aiming to create a need-to-read arm which was purely digital and subscription-based. And it worked. “During the next 10-12 years, the idea was developed into a business division of its own. It ignited a growth journey. We have around 28 verticals now and for all of them the story has been the same – break-even in three years, ROI in five, and over 20 per cent profit margin,” said Ørskov, adding, “it’s not high-volume but a high-profit business.” The model has been introduced in Norway, Germany and UK and the growth rate is around 25 per cent.
The Group decided to apply the new recipe for growth to the mainstream media and transition from a free model to a digital subscription one, from news to journalism, from broad reach to a target group, from an unclear core to a sharp value proposition. Politiken is positioned as a quality newspaper. It has a special target group – well-educated, high-income, urbanised. So, from 2016, the organisation decided to stop free distribution and put the whole content behind a hard paywall costing 10 Euro, justified by the similar rates charged by the highly popular Netflix and Spotify. But they found it wasn’t the best of ideas.
The group did not want to destroy its premium standing, so began thinking of ways to justify the price. “We realised that the product had to be richer,” said Ørskov. “We put more value into it, especially the ePaper.” They also tried to woo the 38-to-45-year-olds. “Typically, this is the age when people become stable subscribers. If we get them on board at this time there’s 30-40 years of customer value in them,” he explained.
Subscribers got one comprehensive digital product for 40 Euros – with access to both the ePaper and Politiken.dk. Digital subscriptions jumped and for the first time in the 21st Century, total revenue grew, while the profit margin was 15 per cent. This compensated for the missing growth in ad revenue, despite the fact that advertisements are still important, and the Group continues to be attractive to advertisers in turn.
In the next phase of the journey, the Group focused on optimisation of subscriptions and customer needs. “We went out of our newsrooms to understand our customers. Journalists met subscribers and talked with them to learn what they thought was relevant and valuable. And that changed the way the newsroom worked,” Ørskov told the conference. “Instead of being first with the news, the focus changed to relevance and providing value. We tried to give new offers too.”
But the situation has changed again. “After the substantial increase in the subscription base over the last five years, what we see now is a stagnation. The question is how to nurture new growth when people are struggling economically and consumer confidence is the lowest it has even been in Northern Europe” said Ørskov. “We think different parts of the product with different price points will work,” he shared.
Nevertheless, the new growth recipe seems to have worked quite well. “From 3 billion Danish Kroner in 2020, we hope to reach 5 billion Danish Kroner in 2025,” Ørskov reported. He estimated that his organisation had spent around 1 million Euros in pivoting to digital, and had recovered the sum in five years. The effort now is to scale up operations. Good journalists hold the key, and they’re at a premium, he added.
And an interesting byproduct is trust. “There’s greater trust now in the news media in North European countries – Denmark, Sweden, Norway and Finland, corresponding to the growth in people paying for online news,” Ørskov noted.
Earlier, Mohit Jain, executive president of Bennett, Coleman & Co, WAN-IFRA Board member and president, Indian Newspaper Society, also focussed on the importance of content in the media, saying that the future of the media industry is tied to curiosity – a basic human quality. As long as people are curious about what’s happening around them, content won’t go out of fashion, he said, in his opening address.
Magdoom Mohamed, managing director, WAN-IFRA South Asia, welcomed the gathering. The conference themed ‘Ideas for news realities’ was attended by more than 250 news media executives from 40-odd organisations.
(The writer is assistant editor, RIND Survey.)