Uutta kasvua 26.9.2017: New business models in the news media in the U.S.

FUTURE

STRATEGY

ACTION

Research-based foresight

Futurebased strategy

Strategy enforcement

New business models in the news media in the U.S. Mats Lindgren, CEO, Kairos Future 26 Sept, 2017

Kairos Future International research and consulting agency Foresight-driven strategy and innovation Technology for data-driven research and collaborative innovation Founded 1993 Stockholm, Barcelona, Shanghai

Kairos=the opportune moment

How many more years until your existing business models is outdated?

500+ Nordic executives 2016

yrs Source: Kairos Future och Tieto 2017

The future market place Platform companies – ”Everything everywhere for everyone”

Gold diggers

Product specialists

Sub contractors

Full service suppliers

What did we do? Research model Understanding new and evolving business models in the news industry in the U.S., trends in the contextual environment, changes in subscribership and partnership

Experts ≈100 observations

7 Observed mechanisms

7 Business model elements

In-depth case studies

Final report

Data mining

February

June

Drivers transforming the news media landscape ▪ Google News scan 50 000 sources globally ▪ 2 out of 5 top in the US are UK: Guardian & Daily mail ▪ Up to 35 billion USD will be blocked out 2020 ▪ More revenues from vinyl now than ads on Youtube and Spotify ▪ Video will account for 82% of internet traffic 2020 ▪ 7 % of US population use VR monthly ▪ 18 000 different chat bots

Seven coping strategies aimed at exploiting and manipulating the long-tail demand curve 1. Sponsorship

3. Experiments

2. Premium content 4. Engagement

7. Automation

5. Targeting, bundling 6. Micropayments

1. Sponsorship Subsidization of cost sensitive target group by less cost sensitive subscriber group

The NYT lets readers sponsor digital subscriptions for students – leveraging generosity among readers with a low costsensitivity with the added benefit of building loyalty among students.

2. Premium: Re-packaging lets publishers charge for data Publishers should consider what data they have that is of value to customers

▪ Crunchbase, part of the Techcrunch tech website, has started charging for premium access to its startup database ▪ Added services such as improved search functions and analysis tools, as well as the integration on Techcrunch, provide “within-the-workflow” value to customers

3. Experimentation: Finding the right price Keeping subscribers at a low-priced trialing level during an extended period of time creates the habit needed to build loyalty

â–Ş The Boston Globe steeply raised the price of their digital subscriptions to $1/day, with above 90% retention of subscribers.

â–Ş The Financial Times doubled its growth rate of new subscriptions after replacing its paywall with a trialling model

4. Engagement: The Quartz news app 650,000 downloads, 300,000 active users (using it at least once per month).

Half of users belong to overall user base, the other half are new to the brand.

Willingness to pay

5: Bundling: 97 daily newspapers making events and conferences a core business

Willingness to pay

Readers

Brand owners

Regional publishers find new revenue in organizing events â–Ş GateHouse, the largest newspaper publisher in the U.S., has started the division GateHouse Live for producing (mainly lifestyle-oriented) events. â–Ş All events are sponsored, some with bundled advertising, and some also charge entry fees.

6. Micro-payments Finding new revenue streams. 20 cents per article

7. Cost reduction: Fresco: Crowdsourced photo & video Get close. Get the shot. Get paid.

▪ Uber-style smartphone app, in which pre-vetted amateurs take on assignments to cover current news events with photo material ▪ The app’s users get paid $35 for submitting a still image or $50 for a video ▪ Fresco sells the material to TV-stations and newspapers, who can thereby cover news events early at a low cost

7. Cost reduction: Automated Insights increases scope and speed ▪ AP now covers 5,000 companies with earnings reports thanks to automated journalism, compared to 500 before.

▪ The automation often allows AP to be first with the news, and to gain the top position among Google search results.

▪ AP’s partner Automated Insights does the “writing” using natural language generation technology, based on business descriptions from AP and financial results and estimates for various business measures from Zack’s Investment Research.

Take aways ▪ In the absence of silver bullets, systematic experimentation is needed ▪ Design business models for a skewed demand curve ▪ Take a user-centric perspective to monetize the long tail ▪ Avoid overestimation of readers’ price sensitivity ▪ Seek synergies within the ecosystem and between value chains ▪ Adopt social network logics ▪ Find the right balance between reader and advertising revenue ▪ …and between the core and extending the value chain ▪ New formats are key to increasing engagement ▪ Tasks, not jobs, will be automated in the short term

Emerging Newsroom Models ”End” Searching for Roots

The Community Organizer

Journalismcentric

Social-based

Content

Wikipedia, NYT 1942

Reader The News Machine

The Brand Builder

Technologydriven

Advertisercentric ”Mean”

The Community Organizer The newsroom as a tribe leader ▪ Collaboration with the audience – being part of the tribe!

▪ Using youth slang and online memes ▪ Leading the crowd, setting the trends ▪ Introducing new topics that resonate with readers, let them be ambassadors Content ▪ Connect with readers aspirations ▪ Feedback-based approach ▪ Social media more important than website ▪ Brand-based collaboration with peer companies in media and other industries ▪ Guest stars, “star-production”

”End” The Community Organizer Social-based Reader

”Mean” ”Mean”

In Search for the Roots The newsroom as enlightener ▪ Focus on the core: “slow journalism” and ”the story behind the story” ▪ New tech to enhance journalism quality, dynamic visual and infographic elements frequently used ▪ Crowdsourcing to gain additional inContent sights ▪ Readers and brands subsidize subscriptions to others ▪ Data and analytics are used to understand and explain complex phenomena in an easily digestible way

”End” Searching for Roots Journalismcentric Reader

”Mean”

The News Machine The newsroom as a news producer ▪ High-quality at a fraction of the cost ▪ Automated journalism – from ”all” to providing outlines and finding content ▪ Crowdsourcing of pictures, videos, ideas etc ▪ Wikipedia style journalism with revenue Content splits ▪ Auto-translation extends readership ▪ Multi-platform distribution, i.e. conversational interface (Alexa, Siri et al) ▪ Data and analytics to pick up new topics, optimize content and pricing

”End”

Reader The News Machine Technologydriven ”Mean”

The Brand Builder The newsroom as a communication agency ▪ A service portfolio to serve brands: consumer insight to strategy development, content creation and marketing execution ▪ Readers are a commodity that fits into an extended value chain of brand-building services Content ▪ Knowing the customers’ tastes ▪ Sponsored content, conferences, speaking engagements, merchandise ▪ Data and analytics used to understand readers and optimize campaigns

”End”

Reader The Brand Builder Advertisercentric ”Mean”

Detta är framtiden‌

The future is like stray dog.

Whoever catches is gets it.

Thank you!

Mats Lindgren CEO and Founder mats.lindgren@kairosfuture.com +46 (0) 8 545 225 00