The decline of publishing houses is evoked for three decades. Partly rightly, because print sales are steadily declining and, at the same time, comparable sales are not being generated in the digital business. The question arises whether there is still any salvation at all? And if so, is paid content the savior? Or is it a fairy tale who, like the head of Bertelsmann once said at DMEXCO about the “web failure of the web” and identified the free culture as the reason for the misery?
Complexity through corona
For ten years I have been working as a software provider for publishers as my customers, both for a group and as an entrepreneur. My second passion is complexity. In the course of this I deal with the so-called Kübernetik with complex systems. And related to Corona it is a newly networked system quality. A change of times for the publishers. Because even if the online traffic figures and the reputation of the portals increase significantly due to the reporting - it will also weaken again - the advertising revenues will never be as high as they used to be.
What's happening now?
On the one hand, many experts fluctuate between concrete demands as to what should be done against Corona, accusations of what has been done wrong by politics, etc., and on the other hand, the unassailable position that you cannot know what to do and what still happens.
That is right and wrong at the same time. Because there are things that, at least in terms of time, cannot be determined. On the other hand, all have existing, and at least reasonably stable, systems inherent pillars. Otherwise they would not exist! For example, the human organism has an immune system that fights off viruses and germs attacking from outside. It even protects the whole person for future attacks and makes them robust. This does not mean that every human being survives, but humanity is largely secured. The paradox is that the system is almost always more robust if it has been attacked several times in the past and was able to keep the knives sharply ground for defense.
What does this mean for publishers?
Now a virus hits an unhealthy industry. A massive threat to existence. The first question that arises is that there are these strong, survival pillars in publishing. Which can withstand the storm? The answer immediately: yes! People need a stop. You need information. From secure locations. Ie Quality and response time make journalism rock solid in the surf. However, there is already the “but” in this. Not every (online) publisher, newspapers and magazines, can deliver quality and speed at the same time. Not to mention, few have Reputation, the fire, the information authorities in and after the crisis, to be the first point of contact for readers.
Who survives in the publishing market?
It will now happen even faster, which would otherwise have taken longer - albeit inevitable. One accelerated death in the publishing scene. While, as is usually the case in crises, around 17% will be winners, there tend to be two thirds or more real losers.
In my view, it is now almost systematically determined who will survive and who has a good chance of being among the winners. There is always a differentiation into what I call in more mature markets Gucci-Prada vs. Hit textile discount system. That means the middle belly disappears. The small consumer buys from the more expensive Dallmayr like the Aldi. But hardly with a provider in between. At least not when there are special criteria, such as location advantages.
In terms of the publisher market, that means this Bathtub curve indicates that the number of providers will decrease significantly. On the edges there are mainly two types of publishers what is left: the news engines and the paid content publishers.
What are news engines?
These publishers are “machines” in the truest sense of the word, because hardly any people work there. These technology-driven portals are characterized as follows:
- minimal Cost structure, as there is no editing of their own, but not using self-created content - e.g. through content syndication
- maximale Technology power in the area of machine learning / AI and user data analysis and use
- automated marketing via programmatic advertising and marketing by external providers
- existing, broad-based Brand as a news portal
A representative here who will survive in the long term is MSN.de. Focus.de or t-online.de also have opportunities here, but will not be recognizable in a few years.
Paid content publisher
The second type of publishers that will survive are numerically the larger number. They are Print and online publishers who successfully sell paid content in the form of subscriptions. The only thing that will survive is who can steadily increase the online subscriptions for so-called plus-pay content over the years. This can succeed for providers with the following setup:
- with a strong brand, such as the South German, Zeit, Spiegel, Stern, etc.
- im Special interest area Represent well-known names today and don't have too much competition in their niche
- Local newspapers targeting critical readers have a high credibility and relevance for the population outside the big cities in the catchment area
- Publishers who are more concerned with eCommerce and funnel management than with marketing. The publisher must completely do that Let the business model mutate into an online subscription shop. That means with all KPIs that are so far unknown to publishers and that require new tools and processes.
The middle belly has a hard time
Many publishers had tried to build up new pillars in the last few years to try to compensate for the dwindling sales. Some also act as event organizers, which will now be on the brink of Corona - at least in the near future. Others rely on product shop offers for various products that work rather poorly than right.
How to become a paid content provider?
Now a publisher in this dilemma could come up with it and simply say:
No, I don't want to be a news slinger, high-tech is not our thing, we are seasoned journalists and always want to deliver quality! Then just paid content ...
But attention: Successfully turning a publisher into a paid content provider is not trivial and is not something for everyone. Sure, if there is a chance at all, then probably for most with digital plus subscriptions. This does not mean to print the print version as ePaper. This is old hat, although for some a small source of income.
As in the movie "The Founder“The founder of the McDonalds empire Ray Kroc is told in one scene:
You are not in the burger business with McDonalds, but in the real estate business! "
Paid publishers need the following strong mind change:
Publishers are no longer a platform for ads, they are in the online marketing business for digital assets.
These digital assets as paid content can now be a smorgasbord of:
- Plus items with paywalls for premium content
- Video and live courses - an as yet undiscovered market for publishers from my point of view!
What should a publisher be able to do, but what should be done by external providers?
In my experience there is A disease for publishers: they always want to do everything themselves. The innovation almost always comes from startups. But if you build everything yourself at a price that is usually x times as high, then these are not only unnecessary costs, but also also undermines the performance of a startup eco system.
As a lecturer at the TU Munich for entrepreneurship and in my Munich founder network, I know dozens of startups who wanted to do something for publishers. But everyone I know without exception turn away after a short time or go under if they have trusted the "wrong" target group of publishers for too long.
Of course, there are reasons why publishers only allow a few third parties. Nevertheless, the price seems too high for me to only add and allow external providers if everyone is doing it anyway or the technology is as mature as with Google. Without healthy external small and medium-sized providers who can make a good living from it to be there for your publishers, innovation and thus the Viability of an entire fallow land is jeopardized.
My recommendation to the publishers, and I say that independently as a vendor for publishing software, is that they have one Invest a minimum percentage of the annual budget in external startups. And not as financial investors or with ineffective accelerators, but rather as real and well paying customers of these little innovators.
Every growth industry cultivates its start-up scene by becoming sustainable customers, with patience and constructiveness without any pretensions to superiority. Because:
An industry in decline has the self-destructive quality of not promoting external positive forces and not taking advantage of opportunities.
Anyone who wants to become a news engine now or after Corona has to invest money in AI developer professionals. These can be built up internally, but must be supported by external consultants. The content must be purchased from third parties or generated automatically - e.g. with robotic journalism.
Those who want to find their way to a paid content publisher should get outside online marketing experts who have successfully promoted larger shops. These include conversion specialists, SEA agencies, technology providers for paywalls, etc.
Who is interested in an exchange on the topic, the I offer a personal interview. Just do it here. register for an appointment!
Stay tuned, it will be difficult, but not impossible!
Chris Eberl - CEO & Founder kontextR GmbH
16,868 total, 1 views today