Report: The future of national newspapers

Walled gardens, the end of old rivalries and native advertising had the newspaper industry locked in debate this week. Here, Newsline reports on how the future is all about working together.

After years of experimentation it appears newsbrands are still some way off from finding the magic formula for a sustainable business model fit for the 21st century.

However, there are still some big and interesting changes happening in the national newspaper industry – not least the attitudes towards collaboration.

From publishers working together to offer better scale, to getting cosy with the likes of Facebook and Google, attitudes are clearly changing.

“The whole industry is very good at being sceptical,” said Christian Broughton, digital editor at The Independent and i, at the Future of National Newspapers on Wednesday. “It’s in our blood. But, sadly, that can sometimes lead to a negative perception of what I think are some fascinating opportunities.”

Broughton argues that one of those opportunities, Facebook’s Instant Articles, the new tool that allows publishers to host their content directly on the social network, is a good thing and that instead of fearing the collaboration, it should be embraced.

“I don’t think there’s any reason to be hugely sceptical,” he said, noting that the Independent and i are planning to join the growing number of newsbrands to use the feature, including the Guardian, BBC and New York Times.

“No one has been doing it at massive scale yet because it’s new and we’re trying to work it out – but as far as I understand it the commercial terms are pretty good.”

Others just worry that, somewhere down the line, the commercial terms will not look so good and publishers will lose out. Yet something has to give, and it was the commercial side of the newspaper industry that dominated the conference debate.

Interview with William Stolerman founder, The News Hub

“Every time we write newspapers off they bounce back,” said the Guardian’s head of media, Jane Martinson. “But how do they make money?”

Print circulations are in decline, competition from ambitious upstarts is fierce and the business models of yesteryear are no longer fit for purpose.

The Daily Mirror columnist Susie Boniface – aka Fleet Street Fox – argued that “menopausal morons” running the UK’s newspapers were trying to apply old fashioned business models to new and different ways of publishing.

“It’s ridiculous,” Boniface said, arguing that newsbrands must experiment and “speculate to accumulate.”

That means, instead of making money off the back of old-fashioned advertising, newsbrands should invest and experiment in spring-boarding new business off the back of the brand name – such as dating sites, events and membership schemes.

“We are so used to selling [advertising] space and getting paid for it,” said Boniface, “but the idea of having to sell a thing; to actually have to think first and maybe invest in it, is alien to the people who are running the newspaper industry.”

Of course, the commercial top brass disagrees. Trinity Mirror’s strategy director, Piers North, said that it is a “day-to-day preoccupation of those working in the print industry to find new business models.”[advert position=”left”]

North told the conference that the idea that those running the business side are sat around simply cutting the bottom line “does a massive disservice” to their work.

The problem, North argues, is that the online advertising market is now “considerably smaller” than it was three to four years ago.

“There are only two businesses that are gaining any take-up of the market: Facebook and Google. Newsbrands have no right to exist. We need to find the commercial model and we don’t have the answer and that’s an incredible challenge that we all need to face.”

Better together?

It is here that we see old rivalries being placed to one side as publishers look to work together as they square up to the online giants.

Earlier this year four major publishers unveiled the Pangaea Alliance, a new digital advertising proposition that will allow brands to collectively access a “premium” global audience via the latest programmatic technology.

Led by the Guardian, Pangaea brings together CNN International, the Financial Times and Reuters as founding partners, with The Economist also providing access to ad inventory.

But this leads to a thorny issue: the rise of the walled garden.

Viewability and ad fraud are big topics, argued Quantcast’s Sebastien Blanc, director, global supply, but they are nothing compared to the idea that publishers – or groups of publishers working together – will begin to restrict third party ad tech companies from operating on their networks.

Left to right: Nick Hewat, Adam Pace, Karin Seymour and James Wildman

Premium publishers with high value audiences want to run premium ad networks to compete with the online giants. However, programmatic ad buying is diminishing their rates as sales become increasingly automated.

The Pangaea alliance offers publishers the benefits of machine-based automation with added scale while advertisers can ensure their ads will be placed within high-quality environments.

However, closed or open, it’s not straightforward said James Wildman, chief revenue officer at Trinity Mirror.

“We’re really wrestling with this issue. We’ve been relying, up until now, on the open exchange, predominately programmatically – but we struggle with yield.

“If all we do is trade on the open exchange then we’re in a race to the bottom, competing with millions of other sites. Ideally, we’d go closed – but there is the question of scale.”

Wildman said that Pangaea is a “bold” move and the “right direction of travel” and that Trinity – although not a part of the alliance – is in dialogue with a number of other publishers about similar propositions.

Nick Hewat, commercial director, Guardian News and Media (GNM), argued that it is not a binary issue and publishers should not have to go one way or the other, but for GNM the key is selling the idea of scarcity.

“There’s no scarcity of inventory,” he said. “There are some terrifying numbers out there. In the US you can get around 14 billion ad impressions a day, so there’s no scarcity there. But what is scarce is information about the consumer.”

Audience data is, effectively, Quantcast’s business, but Hewat said that he does not necessarily want to share the information GNM knows about its audience with them.

“I think I can utilise that information better,” he said. “Scarcity has value that is not recognised in the programmatic market but that we would like to see recognised over time as the market matures.”

On the buyer side, however, things are stacked against Hewat and Wildman.

“Publishers want high yields, I want low prices,” said Adam Pace, deputy managing director, Opera, the media investment arm of Omnicom Media Group.

“A closed ecosystem requires leverage – Facebook has lots of audience data, Google has YouTube and strong ad tech. Unless you are a publisher with something along those lines, I think you are going to struggle,” Pace argued.

“Open exchanges aren’t great for high-quality publishers, but you have to bring something to the party.”

Christian Broughton and ex-Independent editor Chris Blackhurst (chairing)

To find out more about Mediatel events, please visit the dedicated website. Up next: The Automated Trading Debate, Oct 5.