Each section has a collection of posts on the steps publishers need to take to transform their newsrooms into effective digital news gathering and publishing operations, organised in the following way:

The unbolted newsroom: Several posts giving an overview of unbolting issues.

Getting your newsroom started: Carrying out a newsroom assessment to help set priorities.

Cover events and breaking news live: “Live coverage provides depth, immediacy and interactivity for the digital audience. You should always cover breaking stories as they unfold.”

Unbolt enterprise from the Sunday story: Instead of planning enterprise stories (articles that explain the forces shaping events, rather than simple reporting of those events) for the Sunday newspaper, plan them to appear first on digital platforms at the best time to reach your digital audience.

Cover routine daily news as it unfolds: Change the daily routine so reporters produce content throughout the day, not in the evening for the next morning’s newspaper.

Focus on mobile success: Prioritise mobile.

Newsroom meetings: “Daily planning meetings need to focus on digital platforms, rather than the next morning’s newspaper.”

Leading the unbolted newsroom: Include data and interactive specialists in story-planning, hire staff with digital skills, get the right CMS, let people lead, and more.

Editing: There should be fewer editors but more journalists who can edit their own work.

Measuring success: It’s challenging, but there will be a mix of subjective ratings and measurable metrics.

How the Berkshire Eagle is unbolting: A case study of one ‘unbolting Master Plan’.

Working Digital First: Posts on other issues to consider.

Read more: UK daily newspapers have doubled in price since 2004 and shrunk in size – no wonder sales are down

Most see journalism going in “wrong direction.” Six in 10 journalists (59.7 percent) say that journalism in the United States is going in the wrong direction.

Newsrooms are shrinking. Six in 10 journalists (62.6 percent) say their workforces have shrunk during the past year, while only about a quarter (24.2 percent) said their staff numbers remained the same, and even fewer reported some growth (13.2 percent).

Journalists are getting older. The median age of full-time U.S. journalists increased by six years to 47 from 2002. This trend applies to journalists at daily and weekly newspapers, radio and television stations, magazines, wire services and online news sites.

More women in journalism. The number of women in journalism increased by 4.5 percent. However, women still represent only slightly more than one-third of all full-time journalists working for the U.S. news media, as has been true since the early 1980s. This trend persists despite the fact that more women than ever are graduating from journalism schools.

Journalists are more likely to have at least a bachelor’s degree. About 92 percent of all full-time U.S. journalists have at least a bachelor’s degree, but slightly fewer proportionately are journalism majors (37.4 percent).

Gender pay gap persists. Median income has climbed to about $50,000 in 2012, up 12.9 percent since 2002. This increase was less than half of the combined inflation rate of 29.5 percent during this decade (2001-12). Women’s salaries still trail those of men overall, but not among journalists with less than five years’ experience.

More journalists say they are independents. In 2013, about half of all journalists (50.2 percent) said they were political independents, up about 18 percentage points from 2002.

Job satisfaction drops further. Job satisfaction dropped from 33.3 percent of journalists who said they were “very satisfied” with their job in 2002, to 23.3 percent who said so in 2013. This trend continues the decline in job satisfaction that was observed between 1971 and 1992 but was interrupted with a positive bounce in 2002.

Source: Indiana University Press Release

Read more:
Report: Journalists Are Miserable, Liberal, Over-Educated, Under-Paid, Middle-Aged Men
Indiana University survey: journalists grow more negative about their work
Three charts that explain how U.S. journalists use social media

The two charts above may seem contradictory. Yes, global online ad expenditure has multiplied tenfold since 2004. Yes, digital spend will surpass the printed press worldwide (in many countries, it already has) in 2015. But despite this impressive turnaround, the newspaper industry still gets most of its rapidly diminishing advertising revenues from print, not from digital. Indeed, many traditional news brands have reached huge audiences online but just a tiny amount of the global digital ad revenue cake. Why is that? Just a lack of vision, or is it an unfinished digital transformation?

The advertising paradox

The slow transformation to digital has indeed played a role for many traditional media, but unfortunately it is not the main factor behind this paradox. The most important cause is competition and this cannot be fixed. Media have moved from a world where ad revenues were shared among a very small bunch of papers, TV and radio stations in each country to a world of limitless competitors, from the huge new arrivals like Google or Facebook to the myriad bloggers. It’s almost a perfect market, awash with inventory, that is now getting even more ‘perfect’ with the development of programmatic buying, where machines (not fallible or emotional humans) match supply and demand in real time.

The laws of economics are ruthless. With an increase in competition/supply comes, inevitably, a decline in prices: so digital advertising has always suffered and will always suffer downward pricing pressure. This is why news outlets all over the world are searching with renewed passion for complementary revenue lines. And the main focus is now on ‘user generated revenues’, either traditional revenues based on editorial content or revenues based on new services.

Revisiting ‘editorial revenues’

Only five years ago, almost every news outlet in the world was banking on an open-web-pure-advertising-revenue model. But the global economic downturn and the low prices of digital advertising described above convinced many of the dangers of ‘single crop farming’ in digital. Only two international business brands – the Wall Street Journal and the Financial Times- were previously pursuing a subscription-based model, based on the exclusivity of their contents and the predominance of companies among their customers: WSJ as early as 1997 and the Financial Times 10 years later. But it was only in 2011 that a major general news property, the New York Times, dared to put its contents behind a paywall.

Three years later, the NYT has grown to 760.000 digital subscribers, an impressive number that has encouraged many to follow suit, even if The NYT’s journalism and singularity are difficult to match. Just in the US, there are already 450 national, regional and local news outlets (out of 1,380) that have introduced a digital subscription model according to the Pew Research Center. Are the models all the same?

No. Indeed, the discussion around ‘paid content’ and its presumed nemesis the ‘open web’ became so heated (creating two quasi-religious factions), that no one wants to talk about ‘paywalls’ any more. The forbidden word, as in Harry Potter’s ‘Voldemort’, is now replaced by ‘membership’, ‘club’, or anything else without ‘pay’ in it. And in most cases the offer does go beyond a pure payment for contents, offering users access to extra services, apps or discounts, and – of course – a special engagement with their favorite news brand. In any case, all offers include one or many of the following features:

• Hard paywall

It’s the oldest and usually simplest mechanism tried by publishers online. Users can only visit the homepage for free (sometimes also the sections’ homepages and/or ‘soft’ contents like photo-galleries), while most of the content online is reserved for subscribers. This was the system used by the Wall Street Journal in 1997 (now, fine-tuned) and by some general news big brands around the world at the turn of the 21^st Century, like El País in Spain in 2002. But most of them reverted to open websites after a disastrous drop in audience and very limited digital subscriptions. Surprisingly, Rupert Murdoch announced and put in place a hard paywall at The Times of UK as late as 2010. Last year, The Times and The Sunday Times totaled 130,000 digital subscribers, with a massive fall in online traffic (also affecting the paper’s audience) of more than 60% and a similar drop in digital advertising revenues.

• Soft paywall/Metered paywall

Introduced in 2007 by the Financial Times and popularized by The New York Times in 2011, this scheme tries to ‘square the circle’ of subscriptions and advertising revenues. The idea is to design a paywall that is porous enough to allow a very big number of free visits (and, therefore, a large enough digital advertising inventory), but not too much so as to discourage subscriptions.  The logic behind the system is the fact that loyal and very active readers are more willing to pay than casual users – though the latter massively outnumber the former. So the system relies on a ‘meter’ counting the number of times that a user visits the site and, from a set number of visits per month, the paywall pops up asking the user to log in or subscribe.

The Financial Times launched its paywall with a limit of 10 visits per month, excluding the homepage that is always open. Four years later, The New York Times took a much more cautious approach, because it had a much larger audience and advertising revenues to loose, and because the ‘exclusivity’ of a general news outlet is always more questionable than that of a financial one. So, the Times opened the limit to 20 free visits per month, excluding homepages and photogalleries which are always open. And to allow the virality of the internet to continue its magic (the main ‘collateral damage’ of paywalls), the NYT decided to keep access open to any visit coming from search engines and social networks.

All in all, this metered paywall only reduced the number of online visits by 5% and page views by 10% when it was launched. And to the surprise of many who thought this was too open an approach,  the number of digital subscriptions grew to the current 760,000. In the meantime, the NYT has reduced the number of free visits per month to 10 but, on the other hand, has completely opened access to video, whose ads are especially lucrative, and to some areas of content outside the US, where the rate of loyal users is lower. Indeed, the key to ‘metered paywalls’ is precisely this: they give publishers the ability to tweak the system on-the-go, depending on usage results and the need for inventories.

Ever since the NYT launch, hundreds of news outlets worldwide have introduced a metered paywall, including titles as different as The Telegraph in the UK, Folha de Sao Paulo in Brazil, The Onion in the US and El Mundo in Spain. Most are very recent developments, so we do not have meaningful numbers yet, but it will be interesting to see whether they are able to reach similar conversion rates to such an iconic brand as the NYT and whether they also manage to keep advertising revenues almost untouched.

• Freemium model

Freemium models are almost as old as the basic paywall. Their logic is straightforward: you cannot charge users for the same contents you were offering for free just before. So the basis is to keep the existing web open, while creating separate contents and/or products only for subscribers; i.e. a Free area + a Premium area. Indeed, this is a very typical model for software or mobile apps, which provide a basic service free of charge and a paid premium for accessing advanced features.

Many media outlets, old and new, have tried this model, including the New York Times previous ‘Select’ offer, Le Monde, Slate (very recently) and even the champions of the open web, The Guardian, with its premium tablet and mobile apps only for subscribers. But many ditched this approach after trying it out because it didn’t trigger a large number of subscribers (most users are fine with the free part) and because it usually involves an extra effort/cost from the newsroom or the publisher to create additional content/services for the premium area.

• Membership

Membership usually brings a set of advantages to the subscriber in addition to the editorial contents of the publication – such as free or discounted prices for conferences, exhibitions, theatre and concerts; or special events with the newsroom, etc.) to make him/her feel like they are a member of a ‘club’. As noted above, most paid offers from publishers – be they paywalls, freemium models or some other form – are also marketed as memberships. The emotional and ideological link with the news brand is indeed one of the – if not the only – most important factors for readers entering a paying scheme. Importantly, the New York Times realized recently that users respond better to a marketing campaign focused on the survival of the quality journalism they represent, than to other campaigns focused on the many features and advantages of their offer.

New media properties also use this emotional link with their readers/users as a key to their survival. New brands all over the world are being launched thanks to crowd-funding campaigns among their potential readers: people willing to pay to enjoy the type of journalism the brand promised. And many of them are inviting these readers to become subscribers or ‘members’ as a way to avoid a heavy reliance on advertisers – especially dangerous for small companies – and to support independent journalism. As the new Dutch kid on the block, ‘De Correspondent’ (famous for raising more than 1 million Euro of crowd-funding in eight days) put it: “De Correspondent is a commercial, for-profit enterprise, but our business model focuses on selling content to readers, rather than selling readers to advertisers”.

Beyond publishing

‘Diversification’ is the magic word for many media groups searching desperately for new sources of revenue in addition to advertising and to the – always challenging – paid content. The logic behind this model is: if I have a trusted brand and X hundred thousand – or even million – users visiting my website every day, I may be able to offer them other services or products endorsed by my brand. This way, publishers can leverage their own media power to build new businesses more or less connected to the editorial, instead of always relinquishing this to advertisers.

Given the difficulties of moving from the publishers’ trade to the service providers’ or retailers’ one, media groups are typically partnering with specialists or even buying their way into these new businesses. The two most widespread diversifications are online services and e-commerce.

• Services

Many publishers worldwide have been offering ‘collateral’ online services to their readers for more than a decade. Indeed, some of these services – such as classifieds – were a regular and very lucrative offer on print papers, and it was a natural transition to exploit them online too. The main difference between media players has been the size of their stake in this market, and their speed to approach it. While some news outlets have been particularly slow and cautious to enter the online business (for fear of harming their declining print product), others have been fast and assertive. In markets where supply of these services is mature, the late entrants are struggling to earn decent incomes from their affiliations with big players, but those who got in early are earning very significant revenues from their own fully-fledged operations. In some cases, much more than their revenues from the editorial business.

The Nordic champion Schibsted and the German group Axel Springer have been the most bullish in this diversification, and not surprisingly they are also the two European players with strongest digital revenues. Schibsted began as early as 1999 to position itself very aggressively in the online classifieds business in Norway, then bought start-ups in Sweden, France and Spain that are now blockbusters in their respective markets. Today they are shopping for a second round of personal finance services websites all over Europe to replicate the feat.

Springer initiated its diversification a little bit later, 2005, buying startups also in classifieds, affiliate marketing, price-comparison and women’s communities. In 2012, the German group was already earning more revenue from its digital operations than its print publications (that includes the 3 million daily copies of Bild!). A little bit further behind, the Guardian Media Group also relies on its dating and jobs classifieds online services for more than half of its digital revenues, and has recently sold part of the family silver – its 50.1% stake in Autotrader – for more than £600 million to finance its money-losing editorial operations. Last year, Autotrader made £252m in revenues and £32m in pre-tax profits.

• E-commerce

“Retailers have been very good at being publishers for a long time, it’s time for publishers to be good retailers,” the commercial director of the Daily Mail Group, Marcus Rich, said last year. DMG consumer media division is undoubtedly pushing e-commerce as a key strategy for the Daily Mail brand extension; they already make £5 million in direct cruise sales alone. Pure players like Gawker Media are also keen to run this race and, according to its founder Denton Memo, will make around 10% of their digital revenues from E-comm this year. Even media power houses like the Italian RCS-Corriere della Sera are swiftly moving from taking their first steps in e-commerce (selling ‘extended editorial content’ such as books or movies) to the second step (partnering with retailers around editorial topics such as travel or beauty) and even third steps (integrating pure e-commerce offers in the editorial content), according to RCS’s CDO, Alceo Rapagna.

But most publishers are still in the early infancy of an e-commerce strategy, even if they consider it important.  According to a Forrester Consulting survey of 106 media companies in December 2012, more than 70% thought that having an online store was important, and about the same number said that having a separate deals site was important too. Indeed these two options were ranked third and fourth for driving audience and revenue only after an ‘Advanced website functionality’ and ‘More online advertisers’. But 30% of them added that they didn’t have the budget for adding real e-commerce. Are we in Year One of e-comm for publishers, just as 2000 was for services?

“We would like to find out whether the physical newspaper can be replaced by a reading device delivered with the subscription”, said Santtu Parkkonen, Producer, Helsingin Sanomat development. “The ePaper device also enables new types of subscription-based products. Ideally, readers could take contents of Sanoma’s multiple media brands and compose their own favorite magazines. A personalized newspaper has long been the stuff of dreams, but now it can become reality”, Parkkonen said in a press release.

Read more:

Helsingin Sanomat tests solar-charged e-reader

New Color e-Reader being Developed in Finland

Foto: Leia Media

Read a comment from PaidContent’s Mathew Ingram: Jeff Bezos is both right and wrong about why newspapers are like horses.

However, the question remains on how advertisers and news organisations, especially in markets in the early stages of digital development, realise this potential. In major markets both in developed and emerging markets, massive news conglomerates have been able to diversify, building or buying companies to create a multi-platform strategy.

In smaller markets and for smaller news organisations, this strategy isn’t an option. Smaller ad budgets overall and smaller digital opportunities force both advertising agencies and news organisations to be more creative in building sustainable businesses.

The rich, Latin American giants

When talking about digital advertising in Latin America, we need to begin by talking about advertising in Latin America.

When we look at the big picture, we come to one reality: Latin America is a divided market. On one side, there are the bigger and wealthier countries with big budgets, and on the other side are the smaller, less affluent countries with small advertising budgets. This fundamental difference impacts on how digital advertising is developing across the continent.

The Latin American giants, Brazil, Mexico and Argentina, are powering digital ad growth across the region, helping it achieve the world’s second fastest growth rate.

“According to new projections from eMarketer, in 2013 online ad spend in Latin America will grow by 23 percent, more than any other region in the world except for the Middle East”, according to an article on Latin Link, a site that covers Latin American media developments by usmediaconsulting.com.

Mexico will lead this growth with an increase of 32.1 percent in digital ad spend in 2013, Argentina will come second with a rise of 30 percent, and Brazil will grow by 20 percent.

This impressive growth is a result of several factors, one of them being the size of these countries. Brazil, Mexico and Argentina together have 158 m internet users, more than half of all Latin American users, which is estimated to be 232 m, according to a May 2012 projection from Registro de Direcciones de Internet para América Latina y Caribe (LACNIC). Their sheer size makes them attractive to advertisers.

Another factor is the maturity and size of the advertising industries and their competitiveness. Advertisers and advertising agencies, like news businesses, cannot stand still; they must invest in their teams and keep pace with digital innovations in order to achieve a competitive advantage in hotly contested markets.

The industry demand for specialist digital skills is so high in some of the developed markets, that some universities and colleges offer digital communications programmes sponsored by advertising agencies. This is not the case in the less digitally developed markets, where news organisations and advertisers are still trying to come to terms with new digital platforms and how they might be the source of future revenues.

Innovations in sustainability in struggling markets

Another glaring difference between the digitally developed and less developed markets is the size of digital budgets. There are enough digital consumers in the developed markets to allow the advertising industry to charge commercial rates for its work, which means advertisers have specific budgets for digital advertising in addition to traditional ad budgets. This is not the case in the less digitally developed countries where digital budgets must be taken out of the traditional ad spend.

This makes digital advertising financially challenging in the less-developed markets and also means that advertising agencies have to be resourceful, inventive and, most of all, curious. This curiosity has led ad agencies on this side of the Latin American divide to develop some of the most creative and effective advertising in the region.

A huge amount of talent exists in the less digitally developed parts of Latin America, but a lack of knowledge in advertising agencies, advertisers and the media undermine the potential the business has in the region. You can have an international award-winning digital ad, but it can’t command a fee that reflects its sophistication, so it won’t earn a profit for the agency.

While some countries have no idea of what digital advertising is, other countries in Central America, for example, have found a way of making a profit with digital advertising by creating offices with local talent that produce digital platforms for European countries, charging prices only slightly lower than their European competitors.

This shows an inconsistency in how digital advertising is developing even within the struggling side of Latin America. Approximately 95 percent of the digital advertising work in the less developed markets of Latin America could still be categorised as community management, website design and basic app design, while the remaining 5 percent is genuinely creative advertising work that can earn profit for both the advertiser and the advertising agency or digital studio.

Impact on news media

In some of the struggling Latin American markets, legacy media, such as newspapers and TV channels, bundle up their online ad space as a package when advertisers buy space in their traditional media. This makes it more difficult for digital-only media to compete.

Most of the digital-only media in this region that have survived have very defined target audiences. They maintain their editorial content very well focused on that target to build loyalty. These specialist media can defend their costs when selling advertising space, as their selling strategy focuses on connecting brands with specific audiences. This niche strategy allows the sites to sell very targeted advertising based on a narrow content strategy rather than the technology that search engines and social networks use to deliver ad targeting.

One of the known virtues of digital media around the world has been their versatility and ability to reinvent themselves to offer different formats, but a lack of technical knowledge in the less digitally-developed side of Latin America hinders progress. For example, programming limitations mean that the only format on offer is usually the traditional banner ad, which means a media company can’t charge premium prices for a more creative use of ads.

The digital side of news organisations is normally not led by digital experts – most are directed by people with a traditional media background and have limited “know-how” about the potential of this new field. There’s a lack of vision not only in content but also in digital advertising sales. They focus mainly on selling display advertising – banner ads or pop-ups – instead of developing proper and specific digital platforms custom made for the advertiser’s needs. This fuels advertisers’ perception that digital media is all the same, so they end up choosing the cheapest option.

As noted above, digital media and traditional media in the struggling side of Latin America have to fight for the same marketing budget from advertisers, which creates a very confrontational environment, and as traditional media offer digital ads as a bonus for buying traditional ads, there is little room for companies specialising in digital media. The problem is that digital media companies have not yet differentiated themselves from regular digital media placing, and they need to be even more innovative to successfully compete with traditional media.

At the end of the day, if digital media does not offer something truly different and an advertiser has to choose where to spend a single ad budget, they are likely to choose traditional media as it still reaches more people, and they will given some online space for free promote their brands. As digital audiences grow and digital budgets develop, it will be very difficult for these media groups to increase their rates.

Digital education needed

Much of the recognition Latin America has for digital ad spending is due to the few digitally-developed markets. What the struggling side of Latin America needs, is know-how; it needs advertising agencies to invest in technology and education for their teams and clients. Advertisers and digital media need to understand the benefits digital advertising can bring to their businesses, and most of all the relationship that can be established between their brands and their consumers by making them engage through technology and digital platforms.

While I realise there is still only a weak digital culture in most of the struggling side of Latin America, I believe that this represents an opportunity. It is an opportunity for:

• Universities and colleges to open specialised programs focused on digital advertising.
• Advertising agencies to build knowledge, become more competitive and increase income.
• Advertisers to achieve their business objectives and reach their targets in a more engaging manner.
• The developers of digital advertising to be creative in a part of the world that needs people who know what needs to be done.

Digital: Online and on mobile

I believe that digital advertising opens up an entire world of opportunities in emerging markets such as Central America, and this means “digital” not only online. Online will always depend on internet penetration in order for an advertiser to consider it as an important channel that needs more budget, and the growth of internet penetration depends on the capability of technological expansion by every Internet Service Provider, as well as the ability of the population to afford it.

But digital represents many other formats than just online. Mobile is a form of digital advertising and there are more mobile phones than people in these countries. The biggest opportunity will arise when people begin to understand the full potential of digital advertising in struggling Latin America. Advertisers will see something truly different from what they’ve come to think of as community management and online advertising, and start seeing that they are really being offered something that will give them their money’s worth, something that they will believe is worth investing in.

There is hardly a week that passes by when we don’t read of some bad news or other about the media industry. More and more papers are reporting circulation declines and many have cut down on the number of publication days.

Just this month, a business information analyst, IBISWorld, reported that revenues for newspaper publishers in Australia are expected to drop by 4 per cent this year – from $6.7 billion to $6.4 billion. IBISWorld general manager Karen Dobie was quoted as saying:

Declining circulation over the past five years, caused by time restraints, the rising popularity of new media like the internet, pay-TV, and mobile devices, and competition from consumer magazines has continued to have an adverse affect on the industry.

That story is not unfamiliar to newspapers worldwide. While the declines in the US and Western Europe are well known and well reported, those regions are not alone is seeing print circulation decline. A recent report by the International Federation of Audit Bureaux of Circulation showed that from 2010 to 2011 declining print circulation even spread to the Asian giants of China and India, which had been seen as bright spots in terms of print as rising affluence and literacy increased newspaper sales.

Revenue following circulation declines

As print circulation comes under pressure, sadly revenue follows it. Indeed, new media has taken a huge toll on one particular area for newspapers – the classifieds pages.

What once used to be referred to as “rivers of gold” has slowed down to a trickle, with consumers preferring to check out classifieds online where searchability is the prime selling factor.

Not so long ago, for example, the Sydney Morning Herald’s Saturday paper was packed with 120 pages of classifieds. But today, it is much less than half that. Classifieds for property, cars and jobs have migrated online with a vengeance.

Newspapers are, in large part, to blame for this predicament.

For years, they stubbornly refused to put their classifieds online, giving non-traditional players such as Craigslist, eBay and new entrants such as iProperty, PropertyGuru.com.sg and carsales.com.au.

iProperty has sites in Malaysia, Singapore, Hong Kong, Indonesia, The Philippines and India, and in some cases multiple sites in one country – all targeted at taking away a slice of revenue from print media.

It has diverted some of the revenue from Singapore Press Holdings (SPH), which owns more than 10 newspapers in Singapore. For many years, its flagship paper, The Straits Times, refused to put its classifieds online for fear that if classifieds were available online, few would advertise in the printed paper.

Meanwhile, other hitherto unknown players entered the market. For nearly a decade, they were allowed to grow with little fightback from the SPH group.

“Our online competitors have grown strong through the years. In fact, for some of them, we had allowed them to grow,” SPH’s vice president and head of its online classifieds, Johnson Goh, confessed at the Digital Media Asia conference held in Kuala Lumpur last November.

SPH saw its classifieds’ revenue decline while, at the same time, the number of adults using online classifieds doubled since 2005.

Newspapers begin to fight back

Last year, the group decided to act.

“If our classifieds were going to lose business to online players anyway, there was no reason why we should not have our own sites,” Mr Goh said.

SPH devised a strategy to fight back. It reorganised its classifieds team into print and online, repositioned its classifieds strategy, and rebranded the various products.

In June last year, it launched the first of several vertical, or niche, businesses. STJobs, a recruitment and employment site, took off, followed by STCars, STProperty and a general classifieds site, STClassifieds.

It was a resounding success, said Mr Goh. STJobs has chalked up 10 million pageviews since it was launched.

Media groups go global with classifieds

Similar stories of newspapers coming late to the party can be found around the world – and some are success stories too.

Sweden’s Schibsted is a case worth studying for those interested in the online battle. A major publisher of newspapers including Norway’s biggest paper, VG, Schibsted has gone into online classifieds aggressively. Its aim is to be the No.1 online classifieds site in the world.

In the spring of 2008, Schibsted brought all its online classified companies into Schibsted Classified Media.

Already hugely successful with its Blocket.com classifieds site in Sweden, the company decided to take the model around the world. It launched Blocket or Blocket-like sites throughout Europe.

Today its European operation has become the leading online classifieds business.

Not content to sit back, Schibsted has set up operations or entered into partnerships with local groups in Asia, Eastern Europe and Latin America.

The sites take on distinctly local names, such as ayosdito in The Philippines, chotot.vn in Vietnam, liaomaimai.com in China, sahipasand.com in India and mudah.my in Malaysia.

SCM’s annual report for 2011 says gross operating revenue rose to €264.1 million from €213.7 the year before. Of this, the international business generated €75.1 million.

South African media giant, Naspers, too has employed a similar strategy. Early during the online boom, Naspers bought into TenCent in China. Today, TenCent is one of the biggest players in China, and in terms of sheer size and numbers, in the world.

Naspers has moved rapidly into a range of products including Russia’s Mail.ru, Brazil and elsewhere, with classifieds offerings such as Dealfish, Gadu-Gadu, kalahari.com, lelong, PayU, PriceCheck, Sanook!, and TravelBoutique Online.

Clearly, it is no longer the local market or even hinterland countries that is attractive to some of these major players. The world, indeed, is their oyster.

If I had a dollar for every time I’ve heard that hyperlocal news start-ups would be the next big thing in journalism, I’d be a rich man. But unfortunately, for many of these sites, dollars, in the form of a sustainable business model, have not materialised. The dream has been that targeted local advertising would flow to focused, local content. The problem has been that “hyper” local content, as opposed to simply local content, has been scale. How do you create content that is targeted enough to be relevant to local readers but still captures a large enough audience to be relevant to advertisers? At the recent Street Fight Summit, a conference dedicated to hyperlocal media, Kira Goldenberg of the Columbia Journalism Review gave this pessimistic summary of a panel of hyperlocal news start-ups:

The panel just before lunch at Tuesday’s Street Fight Summit, a two-day conference dedicated to all things hyperlocal, was on hyperlocal “publishing models that work.” But by “work,” organizers seemed to mean models that “have yet to fail”; none of the sites represented by panelists are making money yet.

The panellists included Daily Voice, DNAInfo and GoLocal24, and all of them said that they were on their way or “on plan” to profitability but still not there yet.

Hard lessons learned

If you want to cut through the hype, it’s worth reading a detailed post by Mike Fourcher, a Chicago-based entrepreneur and publisher of hyperlocal sites in the city. He listed 21 lessons he learned running sites Lakeviewing.com and Center Square Journal, and I’ll highlight just a few here that are relevant to all markets. The post is well worth reading in its entirety because it’s one of those times where someone is highlighting challenges rather than simply promoting success.

The challenges of selling to small- and medium-sized local business – This is one of the advantages that newspapers and other traditional media still hold and must defend: their relationship with local advertisers. For hyperlocal news start-ups, they don’t have these relationships and must build them, a challenge that Fourcher said was much more difficult than building an audience. He pointed out how local small businesses suffer fatigue from being sold to, not only by people wanting to sell advertising but also by their suppliers. He said, “Small business owners are constantly fighting off salespeople with a stick.”

New competitors and challenges in local advertising – In addition to these long-standing challenges in the local ad market, he also said that there were novel challenges that he faced. Chicago was where Groupon was founded, and although it has suffered from competition and trying to scale its own business model, Fourcher said that new Groupon-style businesses are being launched that are signing up advertisers rapidly. Daily deal providers and aggregators are now present in most news markets. He said:

Belly, which is founded by former Grouponers and funded by the Groupon founders’ investment fund, showed up at a local merchant group meeting unannounced. They brought a pile of iPads for businesses that sign up, and  thus signed up everyone in the room in a flash. Now Belly is a major competitor for neighborhood marketing dollars.

Social media giveth. Social media taketh away – As we’ve said frequently here on Knowledge Bridge, news sites have been very successful in building their audiences using social media, but now businesses are turning directly to social media to market to their customers, cutting out intermediary advertisers such as news organisations.

I’ll highlight one more lesson that he learned because I think it’s so crucial in terms of commercial success:

It’s easier to find a good writer than a good sales person. … Lots of people like to write. Very few people like to sell.

Just as editors and publishers know that they need to hire great journalists to create great content to attract audiences, we need to hire great sales staff to attract advertisers. Local journalism is coming under increasing pressure in the digital age, but to maintain sustainability we need to fight for advertisers just as aggressively as we fight for readers and viewers. Fourcher has some important, hard earned, lessons to help you keep winning that fight.

“We had a benefit of being online at a very early age in our history,” said Mail & Guardian CEO Hoosain Karjieker, adding, “that really gave us a base upon which to grow.”

This early lead positioned the Mail & Guardian to take advantage of recent rapid growth in internet usage in South Africa. Internet use grew 25 percent in 2011, bringing the number of South Africans using the internet to 8.5 m, and it is estimated that the number will grow further to 10 m by the end of 2012, according to research by World Wide Worx. Of the 8.5 m internet users, 7.9 m have accessed the internet on their mobile phones, and 2.48 m do not have a PC and accessed the internet solely through their mobile phones.

For the Mail & Guardian, being pioneers doesn’t mean that they haven’t had many of the same challenges other news groups have faced as they developed digitally. However, by clearly laying out their strategy to take advantage of digital opportunities not only editorially but also commercially and working with staff to develop multi-platform skills, they have won over sceptics inside the organisation, which has allowed them to grow their digital business strongly.

The shift to digital first

“About two years ago, we realised that revenues were beginning to migrate in significant proportion into the online environment,” Karjieker said.

South Africa’s internet economy was described as the country’s “quiet engine of growth” in a 2012 report bv World Wide Worx (PDF). E-commerce sales have risen by 30 percent year-over-year for the past two years, and in both 2010 and 2011, the online advertising market grew 35 percent year-over-year, rising to R760 m or US$89 m.

Seeing this shift not just in user behaviour but also a shift in opportunity to attract advertising revenue, the Mail & Guardian launched a digital first strategy, Karjieker said, adding:

We didn’t see this as something that was going to kill off the print environment, but we embraced it as an important platform for us to be engaged with, for us to be present on and for us to develop business models around.

Initially the move met with a lot of resistance “from your traditional print journalist who felt he was employed to write a weekly article that was going to be published in the Mail & Guardian,” he said. Having a byline in the paper was seen as quite prestigious.

They had to undergo training to write for digital formats and a “change process” to deal with the resistance. Journalists also saw what was happening in the US and the UK at The Guardian, and it reinforced the concept of going digital for them, he said. They understood that this was going to come. They also changed the contracts of the journalists so that digital responsibilities were included in their role. All and all, Karjieker said:

It hasn’t been easy. There has been resistance, but gradually people made the shift. What we found now is that people are eager to write, and we have an abundance of articles to put up online.

Now the newspaper is comfortable breaking stories online rather than wait for the end of the week. With that change and others, he says that they are now able to present good quality content on digital platforms. The changes have allowed the Mail & Guardian to see strong audience growth, he said.

The shift to digital hasn’t just been on the editorial side. They also changed their incentive structure to reward digital sales.

Convergence once had a negative connotation in the organisation, but it has become a positive message. “If you are able to articulate the vision and mission right at the top of the organisation at an early stage, especially around a digital first strategy, people are willing to embrace it a lot easier,” he said.

Stronger commercial and editorial cooperation

Shifting to digital hasn’t been the only change. They have also started to soften some of the barriers between editorial and commercial staff. When they launch new print or online sections, they often have held road shows to meet with advertisers to market the new offering. Sales staff are obviously a key element of these efforts, but they also take editors of the divisions as well. “They can clearly spell out and articulate the message and manner in which we will be conveying the editorial,” he said. They found that advertisers want to engage with the editors, he said. In the past, there were fears that such meetings would impact on editorial independence, but editors themselves have seen the commercial advantage in such meetings.

For most journalists, the wall between editorial and commercial in news organisations is absolute and unbreakable. Finding a way to deal with this cultural resistance is often as challenging as dealing with the shift to digital.

“A lot of people still frown on it throughout the organisation, but I think we were able to convince them that taking on a commercial initiative doesn’t mean that journalists have to write positively about them,” he said. He gave an example of how the Mail & Guardian has been able to maintain its editorial independence even when writing about their advertisers. A major telecommunications company is a prominent advertiser for a business section both in print and online, and six months ago the newspaper covered some of the company’s business dealings in Iran and flaws in the operations. “We were able to write that without fear that we would be victimised by the advertiser or anyone from the organisation,” he said.

It has helped convince editors that they can work with their commercial colleagues without compromising their rightly valued editorial independence.