For MENA’s media players however, the report made for a more sobering read.

Two-thirds of the MENA population is under the age of 30, so younger demographics are too big for news organisations and content providers to ignore.

Nonetheless, the findings of this survey suggest that traditional news outlets are losing the battle to retain the trust and interest of younger audiences. To reverse this trend news organisations will need to adapt and innovate. Failure to do so will see this young – tech savvy – consumer base continue to haemorrhage.

Three key challenges: trust, social media and plurality of news sources

TV aside, old media in the Middle East is becoming less important as a news source for young people. The daily consumption of newspapers, radio and magazines by this age group has dropped by over 50 percent since 2011. Although almost half of young Arabs update themselves daily on news and current affairs, online and social media are the sources they increasingly turn to.

Despite TV remaining the primary source of news for Middle East youth, TV Executives cannot rest on their laurels.

When asked: “In your opinion what is the most trusted source of news?”, 48 percent of the survey’s 3,000 respondents selected websites (26 percent) or social media (22 percent), up from a combined figure of 27 percent just the year before.

In contrast, TV scored 40 percent, down from a 60 percent peak in 2011.

Media consumption therefore should not always be taken as a proxy for audience trust or credibility.

For newspaper proprietors, their drop in the trust league table was even more pronounced, part of a wider shift away from this medium, and a migration amongst Arab Youth towards a preference for social channels. Coupled with declining consumption, ASDA’A Burson-Marsteller CEO Sunil John described this as “an alarming development for newspaper publishers.”

The digital opportunity: you have to be in it, to win it

With 81 percent of Arab Youth online every day (one source reported that 40 percent are online for at least five hours a day), the lesson to media players is clear; you have to be as active online as the audience you are chasing.

This is especially true given the decline in offline news consumption. Research from Booz and Co and Google recently noted that:

“roughly 85 percent … (of 15-35 year olds) … now spend less than one hour [a day] with print media.”

The same report also observed that 78 percent of the Arab Digital Generation prefers the Internet to TV.

As Jaber Al Harami,  editor-in-chief of the Qatari newspaper Al Sharq, has argued:

“This generation is the keyboard generation. 140 characters is all you need – media should be restructured.”

Connecting with the right content and concerns

Many of the socioeconomic preoccupations of Arab Youth – rising living costs, unemployment and the challenge of home ownership – are the same as those shared by young people across the globe. Whether the Arab media adequately addresses or reflects these concerns is a moot point. If young people feel they do not, then this may contribute to the drift away from traditional news outlets.

The popularity of blogs – which are read by  48 per cent of Arab Youth and posted on by 38 per cent of them – offer a hint that perhaps mainstream media is not providing the range of content,  or opportunities for interaction, which many young people want to see.

Fashion, news and current affairs, celebrity news and technology, are the most popular genres for blog readers. Publishers need to ask themselves if they’re offering enough of this type of content.

Don’t forget video and social networks

YouTube enjoys 167 million playbacks a day in the region, so media players also need to consider the importance of video online. Vice Media’s  documentary on a heavy metal band in Iraq – and their live streaming from Turkey’s Taksim Square – suggest this may be one way to reconnect with youth audiences.

The increasingly influential role of social media as a primary – and trusted – source of news also poses some interesting questions for news groups. (As shown in the chart above, social media easily surpassed newspapers, radio and magazines in both the survey’s consumption and trust categories.)

Given the dynamics of these networks, media companies will need to actively engage with fellow users and produce content tailored for these medium. With 64 percent of all Arab youth saying they have a Facebook account and nearly half saying they respond to tweets from others, one way of doing this is to create bite-sized content which is perfect for social sharing. That may include blog posts, video clips, infographics, tweets or pictures, all designed for the digital space.

Finally, it is important to note that whilst the Arab Youth Survey shows trends across the MENA region, the 15 countries featured in the study are not homogenous. They do share common characteristics, not least a renewed pride in their Arab identity, but there will be variations across national markets. (Perhaps the most pronounced of these is that 92 percent of Algerians say they regularly read blogs, compared  to 24 percent in Bahrain.)

Reports like the Arab Youth Survey offer great insights, but news groups will also benefit from digging deeper into the needs and behaviours of their audiences, so that they can tailor their efforts accordingly.

More insights are available from the study’s dedicated website: www.arabyouthsurvey.com

Major emerging markets and regions will power the next five years of growth in media and entertainment, and in these rapidly growing markets, growth will come not just from digital but also from traditional media such as television and newspapers, according to an annual media forecast by PricewaterhouseCoopers (PwC).

Globally, digital media will continue to be the prime driver for growth. PwC defines digital revenue sources broadly, including not just advertising but also consumers buying digital content and digital access. The report finds that:

By 2017, digital revenues (including consumer spending on digital content, digital advertising spending and spending on Internet access) will account for 47% of the total, up from 35% in 2012.

However, digital media is not the only growth story in the report. PwC forecasts that eight core markets – China, Brazil, India, Russia, Middle East and North Africa, Mexico, Indonesia, and Argentina – will see growth rates double that of the entertainment and media sector as a whole over the next five years.

And in many of these markets, especially in Latin America and Asia, television and newspapers will contribute to the growth as well a digital.

Key digital trends for emerging markets

It’s hardly surprising that over the next five years digital entertainment and media will continue to power forward. However, dig more deeply into the global, top-line figures, and media leaders in emerging markets can find a lot of strategic insights.

• Classified advertising – Just as they have in developed markets, the report says that “online classifieds are set to take over from their print equivalents in developing economies in the next five years”.
• Search advertising – On Knowledge Bridge, we’ve covered extensively how targeted search and social media advertising often dominates digital advertising. The report says that search will remain dominant with an important caveat. If Google is not a major player in your market, search advertising isn’t necessarily the king of digital advertising.
• Mobile access – The future is not only digital but mobile – and we cannot stress this enough. Emerging markets are playing a huge role in this shift. “Brazil, China, India and Russia alone will account for 45% of fixed-broadband subscriptions and 50% of mobile Internet users by the end of 2017,” the report found.
• Mobile advertising – Do not be timid about embracing mobile because you don’t see the advertising opportunity. “Mobile advertising is finally set to take off properly, with growth forecast across all regions over the next five years,” according to the report, and by 2017, mobile advertising will account for 15 percent of all internet advertising revenues.

Traditional media to continue growth in emerging markets

While digital access, content and advertising will be one of the highest areas of growth over the next five years, growing middle classes in emerging markets will also drive growth in revenues for traditional media including television and newspapers, especially in rapidly growing markets in Asia and Latin America.

Thus far, TV has been very resilient to the digital disruption rocking other media sectors such as newspapers, magazines, music and books. As the PwC reports says, it continues to deliver not only the mass audiences but also the attention that advertisers crave. The next five years will see little change in that. Free-to-air terrestrial channels will continue to deliver the bulk, 70 percent, of TV revenues, only down a few percentage points from the current mix.

Again, the only real news here is that emerging markets will see the fastest growth. Kenya, India, Indonesia, Brazil and Nigeria will see the fastest rise in TV advertising revenues. Indonesia, Kenya, Thailand and Vietnam will see the fastest growth in terms of pay TV subscriptions.

Another important trend that the report highlighted for emerging markets is the opportunities for regional media to reach diaspora audiences. As Jeff John Roberts says in paidContent, tapping into diaspora audiences in mature markets can be a rich source of revenue for emerging market media players. He highlighted this from the report:

As expatriate communities grow, distributors are increasingly crossing geographical borders to address them. Examples include iRoko, which targets the African diaspora in wealthier markets and has more customers in London than Lagos.

Television advertising hasn’t moved online quickly, and PwC thinks that it is wrong to over-estimate the shift from traditional paid TV delivery systems, such as cable, to so-called over-the-top (OTT), internet-carr lanedelivered services. OTT services will remain a small portion, only 6 percent, of paid TV revenues by 2017.

The digital transition has not been so kind to newspapers, and it is important for publishers to note the shift from print to online classified advertising even in emerging markets. However, newspapers will continue to grow over the next five years across Asia and Latin America. Growth in Brazil, India, China and Indonesia will offset declines in newspaper circulation in mature markets such as the US, UK, Japan and Germany.

Leverage data to benefit from the multi-screen shift

PwC painted a picture of a connected but also a confused consumer. Digital has increased consumer choice, but Roberts at paidContent said:

the report (citing people in Singapore who pay for pirated content even though a legal version was available for free) also suggests that the volume of content is leaving consumers “confused.”

With so many choices, customers might be confused, they might be overwhelmed by the options to them, but the level of choice has led them to expect “my media” rather than “mass media”. The future is increasingly one of multiple screens – TV, tablets and smartphones – but this will pose challenges to media companies. To deliver this personalised content and also targeted advertising to consumers, media organisations will have to constantly innovate, especially when it comes to data about their audiences. Again, Roberts pulled this highlight out of the report about the type of data that media companies will need to use:

granular, small data— derived through analytics—that gives insights into customers’ actual and likely behavior in response to a particular message or experience.

It will not be enough to know who your audience is but also what they are likely to do. As advertisers look to increase the return-on-investment for their clients, they will want to know not just the size of your audience and their interaction with your content but also much richer behavioural data. This is why Amazon has just announced that it will be leveraging its vast mountain of e-commerce data to help target advertising.

While paid content has been a major focus in the past year, PwC still sees a huge opportunity for advertising revenue, but media companies will only realise this opportunity if they embrace a multi-platform approach that leverages not only content but also customer data.

Last year alone mobile data traffic almost doubled, and the volume of mobile data traffic was 61 times larger in 2012 than it was five years earlier, according to a report by US networking company Cisco.

The report is packed with similarly staggering figures that highlight the growth of mobile data, including a prediction that by the end of this year, the number of mobile connected devices will exceed the world’s population.

The report provides not just these-attention grabbing global figures, but also regional and in some cases national figures that will help publishers and editors at news organisations make decisions about how to reach their rapidly expanding mobile audiences.

Explosive growth in the next five years

The report, The Visual Networking Index Global Mobile Forecast (PDF) , gives a sense of just how rapid the growth in mobile data will be over the next five years. It draws on a number of sources including Informa Telecoms and Media, Strategy Analytics, Infonetics, Ovum, Gartner, IDC, Dell’Oro, Synergy, ACG Research, Nielsen, comScore, Arbitron Mobile, Maravedis and the International Telecommunications Union (ITU).

The global figures predict global data usage in 2017 with growth rates so fast that the figures truly are mind boggling:

• Mobile data traffic will grow almost three times faster than fixed line traffic.
• By 2017, global mobile data volume will increase by 771 times from what it was just 10 years before. This means in 2017 mobile data traffic will be the “equivalent of 2,789 million DVDs each month or 30,742 million text messages each second”.
• Data use from Android devices is now higher than that of iPhones.

Diving into the details of the report, there are a few things that are important to note: Cisco includes not only data over traditional mobile networks but also data using WiFi. In fact, the amount of data over WiFi is dramatically higher than that over mobile networks.

Also, the global figures themselves already seem staggering, but when you focus on specific regions or countries, the predictions of growth seem even more astonishing. Some highlights from the the report include:

• Africa and the Middle East will see incredible growth in mobile data between 2007 and 2017, with mobile data traffic growing 3405 times in that decade, the report predicts. By 2017, there will be almost 850 m mobile users in the region, up from 661 m in 2012.
• From Central and Eastern Europe including Russia, mobile data speeds more than tripled last year to 551 kbps.
• “In Latin America, 67.7 million devices were added to the mobile network in 2012,” the report says. However, that is just half of Africa, where 144.7 m devices were added to the network.
• In the Asia-Pacific region, which includes Asian giants India and China, some 385.5 m devices were added to the network, just in 2012.
• For all the talk about smartphones, basic handsets still make up the vast majority of devices on the network, accounting for 82 percent.

The value in this report for news organisations outside of North America and Western Europe is this richness of regional and even major country data. To see highlights for your region, Cisco has created a website that allows you to find the statistics by region as well as by major countries in the regions. I will say this: the major countries in each region do tend to skew the data for these types of reports when it comes to digital media usage.

What does this mean for news organisations?

As a company that sells networking equipment, it’s in Cisco’s interest to make these numbers look large, but the multiple sources of data that Cisco uses are credible. The company estimates that, if anything, its estimates have erred on the conservative side by 2 to 10 percent.

The bigger question is why this information is relevant to news organisations. We all know that the mobile revolution has arrived, and it is sweeping across the globe. Publishers and editors need to know how to respond to the ways their audiences are using mobile devices by understanding:

• What devices are they using? How many are using smartphones? How many are using basic phones?
• Are tablet users a significant part of your audience?
• Are they using WiFi, 3G or 4G?

For example, in Africa, parts of Asia and Latin America, digital means mobile. As we noted last year, in countries like Egypt, Bangladesh, Senegal and Brazil, the majority of internet users are mobile-only internet users.

This will mean that not only will publishers need to understand how to deliver their content to these mobile audiences, but they also will need to develop revenue models that will support this expansion of mobile. Monetising mobile audiences is a key strategic goal for many digital media companies, and, while early in its development, there are mobile advertising strategies such as better targeting – both of the customer and the customer’s location – that are proving successful. In addition to advertising, mobile audiences are more willing to pay for apps and information. Mobile payment systems also make it easier for users to purchase things using mobile devices, opening up opportunities not only for paid content but also m-commerce.

Cisco’s report shows that mobile use has exploded past the elite, early-adopter phase and is rapidly moving into the mainstream. It’s another platform, with its own unique challenges, but also its own unique opportunities. Almost regardless of where you are in the world, if you don’t have a mobile strategy, you’ll want to develop one this year.

The report focused on start-ups that were sustainable, ones that were either profitable or on their way to profitably. The report is well worth reading in full and can be downloaded here (PDF). While acknowledging the differences in these 10 markets, from a business standpoint, the report did find some common themes, all of which are worthy of further examination:

• Small, low-cost and lean organisations
• Organisations that provide editorial services rather than content
• Editorial specialists rather than generalists
• Ads dominate but a mix of revenues key to success
• Lack of business skill an obstacle

The authors of the study readily admitted that the lessons drawn from these start-ups might be difficult for traditional media companies to adopt. But the most pressing problems for traditional news groups are around developing digital journalism services to sell and mixing revenue streams to achieve digital media profitability, and here there is a lot to learn for traditional news groups making the digital transition.

Lean and mean

Journalism start-ups, especially the hyperlocal sites, often survive by keeping costs low. In the US, sites like TheBatavian.com and WestSeattleBlog were run almost entirely by husband and wife teams. BargainPage.com, a site created to share tips with people on how to save money, has only one employee, founder Julie Scott.

These small lean sites were profitable, but many of the founders, especially of the hyperlocal sites, found themselves tempted away from their start-up by employers who valued the skills they had developed in running their sites.

As we noted recently, hyperlocal has been one of the most popular, and hyped, trends in digital journalism. In the US, the American University’s J-Lab has compiled a list of 1,200 community media projects. However, due to the inherent instability of a single-person business, only about 50 percent of the projects are ongoing, according to J-Lab executive director Jan Schaffer, adding:

The appetite for starting up independent news and information websites seems to be as keen as ever and the ideas for new projects are quite creative… Most often, sites fold as a result of their founders’ life circumstances – new jobs, new responsibilities – rather than failed business plans.

These lean and mean sites show, however, just how much can be achieved by a small but committed team. Creating a new editorial proposition does not necessarily mean lots of staff and long development cycles, but can be done perhaps more effectively by a small nimble team who can adapt the offering to suit the market as their understanding of it develops.

Services rather than content

Several of the start-ups didn’t create original content but instead sold services or a platform. This was especially true in the UK, where the start-ups were selling their services to traditional journalism players. A good example of such a project is Tweetminster which does social media aggregation and analysis, and is well known for tracking and analysing the tweets of members of the British Parliament. Tweetminster provides the analysis of political tweets for free, but it charges for analysis of other tweets around subjects from “Formula 1 to Middle East”, according to founder Alberto Nardelli.

When established media organisations think about creating new products, they automatically think about content creation, but start-ups like Tweetminster show that there is value in services like analysis and aggregation. The re-contextualisation of archival content and the refocusing of analytical talent on new services is a potential growth areas for traditional media businesses.

Specialists not generalists

Of the start-ups that do create content, many do not look like traditional general interest news organisations. For instance, MedCityMedia and Patient Power focus on health content and get funding either from medical centres or creating content for content partners. ArsTechnica covers technology and was acquired by publishing giant Condé Nast in 2008.

In fact, the study says that all of the start-ups are niche in some way, adding:

All have a very specific area that they are covering: either geographically or in a certain topic, service or product.

Ken Fisher of ArsTechnica says that to stand out you need to do market research and be clear about what makes your publication special.

Focusing on niches, especially if a segment of your readership is currently under-served doesn’t just mean focusing your content, but also providing a well-defined readership or audience to specialist advertisers who are themselves often under-served. Chosen well, niche content can bring together audience and advertiser in a way that simply isn’t possible on generalist news sites.

Ads dominate but a mix helps reach sustainability

The study found that ads still dominate revenue streams, and the authors of the report were disappointed at the lack of variation in business models. However, most of the 69 start-ups did have more than one income source, including events, consulting and training, selling data and, of course, paid content. The project database allows you to explore the start-ups based on their revenue models and is worth exploring.

We recently explored the wide range of revenue streams that digital businesses are developing. When developing a new editorial product, it is worth keeping in mind all of these revenue opportunities and how they might fit with the audience that you are targeting with that product.

Lack of business experience an obstacle

One lesson that really stood out was how some of these start-ups struggled due to lack of business experience. The report says:

Journalists enter their new path as publishers with a content-first strategy, because they are content professionals and able to create competent sites and stories: editorial is their trade of choice. But when it comes to creating revenue streams, making cold calls and creating a sustainable business, journalists tend to struggle. Developing business acumen is thwarting success and preventing profitability in many cases. It is this lack of economic know-how that is proving to be one of the greatest skill shortfalls.

As journalists, we’re all passionate about the mission, but as Kunda Dixit said at MDLF’s Media Forum 2012, “Media can only be truly independent if its financially viable.” Without business experience or skilled business staff, many of these start-ups seemed small and doomed to remain so. They simply did not have the skills or business focus to grow beyond their modest roots.

When creating new products, it’s essential to have one eye on the business model that will underpin it, but the challenge for many established news organisations it to understand how to align that business model with the editorial mission. Too often, the business side of news is perceived as being antithetical to the editorial mission of independent journalism, but instead of viewing making money as a necessary evil, align your business model with your mission.

While the Sustainable Business Models for Journalism report holds many lessons for traditional news companies,  its authors admit that some of the successful strategies that these start-ups employ might be hard to adopt for incumbent news organisations. At Nieman Lab journalism site, Vehkoo and Pekkala said:

In our opinion, it looks like there are numerous possibilities for constructing a profitable business. But most might be difficult for traditional media companies to adopt; the newcomers are small, lean, and nimble, and they use both technology and their audience to create greater efficiency in their operations.

But a company doesn’t need to be small to be nimble. Many news organisations are learning to adapt and use technology better to take advantage of digital efficiencies. As digital media adoption reaches a tipping point in your country, it is worth developing the technical and digital business skills necessary to adapt to the changes that will come. You may not be a start-up but it is worth learning how to think and work like one.

With the industrial and now information revolutions, technology has given rise to new competitors that challenge existing companies whose position once seemed unassailable. Titans of industry are laid low by what they initially view as low-quality upstarts. Kodak created the mass market photography industry but is now mired in bankruptcy and exiting the film business, toppled by a shift to digital that it saw but couldn’t adapt to. Its film business made it rich, but as digital photography and then camera phones disrupted its model, it couldn’t transition from the business that made its name. It was killed by its cash cow.

In North America and Western Europe, newspapers and news magazines face much the same challenge. You only have to look at US news magazine Newsweek ending its print edition after 80 years to see the pressure that they are under. They are facing what Clayton Christensen refers to as disruptive competition, which Josh Benton at Harvard’s Nieman Journalism Lab described as ” when technology enables new players to compete with incumbents on terms the incumbent isn’t used to”. Christensen outlined his theories in the book The Innovator’s Dilemma, which has inspired business leaders including Intel’s former CEO Andy Grove, New York Mayor and publishing icon Michael Bloomberg and the late Apple co-founder Steve Jobs.

Christensen, working with Canadian journalist David Skok and Forum for Growth and Innovation Fellow James Allworth, applied his theories on disruptive innovation to the news industry. They have summarised the results of five months of research and analysis in the autumn 2012 edition of Nieman Reports. It is worth reading the report in full (which is also available as an e-book), Skok’s introduction and an interview with the trio at the Nieman Journalism Lab.

Here at the Knowledge Bridge, we are focused on helping news organisations make the digital transition, and Christensen provides a framework for meeting the challenges of this transition.

The challenge

In all of the cases that Christensen analyses, new competitors not burdened by legacy costs start by producing low-end products but then are able to move up the value chain.

Because new-market disruptors like The Huffington Post and BuzzFeed initially attract those who aren’t traditional consumers of a daily newspaper or evening newscast, incumbent organizations feel little pain or threat. The incumbents stay the course on content, competing along the traditional definition of “quality.” Once established at the market’s low end, the disruptors—by producing low-cost, personalized and, increasingly, original content—move into the space previously held by the incumbents.

This isn’t the first time that Christensen’s ideas have been applied to journalism. He was involved in the Newspaper Next project – which analysed the challenges facing the industry and attempted to identify possible solutions – some six years ago. Obviously, it didn’t have the transformative effect that many who took part had hoped. When asked by Benton at Nieman Lab about how the market had evolved in the last six years, Christensen said that their predictions were right but they underestimated the speed of the disruption.

I think the reason why this happens is that, even as the disruption is getting more and more steam in the marketplace, the core business persists, and really quite profitable for a very long time. Then, when the disruption gets good enough to address the needs of your customers, very quickly, all of a sudden, you go off the cliff.

What job does your audience want to do? 

To meet this challenge, Christensen says that journalists, editors and publishers need to “always consider the audience first” and think of them not in demographics – age, sex and income – but rather think in terms of the jobs that the audience need done.

Putting this in terms of journalism, he gave the example of the Metro, a freesheet distributed to commuters in 70 countries. Metro may not be high-end journalism, but it helps commuters get information and fill their time as they travel to work. The entire paper, news and ads, is designed to be consumed in 20 minutes, the average commute. “By targeting the job-to-be-done, Metro has dramatically bucked the trend of declining circulation.”

To develop products that meet the needs of your audiences going through the digital transition, Christensen says managers need to ask the following questions:

• What is the job audiences want done?
• What kinds of employees and structure does the company need so it can fulfill that job-to-be-done?
• What is the best way to deliver that information to audiences?

The jobs that audiences want to do remain remarkably consistent, but the products that help them do these jobs change. In the past, people waiting in line at a shop or for a bus might read a newspaper, but now they often read updates on Twitter or Facebook or read headlines on their mobile phone.

Organising to meet the challenge of change

News organisations are not only facing competition from new, lean content providers, but also face competition from new competitors for advertising revenue whether that is search engines, social networks, daily deals companies like GroupOn and online classifieds sites.

Christensen framed the innovator’s dilemma for news organisations like this:

Four years after the 2008 financial crisis, traditional news organizations continue to see their newsrooms shrink or close. Those that survive remain mired in the innovator’s dilemma: A false choice between today’s revenues and tomorrow’s digital promise.

Just like Kodak’s film business, newspapers, radio and television stations continue to get the majority of their revenue from their traditional business, not their new digital businesses. In the early stages of the digital transition in media, the opportunity for and the threat to the incumbents seem small.

However, digital disruption can happen quite quickly once it gains pace. As Christensen noted, once the disruptive competitors get good enough to meet the needs of your customers “very quickly, all of a sudden, you go off a cliff”. From 2000 to 2012, print newspaper advertising inflation-adjusted revenue in the US dropped from $60 bn to $20 bn.

What is the best way to respond?

create a separate business focused on taking advantage of the disruption — and give it permission to outcompete and outperform its parent, even to run it out of business. Disrupt yourself before someone else disrupts you.

Scandinavia’s Schibsted has been successful with this strategy. Schibsted CEO Rolv Erik Ryssdal said that the company wasn’t afraid to cannibalise itself. The company moved aggressively into online classifieds and ad networks, helping it generate enough digital advertising revenue to offset losses in print advertising.

Josh Benton, the director of the Nieman Journalism Lab at Harvard, pointed out that many news organisations that once had a digital division separate from the traditional media business have since merged them as the economic pressure of digital disruption increased. One of the report’s researchers and authors, James Allworth, said:

Right. If you can’t afford to have two structures, taking the web structure and folding that back into the traditional business unit, which has got a cost structure designed to run in a completely different world — that’s not the way to solve the problem. The way to solve the problem is to create a new disruptive business unit that’s got to work out how to become profitable by itself. … Don’t assume your starting point is the existing organization, and you try and cut, cut, cut, cut, cut until you make it down to a new organization.

Much of the discussion focused on print and newspapers, but Skok works in broadcasting, and he believes that broadcasting trails the digital disruption of print by about 10 years. He hopes that broadcast journalism can take the lessons of the disruption in print and learn how to respond.

Christensen’s work and this report provide a framework for understanding, but that doesn’t guarantee success. Skok sees half of the challenge is changing the culture of news organisations. He says:

I have come to the realization that while the technological disruptions facing our industry are 50 percent of the challenge; the other 50 percent is on us. We have failed to foster a newsroom culture that rewards innovation and empowers the younger generation, that can readily adapt to the new media world around us, and that is willing to experiment with the diversified revenue streams right in front of us. To use the oft-quoted phrase, “culture eats strategy for breakfast.” Our traditional newsroom culture taken in aggregate has blinded us from moving beyond our walls of editorial independence to recognize that without sales and marketing, strategy, leadership and, first and foremost, revenues, there is no editorial independence left to root for.

PBS MediaShift looked at a new report on mobile developments and their impact in Africa.

The report from the Center for International Media Assistance and the National Endowment for Democracy was primarily focused on international media assistance and international broadcasters, such as the US government-backed Voice of America, but it contains insights for domestic African media as well.

Gabrielle Gauthey, executive vice president of the global telecommunications company Alcatel Lucent:

In 2000, you had about 5 million mobile phones in Africa. Today, we have about 500 million. In 2015, we expect it to be 800 million. Already, 20 to 30 percent of these phones are Internet-enabled. In 2015, it will be 80 percent.

In the report (available in full in PDF), Guy Berger, UNESCO’s director of freedom of expression and media development and a former newspaper editor, “predicted that mobile devices will surpass broadcast receivers as the continent’s primary medium”.

The mobile revolution in Africa is well documented, but the study also looked at another trend: rapid urbanisation. They believe this will transform the African media market. The report begins by saying:

Africa will become predominantly urban within 20 years, according to a United Nations report, with cities tripling in size and megacities developing throughout the continent. This suggests significant changes for Africans’ consumption of media in general and digital media in particular, with implications for Africa’s cities, politics, and civil society.

The pace and scale of the shift to the cities in sub-Saharan Africa is unlike anything else seen before in history. In a few decades, Africa will be predominantly urban.

Key media trends

With this growth of mobile, and the shift to cities, the study identified a few key trends that African media executives and publishers need to be aware of:

• The “use of cellphones and other mobile devices, already widespread, are becoming a nearly universal platform, not only for telephony but also for audio and video information and entertainment”.
• Fragmentation of demand driven by fewer people per television and radio receiver “enabling and encouraging more individually customized media consumption”.
• Urbanisation driving fragmentation of supply. “Competing media sources are far more numerous in African cities than in rural areas.”

The “shift from radio and television receivers to … mobile telephones and other mobile digital devices” has led to “an entirely new and largely unrecognised class of independent media.”

The study suggests that current changes in patterns of media consumption in sub-Saharan Africa will accelerate with urbanisation, helping to reinforce the effect of mobile media adoption as city dwellers in Africa have a higher rate of mobile phone ownership than rural dwellers.

Urbanisation isn’t the only demographic shift that will affect media consumption. The report also noted that of the top 40 countries in terms of fertility rates, 38 are in Africa. This will lead to a dramatic increase in young Africans. The study believes that this will mean:

More people means larger media use, and that in turn translates into greater support for media of all kinds, from advertiser- and subscription-supported media to cellphone ownership. And more young people translates into greater embrace of new media technologies.

African audience on the move

The move to mobile media consumption is clear. For the first time in late 2011, the Voice of America found that more Africans were accessing its website via mobile phone rather than on computers. Broadcasting still has a larger reach, but since 2009, “Voice of America has discovered it is serving a very large audience for video on mobile telephones, especially in Kenya”.

The report believes that urbanisation and the rapid expansion of mobile handsets and mobile data will open up opportunities for independent media. Urbanisation will increase the number and competition amongst media outlets, while mobile will provide media with the ability to engage audiences that remain in rural areas.

The VOA, like other traditional broadcasters, has responded to these shifts by training hundreds of citizen journalists, increasing its use of social media and adding to its digital services targeting mobile phones and computers.

International and domestic news organisations will also have to compete with non-traditional sources of news and information. The report highlighted Google’s efforts to provide more information for sub-Saharan Africa via country-specific versions of Google News as well as information and education offerings via its video platform YouTube. Of course, the report notes that Google doesn’t need a broadcasting licence to offer its service in a country, like a radio or TV broadcaster might.

Digital information innovation is not just driven by large international companies like Google but increasingly a number of innovative projects and companies starting in Africa. The report highlights several, including the crowdsourced reporting platform, Ushahidi and also the virtual noticeboard service, Mimiboard. Mimiboard allows people to post information via the web or text messaging, and already media groups and NGOs have started using it, including the London-based news site The Zimbabwean, written by journalists in exile.

How media are responding

In response to the mobile revolution, new forms of media are being developed such as Interactive Voice Response (IVR). The free or inexpensive service allows people “to leave recorded messages, field questions and answers, and to provide market updates and weather reports.”

VOA is “aggressively pursuing IVR to complement streaming,” said Steve Ferri, the web managing editor of VOA Africa and head of VOA Mobile and Digital Media Africa. VOA is finding that African audiences are not simply using their mobile phones for brief bits of content and interaction but rather listening to full 20-minute programmes on their mobile phones.

Reinforcing one of the observations of the study, that content would become more individual with the rise of mobile, Ferri said that “deeply, deeply personal content is the sweet spot” on mobile. Research has found that dating, ring tones, horoscopes and the Bible and Koran are all popular forms of content, Ferri said, adding that jobs, entrepreneurship and English language instruction are also popular.

The digital transition is definitely happening in sub-Saharan Africa, and mobile technology is driving this transition. New forms of independent media and entirely new forms of media, such as IVR, are being developed to take advantage of this trend, but the study concludes that what we’ve seen thus far will only accelerate as the penetration of mobile phones with data connections increases in the next few years and more Africans move to cities. It’s a good time to review your digital editorial and revenue strategies to take advantage of these new opportunities to reach and serve audiences.

• Start small and build in stages
• Take advantage of low-cost digital development
• Invest in what makes your product distinctive
• Give your product a strong launch
• Be as creative commercially as you are editorially
• Measure and evolve

In a little more than a year, India’s Firstpost has been able to break into a crowded digital news market with a mix of original reporting, curation and “breaking views” – sharp and smart analysis and comment.

It has achieved this success by starting with a small, focused team of journalists and building up a network of contributors and stringers. Use of social media, including Twitter and Facebook, has exploded in the last few years, and Firstpost has not only positioned itself at the centre of the news debates of the day, but also leveraged its social media presence into a revenue opportunity.

The genesis of Firstpost

Network18 Founder Raghav Bahl has successfully built a media empire by launching joint ventures with many of the world’s most well-known media brands, including CNN, Forbes, CNBC and Viacom, but in 2010, he wanted to create a brand of his own. More than that, he wanted this new brand to be digital.

Firstpost would be launching into a very competitive digital market; Indian newspapers and television stations all have their own news websites already. Firstpost had to differentiate itself not just from competitors, but also from news sites already in Network18’s portfolio including that of news channel CNN/IBN and CNBC 18’s MoneyControl, the leading financial portal in India.

So, with a market awash with news choices and a portfolio of existing news websites, Firstpost decided to focus on “breaking views”, smart analysis and opinion, rather than breaking news to attract an audience and appeal to advertisers.

“We needed a product that would stand out. We knew it had to have the qualities of the web. It had to be based on the principles of curation and social sharing,” said Durga Raghunath, vice president of products for Web18 and executive news producer for Firstpost.  “If you look at the most read stories on the web, it is not often the most reported,” she said, adding that instead the most read stories are often sharp opinions and smart views.

In addition to standing out in a crowded market, the challenges of financial sustainability are different for a pure digital product than for a newspaper or broadcast news organisation. Although digital costs can be much lower than print or broadcast, digital revenue models are still being developed. Put simply, digital news projects might be cheap to launch but often find it just as difficult, if not more so, as traditional news operations to make money.

The digital advertising market in India, which includes not just display but also search, video, classified and rich media, is currently estimated to be about $410m, according to the Indian e-tail report. That’s relatively small considering the size of the Indian economy, and it only represents about 7% of total advertising in the country. A news site can tap into video, display and classified advertising but, of course, search advertising goes to digital players like Google.

“Start small and build”

To meet these challenges, one of the key pieces of advice from Raghunath is to start small and build with each stage.

Digital development, maintenance and distribution costs can be much lower than newspaper or broadcast products, and Firstpost took full advantage of the possibilities of these lower costs. Based on her experience at Wall Street Journal Asia, Raghunath thought that the open-source content-management system (CMS) WordPress would be a good fit for their website, and because a developer on staff was familiar with it, they did not need to hire an external development company.

Raghunath believes that you should focus your investment on what makes you distinctive. Instead of spending a lot on the CMS, they invested in a modern design that set it apart from the cluttered look of other Indian sites.

Staff and content make up the bulk of the costs for a site like Firstpost. About 20 to 30 percent of the content for Firstpost comes from newsrooms in its network, such as CNN/IBN or CNBC 18, but Firstpost isn’t as integrated with its broadcasting partners as the web newsroom of a broadcaster or newspaper would be.

Original reporting can be expensive, so they needed to find a way to choose carefully which original stories they would produce, and then do so without huge costs. The site launched with a small core editorial team of less than 20. Firstpost had to balance the need for original reporting and content with the revenue that it could reasonably make.

Those decisions are paying off. A little more than a year after its launch in May 2011, Firstpost has been able to both create a small investigative reporting team as well as pay stringers for original content.

“There are some stories where you have to have boots on the ground,” Raghunath said, citing as an example the coverage of a deadly riot at a Maruti Suzuki automotive plant in July 2012.

The site wraps the news of the day in its breaking views analysis. Social media and participation are central to the site. Borrowing the idea of trending topics from popular micro-blogging service Twitter, the biggest stories of the day are highlighted using another feature of Twitter, hashtags – keywords preceded by a #.

Like many other sites, Firstpost has found that live blogs are a popular feature with audiences, and it regularly produces live blogs on news and sporting events, including the current London Olympics.

With Firstpost being a social media fuelled, discussion-driven site, they have attracted a highly engaged audience; as a result, more than half a dozen members of the Firstpost community have also become contributors, said Raghunath.

To give the site a strong start, it launched with an advertising campaign that emphasised the site would be social and focused on participation, using iconic images of Martin Luther King Jr., the Arab Spring, Gandhi and India’s own struggle for independence.

This year, they took a poke at India’s powerful newspapers and told audiences to read today’s news today on Firstpost as opposed to the day after in newspapers.

To help build its audience and make its content findable and shareable on social networks, the site uses a mix of smart, search-engine and social media friendly headlines.

The revenue mix

To make Firstpost a success, it also needed a strong business to support its strong voice.

From its launch, advertising was always seen as the main source of revenue. Raghunath explained that in India, apart from business content, very few paid-content strategies have been successful.

However, while advertising is the focus of revenue for Firstpost, the team is experimenting with a range of digital advertising techniques. “Advertisers want compelling experiences not boring banners,” she said.

Raghunath said that Firstpost’s revenue is split between volume- and brand-based advertising. Volume-based advertising is based on advertisers who want to reach a large audience, and brand-based advertising is based on advertisers who want to be associated with the media brand you create.

To attract volume advertising, the site first needed to hit a million pageviews per month based on comScore statistics before they could have a seat at the table with the big budget advertisers. The traffic target will vary market to market, but it is important to know what you have to aim for to get the attention of major ad agencies and advertisers where you publish.

Raghunath said that Firstpost was always about building a media brand – a brand with “presence and voice that keeps its promise of being smart and sticky.” That has allowed the site to attract international brands, such as European car manufacturers, looking to tap into the Indian market.

As the site has grown, advertisers have also started “buying audiences” – advertising bought to reach a specific audience. This is only possible because Firstpost’s sales team has built an audience profile using web metrics services, such as Google Analytics and comScore, and social media metrics services, such as Facebook Analytics and Klout, which measures the influence of social media users.  They have also worked to understand their audience not just online, but also offline through reader surveys.

Raghunath stresses that Firstpost is constantly evolving. Since the launch, they have explored sub-brands and niches, such as real estate, that could help bring the site new revenue.

Selling social

The team has used social media effectively not just to keep the site at the centre of conversations, but also to leverage that success with their advertisers.

The micro-blogging service Twitter is hugely popular in India, and just as Twitter is trying to generate revenue through sponsored content, so is Firstpost. Firstpost has developed its own sponsored updates system on Twitter, letting their audience clearly know which tweets are sponsored by including the hashtag #advertiserlove.

“The reader should never feel that (advertising) has been stuffed down their throat,” Raghunath said.  They are experimenting with sponsored posts on the site, but Raghunath says they are doing so very cautiously. Audiences are very sensitive to sponsored content, and she said that they have developed very clear guidelines to govern its use.

One of the more successful experiments has been Firstpost debates, in which two writers take opposing positions and audiences vote for which one they found more persuasive. Thousands of Firstpost readers have voted in the debates, and the site’s sales team is now looking to develop revenue streams around this popular feature.

This experimentation with new forms of advertising is helping Firstpost meet both its editorial and business goals.

As we said last month, the launch of a digital product is the beginning, not the end, of its development. Firstpost has been constantly evolving during its fast-paced first year. Raghunath’s advice for other digital news ventures is that it is important to start small and with a reasonably sized news staff: “Never staff for your end goal, but optimise your staffing stage by stage.”  And when you are launching, and your resources are limited, you should always invest in what differentiates you from your competitors. Firstpost’s distinctiveness has been key to its success.

Disclosure: I was involved with the launch of Firstpost and until recently was a writer-at-large for the site.

In India, the mobile handset market witnessed 6 percent growth in the first quarter of 2012, while the smartphone market surged by 17 percent, says market research firm Gartner. Nielsen also found that as Indian mobile users switch to smartphones, they spend more time consuming content than making calls or sending text messages, which brings new opportunities for content creators, including news organisations, as well as advertisers.

New patterns of smartphone use also present challenges and opportunities for news publishers and advertisers. For advertisers, new ad technology such as real-time bidding gives them more control and an ability to target their audience. It also gives publishers more opportunities for monetization by letting them sell ad space through competitive auctions.

However, Vishal Bali, Regional Managing Director of Nielsen’s telecom industry group, noted that we are seeing significant resistance among smartphone users towards mobile advertising. As smartphone usage and the app space begin to mature, publishers need to look for new ways to monetize beyond the single ad network system. In particular they need to think about how to maintain the availability of various ad formats on different screen sizes.

But digital growth is not incremental—it’s directly cannibalizing older types of content distribution—like traditional books or even TV subscriptions. One business that will unilaterally benefit from the rise of digital: broadband and wireless service providers.

And the report says that entertainment and media digital revenue will grow year-over-year by 12.1% compared to just 2.8% growth in non-digital spending. However, the report covers a wide range of businesses from wireless data and internet service providers to entertainment companies and media groups, so it is difficult to draw conclusions from this data that is directly relevant to news organisations.

The report does look at different entertainment and business segments including consumer magazines, newspapers, radio and television advertising. From these various segment reports, a few things to note for emerging media markets.

• “TV advertising spending in Russia surged by 20.2 percent in 2011, and by 2016 it will overtake the UK, Germany, Italy, and France to become EMEA’s [Europe, the Middle East and Africa’s] largest TV advertising market.”
• The prospects for newspaper publishers is starkly different in North America and Western Europe versus  Latin America and the Asia-Pacific regions. The report summed up the difference as between countries where broadband penetration is high and where it is low. In countries with high levels of broadband access, “newspapers face erosion in print unit circulation as readers shift from print to online for information. ” That will cut both circulation and advertising revenue. However, where rates of broadband access is low, newspaper circulation is rising. That begs the question of what will happen in countries where broadband access is rising quickly.
• The rise of the tablet and increased digital distribution will drive “an emerging digital circulation spending market” to support growth for consumer magazines, even while print circulation is declining.

One area that news groups will want to pay attention to as they make the digital transition is internet and mobile advertising growth. Both are growing, but as the report says from a low base. As we have pointed out several times here on the Knowledge Bridge, search and social advertising – benefitting companies such as Google, Yandex, vKontakte, Odnoklassniki and Facebook – are capturing much of that growth. News organisations will want to make sure that as digital advertising rises they are ready to offer the kinds of ad services that allow them to compete, especially locally.

For Central and Eastern Europe and Russia, internet advertising is growing at a quick pace, with Russia a key driver in the region. According to the report:

Spending in Central and Eastern Europe grew by 36.7 percent in 2011, led by a 56.4 percent rise in Russia, and will continue to grow at a 22.7 percent CAGR [compound annual growth rate] to $8.1 billion in 2016.

CNBC drew this conclusion from the report:

Professional content from the traditional media companies is still the most valuable, but it’s the companies that look at cross-platform distribution that will be the most successful. Companies that find every possible pathway to consumers—via subscription, digital download, traditional TV broadcast—will make the most money.

This is really key. Digital revenues are still growing quickly, but the key for news organisations and media groups is to develop an effective multi-platform strategy that plays to their strengths in existing media such as print, TV and radio and leverages those strengths in emerging digital markets.

Reuters reported that overall in the US, digital advertising revenue for newspapers grew only 1% in the first quarter of 2012, making it their fifth consecutive quarter of declining digital advertising revenue, according to the Newspaper Association of America. At the New York Times, digital advertising dropped by 2.3%, but it was much worse at the Washington Post, which saw digital advertising plummet by 7% at its flagship newspaper site and also Slate.com.

A flood of excess advertising space, the rise of electronic advertising exchanges that sell ads at cut-rate prices, and the weak U.S. economy are all contributing to the slowdown, publishing executives and observers say.

However, this is not just about US newspapers getting lower rates due to a glut of advertising inventory or the downward pressure on rates due to advertising exchanges. US newspapers actually capture a smaller slice of the digital advertising pie now than they did in 2003. While digital advertising revenue has galloped ahead rising from $7.3bn to $31.7bn in 2011, US newspapers share of digital advertising has hit an all-time low. In 2003, newspapers managed to capture 16.7% of all digital advertising in the US – not a great number, but respectable. However, by 2011, US newspapers managed to grab only 10.3% of digital advertising

Why are newspapers capturing less of the digital ad spending? Reuters says that while newspapers used to be one of the best ways to deliver an audience to advertisers, the industry doesn’t have the same advantage in the digital content market that it had in print. From Reuters’ analysis:

Advertisers “are buying audience instead of context and they don’t care what sites they are on,” said Gordon McLeod, president of Krux, a company that helps websites interpret data.

The lessons for news organisations making the digital transition in any country is two-fold. The first, that we’ve mentioned previously on the Knowledge Bridge, is that advertising shouldn’t be the only source of revenue for your digital business. Most companies that have succeeded in digital have done so by building a range of digital sources for revenue including dating services, digital marketing services, events and even niche digital services such as holiday-home booking businesses.

Secondly, as Rick Edmonds at Poynter pointed out, news organisations have been urged to stop selling their advertising inventory through ad exchanges. Instead, news organisations should develop ways to develop more targeted ads and develop other “premium-priced ad placements”. Fundamentally, the lesson is that advertising innovation is as important for your long-term sustainability as editorial innovation.