Axel Springer SE, founded in 1946 in Hamburg, is Europe's largest newspaper publisher. It is active in 40 countries, has a turnover of 3 billion euros, employs 14 people and its publications include "Bild", "Welt" and "Fakt". The three titles have a daily circulation of over six million copies. In Germany alone Axel Springer has 23,6% of the newspaper market. A position that is a dream for other European and even overseas publishers.
Axel Springer is assuming a central role in the European media landscape and emerges as the European media group with the greatest political influence. This leading position is due to Mathias Döpfner, the young, energetic and dynamic CEO and president of Axel. Döpfner is a happy exception compared to Europe's catatonic media industry leaders.
In fact, the fifty-two-year-old manager from Offenbach am Main, with a basketball player's physique, is the toughest and most resolute opponent of the Silicon Valley Internet companies that are setting up monopolies on the concept of OTT (Over The Top). They build and expand services of enormous utility and appeal over the contents and infrastructures developed by other companies (the incumbents). Incumbents thus find themselves in the awkward position of having OTTs as important and essential partners in their business. James Murdoch, who will soon take over the leadership of his father Rupert's media empire, has defined the OTTs as "frenemy" (friend + enemy), a term that has become so frequently used that Wikipedia has dedicated a specific entry to it. They are friends, because the incumbents cannot do without OTTs to increase their presence on the new media, and enemies because the OTTs are taking control of the most interesting part of the business away from them. It is a substitution process well described by Harvard professor Clay Christensen in his theories on digital disruption. We understand that being on the side of those who suffer the "disruption" is not pleasant.
It is for this reason that the OTT concept is anathema to Döpfner, to such an extent that the “Guardian” wrote “Mathias Döpfner is a man on a mission… it's a spectacle to behold” for the eyes). It also happens that Axel's boss is among the five most influential people in Europe. His ability to influence the German government in all its political parts is renowned. It is said that Jean-Claude Juncker owes Döpfner the presidency of the European Commission after an article by Döpfner in the "Bild" swept away the hesitations of the government in Berlin, worried about David Cameron's opposition to the appointment of the former Luxembourg prime minister head of the Commission.
Döpfner and the new media: law&order
Döpfner is not hostile to new media or a nostalgic for the good old days when things had a precise order, not like now with liquid society. Far from it: Döpfner is a convinced supporter of the new media and in fact Axel Springer, thanks also to the dynamism of his boss, is ferrying in an orderly manner and without too much turbulence towards the new economic model and all his activities in this new environment are sustainable and remunerate the shareholders.
Döpfner's vision of the transition of media to digital and the model of relationships to which he aspires, however, is very different from that of the Silicon Valley "innovators" who are the OTT iceberg. It is precisely the different vision between "innovators" and "incumbents" that made Tim Cook, Apple's CEO, exclaim that between the two clubs there is a "Berlin Wall, they do not respect and do not understand each other".
Disruption is a word that doesn't exist in Döpfner's lexicon and a red rag for Axel Springer. The German group is moving so that the necessary transition from media to digital takes place without any disruption and above all is managed and controlled by the incumbents, not by the innovators who will have to participate as ancillary to the former. It's not just a matter of mere business, it's a fact that concerns the social structure and well-being of European nations that do not want to be turned upside down by arrogant young companies that disrespect the rules in force in the places where they operate. Only by keeping the innovators on a leash can the level of employment, welfare, public wealth and morale of the media industry be maintained. It is a strategic economic sector in all European economies already severely tried by the financial crisis and the loss of jobs. This point of view of Döpfner first spread to the German government, then to the group of Nordic countries and finally, with the Junker commission, it became the official policy of Europe towards the Internet and new media.
Facebook, from freenemy to friend?
Leaving this scenario in the evening, one will understand the amazement, in the morning, of finding "Bild", Axel Springer's major newspaper, (mentioned last) in the list of nine newspapers participating in the new Facebook experiment called Instant Articles. “Bild” is found in the company of other major publications: “New York Times”, “National Geographic”, “BuzzFeed”, “NBC News”, “The Atlantic”, “The Guardian”, “BBC News” and “Spiegel” . Newspapers participating in the Instant Articles program will begin publishing their articles directly to the news feed of the Facebook iPhone application. The Android app will also be coming soon. These are integral articles with photos and videos that the user can read, comment, annotate and share directly on Facebook without the need to transfer to the related page of the publication.
Facebook, which is already the source of 20% of the traffic of the "Guardian", 15% of that of the "New York Times" and is used by 39% of Americans for information, has convinced publishers that the eight seconds it takes to moving from Facebook to the page of the newspaper causes a significant dispersion of traffic and causes many potential readers of the article to be satisfied with scrolling through the headlines on the Facebook feed, refusing to proceed further. With Instant Articles, articles are published on Facebook in an attractive format. Initially they will be few, compared to the 300 articles that, for example, the NYTimes publishes daily. If the service works, they will grow quite a lot. Mark Thompson, CEO of the New York newspaper, said that Facebook's program will give newspapers "access to a new pool of users, people who will discover our journalism, who we can then monetize with advertising".
Surrender to the OTTs or more advanced tactics?
The terms of the economic agreement between newspapers and Facebook are favorable to publishers. In fact, publishers will be able to sell the advertising within their articles, keeping all the revenues. Alternatively, they can ask Facebook to place any unsold spaces for which they will receive 70% of the proceeds. Publishers will have the ability to track data and traffic using comScore and other analytics tools made available by social media.
A possible negative consequence of this type of content relocation is that newspaper sites and apps could lose their centrality to become places frequented by subscribers or, worse, content repositories. However, there is another important aspect to underline, an aspect on which the first step can take place in order to get the big newspapers of the mass media era out of the swamp in which they find themselves. It seems that publishers have finally convinced themselves of a truism: that one must be where the crowd is and that the greatest investment must be made in the prestige of the publication, the quality of the contents and the ability to be intercepted by public opinion and by decision makers. In this regard, Mark Thompson told “Mashable”:
We continually ask ourselves about the risks and benefits of placing our content on platforms other than our own. The benefits of being on platforms operated by others all lie in the possibility of having a greater circulation than we could ever achieve with our digital offering alone. Paraphrasing the motto of the "Old Lady", "Mashable" commented on Thompson's words "All the news apps that are fit to print".
While all of this may appear, as it appears to Murdoch who has kept his distance from the Facebook program as well as the Pearson group (“The Financial Times” and “The Economist”), a surrender to OTTs, Instant Articles is not a bad idea and not even a terrible deal for publishers. In fact, the latter achieve the three objectives they care most about: 1) 100% control of their content and its use on the web; 2) reach an audience that they cannot reach with their own means and finally 3) optimize the monetization of Internet flows that are still far from compensating for the losses of traditional businesses. Nor should we overlook the possibility that Instant Articles could embarrass other unwelcome information aggregators such as Google News or Yahoo News who arrive, take, publish without even saying hello.
Let's go back to Axel Springer. Why is “Bild” in Instant Articles? Because this show isn't, but it comes close to Döpfner's vision of OTT ancillary and his realization that it can't compete on a par with OTT in building massive audiences. Not being able to succeed in this, it is necessary to "retire" to concentrate on one point: maintaining control of the content and the related business in its multiple derivations. That's exactly what happens with Instant Articles.
There are many actions to take to keep control of the business. The first concerns the ability to innovate products, processes, management, business practices and make the right acquisitions. A phase that Axel Springer has already positively initiated. The second consists in being able to influence the legislative and regulatory framework so as to create a market that is favorable to incumbents and against innovators. Also in this case the German group is excelling and Europe is becoming a hostile territory for Silicon Valley. The third action is the one that leads into a new, unexplored and slippery area, that of agreements, alliances and synergies with the groups that hold the levers of the new economy: Google, Apple, Amazon and Facebook. It is on this point that Axel Springer is moving from confrontation in an open and total field to a tactic that closely resembles that of the Romans in the Second Punic War.
Apple News
We are curious to see, when the service is also open in Europe as well as in the USA, UK and Australia, how Axel Springer will behave towards the "Apple News" iOS app, which has been pre-installed on all devices from the Cupertino company since October 2015. Like Instant Articles, Apple News aims to offer publishers a luxury showcase in which to showcase content produced by their staff. However, the editors of the newspapers will not choose the articles to be published in "Apple News" and neither will a ranking algorithm, but it will be a staff of Apple curators who will select the contents, publishing the most original, authentic and relevant .
Apple News aims to offer iPhone and IPad owners interested in news and current affairs a service that frees them from the noise, repetitiveness and standardization that are some of the most irritating characteristics of the Internet. That there is a service operated by a company like Apple aimed at recovering quality journalism and disseminating it through its channels is something that can certainly fall within Axel Springer's field of vision and strategy. But there will have to be other conditions for the German media group to be able to join. We still don't know all the economic details of "Apple News" and we don't know for sure how publishers will be compensated; a point that is close to Döpfner's heart.
According to what was declared on the page of the Apple website dedicated to developers, the revenue distribution model between publishers and Apple is the same as Instant Articles: 100% for advertising collected by publishers, 70% for that conveyed by Apple's iAd. Apple's central problem with publishers is not so much the distribution of revenue from joint deals as Apple's unwillingness to share customer data with publishers who subscribe to the service or purchase a product from Apple's stores. This "niet" is unacceptable for Axel Springer and one of the aspects on which the German group is lobbying in Brussels to be regulated.
Indiscretions have recently come out, reported by the "Financial Times", that Apple intends to review the agreements with partners to make them more favorable to the latter. This decision should concern both the economic conditions and those concerning the sharing of customer information with publishers. A step that is certainly in Tim Cook's field of vision who has greatly softened compared to his predecessor, Steve Jobs, on the issue of relations with third parties that feed the Apple ecosystem.
Who doesn't need OTTs
There are native digital news organizations which, unlike the incumbents, do not need Facebook as the fourth leg of the table. For them, Facebook, social media and information aggregators are important resources, but also truly ancillary resources to their strategy which consists in channeling the largest amount of audience to the pages of the magazine. For this purpose, Facebook & Co. are an important vehicle, but not such as to hand over the house keys.
Let's talk about "Vice media", "Vox Media", but also "Huffington Post", "Mashbale", "BuzzFeed", "Reddit", "Gawker" have earned an important role in the digital space thanks to their ability to know packaging information in an innovative way and knowing how to link it to the mechanisms of viral diffusion of contents on the net. A capacity that the incumbents have never been able to fully express as, in fact, denounced an internal document of the NYTimes editorial staff of May 2014 which caused quite a stir.
And the market has rewarded this capacity of the new native digital titles: in August 2014, "Vice Media" was valued at 2,5 billion dollars, well above the market valuation of the NYTimes which today does not exceed 2 billion dollars. In August 2013, Jeff Bezos bought the "Washington Post", a century and a half old newspaper, for just 250 million dollars when Vox Media, directed by Ezra Klein ex-"Washington Post", after just 10 years of activity has received a double assessment of the Watergate scandal newspaper. But the latter, after the exit of the Graham family and the arrival of the founder of Amazon, is taking a well-deserved revenge and is showing what could be the model to follow to continue the tradition of quality journalism and increase the value of 'business.
The open model of the “Washington Post”
The Post has truly set sail and her crew is at the peak of motivation. His owner, Jeff Bezos, is not making him and will not let him lack the resources he needs to complete the journey. The Post's actions revolve around the project of making its contents and services available to anyone who wants them, using the software developed by the publication. To achieve these objectives, the Post intends to become a real technological enterprise. Bezos filled an entire building in Reston, Virginia with software developers and engineers. Without of course neglecting to strengthen the newsroom on 15th street in Washington DC: 100 new journalists have been added to the existing staff.
The Post recently launched a program called "Partners." Partner offers subscribers of the newspapers participating in the program free access to the contents of the Post provided they enter their e-mail address. To date, some 270 newspapers have joined the programme. Traffic on the Post's site soared to 51 million unique users per month. Thanks to profiling, users of the other publications are leaving important clues about their reading and browsing behavior which constitute the big data analyzed by Reston's developer staff and then made available to advertisers.
Another project Restin's technology team is working on is the development of a newspaper content management system. As happened with Amazon Web Service, the CM of the Post will be licensed to anyone who requests it in addition to motorising all the contents of the Post. The first customer will be Amazon, which will include the "Washington Post" in the Prime subscription. A special app, Rainbow, with national and international news selected by the newspaper's editorial staff will be pre-installed on all Kindle Fires. All these projects will not burden the resources and programs of the Washington DC editorial team which is called upon to fuel this variegated system of services and products. Is the loss of control feared by Döpfner really a superior form of control, that of the Post, precisely?
