Is This Little Swiss Company the Future of Newspapers Everywhere?

17/05/2012 07:12 BST | Updated 16/07/2012 10:12 BST

What's wrong with newspapers? We could spend the next year struggling to answer the question, while traipsing through the undergrowth of the internet, of consumer tastes and news appetite, and of the competition for time, money and advertising. Newspapers are, of course, a format, not a media channel.

There are many different types of newspapers. We might just reflect en passant that one of the (many) failings of the sad and sorry of Trinity Mirror Plc is that it was a merger of at least two quite different businesses (one in regional and one in national newspapers) that only shared the descriptor "newspapers". Consequently, the merged company has depressed shareholders across a decade, vainly trying to unlock the synergies dreamt up by the deal's long-departed advocates.

Power rises as sales fall

When it comes to daily newspapers, the debate can become more complicated. And nowhere more than in the UK. The country's national dailies rest in the British national consciousness somewhere between football, the Monarchy, the BBC, and Shakespeare. Daily newspapers have dominated UK public life for more than 150 years, courtesy of a pioneering rail network that made national papers possible.

Even now, when daily newspaper sales are falling by some one million copies a year, the famous mastheads are everywhere: the country's news channels devote hours of airtime every evening to discussing the following day's front pages. That's why the influence of the popular newspapers over which politicians have fought for favour, has hardly been undiminished by the decline in their sales. When The Sun calls 'time' on a government, its front page screamer is seen much more widely than the newspaper ever was. A neat trick that partly explains how Rupert Murdoch's influence had been rising, even while his newspaper sales (like most others) were falling calamitously.

It is that scale of profile and influence that arguably gives newspaper proprietors (in the UK, Australia and elsewhere) confidence that, somehow, they will find their prosperous future role in a changed media world. It gives them a sense of entitlement.

It is ironic, then, to conclude that the daily newspapers actually trashed their own prospects. Let me explain. The major obstacle to daily newspapers everywhere being able to find a new economic model online is the simple fact that readers are no longer (mostly) willing to pay for online news. That situation came about more than 10 years ago when newspapers in the UK and elsewhere panicked about the growth of online, built web sites - and offered free access, while they continued to 'prosper' from hard copy sales. Thus began the pervasiveness of free online news whose lasting effect will be that only the very best national and international news organisations will ever be able to charge meaningful prices for their content.

The answer for some daily newspapers in the UK must now be to forget about news as a way primarily of earning profits and, instead, use their current promotional power to establish strong ecommerce platforms. Which is why the major 'bricks n clicks' retail chains should start developing content to occupy the same ground - or, alternatively, establishing powerful alliances with the media companies themselves.

One answer is in the Alps

Given these trials and the death spiral of so many regional newspapers and their debt-laden owners, it might seem surprising to identify realistic new growth opportunities. But, deep in the Swiss Alps is a business which may point the way to a profitable future for newspaper publishers everywhere.

The town of Brienz is in the shadow of the Jungfrau mountain, near Interlaken. It is home to a population of 45,000 and a pioneering family-owned, local media business built round a 100-year-old newspaper Jungfrau Zeitung. This is now a multi-media 'hub' which delivers local news and content via mobile, web TV, and a twice-weekly newspaper. All content goes online as soon as it is written and, crucially, advertisers cannot choose the platform but must book their ads across all media. The business model has been developed by Urs Gossweiler, CEO of Gossweiler Media and grandson of the company's founder. This is a very local business: the newspaper sells 9,000 copies and the web site has 60,000 page views. But Gossweiler is not a media experiment: the company makes profit margins of 30% and plans to roll out its model across Switzerland and then across Austria and, perhaps, Germany.

The engaging Gossweiler has been busy regaling industry audiences across Europe with his Swiss recipe. The key ingredients are simple enough: strictly local content of the kind which doesn't appear anywhere else, multi-media channels, and multi-platform advertising bookings. A strong emphasis on local content and media platforms. And there can be no doubt that the localised 'web TV' element will grow in importance as broadcasters switch their focus to the web in coming years. But it is easy to see that, for Gossweiler, the hard copy newspaper plays a vital, supporting role in delivering readers and advertisers in a way that can beat the Google onslaught. It is similarly, easy to identify the opportunity to cover 'parish pump' news and information that has been neglected by 'bigger' media.

Going 'hyper local'

The Gossweiler success is prompting regional publishers everywhere to use phrases like 'hyper local' to drive their strategies. And there are all kinds of micro-newspaper activities being developed in the UK and US, where such small local markets have often been less ravaged by the loss of classified ads and copy sales that have decimated regional press profits. But one interesting sidelight is how far ahead of the curve some European publishers have been, compared with the newspaper-obsessed UK.

The ultra-smart Schibsted's powerful cross-border online classified business began in Norway way back in 1999 and now accounts for more than one-third of the international group's total revenues. Sanoma, of Finland, was one media group to eschew the free online model and now has almost 30% of its newspaper readers paying an annual subscription. In the UK, where newspapers are seemingly a source of national pride, it's time to catch up. Will the legacy publishers be up to maximising the opportunities, or will it be left to a new wave of 'hyper local' entrepreneurs?

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