In the second part of our series on
European models of news industry innovation, Ken Doctor looks at a
Norwegian media company that’s expanded far beyond national borders —
and found revenue success with online classifieds.
What can the U.S. learn from European news innovation?Yesterday, we focused on Finland’s Sanoma and its worldwide leadership in digital circulation revenue. Today we look at Schibsted, now the eighth largest news company in the world by revenues, just behind The New York Times Co. It now operates in 28 countries; 36 percent of its revenues come from digital offerings, a percentage more than three times that of the average newspaper company. Schibsted has set a new standard, in both news transformation and in the revival and updating of the classifieds business — and now it’s blazing a trail in online services, an area at which every publisher should be taking a long look.
Schibsted’s success comes from above-average execution, meeting market realities, and making early decisions to depart from print legacies and handcuffs. It is also a story of flexibility, tweaking both product and organization as the landscape and competition changes. It continues to transform, having recently reorganized its Norway and Sweden operations yet again in 2011, ringing out more efficiencies.
Back in 1999, Schibsted split its digital divisions from its newspapers, believing that the web was its own animal. The company decided that “the Internet was made for classifieds and classifieds were made for Internet,” says Sverre Munck, executive vice president for strategy and international editorial. Munck joined the company in 1994 and has served as CFO as well.
Other companies — CareerBuilder and Classified Ventures in the U.S. and Fish4 in the U.K. — sensed similar opportunities. Schibsted, though, unshackled top business managers to go after the business, without joint responsibility for the print classified business. Now its online classifieds are a European cousin to the U.S.’s Craigslist, the quasi-commercial venture that drained billions of dollars from U.S. dailies, having disrupted incumbents with a free-plus model. Even in distant Italy, Schibsted controls over 60 percent of digital classifieds.
It’s online classifieds revenue that has enabled Schibsted, once an old-fashioned Norwegian newspaper publisher, to generate 36 percent of the company’s total revenues from digital sources. That’s more than three times the average of the newspaper industry worldwide. While Schibsted’s core newspaper business is only a tad above-average — now deriving 11 percent of newspaper revenues from digital — it’s that major online classified push that is paving the way to a sustainable future. Online classifieds are rolled out in 28 countries, reaching much of Europe and spreading to Asia as well.
...
Quite instructive to the rest of the newspaper world is the breakdown of Schibsted’s overall revenue, from its 2010 annual report:
It draws 21 percent of all revenue from online classifieds. Its reliance on print advertising — or as the company refers to it, “offline” advertising — is far less than most publishers, at 28 percent. It faces perhaps more challenge in the digital transition in retaining circulation revenue, which now accounts for 32 percent of overall revenue — 20 percent from single copy and 12 percent from subscription. As most news companies reliant on single-copy sales will tell you, figuring out a strong digital pay program for those customers is far more difficult than for subscribers. For Schibsted, some flavor of an all-access model could work.
http://www.niemanlab.org/2012/02/looking-to-europe-for-news-industry-innovation-part-2-schibsteds-stunning-classifieds-and-services-business/
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