Andrea Rangone is the founder and coordinator of the Centro di Ricerca Osservatori Digital Innovation at the Polytechnic of Milan. For the past several years he and his team have been studying the media trends of Italy and trying to come up with a business model that will be successful in the midst of the changing field of journalism.
Everyone who is in, or who knows about, the trade of journalism is aware of the current struggles our industry is facing. We hear again and again the question of how to create revenue in an increasingly online world, we hear gloomy confirmations of the fall of print, we hear that there is no money online, that advertising revenue is falling, that newsroom’s staff are shrinking, that there’s fewer jobs in the industry… all of these announcements do not bode well for aspiring journalists today.
In a series of graphs and research, Andrea Rangone laid out the state of Italy’s media and news sector over the last six years.
The problem
First, Rangone looked at the traditional media outlets and with his data he can clearly demonstrate a steady decline in revenue. “In paid content…the market lost €3.2 billion euro [in six years]. About 7.5 per cent.” And that is just looking at paid content and sales – the far bigger decline in advertising revenue is an extremely big problem.
“One quarter of the advertising market has vanished in the last six or seven years…the media sector in Italy is in big trouble.” Apparently compared to other Western media, and specifically in the rest of Europe, Italy is performing particularly badly. The average revenue loss in the EU over the same time is 4 per cent – compared to Italy’s 25 per cent.
Another big chance is in what portion of the media sector belongs to what form of media. This is where the Internet makes itself known. While TV has remained steadily at 51-54 per cent over the years, print media has suffered a massive decline – going from 40 per cent of the media market to 29 per cent – replaced, it would seem, by the huge rise of online media – from 10 per cent to 30 per cent of the market.
“Internet is the fastest growing…it’s more than doubled in six years time”, said Rangone, as he goes on to describe the patterns of the online journalism sector in more detail. Specifically the detail of where that area makes their money.
“The paid component is still quite small”, he said. That component would include online subscription based services, paywalls etc. It’s a field many are increasingly experimenting in, but it’s still a tiny fraction of online revenue in comparison to advertising. According to Rangone, news organisations still find it “easier to have a revenue from advertising than selling content.”
And of those organisations that are actually making some money online, fewer and fewer of them are the “traditional” media brands that were strongest before the Internet changed the game. These media companies have “not only lost a lot of money in traditional media, but they also lost their market share in the only growing component of the market – the Internet.” Roughly one forth of traditional outlets online value was lost over the last five or six years. In number, that’s down from 40 per cent to 25 per cent.
“That is unfortunately the scenario. These are the facts…there is obviously a serious need for innovation.”
The solution…?
So what kind of innovation does Andrea Rangone think can save the future of journalism? He said that in during his research at the Centro di Ricerca Osservatori Digital Innovation, he has identified a “distinction between two major catagories of innovation: focus on the core business…or innovation in diversification”, which means entering new business endeavours that are separate from but somehow connect to the original business model.
Let’s concentrate on the first point – focus on core business first. Rangone gave a long list of ways and examples this could be achieved by innovating the business model, or the ways content is created or through exploring new lines of revenue.
The use of premium content to generate revenue is one example – like the case of Blendle, a site created by the New York Times that offers a pay-per-article service where users can pick the articles that interest them and read them for a small charge, instead of being tied into a long term subscription plan. Rangone also talked about sponsored content and storytelling and creating suites of content and services to meet the demands of users as ways news organisations can find revenue online.
He went on to speak about different methods of curating stories. Human content curation – like OZY, where journalists pick and curate stories from across the web – and automated content curation, more in line with the Buzzfeed algorithm model are both competing online with crowd-sourced curation. Finding a technique that works for them should be a key part of any news service’s strategy.
When it comes to diversifying a media company’s business model, Rangone promoted the idea that news organisations should make it part of their business to invest in and join in with online commercial pursuits – like the purchasing of ecommerce luxery shopping website Handpicked by News Corp.
After all this there was time left for one question: “Is the future all commercial?”
It’s a “shift in strategy”, replied Rangone. It depends on how a media company sees itself, “if a media company considers itself as a bundle of assets”, then the company is just applying those assets in different way – “sticking to the traditional services but trying to get value for core assets.”
“In light of the dismal trends…” argued Rangone, “the future of a media company will need to include innovation.”