StuffMe? Or Just Stuffed?

The big news today is that the NZ Commerce Commission has declined the NZME/Fairfax merger. There’s plenty of coverage from the various news companies around NZ, but does it really matter? Either way NZME and Fairfax are stuffed – merger or no merger – unless they can actually create a viable business. The merger would only have changed how long the decline would have lasted.

The fundamental issue is that both Fairfax and NZME were built on the cash cow that (was) classified advertising and print advertising. Classifieds were lost long ago to the likes of TradeMe (although you can argue that Fairfax let that one slip away) and advertising (of both print and digital form) has been on a steady decline as readers move to a range of other medias (social networking, online advertising, TV advertising, etc).

If Fairfax and NZME want to survive they can’t fix their business model by simply cutting headcount to reduce costs, or trying to diversify into unrelated ventures like fibre internet or a daily deals website. They need a fundamental redesign of their business and I doubt that either company is going to be prepared or brave enough to build a senior leadership team that can make this happen.

So what should a media company in 2017 struggling to survive do? Adopt a playbook from the technology and startup world. Cut all the noise out and focus on what the core product should be. Simplify. Dump legacy. And stop operating a structure that suits massive enterprises.

So what does this mean? What should these companies do?

  1. Firstly recognise you’ll never be the massive financial behemoths that media companies were back in the golden era. The money just isn’t there with reader and advertisers attentions now split across so many medias and consumables. Instead of trying to regain glory days, focus on being a leaner company with smaller revenues, but making good profits and keeping the important role of a free press going.
  2. Print is dead. We all know it. It’s just a question of time until the revenue still made from print advertising and subscriptions can no longer cover it’s costs for production. So treat it as a legacy product. Stop investing in it. Do the absolute bare minimum to keep it ticking over until the end. And when that end comes, be ruthless. Kill it.
  3. Move your best people away from any legacy projects – you’re incurring massive lost opportunity costs by preventing them from working on more long term investments.
  4. Avoid the side ventures. You’re not an investment company. The only skill/resource a media company can bring to other industries is free advertising. And then you’re devaluing your advertising product offering by flooding it with your own ads.
  5. Strip the company overhead. You can no longer be a big corporate with layers of management. You need to be a small lean business. Remove layers of management that doesn’t directly create more value.
  6. Drop Outbrain. It isn’t worth the money, it’s a drain on your reading experience and website quality and ruins any quality aspirations that you have. Promote your own stories instead, expose hidden evergreen content and give it longer life thus get more value out of producing that content in the first place.
  7. Does the massive cost of serving your video content pay for itself? Enterprise transcoding tech and data transfer is ridiculously expensive, especially for small NZ players whom are buying data by the hundreds of terabytes rather than hundreds of petabytes. It may be you’re paying more to have control of your own videos than you actually make from all the revenue around them. Think like a startup – upload all your video into Youtube and take advantage of their ad revenue sharing system. And yes it may only be 50% or so revenue share, but it’s 50% + getting all your data transit for free + getting high def 4k capable video serving infrastructure. And your journalists know how to use Youtube and the built in editing tools. Hell, they can upload to it directly from a phone in the field.
  8. Stop writing your own in-house CMS solutions or buying awful not-fit-for-purpose CMS solutions sold by companies with no understanding of the media and news website business and technical requirements. Build something light ontop of open source bones (never underestimate WordPress with a theme and some plugins) or buy a solution that’s specifically designed to meet media requirements like Arc (which is what NZME is doing).
  9. As an extension of the above – you can’t afford to build everything you need. You’re a tiny NZ local news provider, you need to focus on your core business and find ready-to-use off-the-shelf (or off-the-github) solutions.
  10. If you keep finding that you “just have to build our own tech since nothing else does what we want”, ask yourself the question of whether it’s your business workflow at fault – it’s generally cheaper to change processes than to write all your own technology.

And the big one – kill your mobile website. 99% of the smart phones being used are running either Android or iOS. Sorry to the people out there running Windows Mobile or FirefoxOS, you simply don’t have the statistics to justify any kind of investment into your needs. Building and maintaining a mobile website is a hugely wasteful investment to cater to 1% of users.

Instead pour all the mobile budget into developing beautiful apps for Android and iOS that customers actually want and enjoy using – they shouldn’t feel sad that the mobile site has gone, they should be elated that the app experience is so good.

By pushing mobile traffic exclusively to apps, suddenly some interesting capabilities reveal themselves:

  1. You can deliver tailored push messages with breaking news and updates that are actually relevant to the user’s interest- and measure this using an off-the-shelf push message analytics platform (like my current employer offers).
  2. Paywall introduction suddenly becomes trivial. Android and iOS both support in-app purchases. What could be easier than paying $4.99 for one month of full access to all the premium stories and an ad-free experience? You don’t even need to invest in payment and paywall infrastructure, it’s built right into the goddamn operating system. Unhappy about Apple’s and Google taking 15-25%? Doing nothing means taking a 100% cut. And it costs a bloody fortune building reliable and secure payment and subscription infrastructure yourself, don’t think you can do it cheaper unless you really know what you’re doing. And the biggest issue with your own platform is getting users motivated to actually get that credit card out of their wallet. With in-app purchases, it’s trivial since Apple/Google already have their card details – they just need a thumb print to authorise it.
  3. Some people will always be unwilling to part with any amount of cash for subscriptions. That’s fine. Offer up the main headlines and the low cost wire and/or soft-content stories (some might call this “click-bait”) for free and use advertising to drive revenue – just don’t expect it to ever equal print.
  4. And that advertising – suddenly it’s controlled in-app and no longer subject to a browser plugin blocking it. And since you dumped unrelated side ventures, you’re now reducing the volume of advertising so the ads that you DO run are more pronounced, with better engagement. And if you can drive higher engagement, you can get a higher price. Offer an advertising product focused on premium quality, not quantity. And using app location targeting you can do very, very precise local advertising campaigns.
  5. Advertising is an interesting one actually, since so often sales think “banner ads” – but it doesn’t have (and maybe shouldn’t) be just traditional impression or click-through advertising. It’s now trivial to setup an online store with a service like Shopify and just drop their SDK into your own app to sell real world items directly from the phone. Don’t just advertise tickets to that show, SELL the tickets to that show, directly from your app. And offer quality sponsored content – advertorials are awful and should die, but good quality sponsored content relevant to the readers interests has quite successful engagement rates – TheSpinoff is an NZ example doing this quite well. Stuff does it pretty well too when it’s not just promoting their fibre product (stuff bran?) or Neighbourly endlessly.

And don’t think that this mobile-app native strategy will necessarily alienate older print-loving subscribers.  Travel through any international airport and every other elderly traveller has an iPad in their hand. They’re the ultimate old-person computer. Simple, easy to use and feature built in text size zooming for the reader whom struggles to keep up with the font size of the print edition. A quality app experience is actually better than a newspaper ever was. And iPads are everywhere in the older generations now, they *understand* it in a way that they never did with traditional computers or mobile phones.

I do think a good outcome is achievable in the media space, but only if media companies like Fairfax and NZME can apply their funding and learn to actually innovate. There is a space for quality media and content, especially with decent nation-wide coverage – you don’t get that with the international news sources or the smaller players.

During my time working at Fairfax I met many hard working and passionate people in the company whom strongly care about the role of media in society. The editorial team I saw works hard, cares about what they do and can produce some great content. If they can couple it with a proper business plan, the right technology choices and be prepared to make some hard decisions, there is some hope for them. I just fear that it won’t happen.


I worked for Fairfax in the technology team for 4 years in both AU and NZ. I now work for a push messaging and analytics company. This post is my personal opinion and does not necessarily represent the views of my former and/or current employer. It could represent the views of a future employer, but only if you’re a media company that actually wants me to come and apply technology-driven innovation to your business.

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2 Responses to StuffMe? Or Just Stuffed?

  1. Jared Devers says:

    Great article Jethro, this was bold “(never underestimate WordPress with a theme and some plugins) ” :)

    One thing we are finding is the native app development across iOS and Andriod is expensive, and the skills are in so short supply its impossible to recruit for. So moving to responsive mobile seems to be the strategic approach they are about to take here with a native wrapper. In an ideal world everyone would have rich and engaging native experiences, but it appears to be very challenging and expensive to actually deliver. We also find we have to spent a large amount of money trying to get people to install the apps, average phone users are not like you and I, they have 2 apps and avoid the pain of installing apps and entering passwords etc.

  2. Bill Bennett says:

    While there’s a lot of sense here, it would be fun to discuss in the pub, I don’t agree with killing print.

    Print still accounts for the bulk of revenue. I can’t talk specifics, when I last worked full time in publishing it was about 75 to 80 of revenue. I suspect it is smaller today, but not tiny.

    I’d keep running the presses, but move to a magazine-like format.

    I’d print less. Maybe a Weekend edition and a midweek one. I’d run in-depth analysis, not short-form news. I’d let the feature writers (OK they don’t exist any more) and the investigative team loose. I’d go for intelligent, thought-provoking stories. Aim it at smarter, wealthier, readers and sell this coveted demographic to advertisers on the basis that they are hard to reach any other way and it’s even harder to get their attention.

    I’d carry on doing this so long as it doesn’t lose money and use it to built the quality reputation to burnish the online product.

    And yes, I’d dump all the low quality online material. Every last baited click of it. And I’d put a paywall up, it doesn’t need to be expensive. Say $4 a week.

    There. Fixed it.

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