In focus: Publishing. Challenges within the publishing industry
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1 In focus: Publishing Challenges within the publishing industry
2 Contents A new world 3 Key trends 4 The digital readership in detail 6 ICT challenges for the publishing sector 7 The focus of technology is changing 8 The change continues as publishers gear up for a more flexible and scalable future 9 Where we re heading 10 Are newspapers ready to embrace the future? 12 How we can help 13
3 Vodafone News In focus: and Publishing views for broadcasters A new world For newspaper publishers, change happens fast. Never more so than when faced with increased threats and opportunities from the digital world. As a result many of the biggest players are leading the industry by investing heavily in efficient digital content production and multichannel distribution. They recognise the potential to profit from richer experiences on tablets and smartphones. They also see possibilities in reaching out to global markets. But revenues are uncertain. Monetisation is the hot topic and getting it right demands intelligent business planning and investment. An ill-judged move with subscription or other new revenue generating models can mean losing thousands of readers overnight. Operations also need to be tightened to make their people more productive, remove latency, drive organisational efficiency and bring about a lean, ready-for-change business. Against this backdrop, there s also an increasing post-leveson reputation to contend with not to mention the prospect of further hostility towards the industry as the extent of improper conduct continues to be scrutinised. In such a complex, fast-moving environment, the production of engaging content across multiple platforms and formats with speed, credibility and security is key if publishers are to adapt, innovate and succeed. 3
4 Key trends Print declines as digital audiences grow New platforms for distribution are emerging from ebook stores, newsstands and dedicated apps to social networks. Video continues to replace the written word, new roles like Chief Content Officer and Head of Digital Content are emerging and all the while, sales of physical newspapers decline sharply. Take the example of the FT: its digital readership now outstrips its print audience by over 130,000 readers a day. New revenue models need to be found to replace cover price and print ad sales Publishers are experimenting with different digital revenue models with mixed results. The Sun implemented an online paywall from August 2013 and suffered a 60% traffic drop. Some, like the New York Times, are deploying hybrid models, serving a certain amount of free articles according to which channel the content is accessed from. Others, like new market entrants Quartz, sell sponsored content to generate revenues. Getting people to subscribe and renew will be one of the big challenges of the future. In addition, as subscriptions decrease, publishers are looking at advertising revenue. But which online and mobile advertising model will last the distance? The challenge is to secure premium ad rates in an industry increasingly dominated by programmatic buying. This could prove an opportunity for the publishing industry. With such overwhelming level of audience fragmentation, gathering data on customers interactions will give them a comprehensive view that they can use to develop a single strategy about how best to engage with those customers. Sponsored content that s relevant to the consumer experience and not interruptive blending neatly into its editorial environment is also becoming a serious consideration for publishers. 4
5 Key trends Publishers need to invest in Rock Stars and richer content Digital media outlets are producing alternative content formats to increase engagement. They re developing Rock Star strategies where high-profile journalists and columnists are engaged to develop content, leading to a dedicated digital readership. There s also been a shift towards the production of quality, in-depth investigative journalism strategies to regain some control over the news agenda and underpin the ethos and brand of some newspapers. Long-form multimedia journalism is also becoming more popular, as readers increase their content consumption on tablets. Both initiatives need sizeable investments in talent and technical resource. There s a battle for millennial hearts and minds The new digital consumer is social and demanding. Users are becoming increasingly used to curating and aggregating content via social media and apps like Flipboard, Pulse, Zite and Prismatic. And with news breaking so fast on Twitter, Facebook and elsewhere, publishers need to ensure they re a credible destination for younger generations to check facts and get the full stories. They must also offer distinctive products, services and experiences on enabling, relevant platforms if they re to succeed in a new social age of almost limitless connectivity and choice. New global markets present challenges and opportunities Publishers are faced with a new global customer base brought about in part by market consolidation, as major publishers merge with or acquire competitors to survive the squeeze on margins and gain competitive advantage. This means they need to tailor their brand presence to different markets. Subcompact publishing and lists are challenging traditional players Another challenge is coming from new online entrants like Quartz. These new players combine subcompact layouts with long-form journalism, motion graphics, videos and photos that bring stories to life online. They also take a clear mobile-first approach. They provide fully integrated cross-platform experiences and exploit that capability to generate revenue via sponsored content. 5
6 The digital readership in detail Growing digital audience The number of digital media consumers has reached 35 million Viewer device usage patterns also indicate that more devices with richer interfaces are increasing overall news consumption mobiles, tablets and laptops are all being used to consume content at different times of day Increasing number of devices and new formats Publishers are distributing content to multiple devices, including E-Readers, tablets, smartphones and traditional desktops and laptops PCs and mobiles still dominate, but 20 million of the population now have access to a tablet, with 16 million having access to an E-Reader Media outlets are responding with alternative content formats to engage more effectively with the new digital audience. Rich multimedia and long-form journalism are examples of this trend. Regular online news content access by device: 80% 60% 40% 20% 0 67% 29% Opportunity and threat posed by aggregators Flipboard is already partnering with the likes of the Guardian, BBC, The Telegraph and Wired UK, while other news aggregation apps like Pulse, Zite and Prismatic are becoming increasingly popular 16% 2% 3% Computer Smartphone Tablet E-Reader Connected TV Flipboard s 100 million global user base provides new opportunities for publishers through interactive ads, but this also dilutes revenue share 6
7 ICT challenges for the publishing sector Publishers are addressing a number of ICT needs to allow them to create and deliver engaging digital content. New digital workflows With the increasing use of video, publishers now need to consider how IP file transfers can open up new creative possibilities, particularly with live production. Footage transmitted through fibre and mobile uplink can be ingested digitally, for example, allowing reporters to broadcast live from the field by transmitting over mobile networks instead of costly satellite connections. Cloud-based editing suites are also becoming economically viable. Editors can work on content on a private cloud, minimising bandwidth usage and making it cost effective and secure to work anywhere. The entire production process has become more streamlined, changing how content is created and ingested, right through to layout and final output. Software development Newspaper publishers need to invest in software development and transcoding capabilities to deliver new content formats and experiences tailored to each device. Content management Robust systems are needed to allow a single editorial team to produce content across multiple formats without role duplication. Data analytics Newspapers need a deep understanding of changing readership behaviour. Data analytics facilitates this, allowing for better content targeting and aiding revenue maximisation. Security Online newspapers are under threat from hackers pursuing sensitive documents. So publishers need to build ever-stronger systems and in-house security teams to combat threats. Scalable infrastructure Newspaper publishers now need highly scalable hosting infrastructure to support digital content distribution across multiple platforms. 7
8 The focus of technology is changing All areas of ICT spend are set to grow over the coming years. As publishers switch to digital distribution, the biggest spend increase will be on custom software, application packages and development tools. The shift indicates the increased importance of software, rather than a reduction in ICT spend on telecom services. 100% 80% 40.5% 36.9% 60% 10.5% 3.3% IT & Telecom Staff 13.9% 0.1% 3.6% 15.8% 13.6% 14.4% 15.1% 7.2% Telecom Services Computer Services System Software Developement Tools Application Packages Custom Software Hardware 40% 20% % 25.9% 4.7% 2.8% 2.6% 5.8% 1.7% 3.5% 4.3% 2.5% 9.4% 10.8% Source: Cartesian Ltd., Kew Associates, 2014
9 The change continues as publishers gear up for a more flexible and scalable future Publishers are investing not only in software development but also scalable infrastructure to ensure high-quality, multiplatform experiences and content delivery. New software development to create new kinds of content Publishers looking to create engaging crossplatform experiences are developing apps that enable content to be delivered cost effectively and viewed within browsers on both Android and ios devices (also bypassing Apple s revenue share restrictions). Scalable infrastructure to support new digital service delivery Production of new forms of rich multimedia content mean bandwidth demands are variable. So publishers need to be able to react to changing demand. Cloud-based hosting gives publishers a scalable infrastructure, allowing them to allocate resources more efficiently, maintain uptime, collaborate more effectively and speed up time to press. Digital working also gives publishers the opportunity to attract the newer, multimedia savvy generation of journalists a helping hand in a fierce talent war. 9
10 Where we re heading Many publishing challenges will be solved in the future by new software development, connectivity solutions and cloud and hosting services that support a new digital era. New software development The Times and other News International newspapers are already using native HTML5 apps to deliver content to mobile devices The Times is also forging ahead by developing selfenabling tools for journalists to quickly and easily produce and develop engaging digital-focused content, including rich media templates and social sharing widgets for its writers More scalable and efficient working through the cloud Publishers now also need to look at more efficient ways to secure and store archived content, creating long-term opportunities for advertising and other forms of monetisation Transcoding needs to be carried for at least 30 different formats creating a massive spike that requires big scalable data centres in the cloud Trinity Mirror has already migrated all its newspaperbranded sites to cloud hosting services in order to rapidly provision infrastructure (and now benefits from almost 100% site availability) Production and secure archiving of content can be achieved quickly and efficiently through the cloud, satisfying the need for multiplatform content delivery. Also transcoding in the cloud will increasingly be the de-facto solution for publishers that want to scale quickly in line with demand. Multiple jobs can be carried out simultaneously without increasing fixed costs through provisioning of dedicated servers. This is crucial because the number of transcoding jobs is only going to increase further as the number of platforms and devices grows. Publishers in-house server capacity can t keep up with this growth and they increasingly need a cloud solution that can meet future demand especially as different devices and platforms become more popular. too Andrew Halliwell, Head of Media, Gaming and Technology, Vodafone UK 10
11 Where we re heading Connectivity Distribution of content through mobile and fixed-line networks in volume and scale enables easier production of material and consumption by readers on a range of devices. Network intelligence Intelligence gathered from opt-in customers on mobile networks can identify new reader trends and support social media engagement and content pushes. Cloud and hosting Data centres connected to fixed and mobile networks give publishers flexible hosting resources for their content, plus the distributions of this content through multiple interfaces. Processing power can be provisioned instantly, so cloud services also maintain high uptime for media sites, even when traffic is peaking during the biggest stories or events. 11
12 Are newspapers ready to embrace the future? New software development Risks are high and the ultimate shape of the media business is far from clear. Technology continues to impact the business in complex ways, giving the IT organisation an important seat at the boardroom table. Fact-based research and analysis is more important than ever as media companies struggle to embrace new models and replace legacy operational technologies with cloudbased digital services. Gartner, 2014 The world s oldest newspaper has already adapted The Telegraph is already running all its operations in the cloud. This strategy lets its IT organisation focus on delivering application functionality that helps offer more value to readers. IT is now developing applications that make it easy to publish and support the Telegraph s own content and their customers interaction with it. This helps the Telegraph evolve with the changing world of media, content and community engagement. A new way of thinking is needed British newspapers have so far applied 20th century solutions such as new design, formats and aggressive marketing to a 21st century problem primarily fragmented audiences, new advertising platforms, and massive digital storage capacity through so-called cloud computing. Lionel Barber, editor of the Financial Times Digital is on the march Digital sales for some global brands like the Financial Times now far outstrip print. FT: print vs digital subscribers: 500k 400k 300k 200k 100k Print Digital Source: Cartesian Ltd. 2014
13 How we can help We ve worked extensively with the UK publishing industry over the years. Our expert team manages the needs of over 50,000 users across 75 of the UK s largest media and broadcasting companies. We help them to meet their challenges with an innovative range of connectivity and cloud and hosting solutions that help with production, multiplatform management and end-to-end digital workflows. Find out what we can do for you by arranging a visit to our Customer Experience Centre in Newbury. Talk to your account manager, or call us on
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