Paying online readers are more and more important for media companies

Circulations are declining and advertising revenue is collapsing. But traditional media channels are still reaching more and more readers. Meanwhile Google and Facebook are capturing an increasing share of the growing digital advertising market.

The advertising market is in free fall and circulations are declining. International giants like Google and Facebook are still the big winners when it comes to digital advertising.

“The traditional newspapers are reaching more and more people. But it’s their websites that are attracting readers. Meanwhile print circulation is what brings the money into the media houses,” said Gunilla Herlitz, former CEO of Bonnier News and also CEO of the daily newspapers DN, DI and Expressen, at an IVA meeting on quality journalism.

In Sweden Aftonbladet was the first paper to realise that the internet and digitalisation were turning the media world upside down.

“Not many people understood that the trend was driven by digital technology. Advertisers were fleeing from newspapers to platforms that reached their target groups more exactly. Facebook has understood that relationships with customers are what matters,” said Jan Helin, former Editor-in-Chief of Aftonbladet and current Director of Programming at SVT.

The future for local subscription newspapers is bleak, according to Jan Friedman, Chairman of Mittmedia which consists of 28 local newspapers.

“We need local journalism. Local newspapers go deeper than national ones. And local digital media has good potential in the advertising market. Google will never have journalists working locally,” he said.

According to Jan Friedman, one way to maintain the high standard of local journalism could be through collaboration with SVT.

He also believes that the political system could be more constructive. The current way the press receives support is outdated.

“Instead the media should be receiving industry and innovation support. Almi and the Swedish Agency for Economic and Regional Growth could manage that process,” he said.

The business concept of DN, where Peter Wolodarski is Editor-in-Chief, is based on quality journalism.

“Digitally, Aftonbladet had an advantage. The result was that all online newspapers looked the same. This type of standardisation would be a disaster for DN. So we changed our position.”

More narrative and in-depth journalism increases opportunities for DN to charge for the digital content on its website.

In 2015 DN launched its payment system for digital subscriptions. Initially 5,000 subscribers took the bait.

“Now there are 90,000 who only subscribe to the digital version of DN.

Advertising revenue is an important source of income for all commercial news media. With the sharp decline in ad revenue for print newspapers and the digital versions seeing competition from players like Google, Facebook and YouTube, business models need to be changed. This is the opinion expressed by Jonas Ohlsson who is in charge of a study entitled Kampen om reklamen (The fight for advertising) at the University of Gothenburg.

According to the study, digital platforms outside the Nordic region are attracting 60 percent of digital advertising investment in Sweden. The total combined growth in digital advertising investment in 2015 and 2016 went to players outside the Nordics.