The second half of the current decade has been good for media
owners in Europe. According to Zenith Media research, over the past four
years alone, advertising expenditure across Europe has grown by 20 per
cent to dollars 84 billion. The first half of the next decade promises
to be no less sunny. Zenith has forecast annual real growth of 2 per
cent for each of the next three years.
Perhaps newspaper publishers have fared less well than companies in
broadcasting.
TV’s share of advertising is now 33 per cent - up from 31 per cent four
years ago - while newspapers have seen their share drop from 58 to 56
per cent over the same period.
However, it would seem that no-one in the newspaper industry has real
cause for complaint. The second half of the decade has seen the
development of a whole new type of media - the emergence of new, or
electronic media - and what began as a marketing tool for newspapers to
promote their papers’ distinctive brand virtues to as many people as
possible is about to change the face of European media.
It’s difficult to say how quickly and how far everything will change
because, for the moment at least, electronic media is not a consumer
money-spinner. Those companies that do make money out of it - Reed
Elsevier claims that almost a fifth of its entire turnover is new-media
dependent - do so because they are communicating business and technical
information to companies and learning institutions. A conventional
consumer publishing company, such as Germany’s Axel Springer reckons
that just 2 per cent of its turnover can currently be attributed to new
media. But the point is that consumer new media is finally starting to
make inroads, not least into classified advertising revenues.
Those inroads are clearly better developed in some regions than in
others.
In Scandinavia, for example, internet penetration is very advanced.In
countries such as Italy, development is slower. But the whole continent
is witnessing change.
FRANCE
In the mid 80s, French newspaper publishers were given a huge leg-up
into the bold new-media future as a result of government legislation
originally passed to encourage printing press investment in a then
struggling newspaper industry. Under current French tax law, all dailies
and weekly regional titles with a turnover of less than Fr50 million can
set aside 80 per cent of their profits as a reserve fund. These funds
must be used to finance part of the cost of new equipment and
facilities.
Originally they were used to help the papers invest in initiatives like
France’s Minitel home information and retail system. More recently these
subsidies have been used to help structure one of the most comprehensive
online newspaper markets in Europe. The site that claims to be the most
visited belongs to Le Monde, the Paris-based national daily that ranks
fifth in the list of France’s top selling titles. Le Monde Interactif
was launched in June last year and was subsequently established as a
separate company under the presidency of Alain Giraudo in January this
year. It received an immediate boost when the new-media content
provider, Grolier Interactive, took a 34 per cent stake in March.’By
April this year the site was registering a total of six million page
hits a month and it is now getting at least 50,000 daily visitors,’
Giraudo says, ’which is more than four times what it was getting a year
ago.’
Le Monde Interactif runs an archive of more than 555,000 stories culled
from the paper over the last 12 years, charging one Euro per
article.
But it is really as a replacement for the fading Minitel system that
French media owners see their on-line versions working best. Company
research suggests that Le Monde Interactif browsers are attracted to the
site’s news resource first but then tend to use the system for buying
books and CDs through Alapage.com and for buying cinema tickets through
the Cinefil network.
It’s a similar story at other online sites. The success of the Minitel
system, for example, which for years has been a popular way of doing
everything from checking the TV listings to ordering train tickets,
means that even older people in France are not daunted by e-commerce.
The sites themselves are often targeted at the young - a group which
French publishers desperately need to woo from other media.
Although circulation has risen as a whole among national dailies, there
has been a corresponding decline in the regional market, while only a
fifth of all adults now take a daily paper, compared with 80 per cent in
Germany and 74 per cent in the UK. Publishers are hoping that increasing
online browsing will help stabilise readership for the printed
versions.
GERMANY
Germany’s 15, fiercely independent provinces have helped produce one of
the most competitively structured local newspaper markets in Europe.
In fact, overall newspaper readership in the country is extremely well
developed, with more people still reading papers than watching TV
despite the country’s burgeoning cable and digital TV market. But
Germany’s federal make-up has tended to favour regional media
development and is a handicap to the establishment of strong, national
online brands. Rather, a number of regional powerhouses have sprouted
which now dominate the overall marketplace.
The Frankfurter Allgemeine Zeitung group is a case in point. It is
ranked among the top 50 media companies in Europe but the bulk of its
income comes from its traditional newspaper publishing activities in a
single German state - Hessen - where the title is market leader and
where the group also publishes the third-highest circulating paper, the
Frankfurter Neue Presse.
Only six of the country’s 400 daily papers have a national reach, and
the paid-for weekly market, where national titles have stronger
representation - 12 of the 26 titles - are in some disarray. But perhaps
that is not surprising. Germany has the strongest weekly free market in
Europe, circulating more than eight million copies of over 1,200
magazines. The result is that classified advertising occupies an
unusually large part of the total newspaper market - around 60 per cent
of total revenues.For this reason internet penetration is causing a
mixed reaction from newspaper publishers.
On the one hand they have been quick to release online versions of their
own titles in the hope of spreading the local nature of print-based
titles throughout the country.
On the other they see the internet as the birthplace of increasing
competition for crucial classified advertising revenues from which they
traditionally earn a large percentage of their income.
Hans-Joachim Fuhrmann, a spokesman for the BDZV Group, says that in the
next year, newspaper publishers will huddle together in the new-media
marketplace, probably in the first instance by forming a joint marketing
venture for their online ads.
’Total internet ad revenue still represents a small fraction of the
overall advertising figure,’ Fuhrmann says, ’so the internet has not yet
had a negative effect on our business. But with the growing market
penetration of new media, that is going to change. Printed papers are
going to have to expect losses.’
According to the ZMG newspaper marketing group, the total number of
German newspaper ads in the first half of the year was 3.3 per cent
above the same period for last year, while nationwide newspaper
circulation fell by 1.6 per cent in the same period to 31.1 million.
SPAIN
The home of one of the most robust newspaper markets in Europe, Spain
initially lagged behind other markets in the development of an online
newspaper economy. The country’s largest daily newspaper, El Pais, only
launched its new media version, El Pais Digital, to coincide with the
paper’s 20th anniversary celebrations on 4 May 1996.
But Spain has got one in-built advantage in the development of a new
media economy - although only 38 per cent of all adults read a daily
newspaper, 46 per cent of the total readership is under 24, and this
youthful audience has been quick to embrace the digital market. Spain’s
online papers have shifted editorial content towards issues and subjects
of particular interest to the young, such as sports, cinema and
entertainment listings.
In fact, according to the head of its digital advertising department, J
Fermin Larrea, El Pais Digital is now the largest newspaper website in
Spain, receiving around 100,000 daily visitors and recording more than
12 million page hits a month.
The Spanish new-media market pioneer was El Periodico de Catalunya,
whose printed version was originally launched to ride a wave of
Catalonian independence-driven fervour in 1978. The online and printed
versions are both published in Catalan and Castillian. The online
version also allows its publisher, Grupo Zeta, to offer advertisers
truly national ad packages.
During the 90s the group has been the most active predator of regional
newspaper groups in Spain, even building up a presence in the remote
regions of Extremadura and Asturias, for instance. It now uses its web
pages to complement its printed papers and offers a national package to
advertisers based on both the regional titles and online content.
The online service also promotes other Grupo Zeta companies, notably the
regional cable TV provider, Cable Total, and Sport, the second-largest
Spanish sports newspaper which also has its own dedicated interactive
service.
Spain’s second largest broadsheet newspaper, Prensa’s ABC title, was
another early adopter of the internet. Its online edition made its debut
in September 1995 and the group, which had experimented in the early 90s
with editorial CD-Roms, has now built up an impressive catalogue of
online editions.
ITALY
Hamstrung by some of the most expensive call rates in Europe, Italy’s
internet usage lags some way behind the rest of western Europe. For
newspaper proprietors this presents a considerable challenge, since the
internet offers the easiest solution to the biggest problem faced by an
Italian press - an ageing readership which is also on the decline. Daily
newspapers only reach 42 per cent of the adult population according to
Pira International research and, worse, the bulk of existing readers are
over 35 years old.
The number of regional and national titles has declined by almost 10 per
cent over the last decade while,in the last five years, national daily
circulation has declined by 5.7 per cent. Regional papers have tumbled
by 12.5 per cent and local dailies have collapsed by almost 14 per
cent.
RCS Editori publishes Italy’s top selling daily, Corriere della Sera,
and best selling La Gazetta dello Sport, whose modest 400,000
circulation belies a hefty readership of over three million. The company
runs online versions of both papers and says that digital TV trials are
a chance for online papers to prove their worth and lure would-be users
given that internet connection rates remain so high.’We are some way
behind the UK in digital TV but there have been some long running trials
and this is one area that might be important, especially for the sports
newspapers,’ an RCS spokesman says.
In Italy TV penetration is unusually high, while newspaper and magazine
sales are at best static and at worst declining. Experiments with new
media have gone ahead regardless of slow penetration, partly because of
Italy’s complicated media ownership rules which encourage diversity. In
general media owners are restricted to just 20 per cent of the media
market and 20 per cent of their own sector. Despite this RCS currently
manages to account for about 40 per cent of daily national newspaper
sales.Italy’s other leading newspaper publishers whose titles include La
Stampa and the Rome-based daily La Repubblica have all made forays into
the world of electronic publishing, but remain less bullish about the
potential of the internet to generate real profits in the short term.
Sports coverage provides a chink of light, however - one in five Italian
men buys a daily sports newspaper and since sports games were put onto
pay-TV last year, demand has gone up. Non sports papers like La
Repubblica use their websites to encourage Italy’s voraciously
media-consuming football fans to take up regular purchase of
newspapers.
UK
When the Electronic Telegraph launched in 1994 it was championed as a
vehicle for raising awareness of the printed paper and little else. The
internet was seen simply as another form of marketing strategy. Five
years down the line the ET forms part of the most developed online
newspaper community in Europe, with the possible exception of
Scandinavia. It also contributes to an online advertising revenue pot
worth pounds 45 million this year, according to the Internet Advertising
Bureau, which continues to grow at a rate of 225 per cent a year.
The ET itself has grown in that time to encompass 17 separate major
internet sites and a total of 150 smaller sites. The Telegraph, along
with The Guardian and Associated Newspapers have led the way. Now every
national newspaper and 90 per cent of the regional market are online.
Unlike other European countries which are still waiting for the internet
to make an impact, it has already started here.
’There has already been a staggering cannibalisation of the regional
classified advertising market and there will definitely be
cannibalisation of the printed and broadcast media by online products,’
Danny Meadows-Klue, head of Electronic Telegraph, says. ’It’s important
that media owners now start to think in terms of share of voice and
concentrate on the total reach of their products throughout all media.’
He expects total internet advertising revenue to reach pounds 45 million
this year and points to the advent of interactive cable and the
successful BT Kiosk trial as catalysts for growth.
Certainly the development of free internet service providers has helped
in the democratisation of online and to switch consumption from the
office to the home. One issue that is proving a small cloud on this
otherwise clear horizon is the BBC’s aggressive role in the new-media
marketplace.
The British Internet Publishers Alliance, which represents the UK’s
online newspaper industry, has protested to the Culture Ministry about
the BBC encroaching on to the commercial online arena and using the
strength of its editorial product to compete directly with the service
offered by the leading newspaper groups.
El Periodico de Catalunya was a new-media pioneer in Spain while El Pais
Digital is now the country’s largest newspaper website. Germany’s
federal make-up is a handicap to strong, national online brands and
regional powerhouses such as the Frankfurter Allgemeine Zeitung group
dominate the marketplace. In France Le Monde claims to have the
most-visited website.
