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Show me the money!

Ad sales down; copy sales down; just where are newspapers expected to find their next shilling? The industry’s brightest brains have been mulling over this question for some time now, so presumably there are lots of bright ideas floating about? Err ... Peter Sands goes in search of inspiration.

Peter Sands

Posted on: 15 March 2010

Every spring, I go to a retail park in Kent to buy suits, ties and shoes for the year ahead. This time, as I browsed the sensible size 8s, a man tapped me on the shoulder and said if you want brogues, go to the Telegraph. I did. Smart Oxford lace-ups for less than those on the shelves. The word is out: The Telegraph is a fashion shop ... and a travel agent, loans company, insurance broker, box office and dating agency.

Its business is no longer dependent on advertising and cover price. That model is bust. As the Economist so eloquently put it: “The business of selling words to readers and selling readers to advertisers, which has sustained their (newspapers’) role in society, is falling apart.” Or, if you prefer hard figures, advertising makes up 30% of marketing expenditure, compared with 70%, twenty years ago (Source: UK Newspapers, the Road Forward. iMedia, Nov 2009.)

But, as Samuel Johnson once said, when a man knows he is to be hanged, it concentrates his mind wonderfully. So, have the newspaper industry’s collective brains devised a plan to fend off the hangman? That was what the editor of InPublishing alluded to when he asked for this article, loosely entitled ‘Radical Revenue Ideas for Newspapers’.

I started my search in the regions, asking for their best ideas. A picture quickly emerged of newspaper managements responding to the shadow of Albert Pierrepoint lurking in their pressrooms by slashing and burning. No surprises there. Cutting in the current circumstances is inevitable but it needs to be offset by a strategy for survival – and that requires time, investment, leadership and, critically, belief. Greg Hadfield, the Telegraph's former head of digital development, is particularly damning about the regional press’s failures: “Local newspapers have surrendered their pivotal position at the heart of their communities. Not through poor journalism, but through lack of innovation by media owners. Facebook and a whole host of digital enterprises have stolen their communities, advertisers, and business models.”

A grim assessment but is it true?

Short of inspiration

The first response from my regional colleagues suggested it might be: “Our innovation stretches to putting P45s in blue envelopes rather than brown ones!”

And that was about as creative as it got. A lack-lustre, and often dubious, list dribbled into my inbox.

* Charging to print an obit / wedding report.

* Charging to print graduation and prom pictures.

* Sponsored book of the year award.

* A photography competition with entry fee.

Regional newspapers, it appears, will be lucky to see the year out.

One editor told me "People have just stopped coming up with ideas, because they are no longer encouraged. Sad, but true."

There have been some strategies of course. Johnston Press, Tindle, Newsquest and DC Thomson are among the paywall pioneers. And in February, the Manchester Evening News charged £1 for a download of a 48-page football souvenir supplement.

The MEN has also moved into broadcasting. Its televised Channel M has been battered by recession, losses, redundancies and was rejected by Trinity in the recent sale. But surely owning the city's information, and delivering it in print and through television, is a model with potential.

Not surprisingly, the Sun has seen the merits in broadcasting. SunTalk is online and on the iPhone through a free app. It is broadcast on Spanish radio and Jon Gaunt's show has been sold to stations in the Canaries.

A more lucrative money-spinner for the Sun, though, is the UK’s biggest online bingo site. There are fifteen game rooms and thousands log on every day. Poker is also a profitable online business, particularly for the Racing Post.

Mort Zuckerman, owner of the New York Daily News, believes gambling could "save every newspaper in America". But it would take an impressive business plan to persuade UK regionals that their future lies in betting. And after gambling, why not porn? Local readers' wives would surely be a big seller.

Saved by the app?

With the launch of the iPad and the ubiquity of wireless access, the view that hand-held devices could be the saviour of newspapers has been well-aired. It is certainly a compelling argument that everyone owns a mobile and is willing to spend more on SMS services than on print. Inevitably there has been an explosion in apps. The Guardian in your pocket – an iPhone app that downloads for a one-off £2.39 - sold 70,000 in the first month. The Telegraph has a free one but sells others including its crosswords and Alex. Northcliffe has an app drawing on a database of 150,000 used cars.

There were one or two other revenue ideas that caught the eye, particularly the concept that the community could pay journalists to investigate stories. An example is the website Help Me Investigate which is funded by Screen West Media and Channel 4. A site in San Francisco, Spot.Us, is also developing a ‘crowdfunding’ model where people pay a fee for investigations. Meanwhile the Huffington Post Investigative Fund brings in sponsorship to pay for online investigative reporting.

Another concept from America is the growth in newspapers offering courses, exhibitions and events. The Hamilton Spectator, for example, runs cookery and wine evenings and hosts dinners in its gourmet kitchen.

And one question that continues to emerge is, have newspapers really exhausted the potential of their archives?

But all of this is skirting around the edges.

The Euston Project

What newspapers really need is a ‘third way’ and that brings us back to the Telegraph and Will Lewis. He vacated the editor's chair in October for a role that includes "capitalising on cutting edge ideas" and "driving new revenue streams".

He moved to Euston, to avoid the distractions of the newsroom, and when I caught up with him he was still putting together a team from different disciplines – marketeers, digital developers and journalists. Their brief is simple: To innovate fast.

He insists there is no “magic bullet” but that digital advances, particularly 3G phones, bring obvious opportunities to provide services and goods to existing and new readers. He sees the Euston project as an end to the discussion and the start of the action. “There should be less chat about the decline of where we have come from and what we should be doing, and more time innovating and capitalising on the amazing opportunities that are now becoming obvious.”

Lewis’s team is building on the revenue models that have been developed at the Telegraph over the last four years.

A flick through the paper shows the extent of the 'third way'. In two copies we found the following, all comfortably sporting the Telegraph's brand: Financial and legal services including savings, loans, retirement advice, international money transfers and life insurance; digital services; a business club; travel, including a 40-page glossy dedicated to trips to exotic places; dating; property; Matt eCards; music downloads; DVDs; events including the Real van Gogh exhibition; airport parking for £10 a week; historic newspapers; motoring warranties; books; fantasy football and offers including halogen heaters, wine and snuggle-soft blankets.

The Telegraph is plundering its archives, harnessing its specialisms but mostly using its brand and reach to strike partnerships with the likes of the Bank of Scotland and sell goods and services for commission. This is estimated to bring in one third of the Telegraph Group's profits.

It is a lucrative area for national newspapers, as is collecting customer databases for sales leads and selling them on to third parties.

A model for the regionals?

If the nationals can capitalise on their brands and reach to create databases and partnerships with major players, so can the regional groups. Trinity Mirror's regionals claim more than 6.8 million unique digital users each month. And if the groups broke down their barriers further (were they really ever in competition?) then imagine the power that a united regional press could exert. Consultant Jim Chisholm has long argued that newspapers should move into the ‘below the line space’. “It’s not just the Telegraph that holds well constructed, and exploitable databases. Many regional titles have held these for fifteen years. Typically, we’re still talking about it, where in many countries it’s the norm.”

The major revenue source for local newspapers, though, is with local people; those prepared to pay for content or those prepared to pay for services. It was ever thus. Instead of selling space, regional newspapers now need to sell solutions and strategies. I have a friend who runs a caravan park and so has many days when he has to be on site but with little to do. He has used that time to build up a successful sideline managing the websites and branding for hoteliers and estate agents. Isn’t this our territory? Newspapers clearly need to target the areas where local businesses now spend the bulk of their marketing budgets. They need to offer website building and management, marketing strategies, branding, design, promotional campaigns, catalogues, PR and partnerships. They could do so in return for a fee, a partnership or a commission.

The other revenue option that continues to bubble under is the prospect of public funding. State subsidies to save local newsrooms may have been ruled out, but there is still some public money available. The Government has announced three pilot projects that will supply regional news on ITV. Trinity Mirror and Cumbria Newspapers have teamed up with the Press Association and multimedia producers Ten Alps to tender for the proposed pilot in the North East. On a much broader scale, there is the idea of a levy on broadband operators to help local newsrooms survive. As Peter Preston said in his Observer column: "Don't fret over little paywalls for this and that – build a great wall and let surfers roam free within it."

But for now, newspapers cannot rely on a Government pardon to escape the hangman’s noose. The ‘third way’ looks the most likely path to longevity ... but this isn’t a magic gateway that newspapers will stumble upon. It has to be built.

A dozen money-spinners

1. Shopping

The Telegraph sells everything from shoes to holidays.

2. Commission-based partnerships

Loans, savings accounts and investment advice is reputed to have netted the Telegraph £1m per year in commission.

3. Marketing solutions

70% of marketing spend is on PR, campaigns, direct marketing, online etc. Local newspapers should offer marketing strategy services to every business on their patch.

4. Paywalls

Everyone from Tindle to Murdoch giving it a go.

5. Online gambling

Sun’s online bingo is UK’s biggest. Mort Zuckerman reckons online gambling could save every US newspaper.

6. Mobiles

The Guardian’s iPhone app sold 70,000 at £2.39 (£167,000) in first month.

7. Selling archives

Newspapers can charge for search passes and downloads, sell images, produce books and much more.

8. Broadcasting

SunTalk is broadcast in Spain. Trinity and CN bidding for funding to provide regional TV programmes.

9. Courses and events

US newspapers run everything from exhibitions to gourmet evenings.

10. Public funding

Government is funding Independently Funded News Consortia. There may be more.

11. Community funding

Website models where community pays for investigations.

12. Databases

Selling customer data to third parties can be lucrative.

About Peter Sands
(Details last updated: 25 April 2013)

Peter Sands is a newspaper consultant and designer. He has redesigned 85 titles, assisted publishers in changing their businesses and runs courses in all editorial disciplines. From 1989 to 1993 he was editor of the Northern Echo.

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