The Scandinavian Way: Turn Readers into Customers

May 8, 2014 • Business Models • by

The search for an online journalism business model which not only survives but also guarantees publishers a future on the web, demands re-thinking of existing online news-service models. The Scandinavian Schibsted Media Group has been experimenting with a new approach using online journalism and the traffic it generates as means to sell the group’s other digital services. This model has been discussed  in a recent paper, published by Jens Barland, Associate Professor at the Gjøvik University College in Norway and included in the book “New Nordic Journalism Research” recently published by Nordicom Review.

Journalism brings the clicks, services bring the money.

The Swedish word around which the group has built its strategy is “konverteringsbolag”, which can be translated as “turning readers into customers”, that is, converting them from readers of articles to users of the advertised services which generate profit for the group and are not limited solely to procuring new advertising as could derive from the promotion of another one of the group’s newspapers.

The strategy that Barland describes is using the traffic generated by the editorial content to promote other digital services developed in-house by Schibsted. In an interview in 2010, cited in the paper, the CEO of Aftonbladet, Anna Settmann, explained this business strategy: “we have capitalized on our journalism which has built good volume in our online traffic. We utilize journalism as our engine. Journalism builds traffic which is pushing forward (other) new businesses”. In short, Aftonbladet and VG have become at the same time “both the advertiser and the owner of the promoted services”, writes Barland.

Online advertising takes over print ads:

Schibsted, an international group that operates in 29 countries, owns two of the top online newspapers  in Sweden and Norway, Aftonbladet and VG, with 5 million unique visitors a week and 1.5 million daily visitors respectively. Like other newspapers globally, both witnessed a drop in circulation of their print edition of around 60% over the last ten years. However, the two newspapers invested heavily in digital media (Aftonbladet has been online since 1994) and in 2012 they registered a profit of almost 15% of their revenue. Aftonbladet, in particular, has been experimenting for some time with pay and micro-pay models. Moreover, in 2012, for the first time ever the advertising revenues of the tabloid’s digital edition surpassed those of the print edition.

However, the turning point came way before in 2002 with the take-over of BytBil, an online advertising service for car sales, and of a similar portal Blocket the following year. Both portals were already very popular in the Swedish market and from that moment on they became an important driving force for Schibsted, easily justifying the premium the company paid for them. The profits of these services now stand at around 50% in terms of operating margin. In France the operating margin for the same service, called Leboncoin, is even greater (68%).

In 2012 the group’s online advertising services alone generated around 241 million of the group’s total revenue of 1.78 million Euro. Schibsted’s range of  digital services include other brands such as Dyrebar, devoted to house pets, Møteplassen, a dating service, for the broadcasting schedules of TV programmes and Jobb24, for job advertisements.

Barland writes that this strategy is proliferating and has already been adopted by other Scandinavian publishers such as the Norwegian group Amedia and the Swedish group Bonnier. The heart of Schibsted’s editorial choices, notes Barland, is the change in set up of online newspapers –managing appropriate resources which do not really belong to journalism. The idea is fascinating and, at least in the cases above, it seems to work. However, there are grey areas in the overly close relationship between the editorial and marketing offices, as in the case of sponsored content.  From this point of view the debate and research is still in its early stages.

This article was translated from the Italian “Un modello di business scandinavo per le news

Photo credit: Arjan Richter / Flickr CC

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