For a few years at the end of the past decade, they were ravaged. Some of the UK’s main media owners were rendered bystanders as the ongoing effects of digital transformation were compounded by an economic crash that, for some, all but wiped out entire revenue streams.
As spring sunshine dawned on the Changing Media Summit 2015, however, “old” media companies – following their cuts, contortions, restructuring and digital extensions – looked far better set for their future.
Magazine publisher Hearst UK’s CEO Anna Jones, speaking in a panel I moderated, described developing media strategy as “like white water rafting”. But, when you observe the increasing maturity of media companies’ digital efforts, along with the increasingly competent and balanced management of their diminishing analogue cores, it seems that owners exert far more influence over their future direction than might have been said over the past decade of the summit’s history.
At least one major bump in the road lies ahead, however – the growing shadow cast in the market by progressively larger, nimble and instinctively digital publishing rivals. For all their strides, media leaders’ underlying fear during the summit’s second panel was palpable.
Hard to keep up
“How well can we compete with heavily venture capital-backed, digitally-obsessed companies?” asked Keith Hindle, digital and branded entertainment CEO of X Factor and American Idol maker FremantleMedia, conceding to strike “a negative note”.
Hindle said: “We’re talking here about how we’re managing to move towards a more digital-focused model in our core businesses. But, actually, there are many players out there – Vox and Vice, BuzzFeed – who have no other dream, they have no core business that they’re trying to fold digital into. They are digital at their core.
“When you’ve got that coupled with venture capital money that says, ‘Here’s $50m, we don’t want you to make a profit for eight years, go and build a business’, that becomes a challenging thing to compete with and I think that’s the real challenge to us.”
By fiscal contrast, Johnston Press, whose CEO Ashley Highfield also spoke on the panel, remains saddled with large amounts of debt, as well as print operations that continue to draw costs. The old guard are scrabbling to finance their forever dream home, while having to work increasingly hard to maintain their crumbling current abode.
Guardian News & Media deputy chief executive David Pemsel, was equally apprehensive about the upstarts.
“When I have been on panels with BuzzFeed and others, they sort of try and say ‘the industry of which we are a part’,” he said. “Some of those platforms have been around for three years and we’ve been around for 200. They try and step into our space.
“I look at them and say, ‘It’s an algorithmic sort of search social platform’. I’m not entirely sure where the value sits within the types of content that they create. I say, ‘Look, you’re obsessed with valuation and we’re obsessed with value’.”
Perhaps the digital VC money – of which, Vice Media has an estimated $580m, BuzzFeed $96.3m – is not the panacea old-line media bosses believe. Online postmortems of the recent collapse of tech blog Gigaom, at which I was a senior editor until 2013, have converged to blame a reliance on venture capital, of which it reportedly raised $25m.
This pack-like finger-pointing at the very dollars that fuel the digital economy is unusual, and counterintuitive for the Silicon Valley herd, for whom raising funds is a rite of passage and a reason to pop open champagne. Yet, it also overlooks many potential factors, including that the site was wound up not by investors but by bankers at SVB – suggesting the nail in the coffin may have been debt, or at least venture debt, not necessarily venture capital.
“We’re obsessed by what we give our readers and we’re not obsessed about exiting in three years’ time to return the VC money that came,” Pemsel added. A shrewd delegate might have pointed out, of course, that by virtue of being operated by a trust, the Guardian, like those VC-backed digital-native publishers, is also not compelled to make a profit; at least, not this year.
Digital veterans become frenemies
Regardless of the perceived disparity in available resources, at this point in the evolution of media, it is telling that the biggest fear of the old guard is reserved not for the traditional behemoths of the “GAFA” quartet – Google, Amazon, Facebook and Apple – but for this new line of BuzzFeeds, Vices and their ilk.
“Facebook often drives about a quarter of our traffic,” said Highfield during the panel discussion. “We’ve just become Google’s fastest-growing partner because we sell Google AdWords into small businesses. I think we’ll continue to partner with the Facebooks and the Googles of this world – I think it’s when we start to lose that we’re in trouble.”
If BuzzFeed today is a threat, the GAFA seem firmly in the “frenemy” category. Even the Financial Times chief information officer Christina Scott, whose publication has just shaken up its payment strategy but remains absent from Apple’s iOS platform, did not rule out a return: “As with anything, you have to keep reviewing, you never know.”
Likewise, FremantleMedia is among the biggest independent production suppliers on YouTube. Hindle sees Google’s video platform as “absolutely critical for us”, making up 60% of viewership. But he sees it primarily as a discovery mechanism, for pushing viewers elsewhere. It is destination sites such as Vice, with which Fremantle recently signed a production deal, where Hindle sees the biggest monetisation potential.
They may enjoy the online traction and advantages the analogue set can but dream of – but even the new wave of pumped-up digital content rivals might want to start watching their back. There is a lesson for everyone in the world’s biggest digital beast, Pemsel suggested.
“When you listen to some of the narrative that comes out of Google, however successful they are and however much money they continue to make, there is a restlessness that’s at the heart of that organisation, in terms of how they deal with innovation,” he said.
“They are paranoid because they know … given the opportunities that digital presents itself, someone could come along and just eat them alive within a few years.
He added: “I think we need to look at that and realise that, if they can be paranoid and slightly scared and anxious then I think, given from where we’ve come from, we should probably have the same attitude.”