Leading German publisher Axel Springer has successfully taken on digital transformation to become one of Europe’s largest media companies. In this second of a two-part interview, Dr. Andreas Wiele, member of the board and president of classified media at Axel Springer, reveals how the company stays at the forefront of producing great content. Dr. Wiele was recently appointed chairman of the board of directors at Magnolia International. The interview was conducted by Magnolia’s video journalist Lucius Müller.
How are trends like artificial intelligence (AI) and augmented reality (AR) changing content?
It is already possible, thanks to AI, to have machine-generated content of decent quality. For instance, in the lower football divisions, we were never able to have journalists write decent summaries of individual games, because it would be financially impossible. That can now be done, at Welt newspaper for instance, by AI-generated content. Lots of content types can be AI-generated and that frees up journalists to do more added-value stuff - commentary, investigative journalism.
The point is, you should not take the savings from producing AI content to the bank; you should invest them into more added-value journalism. AR is still somewhat in the experimental phase and mass applications there for journalism are still some years out. We need to be there with the right amount of investment in time and ideas to grow it when it takes off.
What about mobile devices like cars, do those play a role?
A car is a space where people spend a lot of time. Right now, at least the driver is busy driving, but when they free up time to consume media, we want to be there. We are working on some test applications with car manufacturers to try to occupy the space. We’re not the only ones, so it’s healthy competition. But one should not forget that even today, everybody but the driver is totally free to consume media in the car and a lot them use their mobile device, so we will see how much new technologies and screens actually end up entering the car.
What are your priorities in terms of getting content out to people? Are things - like multichannel/omnichannel, personalization, content curation and user-generated content - all part of the game or do you have other priorities?
They all play a role, but one should never underestimate the power of true original content. Our first and foremost goal, especially in times when the big platforms Google, Facebook and Amazon tend to aggregate more audiences and more power, is to truly differentiate ourselves. That’s not only through AI-generated content; it’s certainly not through cat videos. It is through unique content, especially in times of fake news, in times where there are more threats to the free press.
Providing truly independent, well-investigated, researched, documented journalism is what will set us apart. We can create brands and that enables us to monetize properly, not only through advertising, but also through readers paying for content. That’s our fundamental belief which one should never forget when buzzwords or technologies come up.
Everybody once jumped on user-generated content, but it seems to have declined in importance. Do you see that the same way?
User-generated content is a source for news if used smartly and if it is, like in most cases, curated. There can be lots of star sightings, accidents, politicians appearing somewhere, interesting things happening. If people report it to us, and we can put it into perspective, have it checked before being published, then it’s just a great new source of content. Also smart user/reader debates, voting systems - they all can and should be integrated into curated content. But we think that the curation is something that should remain the driving differentiator for our business.
Other technological influences that you think are important, like big data or smart search?
Big data and AI somewhat go hand in hand and there clearly publishers can still go a long way compared to e-commerce companies. Historically, publishers did not want to know what their readers are reading, because it is also part of our understanding of freedom of the press, that readers don’t need to declare what they read and what they’re interested in. Obviously in order to provide them with the content they are really interested in, we have to do that a bit and there we have some catching up to do, while respecting, and that’s an important differentiator, people’s privacy and their right to dispose of their own data or not.
To move to a concrete example: how did Axel Springer take real products like Bild Zeitung and Die Welt into the digital world?
That was a tough process in the beginning, because by declaring (that’s what we did) online first, we had to break the year-old pattern that everybody works towards a certain print deadline, the paper goes to the press and the content is kept exclusive until it hits the newsstands in the morning. Now we publish 24/7 and readers want the news when it becomes available, not when it gets printed and put on the newsstand. That was a big change. In the beginning, people think, hey, you’re cannibalizing your own business.
The only way to achieve change is to make bold steps, get people behind you and also fight a lot of resistance. There’s not a lot of early gains; it takes some time to get there, to make people understand that it works. You need to put your money where your mouth is; you need to invest in that area and ultimately or eventually people will follow. It’s a long process that doesn’t happen overnight.
Many publishing houses are struggling still to monetize their products in the long run. How did you manage to get in the profitable zone?
First of all, it was because we took all the three revenue streams of the newspaper: the classifieds, the advertising and the reader revenue. Second, they’re not tied together anymore by one brand, but on the same Internet, as independent businesses.
How does the classified business sustain the journalistic part?
It shouldn’t sustain the journalistic part. It is now separate from the journalistic part and a separate business. There’s some overlap in terms of how you can tap user data to cross-fertilize your businesses that help, but the journalism (and that’s the great part) has to be self-sustainable. There we believe that it will not only be the advertising, but against the initial wisdom of the Internet that everything is free. We believe and have lots of success that readers are willing to pay for great content, because they recognize the value of valuable content that has a price.
You see that in the development of digital subscriptions not only of our Bild and Welt newspapers, but also of the New York Times, the Washington Post, and more European newspapers who are switching to a paid, premium or metered model. The more publications do that, the more readers get used to it, the more that part of the revenue stream will grow. There will always be a share of free content, content that’s just not valuable enough, e.g. the weather report, if it’s just the temperature and not more local, specific information. But there’s a lot of exclusive stuff that people are willing to pay for.
Did you also kind of carve out a customer journey around the classic business of classifieds?
We are doing so more and more, because actually the classifieds are a fantastic online business. Simply by the fact that if you own the biggest marketplace, where people offer and come looking for houses, cars or jobs, that is the main driver for a successful business. But that in itself is just a one-touch business. The sellers are mostly professionals who come frequently; the buyers usually come once. But then, once contact is made, a lot more follows. You need to organize the job interview, the sale or the move. That is where we can help make this customer journey in all of these businesses much more valuable and benefit from the whole value chain. There lies the future of these classified businesses. There’s lots to evolve and great opportunities to grow these businesses, to make the experience more valuable.
You’re refreshingly positive about the future of the publishing business and rightly so, when we look back at Axel Springer’s history. Still, are there any threats you see that could endanger the ongoing future of your business?
One threat is regulation, in particular the upcoming, and hopefully not final, EU privacy regulation. All the provisions that are well-intended to protect consumers’ privacy actually end up helping the big American platforms, who already have sign-ins and log-ins, where people will always agree to everything these platforms ask for because of their sheer size. On the other side, it will jeopardize the opportunity to provide customized content and customized advertising for the smaller European players.
What are you looking forward to, as a professional in this area but also as a consumer, in the coming years?
The blockchain revolution will be fascinating and also the development of artificial intelligence. Many are afraid that once there’s general AI, machines will make better decisions than people. I think in most cases, it’s perhaps not a bad thing, and overall we do not need to be afraid of technology. But if we embrace it and manage it properly, it will be to our great advantage. So blockchain, artificial intelligence, but also a bit further down the road, VR and AR will be significant changes, and if dealt with well, great improvements for our lives.
Part 1 of this interview focuses on Axel Springer's digital transformation from traditional print publisher to digital media powerhouse.
Magnolia will be at Forrester’s Digital Transformation Europe from June 14 to 15 in London, UK and will give a talk on how its customers master DX challenges through integrating legacy technology, removing silos and building agile platforms and processes.