Newspapers must become integrated media companies that use their brands effectively in order to survive, says Christoph Keese, president of public affairs at Axel Springer AG.
The German-based multimedia company has invested heavily in its digital media division and plans to erect paywalls for additional revenue streams in order to maintain high quality content.
With more than 11,500 employees and annual revenues of approximately €2.9 billion, Axel Springer is the leading newspaper publisher in Germany. The company is active in 36 countries, has more than 230 newspapers and magazines and 80 websites, and boasts holdings in television and radio stations. In 2009, Axel Springer was one of the most profitable publishing companies in Germany, with an EBITDA margin of 18.6 percent.
Circulation in Germany shrunk by 10 percent from 2007 to 2009 and advertising expenditure declined. But this didn’t lead to a large decline in revenue for Germany´s publishing companies. Many have made up for revenue losses by charging higher prices. Although German publishing companies have experienced decrease in volume, the decline is moderate from a global perspective.
“Axel Springer´s core business is the provision of information and entertainment for different audiences,” Keese explains. To this end, Axel Springer has three primary strategic targets: the German market, the internationalisation of the model and the digitalisation of the business.
The newspaper business is the most lucrative segment of Axel Springer´s portfolio and subsidises the organisation’s online activities. But the primary goal for the future is to increase online revenues from 25 percent to 50 percent of total revenue. Axel Springer has also taken a decisive stance against the “free-of-cost” culture on the Internet.
“Journalism cannot be free of cost and high quality content needs a price tag,” Keese says. Currently, only search engines can appropriately price their product. Content contributors must participate more in order to generate adequate profits. “Content is not king, content is everything!”
Axel Springer’s high quality content and brand are of high strategic importance to the company. The consumer has the strong desire for orientation and curation. Due to the variety of products and competition in the digital age, strong brands are critical to the success of media companies.
Further, Axel Springer has quickly scaled internationally. Axel Springer AG and Ringier AG merged in Poland, the Czech Republic, Slovakia and Serbia in 2010 to create a joint venture called the Ringier Axel Springer Media AG. To date, the new multimedia company has secured of €414 million in revenue and employs 4,800 people. It is already one of the leading media conglomerates in Eastern Europe, publishing more than 100 titles and managing over 70 websites. The goal is to have an IPO in three to five years.
Axel Springer has “evolved from an old fashioned newspaper publisher to a multimedia powerhouse!” Keese says.
This interview and more will be available in the World Newsmedia Network’s upcoming World Newsmedia Innovation Study. To secure a free copy of the report, please take our survey, available in nine languages.