In 1999, the record industry was on a high. Driven by booming CD sales the global business posted revenues of $26.6bn. Sixteen years later, this had slumped to just $15bn.
In that context, holding record labels up as a model for dealing with digital disruption may seem counter intuitive. But bear with me.
Faced with a rapid decline in print advertising, an alliance of the UK’s major newsbrands under Project Juno, now rebranded Project Rio, was proposed.
Pooling inventory and data, it was suggested, would create a more relevant and value-driven audience for advertisers.
Like CDs, ad sales are moving from physical pounds to digital pennies. And while the volume is greater it doesn’t compensate. Programmatic means finding the right audience at the lowest possible price – not good news for quality publishers like newsbrands.
Belatedly, newsbrands are responding. Private marketplaces allow some control. But the reality is, despite the decline of print, revenues are still heavily weighted to print. Anecdotes from sales teams say that they simply can’t sell digital ads, advertisers just want to buy programmatic. They end up giving away the digital inventory.
So what’s the lesson from music?
Just as the record industry was peaking, record labels lost control of distribution. Peer to peer piracy and the lack of a compelling alternative hit hard. And when you don’t control distribution, you lose value.
Despite the decline of print, revenues are still heavily weighted to print. Anecdotes from sales teams say that they simply can’t sell digital ads, advertisers just want to buy programmatic. They end up giving away the digital inventory.
They learned that you can’t gate-keep consumption online as you would in the physical world. Trying to is how you lose control. The product’s already out there for free. So you change.
First, they consolidated for scale and efficiency. Five major labels – Universal, EMI, Sony, BMG & Warner became three corporate groups.
Project Juno stops short of being a merger, but the principle of centralising shared back office functions like sales and marketing to leave more money for content is the same.
Second, they innovated and licensed new services to build value in other areas. Built around the convenience of a jukebox in your pocket, subscription revenues from services like Spotify are growing rapidly.
While we are yet to see a platform emerge that allows newsbrands to offer consumers a high-quality personalised news service at the right price, I can see that the demand would be there.
Finally, they’ve protected value in physical. Vinyl has been repositioned as a high-quality music lover’s product where retro, rarity, and quality hold sway. And sales of CDs remain strong in many parts of the world. In Japan, 80% of music revenues still come from physical product.
Like the music business before it, newsbrands need to decide where the value lies and work together to build revenue streams around it.
And fortunately for news brands – like music – they matter. Personality attracts readers. Build an opinion, a stance, an experience into the print product. And living in today’s alternative facts universe, readers increasingly crave the Pulitzer-prizewinning diligence and investigation that newsbrands offer.
The ABCs proved this to be true, with Private Eye and The Spectator triumphing over the glossies.
The decline in print revenue has been faster than the decline in circulations, which suggests the bigger problem is more to do with marketers’ obsession with measurement than people falling out of love with papers.
As a specialist performance media agency, I love the accountability and certainty of measurable media, but mass media like print is crucial to bringing new prospects into that digital pool, otherwise brands just can’t scale.
After years of decline and digital disruption, the record industry is stabilising and showing signs of a return to growth. And I hope the news brands, like the labels before them, turn the ship around.
As media agencies much of the future of newsbrands is in our hands and we too should be educating the brands we work with on the value of print media before it’s too late.
Mark Jackson is the managing director of MC&C.