The rise of the digital business model in the on-demand economy, and the demise of The Independent newspaper

The final print edition of The Independent newspaper went on sale Saturday, ending its 30-year appearance on British newsstands. A poignant wrap-around front page carried the words “STOP PRESS” in red lettering on a white background, followed by the words Read all about it in this, our final print edition – 1986- 2016.

Journalists earlier posted footage online of the team ‘banging ourselves out’ – an old tradition of banging the desks to mark the departure of a colleague. Today the presses have stopped, the ink is dry and the paper will soon crinkle no more it said.

The Independent is to become the first national newspaper to move to a digital-only publication. The move will capitalise on its position as the fastest growing UK quality newspaper website, its monthly audience has grown 33.3% in the last 12 months to nearly 70m global unique users. The site is profitable and is expected to see revenue growth of 50% this year.

The Indy was launched 7 October 1986 by Andreas Whittam Smith, Stephen Glover and Matthew Symonds. Reaching a circulation of 400,000 in 1989, it has been characterised by a number of innovations introduced by a succession of talented editors, which have included Andrew Marr and Simon Kellner:

  • Originally published as a broadsheet in a series of celebrated designs, from September 2003 it was produced in both broadsheet and tabloid versions. The tabloid edition was termed ‘compact’ to distance itself from the sensationalist reporting style usually associated with tabloid newspapers in the UK.
  • In 2010, a new format featured smaller headlines and a new pullout Viewspaper section. October saw the i launched, for 20p, and The Independent printed on slightly thicker paper, ceasing to be full-colour throughout.
  • The Independent became known for its unorthodox and campaigning front pages, which frequently relied on images, graphics or lists rather than traditional headlines and written news content. For example, following the publication of the Hutton Report into the death of British government scientist David Kelly, its front page simply carried the word Whitewash?

At the peak of its popularity, it had a circulation of 450,000, but this slumped to 40,000. It had suffered from dramatic changes to the advertising market, notably the shift to social media sites. Great newspapers, which have survived for centuries, find their business models challenged as never before. It becomes the first British daily national to close since 1995, when Today folded.

I’ve been an avid reader of The Indy since 1986, it has often left me feeling uplifted and informed, and with at least one thought-provoking idea itching at my brain from its contents everyday. It may be unfashionable to admit it, but I love my paper based daily newspaper. I know I get the same content on my iPad but for me, nothing quite beats the thrill of sitting down and savouring the experience ahead of me and reading a newspaper.

I now realise that this was down to the talent of the writers, journalists, and editors. Well written paper newspapers are something special, digital is not quite the same as turning the pages and appreciating (albeit subconsciously) the pace of the articles, the alternating weights of the pieces, the contrasting light and depth between stories, the different tone and style of the writers. The paper is paced in such a way as to lead you on, to keep you turning the pages, ever onwards until you reach the end.

I don’t think people realise the very different experience between the product you hold in your hand, tuck into your bag, pull out again to read over tea, tuck away again, and then take out again later for a last read before you go to bed, and the thing you call up on your computer screen for a quick scan.

There’s an entirely different level of engagement. While digital versions enable updates as new stories emerge, most online readers spend probably ten minutes scanning the stories, whereas paper based readers are likely to spend anything up to an hour reading and re-reading the articles – and, if you’re like me, cutting out interesting snippets to keep for future reference.

Social networks now dominate media distribution, but we forget that’s just a return to the way things used to be before newspapers, TV, radio or Internet. News was a social activity. Information spread person-to-person, group-to-group. People chatted in the village square or around a campfire, spreading stories and information to each other. This was word-of-mouth, social distribution. News moved through networks of people – vegetable prices were relayed among farmers – few people could read, so news spread face to face.

All that changed with the newspaper, which first appeared in trading cities in the 1600s. As society learned to read during the 1800s a formula emerged: the information was gathered by professionals, formatted by editors, and distributed to shops or to our door. The resulting information-rich package was far more useful than any fireside gossip.

Today is all about social media, with people sharing stories with their friends and instantly broadcasting them to their followers as latter day town heralds. News spreads person to person, just as it did around the village, back in the day.

In the modern village square of social media, there’s so much stuff that we need social signals like Twitter to navigate, and we trust our friends to pick out relevant stories – plus we can get our friends’ opinions, and generally do all the things people did with news back in the pre-newspaper days of the village square. So we’ve come full circle, social distribution is back.

With the digital and social media distribution for everyone, the major obstacle to the newspaper sector is finding a new economic model. A decade ago newspapers built web sites and offered free access. Thus began the pervasiveness of free online news, whose lasting effect will be that only the very best news organisations will be able to charge meaningful prices for their content.

Tablet devices have changed the face of media, offering publishers both an opportunity and a challenge. The opportunity is that tablets allow them to seamlessly integrate text, video and interactive graphics and create more engaging products, but also via video output gain access to the TV budgets, and do so in a personalised, intelligent way based on a reader’s digital footprint.

The Internet brings news to the consumer faster and in a more visual style than newspapers, which are constrained by their physical form. The competing mediums also offers advertisers the opportunity to use moving images and sound, and to tailor their pitch to readers who have revealed what information they are seeking – an enormous advantage.

Paper is dying, but it’s just a device. Replacing it with pixels is a better experience said Arthur Sulzberger Jnr.,  Chairman and Publisher of  The New York Times. We will stop printing the New York Times sometime in the future. As pixels replace paper, the ‘newspaper’ of the future, may resemble The Huffington Post an online news aggregator. It’s like people still have horses, but it’s not their primary way of travelling, or that we use candles – but for romantic dinners and birthday cakes, not for lighting.

The New York Times has managed to prove many naysayers wrong. In 2011 it introduced a ‘pay meter’ that limited the articles casual readers could access, and successfully convinced people to pay for content. It has two subscription offerings, the more interesting is NYT Now, a mobile app that is free and available to iPhone users and offers readers a more limited selection of articles, all hand-chosen by editors.

Perhaps the analogy is that The New York Times newspaper is a full, sit down meal, and by contrast, NYT Now is more like food-on-the-go, appetising to those hungering for curated news on their mobiles. Users of NYT Now will access news analysis and articles from The New York Times, but editors will also link to their favourite articles from other publications. The strategy is that it will go some way to reducing customers’ reliance on other sites and social networks for news and thus become an online digital aggregator of choice.

I’m always interested in changing business models, new and evolving value propositions, and innovative pricing strategies. Research into other sectors offers insight and can spark innovations in your own thinking, stimulating at a time when you’ve become moribund in how online models are cannibalising your business. It needn’t be so, the lesson is keep a positive mindset, learn and leverage, and be creative. You have to innovate your business to make your own headline news today, or face being in the obituary section tomorrow.

The Internet is an isolating, solitary experience; reading a newspaper is the opposite. While digital may be clever, quick and flashy, for me nothing will ever quite match the imagery and power of the printed word, like the smell and anticipation of an unopened new book.

So that’s the last time I’ll see the paper boy stumbling up our drive with his heaving bag, the last time I hear the newspaper crashing through my letterbox. It will also be the last time I swap a smile, chat and coins with the man in the paper shop in town and walk out having paid the papers. This change has been driven by the readers, so the business model must change. It is estimated that one in five journalists lost their jobs in the first decade of the millennium as a result of the demise of printed newspapers.

New tools, new markets, new business models and new audiences are consuming volumes of information once unimaginable. Digital technology makes reaching them easier than ever.  As a result, The Indy’s journalism reached nearly 500,000 readers in print, and three million readers online – a third in America, over half through social media and also more than half on their mobiles.

The business model for printed general news from Monday to Friday is broken forever. Where the Lebedevs go, others will follow. One future for journalism is specialism, but for providers of general news in a landscape dominated by the BBC, free is the future. The simple fact is, there just aren’t enough people who are prepared to pay for printed news, especially during the week. With circulation and advertising very substantially down, the future of a print edition was inevitably one of managing decline.

Today, journalism, with its integrity, intelligence, courage and wit is reaching more hearts and minds than ever before, as we are hungry for news – but they are reading us digitally, through their mobiles, and via social networks. It is news in a flash, literally.

The online, digital news model offers convenience, speed and cognitive ease for consumers and is part of the on-demand economy. The tech companies competing in this arena have developed new models that are transforming industries which have historically been slow to innovate – taxis, hotel accommodation, grocery, and restaurant industries are prime examples of hyper-growth categories in the on-demand world.

Welcome to the uberification of our service economy. A dramatic increase in the number of smartphone connected consumers, simple and secure purchase flows, and location-based services are a few of the market conditions and technological innovations propelling the explosion in on-demand services.

The always on, always connected smartphone has made convenience, efficiency, and simplicity critical ingredients in purchasing decisions. Everyday purchasing driven through smartphones is creating one of the most transformational shifts in consumption patterns in history — never before has a consumer been able to buy anything they want at anytime with simply the tap of a button. Uber is building a digital mesh — a grid that goes over the cities. Once you have that grid running, in everyone’s pockets, there is a lot of potential for what you can build as a platform.

Uber is in the throws of building a unique platform that will enable instant demand-supply servicing. Fast-followers have quickly capitalised on opportunities in this marketplace by extending to new geographies and through tailored service offerings. Regional clones (Delivery Hero, Just Eat), specialty food providers (Hello Fresh, Sprig), and up-and-coming delivery services (DoorDash, SpoonRocket) are opening up new fronts in the personalised food delivery market.

Aided by the playbook of Uber, and Airbnb, service providers in newer categories are anticipated to reach scale rapidly. Creating a memorable, efficient and frictionless user interface is the focus, addressing consumers’ appetite for greater simplicity and convenience.

The remote controls we use to navigate our daily lives, are transaction engines that never leave our pocket. Never before have consumers had this simple of a way to transact — and never before have businesses been equipped to satisfy this mounting demand, hence the demise of the printed newspaper – I feel like so many existing experiences can be reinvented with the right simple gestures on mobile, and the needs and wants of Generation T (Generation Touch) are going to become the foundation of many massive companies of the future said Josh Elman, partner, Greylock Partners

Hopefully the spirit and quality of The Independent will endure. I know that is of little comfort to folk like me, print readers. I love the rustle and whiff of paper, the thud on the doormat when it arrives, and the geography and serendipity of each edition. However, as Uber and Airbnb illustrate, you need to embrace a digital business model if you are to compete in the on-demand economy.

Innovate your business to the front page, or face the obituary column

The owner of The Independent, Evgeny Lebedev, said recently the newspaper could be for sale at the right price, opening up another chapter in the ownership history of the newspaper. The Indy, it was launched 7 October 1986 by Andreas Whittam-Smith, Stephen Glover and Matthew Symonds and is my newspaper of choice.

The paper was created at a time of a change in newspaper publishing. Rupert Murdoch was challenging long-accepted practices of the print unions, ultimately defeating them. Launched with the advertising slogan It is. Are you? and challenging for centre-left readers in a moribund market, The Independent sparked a general freshening of newspaper design and a price war.

Reaching a circulation of 400,000 in 1989, The Independent has been characterised by a number of innovations introduced by a succession of talented editors which have included Andrew Marr and Simon Kellner:

Format and design originally published as a broadsheet in a series of celebrated designs, from September 2003 it was produced in both broadsheet and tabloid versions. The tabloid edition was termed ‘compact’ to distance itself from the sensationalist reporting style usually associated with tabloid newspapers in the UK.

In April 2010, the paper relaunched, the new format featured smaller headlines and a new pullout Viewspaper section. October 2010 saw the i launched, for 20p, and The Independent printed on slightly thicker paper, ceasing to be full-colour throughout. In October 2011, it unveiled another new look featuring a red, sans-serif masthead. In November 2013 this was changed for a vertical masthead in black. It also had new custom fonts.

Front pages Following the 2003 switch in format, The Independent became known for its unorthodox and campaigning front pages, which frequently relied on images, graphics or lists rather than traditional headlines and written news content. For example, following the publication of the Hutton Report into the death of British government scientist David Kelly, its front page simply carried the word Whitewash?

Online edition In January 2008, its online edition launched with priority on image and video content and additional areas of the site including art, architecture, fashion, gadgets and health. It launched Podcast programmes such as The Independent Music Radio Show, The Independent Video Travel Guides, and The Independent Sailing Podcasts. Since 2009, the website has carried short video news.

The Indy has been an innovation leader in a media landscape that has been challenged by the rapid changes in readership across print and digital platforms. Social networks now dominate media distribution, but we forget that’s just a return to the way things used to be.

Imagine what news looked like before newspapers, TV, radio or the Internet. News was a social activity. Information spread person-to-person, group-to-group. People chatted in the village square or around a campfire, spreading stories and information to each other. This was word-of-mouth, social distribution. News moved through networks of people – vegetable prices were relayed among farmers – few people could read, so news spread face to face.

All that changed with the newspaper, which first appeared in trading cities in the 1600s. As society learned to read during the 1800s a formula emerged: the information was gathered by professionals, formatted by editors, and distributed to shops or to our door. The resulting information-rich package was far more useful than any fireside gossip.

Today is all about social media, with people sharing stories with their friends and instantly broadcasting them to their followers as latter day town heralds. News spreads person to person, just as it did around the village, back in the day.

The modern village square of Twitter is interesting, there’s so much stuff on the internet, we need these social signals to navigate, and we trust our friends to pick out relevant stories – plus we can get our friends’ opinions, argue with them, and generally do all the things people did with news back in the pre-newspaper days of the village square. So we’ve come full circle, social distribution is back.

With the digital and social media distribution for everyone, the major obstacle to the newspaper sector is finding a new economic model. A decade ago newspapers panicked about the growth of online, built web sites and offered free access. Thus began the pervasiveness of free online news, whose lasting effect will be that only the very best news organisations will be able to charge meaningful prices for their content.

Given this scenario, it might seem surprising to identify new growth opportunities, but in the Swiss Alps is a business, which may point the way to a profitable future for newspaper publishers with a hybrid model. The town of Brienz is in the shadow of the Jungfrau mountain, home to a population of 45,000 and a pioneering family-owned, local media business built round a 100-year-old newspaper Jungfrau Zeitung. This is now a multi-media ‘hub’ which delivers local news and content via mobile, web TV, and a twice-weekly newspaper.

All content goes online as soon as it is written and crucially, advertisers cannot choose the platform but must book their ads across all media. The business model is a very local business: the newspaper sells 9,000 copies and the web site has 60,000 page views. The company makes profit margins of 30%.

The key ingredients are simple enough: strictly local content of the kind which doesn’t appear anywhere else, multi-media channels, and multi-platform advertising bookings. The localised ‘web TV’ element will grow in importance as broadcasters switch their focus to the web in coming years.

Here the hard copy newspaper plays a vital supporting role in delivering readers and advertisers in a way that can beat the Google world view, with its strictly local focus. It is similarly, easy to identify the opportunity to cover ‘parish’ news and information that has been neglected by bigger media. The success is a ‘hyper local’ strategy.

Apart from the Internet itself, tablet devices are changing the face of media, offering both an opportunity and a challenge for publishers. The opportunity is that tablets allow them to seamlessly integrate text, video and interactive graphics and create more engaging products, but also via video output gain access to the TV budgets.

Both television and the Internet bring news to the consumer faster and in a more visual style than newspapers, which are constrained by their physical form. The competing mediums also offer advertisers the opportunity to use moving images and sound, and the Internet search function allows advertisers to tailor their pitch to readers who have revealed what information they are seeking – an enormous advantage.

Ultimately, the newspaper of the future may bear little resemblance to the newsprint edition familiar to us. It may become a hybrid, part-print and part-internet, or perhaps eventually, Internet only: Paper is dying, but it’s just a device. Replacing it with pixels is a better experience said Arther Sulzberger, Chairman and Publisher of The New York Times. We will stop printing the New York Times sometime in the future.

As pixels replace paper, the ‘newspaper’ of the future, may resemble The Huffington Post, an online news aggregator and political weblog more than anything in the physical format we have today. It’s like people still have horses, but it’s not their primary way of travelling, or that we use candles – but for romantic dinners and birthday cakes, not for lighting.

The new or reformed media will require completely new business models and cost structures, not mere tweaks of the status quo, and it’s already happening.

The Guardian’ Groups two loss-making newspapers, The Guardian and The Observer, are underwritten by the profits from a 50% investment in the £1bn digital service Auto Trader. The Guardian is building a worldwide news brand with a fast-growing online readership. A video interview with Edward Snowden was viewed over 7 million times on the paper’s (free) web site.

The Daily Mail’s owner DMGT is making huge waves too in ‘new’ consumer media, with Metro, the free daily which is the UK’s most profitable newspaper, and expansion in Zoopla online property services.

Recently The Financial Times reported a 24% growth of digital subscriptions, aggregating print and online, the FT had achieved the highest “circulation” in its 125-year history at nearly 629,000 – up 5% year-on-year. Registered paying online users climbed 29% to 4.8 million. Mobile devices accounted for 25% of traffic to FT.com, while there were 2.7 million users of its App. All this, while the print circulation continued to fall by 14%.  

The FT said the newspaper would be produced by a small print-focused team, while a bigger staff will work in an ‘integrated web/day production’ team. In future, our print product will derive from the web offering – not vice versa. The plan follows the 2013 launch of FastFT, a web service confirms The Financial Times as one of the frontrunners in the shift to digital and the painful quest to reduce its reliance on print advertising.

Newspapers also have to compete with new products launched by tech firms. Facebook’s free news reader, Paper, http://en-gb.facebook.com/paper curates news stories from professional news groups but keeps them within its app.

With the proposed sales of my favourite newspaper questioning the future of the printed news, investment in news as social, mobile and real-time business models is accelerating. Amazon boss Jeff Bezos bought The Washington Post for $250m, Liverpool FC and Boston Red Sox owner John Henry bought The Boston Globe for $70m, and the world’s wealthiest investor, Warren Buffett, spent $400m buying a portfolio of newspapers in recent times. In his annual Berkshire Hathaway shareholder newsletter, Buffett wrote: Papers delivering comprehensive and reliable information to tightly bound communities and having a sensible internet strategy will remain viable for a long time.

And that’s the innovation twist on living in the internet age – it’s still about developing your business model and value proposition for your target audience. The internet is simply a channel, but is frightening a lot of people who claim it means they can’t compete.

The view is that now is a good time to build new brands in the new media landscape – for example Policymic, http://www.policymic.com/ a news site geared towards Millennials – the youngest generation of news consumers have no affinity to established news brands and are attracted by brands building content specifically for them. Another fast-growing online publisher, Vox Media, will launch Vox.com. The company has raised more than $70m in funding http://www.voxmedia.com/

Buzzfeed describes its stories as the kinds of things you’d want to pass along to your friends http://www.buzzfeed.com/ Buzzfeed’s editorial staff has grown from six people two years ago to 170. It raised $19.3m from investors in its fourth round of funding, bringing the total investment to $46m.

The New York Times has managed to prove many naysayers wrong. In 2011 it introduced a ‘pay meter’ that limited the articles casual readers could access, and successfully convinced people to pay for content. On April 2 two new subscription offerings were launched. The more interesting is NYT Now, a mobile app that carries a cheaper price tag ($8 a month, only on the iPhone for now) and offers readers a more limited selection of articles, all hand-chosen by editors.

Perhaps the analogy is that The New York Times newspaper is a full, sit down meal, and by contrast, NYT Now is more like fast food, appetizing to those hungering for curated news on their mobiles. Users of NYT Now will access news analysis and articles from The New York Times, but editors will also link to their favourite articles from other publications. The strategy is that it will go some way to reducing customers’ reliance on other sites and social networks for news and thus become an online digital aggregator of choice.

The risk is that the new offer could cannibalise the existing business by offering subscribers a cheaper product that is just good enough to satiate their hunger for news. But the experiment is worth watching, as it could bring new younger subscribers to the business, and the way people are accessing news has changed dramatically, which requires rethinking how subscriptions should be structured and sold.

Today around half of people access The New York Times’ website from their mobile phones, and in response, on April 2 it also launched Paid Posts, a ‘native advertising’ product for mobile devices. Native ads often look like articles, but are paid for by advertisers, and will be the only advertising available on NYT Now. A sign of the times in every respect.

I’m always interested in changing business models, new and evolving value propositions, and innovative pricing strategies. The possible sale of The Indy triggered my research into the newspaper sector. No newspaper thinks it will be saved by readers alone, although The New York Times is getting a greater share of its revenue from readers than five years ago, advertising remains a critical part of its business, but is a fascinating development.

Research into other sectors offers insight and can spark innovations in your own thinking, stimulating at a time when you’ve become moribund in how online models are cannibalising your business. It needn’t be so, the lesson is keep a positive mindset, learn and leverage, and be creative. You have to innovate your business to make you own headline news today, or face being in the obituary section tomorrow.