Comparing Innovation and Social Media Strategies in Scandinavian and US Newspapers

This is a self-archived version of an original article. This version may differ from the original in pagination and typographic details. Author(s): Title: Year: Version: Copyright: Rights: Rights url: Please cite the original version: CC BY-NC-ND 4.0 https://creativecommons.org/licenses/by-nc-nd/4.0/ Comparing Innovation and Social Media Strategies in Scandinavian and US Newspapers © 2018 The Authors. Published by Informa UK Limited, trading as Taylor & Francis Group Published version Lehtisaari, Katja; Villi, Mikko; Grönlund, Mikko; Lindén, Carl-Gustav; Mierzejewska, Bozena I.; Picard, Robert; Roepnack, Axel Lehtisaari, K., Villi, M., Grönlund, M., Lindén, C.-G., Mierzejewska, B. I., Picard, R., & Roepnack, A. (2018). Comparing Innovation and Social Media Strategies in Scandinavian and US Newspapers. Digital Journalism, 6(8), 1029-1040. https://doi.org/10.1080/21670811.2018.1503061 2018 Full Terms & Conditions of access and use can be found at http://www.tandfonline.com/action/journalInformation?journalCode=rdij20 Digital Journalism ISSN: 2167-0811 (Print) 2167-082X (Online) Journal homepage: http://www.tandfonline.com/loi/rdij20 Comparing Innovation and Social Media Strategies in Scandinavian and US Newspapers Katja Lehtisaari, Mikko Villi, Mikko Grönlund, Carl-Gustav Lindén, Bozena I. Mierzejewska, Robert Picard & Axel Roepnack To cite this article: Katja Lehtisaari, Mikko Villi, Mikko Grönlund, Carl-Gustav Lindén, Bozena I. Mierzejewska, Robert Picard & Axel Roepnack (2018) Comparing Innovation and Social Media Strategies in Scandinavian and US Newspapers, Digital Journalism, 6:8, 1029-1040, DOI: 10.1080/21670811.2018.1503061 To link to this article: https://doi.org/10.1080/21670811.2018.1503061 © 2018 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group Published online: 06 Nov 2018. Submit your article to this journal View Crossmark data COMPARING INNOVATION AND SOCIAL MEDIA STRATEGIES IN SCANDINAVIAN AND US NEWSPAPERS Katja Lehtisaari , Mikko Villi , Mikko Gr€ onlund , CarlGustav Lind en , Bozena I. Mierzejewska , Robert Picard and Axel Roepnack The article focuses on innovation and social media strategies in newspaper companies in the US and three Scandinavian countries (Sweden, Norway and Denmark). Many previous studies have focused on the state of journalism and media industry in single countries, although media have distinct features in different countries. Through the comparative setting, it is possible to examine the differences in media innovation strategies and study what factors affect innovation in media production, business models, sources of funding, and social media strategies. The qualitative part of the paper consists of semi-structured in-depth interviews (N ¼65) with media managers and experts, which were carried out in Scandinavia in 2016 and in the US in 2017. The quantitative market data covers the years 2006–2016; this timespan corresponds well with the accelerating digital transition in the newspaper business. According to the results, new business models are mostly new combinations of existing revenue streams, while adaptation of new technology is slow, with few exceptions. KEYWORDS innovation; newspapers; revenue; social media; transformation Introduction Overall, change is the common and constant element affecting strategic management in the media industry (K€ ung 2008; Mierzejewska 2011). The master frame in the newspaper industry crisis debate is that the appropriate response is to be found in innovations, new business models and better ways to reach audiences (Br€ uggemann et al. 2016). However, continuous and aggressive innovation may be challenging for newspaper publishers who then need to break loose from old production models. Newspapers tend rather to reproduce the concepts of past successes, focusing on incremental changes, rigorous brand alignment and top down-monitored, commercially steered activities (J€ arventie-Thesleff, Moisander, and Villi 2014). Media executives often hesitate to make bold, high-risk moves because the landscape keeps changing so fast (McDowell 2011). This article focuses on innovation and social media strategies in newspaper companies in the United States and three Scandinavian countries (Sweden, Norway and Digital Journalism, 2018 Vol.6,No.8,1029–1040, https://doi.org/10.1080/21670811.2018.1503061 #2018 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group. This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercialNoDerivatives License (http://creativecommons.org/Licenses/by-nc-nd/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited, and is not altered, transformed, or built upon in any way. Denmark). Many previous studies have focused on the state of journalism and media industry in single countries, although media have distinct features in different countries (Siles and Boczkowski 2012). When comparing Scandinavian and US newspaper companies it is interesting to see if it is possible to pinpoint factors that affect innovation in the two contexts. According to Syvertsen et al. (2014) the United States is a leading country in media innovation as it hosts several of the largest enterprises in current global media markets, and also Scandinavian media houses do benchmarking in that market. At the same time, Scandinavian countries lead in the share of consumers ready to pay for online news (Newman et al. 2018), which is a crucial aspect for a sustainable future of newspaper publishing. The initial view that motivated the comparative setting was that there probably are many common traits between US and Scandinavia, but at the same time, certain differences that affect the way media businesses are managed. One obvious way in which the context is dissimilar is the historically heavy dependence on advertisements in US media. Another is the absence of state support for media in the US. The Scandinavian countries can be treated as one context, as they have similar media consumption cultures and welfare state models, small and related languages, and a high number of newspaper readers per capita. Syvertsen et al. (2014) have found four principles characteristic to the Scandinavian countries, or the “pillars of the Media Welfare State”: universal services, editorial freedom, a cultural policy for the media and a tendency to choose policy solutions that are consensual and durable, based on cooperation between the main stakeholders (the state, communications industries and the public). However, between the Scandinavian countries there are also certain differences in the institutional setting, regarding, for instance, the state support for media. In the article, our interest is in organisational processes determined by internal and external contexts, as well as economic capacities and capabilities, with a focus on the impact of disruptive media technologies. We ask the following research questions: RQ1: What are the main features of innovation in newspapers in the United States and the three Scandinavian countries—Sweden, Norway and Denmark? RQ2: How do these newspapers regard social media platforms in their strategies? Media Management and Innovation For both scholars and practitioners, innovation is a core construct when facing the challenges of changing social, economic and technological environments, and surviving in highly competitive markets (see K€ ung 2013). At the same time, media scholars (e.g. Dogruel 2014) have begun exploring the usefulness of the concept of innovation and its application for media goods (see Storsul and Krumsvik 2013a). Media innovations may be related to product innovation, process innovation, position innovation, paradigmatic innovation and social innovation, and can involve different degrees of novelty (Storsul and Krumsvik 2013a). As a consequence, the management of innovation has been identified as one of the most critical areas of research in the field of media management and economics (Mierzejewska 2011; Hollifield and Coffey 2006, 48) and innovation within media management research has gained much attention among 1030 KATJA LEHTISAARI ET AL. scholars in recent years (Holm, Ulhøi, and Uliyanova 2012; Meier 2007; Picard 2011; Uskali 2011). The brakes on media innovation are mostly cultural, sitting within the newsroom; they are systemic, well-rooted practices, and preferred work patterns (Ess 2014), the ideology of journalistic practice embedded in a particular form of production (Deuze 2005). Going from products to services, from hardware to software, and from audience to users and consumers includes changing mindsets, many times unlearning the trade and its institutional truths. There is no successful single recipe of media transformation and adaptation to the new realities (Storsul and Krumsvik 2013b; Holm, Ulhøi, and Uliyanova 2012). Experimentation produces mixed results on what works and could work when it comes to creating commercially successful new services and products. Innovation is a slippery concept often lumped together with another equally ambiguous notion, creativity, despite belonging to different streams of scientific research—engineering and technology management versus psychology (K€ ung 2008). The concept of innovation is problematic, often used in a banal and perfunctory fashion with a heavy bias towards PR and marketing. Innovation is foremost about change, about newness and about ideas that will transform into revenues, cost savings or completely new areas of business. Because of the overuse of the word, some media managers prefer to substitute innovation with the more plain and down-to-earth term product development. In this paper, innovation is loosely defined as “the commercialization of something new” (Janszen 2000, 8) and linked to media management studies. We assume that the understanding of innovation in newspaper companies is the same in Scandinavia and the US. Driving revenues from online content has become the most critical issue for newspaper publishers, especially for those coming from a print background. Online platforms are increasingly important for media content distribution and for gaining visibility and reach among audiences. Newspaper organisations face the challenge and opportunity of leveraging the entire gamut of social connections around their content on different social media platforms and other online communication services (Villi and Noguera Vivo 2017). The sharing of news or what can be called the “social consumption of news”is becoming an important part of news consumption (Villi 2012). Media content is widely available online, and newspapers have to search for the means to make their content “findable.”Social media platforms are an important source of audience traffic and potential new customers for media companies. They play a key role in a situation where the two-sided business model of newspaper companies, combining earnings from both readers and advertisers, is challenged by changes in advertising and media consumption habits. However, platformisation is not an uncomplicated trend of development for newspapers. When news organisations build new relations with social media companies, the latter can control the arrangement and reap most of the financial benefit (Mitchell 2015). Lately, it has become obvious to many media companies that reliance on, for instance, Facebook is not necessarily the right path forward to a profitable future (Piechota 2017; Bell 2017). Data and Method The paper uses two different data sets: one quantitative (market data) and one qualitative (semi-structured interviews). The paper relies predominantly on the COMPARING INNOVATION AND SOCIAL MEDIA STRATEGIES 1031 qualitative data, which consists of semi-structured in-depth interviews with CEOs, editors-in-chief, and other managers in leading newspaper companies, and with media professionals in newspaper associations and media academics at universities. We carried out 31 interviews in the Scandinavian countries with the following national distribution: Sweden 10 interviews, Norway 12 interviews and Denmark 9 interviews. In the United States, we completed 34 interviews, aiming for geographical variety. The interviewees were selected based on the ideal of a representative sample (company size and location) and combined with snowball sampling (Heckathorn 2011). In all of the countries, we selected national, regional and local publications (Table 1). The interviews were carried out in a face-to-face setting or through Skype connection and lasted between 60 and 90 minutes. A semi-structured model based on a uniform set of questions was used. The accumulation of the qualitative data and its thematic analysis were systematic. The responses were treated anonymously and every respondent was given a unique ID number. We indicate the position along with the quote in the following way: Chief Executive Officer/President, CEO; Editor-in-Chief, E-inC; Corporate Manager, CM; Representative of Media Association, RMA; Media and Communication Academic, MCA; and Media Analyst, MA. Countries are marked as follows: US, United States; D, Denmark; S, Sweden; and N, Norway. Focus on Readership Revenues Newspaper companies in Scandinavia and the United States have in common both the rapid loss of advertising revenues and the inability to compete with Google and Facebook when it comes to digital ad revenues. Between 2011 and 2016, Nordic advertising investments (including Finland, but excluding Iceland) fell by an estimated four per cent at constant prices, from around EUR 9.2 billion to 8.8 billion. In Norway, the decline was 13 per cent, and slightly less steep in Denmark. Sweden is the only Nordic country where advertising investments have increased since 2011 (þ5%). During the same period in the US, newspaper-advertising investments dropped by almost 33 per cent at constant prices, from around EUR 25.8 billion to 14.4 billion. US-based social media platforms such as Google, Facebook and YouTube also have a growing share of Nordic digital advertising investments. By 2016, in Sweden and Denmark, non-Nordic digital platforms already accounted for over 60 per cent of digital advertising spending. Consequently, many new ideas around media innovation focus on gaining and retaining loyal paying customers, in a sense applying an audience-first strategy. Hand in hand with this development goes the understanding that media companies need to develop new strategies for readership engagement. Our interviewees agreed almost unanimously that consumers should be taught to pay for digital news media content. Based on our market analysis, this is, indeed a crucial issue. In the Scandinavian countries, advertising revenue in newspapers is expected to fall further (Figure 1), and thus reader revenue is increasingly important—the focus must be on paying customers. Some newspapers, such as Dagens Nyheter, the largest morning paper in Sweden, are already preparing for a future with only minor advertisement revenues or possibly only reader revenues. 1032 KATJA LEHTISAARI ET AL. The newspapers in the Scandinavian countries are mainly home-delivered and paidfor, while US newspaper companies have been more dependent on advertising revenues. Acquiring new subscribers is a challenge for all of them. The issue is also about building a TABLE 1 Primary orientation of media outlets studied, and a list of expert organisations included in the study Country National Regional Local Experts United States Bloomberg View, Gatehouse Media, New York Times, The Washington Post Boston.com, Dallas Morning News, Deseret News, Embarcadero Media, Miami Herald, Philadelphia Inquirer, San Diego UnionTribune, The Boston Globe Coronado Eagle & Journal, Voice of San Diego, Spirited Media American Press Institute, Brigham Young University–Idaho (BYU–Idaho), California Newspaper Publishers Association, George Washington University, Institute for the future, Matter.vc, Monday Note, New England Newspaper and Press Association, New York University, News Media Alliance, Newsonomics, The Nieman Journalism Lab at Harvard, The Shorenstein Center at Harvard, University of Texas Denmark Politiken, Berlingske Jysk Fynske Medier North Media Copenhagen Business School, Danske Medier, University of Southern Denmark Norway Aller, Dagbladet, Schibsted Amedia Adresseavisen, Sunnmørsposten Mediebedriftene, NTNU, University of Oslo Sweden Aftonbladet, Bonnier News, Dagens Nyheter, Schibsted, Svenska Dagbladet Mittmedia, NTM Group Tidningsutgivarna COMPARING INNOVATION AND SOCIAL MEDIA STRATEGIES 1033 strong relationship with customers. However, our interviews also indicate that legacy media companieslagbehinddigitalinnovatorssuchasthegameindustrywhenitcomesto understanding user behaviour and motivation for consuming content. In any case, newspapers need to continue to transform and convert the audience into paying digital customers. The challenge is that newspapers might be good at retaining old customers, but not that good at acquiring new ones. A positive aspect for the newspaper companies in Scandinavian countries is that their consumers pay for online news mostly by subscription, which follows from strong print newspaper subscription culture. Research shows that in countries where most people pay for online news through ongoing subscriptions, average payments tend to be higher (Newman et al. 2017). New Streams of Revenue One area of new business experiencing rapid growth is the creation of vertical services alongside the core of newspaper publishing. In the US, Dallas Morning News and Deseret News are two media companies where progress has been fast in this area. By contrast, more “traditional”and less agile newspapers such as the San Diego UnionTribune (owned by Tronc at the time of the interview) are making some money from events, but besides that only have revenue from traditional sources, 60 per cent from ads and 40 per cent from subscriptions. At Gatehouse Media, a US company that has rapidly expanded, an executive explained that their strategy is not about being a company that only wants to own newspapers. Locally focused print products and digital content are important, but their ambition is to be the premier marketing and technology solutions provider for small and medium-sized businesses in those communities. These growth initiatives—business services, digital marketing services, events, commercial printing and B2B publishing— 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Norway Sweden Denmark USA FIGURE 1 Share of newspaper advertising of total media advertising in Norway, Sweden, Denmark and the US, 2006–2016 Source: World Press Trends. 1034 KATJA LEHTISAARI ET AL. now account for a third of the group’s total revenues. They comprise services such as display digital, retargeting, email marketing, social media search engine marketing, and optimisation and reputation monitoring. Dallas Morning News is a good example of a newspaper with diversified sources of income. They have bought companies focusing on merchandise licensing, marketing automation and high-end search. They have also started companies on their own, focusing on digital marketing and content marketing. These companies help them in maintaining access to the marketing budgets of local advertisers, who otherwise might be tempted to use their dollars increasingly with Facebook and Google. The essential point for them is that with the new companies they are still acting in the media business and not venturing into any unknown territory. In addition, some of our Scandinavian respondents reported that they are broadening their offering to media technology and consulting. An interviewee noted that NTM Group, which used to have two streams of revenue, now has 42 different sources of income, including acting as a local sales agent for Google ads. Organizing for Development The core challenge facing legacy media in the digital transformation is organisational (K€ ung 2017). However, this part has received far less attention than the transformation of content. Few companies have a systematic and strategic approach to organisational change that would give them the opportunity to iterate in short sprints and test new ideas quickly. This “fail fast, fail often”mantra is grounded in the Silicon Valley style of innovation (Draper 2017). Curiosity and openness to very different concepts is one important feature of innovation; it seems like most legacy media outlets seek inspiration among their peers. This is one of the key takeaways from Deseret News where one former manager noted how he has received many visitors from other media companies who have failed to conceive what makes Deseret News different. The company did not invent anything new, but modelled on digital competitors such as Google, Facebook and Autotrader rather than traditional mass media. Newspaper chains (e.g. Gatehouse Media, Tronc, Mittmedia, Amedia, Schibsted, Jysk Fynske Medier) focus chiefly on optimal resource utilisation and increased efficiency. From this follows a general trend towards centralisation of product and process development, diffusion of technology and processes and models. However, Porter (1996) has claimed that many brands lose their competitive edge because of a myopic obsession with operational effectiveness at the expense of true strategic thinking. When making the transition from print to digital, the challenges of ambidexterity (J€ arventie-Thesleff, Moisander, and Villi 2014) and conflicting demands (Achtenhagen and Raviola 2009) are prevalent. Ambidextrous organisations exploit existing products to enable incremental innovation and, at the same time, are adaptive to changes in the environment, and explore new opportunities to foster more radical innovation (Andriopoulos and Lewis 2009). Conversely, the print business requires nurturing, and on the other, new digital offerings need to be developed. The danger is in bringing a “playing it safe”attitude from print business to the digital publishing context. COMPARING INNOVATION AND SOCIAL MEDIA STRATEGIES 1035