Want To See How A Newspaper Can Make It In The New Digital World – Take A Look at Britain’s Financial Times

Philip M. Stone December 1, 2010 Follow on Twitter

Four years ago the talk was about how Pearson needed to get rid of its ailing Financial Times; today the talk is how other media companies should be copying the FT’s success in the digital world.

The FT recently has been bounding from success to success – first, finding the right formulas for its Web pay wall, and then embracing the iPad as a platform for the future, and also a new business model under which it is selling directly to corporations rather than splitting profits there with the likes of Factiva and Lexis Nexus.

The FT, being a business and financial newspaper, does have advantages over general interest newspapers that might try the same. For one thing the FT has gotten across to those who sign expense accounts that its readers, mostly in the financial world,  can do a better job at work armed with the information the FT has each day that is not often found elsewhere. That’s a tough one for general interest newspapers to match – if you don’t get general news from one source it’s not too difficult to find it elsewhere. But much of what the FT has can’t be found elsewhere, so there’s the peg on which to hang the hat.

“Content is King” goes the old motto and never more true than at the FT. Newspapers learned that many years ago, but how to make money outside your normal area of circulation? The answer came from the Factivas and Lexis Nexus’ of the world that, for a slice of the pie, would make newspaper copy available to a global audience via database pull. It was better than nothing.

But now the FT has basically decided it can get better financial deals by selling subscriptions directly to corporations. FT Chief Executive John Ridding told a Reuters Media conference this week that the FT now has about 1,000 corporate clients with those corporate sales increasing around 40% annually. Subscriptions to FT.com, he said, are growing around 50% annually and its iPad app has been downloaded 430,000 times.

And while the FT is British-based, its largest print and online market is the US. How come, especially with the mighty Wall Street Journal to compete against – when Rupert Murdoch bought the WSJ in 2007 he said the WSJ would wipe out the FT. Not yet, not by a long shot!

The WSJ is a daily multi-section big read and let’s face it, no one covers the US equity and money markets as it can.  And yet, the FT has not only found its niche there but continues  growing fast. Why? Probably for its global outlook.

One of the first culture shocks for a non-American visiting the US is how locally centric is its media. Getting a handle on international affairs is tough. Maybe that’s one reason why UK newspapers have such high Web traffic coming from the US driven by the likes of Drudge and others because Americans thirst for a global view they can’t find at home. There’s no question the WSJ has foreign bureaus across the globe and it does indeed cover loads of global financial and equity news, but the FT seems to put it all in a much more global perspective, rather than a US perspective.  Good as the WSJ’s foreign coverage might be the FT is preferred by those who want to know the global view.

So the FT’s financial success on its various digital platforms can be traced back to its exclusive content and comment that few others can match story for story. That’s not the case for general interest newspapers, except for their local coverage. And even if that local coverage is great and gets put behind a pay wall there’s always the problem a competitor will buy a subscription, access the good local stuff, rewrite it a bit and put it on their own site. They may not be first, but competitive enough to stop people paying for pay wall material.

Corporate deals, however, could well work.  Why not offer discounted employee subscriptions to locally based companies, perhaps even bartered some for advertising. If that bartering gets the circulation numbers up then that could lead to higher advertising rates. And the FT has found that because its corporate subscribers are the kind of people advertisers are really attracted to not only has the newspaper gained from those corporate subscriptions, but increased advertising targeted to those readers.

Same could be true elsewhere. If newspapers were to target their local corporations and get more and more subscriptions in desired postal zones then advertisers will take notice and want to target those local high-rollers. The FT says it can charge up to 10 times normal rates to advertisers eager to target corporate readers so why couldn’t the same theory work locally, too; perhaps not 10x, but certainly more than normal rate card.

The FT has a big success on the Web where it makes a limited number of stories available each month for free for each reader, but once the limit is reached its either pay time or no access.  It’s easy getting eyeballs to a site when information is free, but when you start charging and people are willing to pay, then for advertisers that is a goldmine.  Let’s face it, those who access sites via the various search engines are likely to come, read , and quickly leave again. No clicking on ads, no bookmarking, they come and go. Financially they’re of little use. But have a much smaller audience of those who have shown they are willing to pay and they are the people advertisers crave. 

The Wall Street Journal has success with its alternative model of making certain stories free and others – the really good ones – available only for pay. The way to go depends on market competition – the FT has little competition but can local and metropolitan newspapers say the same – and the more exclusive the copy then the more likely people will be willing to pay.

As a print newspaper the FT continues to suffer circulation declines like almost everyone else – down some 4.5% this year. It may be based in London, but 80% of its circulation is overseas with about one-third of its total 400,000 circulation in the US.

But with its Web model, its success on other digital platforms, and its policy of selling directly to corporations rather than letting the aggregators take a big chunk of the pie, it seems the FT is now moving from strength to strength. Perhaps some of what it is doing can be copied successfully by others.

See also in ftm Knowledge

UK Newspapers

The newspaper market in the UK is among the worlds most competitive. The publishers are colorful, editors daring, journalists talented and readers discerning. ftm follows the leaders, the readers, the freebies and the tabloids. 83 pages PDF (October 2010)

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