On a 10-point scale where 1 is having done a little and 10 is almost being there, in the transition to a truly hybrid digital-print business, where do you think your businesses and the industry are today? Döpfner: I would stick to the percentage of our profits, which is between 40 and 50 percent. I think that’s where we are as a company with regard to the transition. We have more to do than we have done. Forty-seven percent of our profit is derived from digital businesses. Miller: If you look at our readers, they are 9 out of 10, and we are probably 3 out of 10. We’ve got a long way to go still. The industry maybe is a 2 out of 10. Do you think the rate of decline in print advertising is going to soften, or essentially the acceleration that we see is just going to wipe out another half of print advertising in the next five years? Do you have a sense of the trajectory of print advertising? Miller: My reference point would be the classifieds sector, where we always thought it would bottom out at some point… but it didn’t happen, and we flipped Auto Trader to being a pure digital model. So my reference point… is you cannot plan on the basis that it will plateau, but it would be a pleasant upside if it did… Will there be an inexorable decline? I’ve given up trying to answer that one. Döpfner: The only consistent trend that you can see is that the advertising business is getting more and more volatile. That’s why it is absolutely impossible to make any prediction here or have any kind of plan for the next two years, or for the speed of decline… But I don’t see any reason why there should be a sudden stop, so you have to prepare yourself. For us, for example, it’s a very good position to be in because we have almost no classified ad revenues in the print business. It was traditionally only around 5-6 percent of our total revenues. That’s why we were very aggressive in entering the digital classified portals, and they are now contributing a great deal to our business. But I think more important than that is that we have to redefine what we are offering to the customers. It’s not a print circulation – it’s a brand… that is coming to their customers on a traditional broadsheet newspaper, in a tabloid version, on a website, on a mobile app, on a tablet app, perhaps in a web TV format. It’s a brand with different distribution channels, and with that I think you can create a growth story, where your reach in the number and quality of your clients is growing. With that you can grow your top and your bottom line. What you’ve said, with the regional papers, and with Die Welt and Bild, is ‘you pay one of three prices and you can get all of these things.’ What have you learned about consumer psychology and where does that tell you where you’re going to go with paid content? Döpfner: It’s very early to say something about it because we have only a couple of months of experience. We were very worried before we started because we were the only ones and nobody else did it, so if you are the only brand on the web that asks for a subscription price, I mean, it’s pretty tough… I have to tell you from today’s perspective the situation is much better than I ever expected. With Die Welt we have 47,000 paying digital-only subscribers plus 27,000 multimedia subscribers who subscribe to print and online, plus a couple of thousand who are sponsored by a car manufacturer, so we don’t count them. Even if… we only take the roughly 50,000 digital-only subscribers, we have generated them in six months with a limited marketing budget. It’s roughly 20 percent of the total circulation of the paper, where we needed 50 years or more to generate that amount. The most surprising thing is that the reach figure of the websites – the uniques – did not go down, which we absolutely expected. 13 www.worldnewspublishingfocus.org My only explanation for that is that it seems to be an emotional perception that something that has a price, has a higher value, and you want to be part of it. Otherwise I could not explain, to be very honest, with all confidence in the great quality of our journalism, why so many people are willing to pay although they have so many alternatives for free, and why the reach figures are not going down. So there seem to be enough people who think, “OK, this is worth paying that price,” and I think it’s very encouraging. It’s a long-term project, and even if it would not go well we would continue to learn from our failures and so on because I really think it is decisive that we have the two revenue sources in order to make journalism a solid business model in itself and not as a recipient of subsidies. What do you see, both for the Guardian and as you look at what’s happening with paywalls generally over the last two to three years? Miller: I think it’s very specific to each company’s position… You’ve got to remember that the Guardian was the second-smallest national newspaper in the U.K., and the opportunity that digital has given us has propelled us to being the third-largest website internationally in English speaking terms. That’s an opportunity that we’d be crazy not to have taken. We are not anti-paywall. Logically over time we’re going to have to be asking for more direct revenue for our readers. But I prefer at this stage to be going after reach and increasing engagement internationally, because I see that as a bigger opportunity than closing down our offer through paywalls at this stage. Is it going to take you to a path by, say, 2015, where you are finding ways to get more reader revenue? Miller: I would argue that we are getting strong reader revenues. Digital advertising is only there because we’ve got readers. It may be indirect, but it’s still reader revenue, and the classified business we have is part of the Guardian’s reader revenue. So I would argue that it’s there. Let’s talk about weekends… Do you think that there’s a longer lifespan for a Sunday or weekend paper, and does that deserve more investment to hold onto that print base? Döpfner: Yes, I do. On the other hand… When we offered the three bundles for Die Welt, there was a mini- November /December 2013 Focus Andrew Miller, CEO, The Guardian Mathias Döpfner, CEO, Axel Springer The opening exchange drew a packed audience. We are not anti-paywall. Logically over time we’re going to have to be asking for more direct revenue for our readers. But I prefer at this stage to be going after reach and increasing engagement internationally, because I see that as a bigger opportunity than closing down our offer through paywalls at this stage. Andrew Miller, CEO, Guardian News and Media
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