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Publishers gain from diversification

Publishers gain from diversification

In the biological world, diversity means strength. The same also goes for the publishing industry, where having a diverse portfolio can do a lot to bolster your business.

One example is Schibsted, the Scandanavian media group that was praised by WAN-IFRA in August as a "shining example of how a newspaper publisher can transform its traditional publishing business into a diversified multimedia company". At the time the company was investing heavily in online classifieds. Now it is continuing to expand its portfolio, as it plans to buy the digital music streaming company Aspiro.

Schibsted is offering to buy up Aspiro for 340 million Swedish krona (that's $49 million or £32 million), Paid Content reports. Schibsted's interest in the company is not unexpected, as it's already an 18.3% shareholder in Aspiro and Schibsted's CFO chairs Aspiro's board. Paid Content writes that, so far, one third of Aspiro shareholders have given their support to accepting Schibsted's offer.

Aspiro runs WiMP, an unlimited digital music streaming service that charges its 300,000 paying users 99 Norwegian kroner per month. Aspiro boasts another 700,000 subscribers through Canal Digital, which sells WiMP as part of its TV subscription package.

Schibsted CFO Trond Berger praised Aspiro for having succeeded in making users pay, saying that its business model "fits well into Schibsted's current work on how to monetize its digital media content". Berger went on to say that Schibsted plans to use its established distribution channels to help Aspiro grow more quickly, adding that they might seek further partners in music streaming in the future.

Of course it's nothing new for a news publisher to diversify in different kind of media. Take the Murdoch empire, which profits from its ownership of 20th Century Fox, Fox Home Entertainment and a dizzying number of other film, television and internet properties. But now, as the news industry continues to be squeezed by a poor economy and declining circulation, diversification is arguably becoming more important than ever.

Still, in order to diversify, companies need significant starting capital. In tough times, many publishers don't have this luxury.

One media company is solving the issue with collaboration, rather than buying power. The Philadelphia Media Network (PNM), which owns The Philadelphia Inquirer and Philadelphia Daily News, has announced a joint venture with the Knight Foundation, Ben Franklin, Dreamit Ventures and Drexel University called "Project Liberty Digital Incubator", which is supposed to "stimulate the establishment and growth of digital media startup companies in the Philadelphia region".

The incubator will be run by Ben Franklin Technology Partners, a group that supports technology entrepreneurs and businesses. The project will support three new technology start-ups, ElectNext, SnipSnap and CloudMine, by giving them access to funding from the Knight Foundation and to PNM facilities.

The technology start-ups benefit most from the project, both from the Knight Foundation's money and because TPNM will provide them with software, utilities and admin support for free. PNM will also give them access to as a platform to launch their products. However, as an article in Nieman Lab points out "PMN isn't offering up a couch to crash on purely out of the kindness of its heart".

An in-house relationship with technology companies also has potential benefits for the media group, who can learn form the way that the tech start-ups operate as it produces its own digital products. The three start-ups involved, also have access to PMN data, so they might end up releasing apps branded with the media group's publications.

Justin Ellis writes for Nieman Lab that many media companies are trying to learn from and imitate the tech community. In the cases of CNN and Zite, Financial Times and Assanka this means buying technology companies up outright. But through taking part in the incubator project, PNM doesn't just get to feel good about supporting technology growth, it also has something like "a skunkworks without paying full retail price", writes Ellis.

Schibsted and PNM are obviously doing very different things, but both make it clear that, whether it's through acquisition or co-operation, media companies have a lot to gain by teaming up with groups that don't publish news.

Sources: WAN-IFRA, CJR, Paid Content, Ben Franklin, Nieman Lab


Hannah Vinter


2012-01-12 15:09

Shaping the Future of the News Publishing

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