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Inside Russmedia's dual strategy for regional and global growth

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World News Publishing Focus
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Inside Russmedia's dual strategy for regional and global growth

Russmedia operates successful Internet operations in Germany (Quoka.de) and the UK. The company publishes 10 daily newspapers, 80 weekly papers, and more than 100 Internet portals that reach nearly 20 million unique users every month.

WAN-IFRA: When we last interviewed you at length, a little more than two years ago, you mentioned a number of very positive aspects for newspapers in Austria, but you also stressed that while things were going quite well at that moment, “as a company we are gearing up for difficult times.” With that in mind, where do things stand today for Russmedia? What have been your main developments in the past year?

Eugen Russ: Our company is separated into two parts, both serving niches.

One is regional oriented and follows the distribution areas of the newspapers in Austria, Hungary and Romania.

The other one is purely digital and as international oriented as possible.

Let's start with our main market in Austria:

Austria is doing extremely well as newspaper market. The daily reach of newspapers exceeds 70 percent on a national basis. So the retailers still prefer newspaper advertising to TV ads and leaflets. Newspapers deliver still the best results.

Nevertheless we believe in the Innovators Dilemma described by Clay Christensen and Clark Gilbert. Even if print is still successful today and in the foreseeable time, we separated digital from print. And have never changed.

Even in editorial we still have two teams. One is focusing on paid content in print and tablet/smart-phone/epaper-edition. The daily bundle we are charging a lot of people successfully in the region. This is a product that has a beginning and an end that readers can finish.

We're raising newspaper print prices heavily. In addition digital sale of the bundle (newspaper online as www.vorarlbergernachrichten.at) is working well. Already 4 percent of subscribers pay for digital-only or digital in addition to print, plus 15 percent.

Transformation A. Getting even more productive. New revenue through events, loyalty cards, magazines.

Also Hungary and Romania are doing well. Very profitable but on lower revenue due the depression there since nearly five years.

Transformation B: Region Online, as www.vol.at. Our digital department works independent of print and in strong completion to it. Jeopardize yourself. Give the new business models a chance. Editorial is working different, breaking news, live character. Pictures, videos, interaction, data journalism.

350 out of 1,500 people in Russmedia are devoted to digital only. No connection to print. Banner advertising makes less than 30 percent of revenue, going south. Verticals, services, videos, concepts, events bring the major part of income.

Russmedia is diversified both in terms of products and markets. What products and regions are strongest for you right now and where do you see potential for growth?

Newspapers in print and digital (paid content) are doing well. Also our region online portals (free) are growing heavily in traffic, revenue and profit. I think, the demise of Patch.com is the best news for newspapers since a very long time. Regional professional journalism is provided by former newspaper companies only, with only very few exceptions. Worldwide. That provides us the opportunity to build on unique content and services. And combine ad revenue with paid content as we did for many decades.

But the main growth is done in our international portals that are not connected to our traditional footprint of our newspaper distribution areas. As pure digital plays.

Quoka.de, erento.com, pferde.de, bikerszene.de to name a few.

What is the role of mobile publishing in your operations? How long do you think it will take before mobile is more important than the desktop as a platform for reaching the public?

Mobile will take over from print within two or three years. But we have to prepare now. Mobile is to desktop as disruptive as online is to print. So, all existing business models will flip on short notice. Just watch Facebook. More than 50 percent of revenue is coming from mobile.

All our portals have Apps now, and our goal is to overcome desktop by 2015.

Therefore, we've just opened a 15-person company in India additionally devoted to mobile development only. About 25 developers at Russmedia are now working on mobile apps only.

How is Quoka doing and what are your plans for further development of it?

Quoka.de is doing extremely well. We decided to cancel the still profitable print business two years ago and just stick to digital only. The company, now a digital pure play, is growing fast and generating money and expertise for further investments in digital.

And also the shift to mobile is on the way. As said: Mobile is extremely disruptive to desktop. Please test our Quoka.de-Apps in Playstore and AppStore.

Erento.com, based in Berlin, is devoted to do our international expansion crossing the German-language barrier. As the world market leader for rental goods and aggressive international young team they set the pace at Russmedia.

Erento is the world's largest marketplace for renting on the web. Hire companies place their products (e.g. motorhomes, bouncy castles, marquees) in the marketplace. You, the user, can then search for items by price and location.

Are you charging for digital content on any of your websites, and if not, do you have any plans to do so? What are your thoughts on paid digital content in general?

Indeed. Banner ads alone can't feed professional regional journalism (see patch.com). And there's no reason to give away unique content for free. Therefore we charge for the bundled product in print and digital (e-Paper, Apps, Web).

Region online stays free. We'll build on a model with a very different price point. Combined with big data. Work in progress. Too early to tell about it.

Approximately what percentage of your revenues come from print vs. digital operations? When do you project you will have higher revenues from digital operations than print?

Today it's 25 percent. Digital is delivering fine cash flows today. We plan to reach the goal to exceed print in about three years. Depending on our luck in acquisitions and international growth.

Do you have a so-called "big data" analysis operation – for either advertising or editorial purposes? If so, what advantages does it bring?

Not really. But journalists are data driven. We show our current visitors on our homepage. And editorial is watching close.

Also: There are different ways of story telling. Data journalism and live streamings. Similar projects for our ad customers.

It’s always difficult looking too far into the future, but how do you see Russmedia developing in the short term – say the next year to two years? What are your goals in that time period?

More revenue through physical events and digital bundle for Transformation A.

Transformation B: Far more growth in digital niches international.

Two additional narrow verticals (niches) with the potential of world market leadership.

Mobile: 50 percent of our traffic is coming from mobile. Monetization of mobile is working.

Russ will be speaking at the World Newspaper Congress/World Editors Forum in Torino, Italy, at a session titled "The Game-changers - why venture capitalists are suddenly investing in news," which starts at 16:30 Monday, 9 June.

Get the whole story in our January-February issue (members/subscribers ony).

Photo: Klaus Hartinger, copyright by Russmedia GmbH

Author

Brian Veseling's picture

Brian Veseling

Date

2014-02-24 17:20

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