A framework for building media companies in the digital world

– In the future, every media company also needs to become a tech company. If we had to boil all of our […]

– In the future, every media company also needs to become a tech company.

If we had to boil all of our forecasting and consulting expertise down to one single piece of advice to the media industry, it would be this.

Look at Starbucks. Unlike most media companies, the Starbucks management understands the role that digital technology will play in their future. They have realized that, in order to keep selling coffee, they need to embrace the ways in which their customers use new technologies like the smartphone. Starbucks was one of the first retail brands to invest heavily in mobile-payment services and apps. Under the guidance of Chief Digital Officer Adam Brotman, they have continually experimented and field-tested new ideas and approaches. Their efforts have been centered on customer feedback. Starbucks understands that, in order to be successful as a coffee company in the future, they must also become a tech company.

Digital technologies have become such an integral part of our lives that any company dismissing this development will suffer immensely.

This is especially true for the media industry. Hardly any other industry has seen equally dramatic changes in consumption behavior because of new technology. Unfortunately, the media industry is also particularly resistant to change and to adopting the new technology paradigms.

But while the majority of the industry is waiting for the storm to pass, some new companies have been founded on the premise that this change is perpetual. For the last couple of years, we have been studying these companies closely to identify the patterns that set them apart. We have condensed our findings into a simple model – a framework featuring the areas and patterns most vital to a media company’s success in a digital world.

In the first part of this article, we explain the model and discuss the insights connected with it. In the second part, we apply our framework to companies like Buzzfeed and Vox Media to highlight why they are currently so successful.

This framework is not a how-to guide for building a news-publishing product. It is rather a mental model for how to think about and develop core parts of the company.

1. Audience

Every media company needs to start with and evolve around its audience: the readers, viewers, listeners, commentators, community etc.

2. Product

It is almost impossible to create a digital media product if you distinguish too strongly between the content, the people creating it and the content delivery.

That is why we define ‘product’ by the following components:

The Content

Anything that is written, produced, recorded, filmed. The editorial strategy and the “voice” (as in tonality) are part of this, too.

The Talent

The writers, journalists, photographers, film crews, fact checkers, legal experts and researchers. Also the formats: articles, slideshows, listicles, quizzes, clips, interviews, op-eds, etc.

The Frontend

The user experience. The technology interface and the audience perception of the content. Websites, apps, email newsletters, magazines, newspapers, PDFs, eBook readers, etc.

3. Business

This includes all the ways the company makes money: Advertising in all its forms (display, native, etc.), subscriptions, memberships, consulting, events, etc.

4. Infrastructure

This encompasses the servers, tools and systems that keep the company running. It is also where the content is created: The content management systems, databases, communication channels, the analytics dashboard, the tools and gadgets for reporting, writing, recording, maintenance and distribution.

Most media businesses have always contained these aspects. It is their interaction with each other, as well the pace of the resulting change, that gives new insight.

1. Collaboration

The three areas and their corresponding departments must not only be in constant contact, but also in constant interaction. The days of the separation of the product development department and the newsroom – commonly referred to as the separation of church and state – are over.

We most certainly endorse a transparent approach to income sources such as native advertising. Nevertheless, in a time when fresh ideas are in desperate need, much is lost when departments don’t think and work together. The best way to set up a media business for the digital world and avoid silos is no longer to separate the three aspects of our model in separated departments, but rather to hire people with clear goals spanning more than one area.

All three areas also need to be perpetually connected to the audience. The product department needs to understand the audience’s interests and opinions. The business department needs to understand where the audience’s money is going, what they spend it on, and how they value the content. The infrastructure department must have a dynamic understanding of the audience’s consumption behavior, favorite tools and devices, and payment preferences.

This means being involved in a continuous conversation with the audience. It means studying reports and conducting research, prototyping and testing.

2. Iteration

The complexity and rapid progress of the digital world makes it hard to just plan, implement and then run with a finished product. This is also what current media companies, and even a lot of the ones “born digital”, struggle with.

Some media companies iterate their content. They try out new formats, writing styles, video story lines, etc. Others experiment with new business models, opening event spaces, releasing special purpose apps or starting agencies. But only very few media companies iterate within their infrastructure development, continuously working to improve their website, optimizing CMS and the publishing process.

To be successful as a publisher in the future, a company needs to iterate continually in all three areas of our model. An iteration in one department must be shared with the other departments to inspire the iterations there. The result is a constant renewal of the whole company.

1. Audience

Buzzfeed

Few, if any, media companies out there are building their products in closer accordance with insights about their target audience than Buzzfeed. They started with the “bored at work”-audience. From there, their analytics tools and dashboards have shown them exactly how audiences have reacted to and shared every single story they publish. The knowledge they have gained about what works is giving them a larger and larger advantage in developing new products and growing their audience.

Peretti does not believe that his audience cares much about walls between verticals. His analytics tell him that readers have no problem looking at listicles with cat gifs before clicking a story about investigative reporting in politics, as the quote on the following quote explains.

That is why some industry veterans find it hard to grasp Buzzfeed. They only see the gossip stories and the animal pictures. They tend to overlook the strong hires Buzzfeed has made of political reporters and foreign correspondents. The recently announced fellowship for emerging writers and a book club are only two additional examples of Buzzfeed reinventing the bundle.

These moves are informed by Buzzfeed’s insights into their audience, made possible by their in-house tool for analytics and their broad distribution. This, in turn, allows them to offer their advertisers a unique way to gain the attention of their audience. Buzzfeed does not do display advertising, only sponsored stories (native advertising). And they give their clients access to the same analytics and distribution tools that their writers have. Thus, Buzzfeed is a media company that is mastering all areas of the framework and is continually iterating throughout all of them.

Imagine you are sitting at a street cafe in Paris. You have a copy of Sartre’s Being and Nothingness, a copy of Le Monde, the newspaper, and next to you, as is often the case in Paris, is a cute dog. You read philosophy, you read the news, you pet the dog. You don’t become stupid when you are petting the dog, you are just being human! And when you read the philosophy you are still worldly. And when you read the paper you are still intellectual. You talk to your friends at the cafe: sometimes about the dog, sometimes about philosophy, sometimes about the news, and, yes, sometimes about what you are eating for breakfast.

JONAH PERETTI, BUZZFEED CEO, TALKS ABOUT THE PARIS CAFÉ CONCEPT.

2. Product

Vox Media

Maybe the media company closest to fulfilling our model now is Vox Media, with seven digital brands such as The Verge and vox.com. In an interview with the Reynolds Journalism Institute blog last October, Jim Bankoff, chairman and CEO of Vox Media, laid out their current setup.

”We really can think of us in three parts: One part is we produce seven big consumer brands, consumer titles across seven big content verticals. So that’s one part of the business. The second part is how we make money, which is around premium brand advertising, digital advertising and branded content, so we create content for our marketing partners and then we help them find an audience for that content as well, and that’s our business model. And then the third part is the technology and the product platform that underlies all of it. ”

No other media company we know iterates so strongly, constantly and collaboratively. Vox are especially impressive when in the product area of our model. Through hackathons and other initiatives, Vox tries to make it more common for journalists, technologists and marketers to work together. They know that their future depends on less prejudice and reservations between the different disciplines.

So on any given day, you’ll see our technologists, our designers working really closely with our storytellers, our journalists, to help them figure out how to express their ideas in the most compelling way, …

We like to joke that one can tell how fit a media company is for the near future by the size of its in-house design and development team. It shows how much they have understood the role of digital technology to their company’s success. Vox Media has a 60 person product team of designers, developers, project managers and others. That is promising in our books.

3. Business

New York Times

Slowly but surely, the idea is sinking in at media companies that their business models’ future is not that one big idea that will provide a new steady source of big bucks. Instead, a wide collection of small and very diverse approaches will do the trick. That is why many media companies are experimenting with business models that are much more diverse than just new ways to advertise and subscribe.

Some are adding event departments, setting up their own spaces for conferences, meet-ups and workshops. The Guardian, for instance, is rediscovering what it can mean to be an international media company with a local involvement.

One big trend in media business models is the re-bundling of content. One example is The Atlantic, which at the end of the year released its best technology writing as an eBook.

Another example is the New York Times. The paper has an archive with content going more than 100 years back. With the help of digital technology, they are discovering new ways to put this content into new products. One example is their new cooking app. From their leaked Innovation Report last year:

The Cooking team is providing a fresh reminder of our treasure trove of evergreen content. For decades, we published and promoted a handful of new recipes each week. The new Cooking product better reflects the fact that recipes are timeless and best organized in other ways: by meal, ingredients, season and our critics’ favorites

NEW YORK TIMES INNOVATION REPORT

Not only can they make use of their vast archives. They can sell it via apps or with sponsorship, and thus add to the income stream. This would be much harder if the New York Times Times had to go to external vendors for the development of apps and other products. With their large in-house development department, they can experiment with new formats for existing content and can shape the products to their audiences’ preferences

This is also where we see the true future of “native advertising.” By iterating towards new unique formats, media companies can offer unique advertising possibilities. Think more ”promoted tweet”, than ”advertorials”.

Other media companies are learning from the music industry. It has become common practice to offer premium versions of albums to the most dedicated fans at very high prices. This could be one direction that paywalls are heading. Companies can offer tiered memberships that offer added value. German Wired did this with its Founding Members Program, which offered a special edition t-shirt and access to exclusive content.

Again, it is much easier to offer something like this when the media company controls the platform and can develop and improve the added value services in-house. This is what retains membership.

4. Infrastructure

De Correspondent

By now, it should be pretty clear how important we think infrastructure is in our model. The examples of Buzzfeed, the New York Times and others show that every media company needs its own in-house development team that can build and iterate its own infrastructure continually.

The advantages to having your infrastructure developed in-house rather than by an external partner, is easy to see when looking at the Dutch De Correspondent, and its German copycat Krautreporter.

The crowdfunded journalism of De Correspondent was one of the big stories in 2013. Almost 19,000 people pledged 60 euros each for a one year subscription. To deliver on their promises, De Correspondent brought their agency Momkai in-house to build the website infrastructure. Publisher Ernst-Jan Pfauth:

“Our custom-made CMS — called Respondens — is designed to make it easy for our authors to include different media types in their articles and to set up their own corner of the site with lists of favorite books and sites, and contact information such as

Pretty Good Privacy email codes.”

They have been iterating their CMS ever since. Last year in Germany, Krautreporter set out to repeat the success of the Dutch original. But after the successful crowd funding, they hired an external agency to build the website. When it launched, it mostly felt like a copy of an old version of the Quartz website. Not much seems to have happened since.

Seemingly, this difference does not influence the quality of the articles on each platform. But if you ask journalists about the content management system that they have to work with, you realize how much it influences their work. A constantly improving CMS not only makes it easier for journalists to focus on the content.

It also deals much better with changes in audience behavior.

Vox Media’s technological setup is even more auspicious. They call it their ”media stack” and have labeled it Chorus. Vox understands that the only way to keep iterating towards the best possible content creation and delivery is to own the talent and the technology. Their media stack consists of layers like story creation, distribution to different audiences, metrics and analytics, community and conversation.

Vox Media has realized that they compete for the best talent not only with other media companies, but also with other technology companies. A big part of that strategy consists of creating the right atmosphere and ethos in the company. The product team is not seen purely as support for the “real journalists” in the newsroom. They are an integral and equally valued part of the whole.

Read more about De Correspondent in Publisher Ernst-Jan Pfauth’s contribution to this years report here.

The purpose of a framework is to communicate core principles and provide a guideline for implementation. Examples like Vox Media show that the borders between different areas of the model sometimes dissolve in practice. That is a clear sign that a media company has not only understood the new paradigms of collaboration and iteration, but has internalized them.

The near future will show if it is actually possible for a mature media company to make these necessary steps towards the digital future, or if it needs to be build into the foundation from the start (like at Buzzfeed and Vox Media). The New York Times is one of the traditional companies best equipped for this challenge. But their current struggles show how difficult it is to adapt.

The most basic application of this model, is not that media companies must finally adapt the new paradigms. It is rather that once started, that they never stop.

Igor Schwarzmann & Johannes Kleske are founders of Third Wave, a Berlin-based think tank and digital strategy consultancy. Third Wave gives advice on technological trends and their effect on human behaviour.