Just had dinner with my friend Mathias Döpfner, the CEO of Axel Springer one of Germany‘s top media and newspaper groups. During dinner we spoke about the future of newspapers, a subject very relevant to him since his company still makes most of their revenues and earnings from them. Indeed Axel Springer has Bild, the largest circulation paper in Europe, it also has the less popular but more informative Die Welt. In our conversation a trend came up that is worth sharing.
While downloading without paying has caused tremendous revenue erosion for record labels and studios, it is the culture of everything on the internet should be free that is hurting newspapers. In the case of newspapers it is not that people copy their content online for all to get it for free. What happens in the print industry is that owners put the content online and the revenues they make on online advertising do not compensate what they lose in print. But that is because the PC is an instrument that has made people used to not paying. While in print content owners can both sell the newspaper or magazine AND make money from advertising very few are willing to pay for content delivered to their PC. People have come to expect that everything that happens in a PC other than paying your DSL/Cable/Fiber provider should be free. But this is a psychological stance. It is hard to understand why this is the case but what is clear is that with other hardware come different habits. So the same is not true of smartphones and tablets. In a way what Apple has done is made people used to paying again both for apps (formerly known as software) and for content through iTunes. And that is also happening with Android both for smartphones and soon for tablets (Android tablets are still not a real contender for the iPad but Android smartphones are for the iPhone). So as people migrate from PCs to smartphones and tablets they will not find it offensive to pay, just like they don’t find it offensive to pay in the Sony PS3, or in Microsoft XBOX. Bottom line is this: if you have content think less of PCs and the web as we know it and more of smartphones, tablets and gaming platforms. That’s where the money is. Or may be. In the meantime Axel Springer is doing a remarkable transformation from offline to online. This migration should be good inspiration for my friends who run the New York Times, El Pais and other newspapers and magazines.