What can Latin American Publishers learn to transform into global Digital Business.
Axel Springer SE is one of Europe’s largest digital publishing, with numerous multimedia news brands, such as BILD, WELT, and FAKT. Today it employs nearly 14,000 employees across the globe. In 2014 Axel Springer generated total revenues of about €3 billion and an EBITDA of €507 million. Today, digital media activities contribute more than 50% of its revenues and more than 70% of its EBITDA, an unheard number, as most Latin American Publishers are lucky to have more than 10–18% of their earnings from digital.
It’s taken Axel close to 16 years to emerge as a digital European powerhouse, from virtually zero — “a mere internet midget” according to the Financial Times Deutschland. Axel Springer strategized, calculated and shopped itself to the very top of the European digital media industry. One key important step in their digital strategy was to divide it’s business into three segments: Paid Transactional models, Marketing models, and Classified Ad models.
“I would not exclude that, in 10 year’s time, our company could be 100 percent digital and 80 or even 90 percent international,”
Mathias Döpfner, Chief Executive, Axel Springer.
Headquartered in Berlin, Germany, the company today is active in more than 40 countries through subsidiaries, joint ventures, and licensed partnerships.
Mathias Döpfner, Chief executive, who has been at the helm since 2002 as CEO after being part of the senior management board is a “print paper lifer.” At university, Mathias Döpfner studied musicology, German literature and theater science in Frankfurt and Boston. He later went on to become a music critic for a leading German newspaper. From there he moved to other print publications whilst moving to more senior positions and becoming Editor-in-Chief for a tabloid paper.
He joined Axel Springer as became editor-in-chief of SE’s national daily newspaper Die Welt 1998. Under his leadership, the content and visual appearance of the paper was fundamentally revised and embraced by readers.
As head of the publishing group, Mr. Döpfner had already made significant strides in revamping Germany’s largest print publishing group for the digital age. The combined online audience of its flagship newspapers, Bild and Die Welt, had become one of the largest in Europe, and the group under his leadership began investing heavily in digital companies, which were generating an increasing share of revenues and profits.
Mathias Döpfner, the chief executive of Axel Springer. Credit Gordon Welters for The New York Times
His vision has been to build multiple digital revenue streams for his companies, moving well beyond the established, and unsustainable digital news model, of relying purely on digital advertising. In mid 2013, the company announced that it was launching a Paywall for one of it’s leading mast heads, Bild, the best-selling non-Asian newspaper and has the sixth-largest circulation worldwide, according to WAN-IFRA’s World’s 100 Largest Newspapers ranking.
Six months after introducing a paywall on the Bild website over 150,000 people have signed up for a digital subscription. Considerably a great result, showing that publisher can generate new revenue online with editorial content.
“We have gotten rid of the distinction between print and digital. Bild is Bild, we produce content only once and then every outlet picks out what they need”
Donata Hopfen, CEO, BILD Digital — Axel Springer
Still, Mr. Döpfner, now 52, worried that the company’s management culture was too hierarchical and risk-averse, leaving it vulnerable to challenges from nimbler American technology companies like Google and Facebook, as well as rising digital media brands like BuzzFeed and Vice entering it’s European markets. “It was very clear to me that we needed to accelerate our cultural transformation,” Mr. Döpfner said in a recent interview from Axel Springer’s Berlin headquarters according to a recent NY Time company piece.
As part of initiative to further accelerate the company’s digital transformation, Döpfner sent three top executives to embed themselves in Silicon Valley, and to live together in the same apartment that is traditional of the San Francisco Start-up environment and networking tech executives.
As they met Tech executives it became quite apparent, that there was room for Axel Springer to actually invest in the US Tech eco-system, prompting the company to create a Venture Fund.
Axel Springer has since aggressively expanded its portfolio of media investments, having snapped up stakes in the American digital media companies Thrillist, Mic.com and Jaunt, and, in its biggest acquisition, paid $343 million in late September for a controlling stake in Business Insider. The company’s ambition has fuelled it’s appetite to further expand into the English Speaking market, making it a serious digital contender on a global scale.
“I would not exclude that, in 10 year’s time, our company could be 100 percent digital” in terms of revenue, “and 80 or even 90 percent international,” compared with about 50 percent today, Mr. Döpfner said as he took in the panoramic view of the German capital from his glass-walled office. “And that given the scale of the U.S. market, the largest part of our English-language business will be in the United States.”
“We are increasing our share in a promising journalistic start-up that is focusing on the attractive future market of mobile and social video consumption”
Jens Muffelmann, CEO, Axel Springer Digital Ventures & President (USA)
The company is also targeting Millennials by investing in Start-ups that deliver News content in digital formats as well as Start-ups that leverage new technologies such as NowThis and AirBnB respectively.
The German company led $16.2 million investment round for NowThis, a digital media company that distributes short video clips across social media networks.
“We are increasing our share in a promising journalistic start-up that is focusing on the attractive future market of mobile and social video consumption,” said Jens Muffelmann.
Mr Müffelmann, 49 who joined Axel Springer in 1997, manages the 200 portfolio companies in the newly established Marketing and Classifieds Division as also serves as it’s Chief Executive Officer of Axel Springer Digital Ventures GmbH at Axel Springer since June 2014.
Jens Müffelmann, CEO, Axel Springer’s Digital Ventures Credit Gordon Welters for The New York Times
Another recent investment was, Business Insider, with its younger, digital-savvy readership, to be its “anchor investment in the United States,” said Jens Müffelmann. The acquisitions follows a series of smaller bets on more than a dozen American digital start-ups whose activities generally fall within one of three categories: media content, marketing and classified advertising.
Nonetheless, Axel Springer, remains a family-controlled empire with deep ties to Germany’s political establishment, and has shown a willingness to place more opportunistic bets as well. Its first American deal, in 2012, was a modest investment in the home-sharing website Airbnb just weeks after Mr. Döpfner met one of its founders, Brian Chesky, at a conference for technology entrepreneurs in Sun Valley, Idaho.
“I was stunned by the growth potential and the simplicity of the business model,” Mr. Döpfner said. In addition to the financial investment, Axel Springer’s main real estate portal, Immonet, formed a joint marketing partnership with Airbnb in Germany.
Persuading Bild’s staff to experiment with what was already one of Germany’s most successful media brands was a struggle at first, Mr. Diekmann conceded. But the newspaper, whose paid digital subscriber base of around 300,000 is still dwarfed by a print circulation of just over 2.2 million, has nonetheless made digital investment its top priority, reconceiving its newsroom to cater to an increasingly mobile and social-media-driven readership.
“I want our stories to be read, and it is not really important if it’s on a printed paper, digitally or on TV”
Jan-Eric Peters, WeltN24’s Editor-in-Chief.
“We have gotten rid of the distinction between print and digital,” said Donata Hopfen, 39, who heads Bild’s management board. “Bild is Bild,” she said. “We produce content only once and then every outlet picks out what they need.”
A similar digital-first transformation is also underway at Die Welt, Axel Springer’s other print flagship, whose staff was recently merged with that of N24, a 24-hour television news channel that Axel Springer acquired in early 2014. (The combined operation was recently renamed WeltN24.)
“I want our stories to be read, and it is not really important if it’s on a printed paper, digitally or on TV,” said Jan-Eric Peters, WeltN24’s editor in chief.
After a career in newspapers, Mr. Peters, 50, is poised to become one of the next Axel Springer managers to more fully embrace the group’s digital future. Beginning in January, he will leave WeltN24 to become chief product officer for Upday, a new mobile news aggregation service that Axel Springer has developed in partnership with Samsung Electronics. The service, announced in September, uses a series of algorithms to track users’ reading habits and select a personalized stream of content from across the web.
Donata Hopfen, CEO of BILD Digital
Mr. Peters and others said that just a few years ago it would have been difficult to imagine a digital-native project like Upday winning broad support from the Axel Springer leadership.
“I don’t know if Mathias really knew at the time how radically he was going to change the culture,” Mr. Diekmann said of Mr. Döpfner. “But now we’re infected.”
Axel Springer is taking iOS 9 ad-blocking app to court
One major threat that Axel Springer sees are the rise of Ad Blockers, that are gaining more and more users and has been very aggressive in responding to Ad Blockers as so much to block it’s premium content to user when it detects that their browsers have Ad Blocking software installed, It is now taking iOS 9 ad-blocking app Blockr to court to stop its development and distribution.
The final ruling on the case isn’t expected until Dec. 10, but in an early hearing the momentum seemed to be on the side of the mobile app.
It’s latest move comes after mobile ad-blocking tech became all the more real with the release of Apple’s iOS 9. According to Axel Springer’s legal representation, it wants to stop Blockr’s developers from offering, advertising, maintaining and distributing the app.
Axel Springer is not the only publisher that’s taking a confrontational approach to dealing with ad blockers, The FT recently reported. U.K. newspaper City AM banned ad blockers from its website; U.K. broadcasters ITV and Channel 4 have now done the same; and the Washington Post redirects readers to a subscription page, or asks them to sign up to newsletters, or disable their ad-blocking software. Even Yahoo has gotten in on the action, blocking users from their email when they have Ad Block running.