Five key actions to accelerate the digital transition

Publicado no site da WAN-IFRA: Wold News Publishing Focus em 1o/8/2104 às 10:17

By Raquel Devis

The recent unabated pace of digital innovation in Latin America has been impressive to witness. Brazilian Caio Túlio Costa, founder of UOL, Latin America’s largest Internet provider, is a prime example of the daring digital spirit sweeping the region.

Costa will take part in Digital Media Latinoamérica on 19 and 20 September, in Lima, Peru, the next stop in WAN-IFRA’s global series of digital media conferences. He will give a presentation on “Finding a sustainable business model in the digital age”. WAN-IFRA spoke with him about media innovation in Brazil and the challenges of the digital transformation within the media industry.

WAN-IFRA: Could you highlight the main obstacles for publishers trying to develop successful digital media businesses today?

Caio Túlio Costa: The main pitfall for newspaper companies is failing to understand that the business model in the digital ecosystem is radically different from the classical journalism model. Because of this misunderstanding, they simply try to apply the old analogue model of producing and editing news to the digital environment. The second pitfall has to do with a generational dispute while the analogue natives are still in command of the newsrooms. The third pitfall has to do with a wrong decision to consider technology as an expense and not as an investment. There are many others, like considering that revenues from advertising and paywalls can pay the bill. They cannot. Newspapers will need revenues from value-added services to be profitable in the online environment.

From the outside, Latin American publishers seem to have less cultural barriers when embracing digital opportunities compared to the decades it took the mature publishing markets to act. Is this perception correct?

Yes, that seems to be the case. Latin American publishers have shown more flexibility and ability to make leaps than more mature markets. But they are far less equipped in terms of capital – crucial for technological investment. And they invested little, while they see the value of their traditional assets falling.

In your research report at Columbia University you explain how the traditional business model is no longer valid. What are the most important actions to accelerate the digital transition?

There are five keys:

1.         understand the moment of disruption;

2.         speed up the generational change;

3.         invest in technology;

4.         embrace social networks to exploit its vast distribution reach; and

5.         understand that newspaper companies must sell services instead of simply sell information. We can no longer afford to fear making mistakes.

Those media companies that do not take these measures may continue to survive for some time, but will surely sink in the digital ecosystem.

O Globo’s first tablet-exclusive product, ‘O Globo A Mais’, was launched half a year ago and is a great example of innovation in Brazil. Are you aware of other innovative digital projects coming up in the region, besides the popular foreign news products like Buzzfeed or The Huffington Post?

The use of all current platforms, including tablets, in creative and functional ways is an obligation for every publication. You have to reach people where they are and in the right moment. The big problem is not innovation in terms of device usage or creativity in terms of content. The biggest problem is the business model (revenue sources, revenue sharing, what to charge, how to charge, which products to distribute, how to deal with social networks, how to deal with Google and Facebook) that will support this new journalistic enterprise. The largest and most accomplished example of the region is UOL in Brazil, an information and services portal created by a traditional newspaper, which today has more than thrice the revenue of its parent company, Folha de S. Paulo.

The Reuters Institute Digital News Report says that traditional brands remain strong in most markets, with cross-platform newspaper reach averaging 75% in most countries. But the report also says that pure players and aggregators are now more, or as, popular in the US, Japan, and Brazil. Why are pure players and aggregators especially strong in Brazil?

Yes, aggregators have larger audiences and higher revenues, particularly in Brazil. But one of the biggest aggregators, UOL, belongs to a newspaper, Folha de S.Paulo. Another great aggregator, G1, belongs to a traditional media company, Globo. There are independent aggregators, like Terra, which belongs to a telecommunications company, Telefonica-Vivo. Thus, we cannot say that traditional companies are losing ground in Brazil.

The same report emphasises the high likelihood of Brazilians’ willingness to pay for digital news in the future. Why do you think Brazilians are ready to pay for digital news?

First, because Brazilian newspapers are determined to install the paywall, especially in porous mode, like The New York Times system. Folha de S. Paulo, Zero Hora, O Popular, Gazeta (from Vitória) and Valor Econômico are already using paywalls. O Globo and O Estado de S. Paulo are already enrolling readers. Second, because Brazilian newspapers opt out of Google News, which facilitates charging for content. And thirdly, because they are quality newspapers and the people seem to see value in this kind of content.

Thus, do you think publishers in Brazil are on the right track with their paid content strategies?

Yes, Brazilian newspapers are absolutely correct. The only criticism I have is that they are taking much longer than they should to deploy the paywalls.

You also talk about “The Mobile Challenge” in your report; do you consider the increasing news consumption on mobile as one of the most decisive changes in the industry? And, what are publishers missing compared to companies like Facebook or Twitter that are significantly more successful on mobile?

Yes, this has been a decisive change – another disruption. The newspapers must learn to produce news for mobile and understand how each segment (young people, women, older…) consumes news on mobile and deliver multimedia-specific content for this. Those who think that simply “adapting” or “repackaging” traditional content as a possible solution for mobile will fail. That is not enough. Content must be modulated specifically for each audience, and formatted completely anew according to the architecture of each device, of each operating system.

Digital Media Latinoamérica 2014 will offer four sessions devoted to the biggest issues facing news publishers everywhere: How to boost digital revenue; How to create the best multi-platform projects; How to make the best use of new platforms and How to find and use new digital tools. Check out confirmed speakers and full details of the conference at www.wan-ifra.org/dml14

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