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Home » Blog » Spotify for News? – Aggregation as a challenge for publishers [Forum NWE]

Spotify for News? – Aggregation as a challenge for publishers [Forum NWE]

“For me, it is incomprehensible that there is no qualified subscription offer for simultaneous use of different online sources.”

“Why is there no subscription where I can choose among, for example, three  different newspapers?”

“My request to the newspaper publishers in Germany, create a uniform, very simple way to be able to buy individual articles with a “click”.”

These are examples of messages from newspaper readers to the German publishers’ association BDZV, regretting there is no flat rate model for multiple newspaper titles. Other media —  movies, music, radio programs and e-books — are being successfully marketed in aggregate, with a common pricing model (usually a flat rate) by companies like Deezer, Netflix, Prime and Spotify. What has become a matter of course in other media has not yet made a breakthrough in the newspaper industry.

For users, these offerings have enormous advantages. They are convenient, because users have access to many different media offerings with one account. They can flexibly to select from unlimited content. The subscription fee to be paid to the aggregator (around 10 euros per month) is acceptable and usually amortized with just a few views per month. Subscriptions can be canceled on a monthly basis. And the aggregators have well-programmed, attractive and innovative websites and apps.

Why is there no flat-rate digital subscription offer for multiple journalistic sources with one access? This question has been the subject of debate in te trade media and at industry conferences for years.

For publishers, the offers initially sound tempting. As a marketing tool, the aggregator opens up young target groups for the newspaper and generates important information about purchasing and usage behavior. The platform providers promise to generate additional users who – it is argued – would probably not have subscribed to any of the media products on offer or purchased them individually. This leads to an increase in technical and advertising reach. The aggregators pass on part of their revenues to the content providers. Co-purchase opportunities arise when readers discover other interesting author pieces or content.

In principle, there are several different models that could be employed for the aggregation of newspaper content. The publishers’ newspaper websites could remain completely unchanged, and only be linked by a common log-in and payment system. Or, a mega-content platform of newspaper content under one brand could be constructed, with unified access and payment processing, and offering tiered subscriptions depending on usage intensity. A simple payment system could be employed, offering subscriptions or on a per-item basis. Newspaper publishers could join forces and offer such a model jointly, or they could join a digital platform from outside the industry.

A recent study by the North Rhine-Westphalia State Media Authority on the future of digital paid journalism claims that such platforms make sense. According to the study, a cross-provider platform for digital journalistic content would have a maximum revenue potential of around €128 million to €152 million per month. The study concludes that most of the described disadvantages of a “Spotify for journalism” could be largely eliminated or at least greatly reduced if the platform was brought to market independently by publishers.

BDZV President Mathias Döpfner does not rule out the possibility of such offerings in the future. “But I don’t think it’s likely that there will be a single Spotify that replaces the diversity of offerings,” he said. “There will be a variety of media brands that serve their readers with individual offers and their own price points. And there will be readers who subscribe to exactly one brand because of its social stance, tone, aesthetics and regional proximity.”

The BDZV has so far rejected calls for a “Spotify for publishers”. According to the BDZV Trend Study 2021, conducted by the publishers’ association and the management consultance Schickler, the majority of publishers are skeptical about the concept. For 54 percent who were surveyed, the risks of such a model outweigh the benefits.

The dangers and points of criticism are manifold:

Risk of cannibalization: the platform operator’s offer might compete with individual companies’ established brands. This happens, for example, if a potential user cancels an existing subscription because of the flat-rate offer.

Loss of the customer relationship: The primary user relationship and direct contact with the reader is lost. This relationship is essential for success in the digital reader market. According to Meinolf Ellers, Chief Digital Officer at dpa, giving up the customer relationship would be “sheer madness for many local and regional newspapers.”

Loss of control: Publishers relinquish sovereignty over their content and tend to mutate into content suppliers who sooner or later are at the mercy of the aggregators’ terms. The aggregator sets the standard and lays down the rules. Publishers are only junior partners in the aggregator ecosystem. They become more dependent the more control they relinquish over their content.

Loss of pricing sovereignty: Pricing sovereignty, i.e., the ability to determine the retail price for a journalistic product and also to differentiate itself from other products and competitors through price, may be lost.

Loss of brand environment: the brand identity becomes blurred in the uniform layout of an online newsstand. The publisher does not have the opportunity to arrange and weight its product or content according to its ideas. An algorithm decides whether and how to present it. Media products as collections of content put together by publishers would lose importance and the source recedes into the background. For users, only the individual article tends to be relevant. They no longer perceive the newspaper as a whole. The traditional function of a newspaper, its own compilation of content, its distinctive voice or tonality are lost. The discoverability of content of all kinds through aggregators softens users’ ties to media brands.

Access to user data: There is a risk of limited access to user data for the publisher. In relation to advertising customers, the publisher could lose “weight” in marketing. Insufficient data would also have negative effects for self-marketing. There is a risk that no real audience targeting is possible.

Opinion control: the aggregator is in a potentially strong position to control opinion and create topic bubbles, as well as promote click-driving articles.

Antitrust law: It remains to be seen whether such a model could possibly be in violation of antitrust law.

Looking back: Experience to date

In 2012, the Digital Working Group of the German Newspaper Publishers and Digitalpublishers Association (BDZV) first addressed the issue of introducing a joint payment system for several newspaper titles. The occasion was the launch of the Slovakian Internet service “Piano Media,” in which 12  publishers placed part of their content behind a common paywall. For 4.90 euros a month, Piano Media provided access to all the paid content of the most important Slovakian media. Despite intensive talks in the newspaper industry, Piano Media did not get off the ground in Germany.

In recent years, several companies have ventured into the German market with a similar approach. Online newsstands such as Blendle, Readly, Read-it, Newsadoo or Pressreader usually offer users unlimited access to the respective assortment for monthly subscription prices. Publishers get a pro-rata share of the revenues. The revenues are a nice extra income, but overall the platforms are far from becoming a serious sales alternative.

In Switzerland, a digital alliance of publishers is launching a joint login for the first time this year. With Onelog, customers of all connected media products will be able to log in everywhere with the same credentials. The digital alliance is made up of CH Media, NZZ, Ringier, TX Group and SRG. The login alliance includes 30 online sites that account for 90 percent of Swiss news traffic, according to its own figures.

Are aggregation models successful in other media genres?

There are aggregation models that are born out of necessity. Music and movie aggregation services were a response to widespread piracy. For this reason alone, Spotify and Netflix are not “role models” to follow. There is no comparable situation with books, magazines and newspapers.

But streaming services such as Deezer, Spotify or Apple Music lead to an impoverishment of performers and artists. Record labels profit from high streaming numbers, while the artists go almost empty-handed.

Other aggregation models represent enrichments for the respective content providers. Through aggregation, TV broadcasters reach new users and old users in new places (for example, when they are on the move). Moreover, through aggregation, TV broadcasters are initiating a cautious paradigm shift from free to pay. Flat-rate aggregation is also interesting in the e-book sector.

But local and regional newspaper publishers cannot derive anything directly from the examples of the other media. The starting points and business models of the various sectors differ too greatly for a general consideration of the issue.

Touchstones for aggregation

In 2015, BDZV expert group on e-publishing identified four touchstones that publishers can use to decide for or against aggregators: product integrity, price sovereignty, customer relationship, and brand perception.

1. Product integrity means that the publisher can arrange and weight its product according to its ideas. Product integrity also includes factors such as recognizability, habituation effects, and audience flow generation.

2. Price sovereignty stands for the ability to determine the final selling price for a journalistic product and also to differentiate itself from other products and competitors through price.

 3. Customer relationship means knowledge of customer data and the possibility of addressing the customer in a targeted manner.

4. Brand perception describes the customer’s ability to clearly identify the “publisher”.

The expert group recommended asking three questions for publishers who are considering aggregation:

What exactly is being aggregated?

Why have other respective publishers accepted aggregation?

What revenues do the publishers gain or lose from aggregation?

Based on these questions and touchstones, newspaper publishers can better determine a position of aggregation.

The skeptical attitude of publishers to the question of a “Spotify for News” in the trend survey is only a snapshot. Digital development, technological possibilities and market players are changing at a rapid pace. What was wrong yesterday may be reassessed tomorrow. That’s why there is no permanent blanket “no” to the question of a “Spotify for News” for publishers, but must be decided again and again by each individual publisher.