This is a republication of a collective interview prepared by the European Business Press association.
EBP awarded Mr Döpfner its ‘manager of the year’ award in Stockholm on Thursday 14 th November. The CEO explains how he transform a large media group from print to digital. All this while maintaining profitability, in a sector mired by losses.
“The best times are yet to come”
In this interview he talks about his media consumption, the perspectives of media companies in the digital world – and what shoplifters have to do with paywalls.
Mr. Döpfner, what did you read first this morning?
The same as every morning. First I take a look at my cell phone. Then I check out bild.de and welt.de.
What device do you use to do that?
Sometimes my cell phone, sometimes my tablet.
You no longer have printed newspapers at home?
Of course I do! Fourteen newspapers.
First Bild, then Welt. Berliner Morgenpost, Hamburger Abendblatt
Nice advertisement for your titles. What do you read from other publishers?
The Süddeutsche, FAZ, Herald Tribune, Berliner Zeitung, Märkische Allgemeine, Potsdamer Neueste Nachrichten and the Tagesspiegel. In addition to those, the Financial Times, the Wall Street Journal and the Handelsblatt.
You produce a lot of waste paper!
For me it is a ritual and a sensual experience to read a newspaper that smells and rustles. But I don’t really care which medium I get my information and entertainment services from. I am non-ideological. Cell phone, tablet, PC or paper – it depends on the situation. It’s about content. Which distribution channel is used to get it to the reader is irrelevant.
Really? Axel Springer’s credo is to become Europe’s leading digital media company.
We implemented our digitization strategy at a very early stage. Essentially this says that we will also do what we can in the digital world. We are only active where we have our core competencies as a media company. Cobbler, stick to your last. And a publishing house has three traditional core competencies: first, the creation of brand-related content, i.e. excellent journalism. Secondly, the marketing of the content and its reach to advertising customers, i.e. advertising marketing. Finally classified advertising platforms, once known as classified ads. This applies in exactly the same way in the digital world.
How digital is Axel Springer already?
The company generates 47 percent of its operative earnings and 40 percent of its revenue digitally. 55 percent of last year’s advertising revenue was generated by our online and advertising business. In short: Axel Springer is already a multimedia company today. We want to take this even further in the coming years.
How far do you want to go? Axel Springer as the world market leader?
Certainly not. We are not megalomaniac. But we are striving for market leadership in the countries in which we operate – in journalism, in advertising marketing, in classifieds. This is our goal and we are well on our way to achieving it.
You joined Axel Springer in 1998 as editor-in-chief of WELT. Did you believe back then that the company would have to digitize to such an extent?
In my former capacity in 1998, I wrote an editorial in which I stated there were only three priorities for media companies: Internet, Internet, Internet. Does that answer your question?
It certainly does. How was your radical commitment to the Internet received at that time?
I was ridiculed. I was accused of exaggeration. But the fact is: The transformation came a lot more quickly and fundamentally than even I had thought at the time. When I became CEO in 2002, we developed a clear digitization strategy for the company which has been systematically implemented ever since. In 2004 we generated 2 percent of our revenue digitally, today, as I have said, this has become 40 percent. This shows: Digitization is attractive. It is not a threat to media companies, but rather a huge opportunity.
More than half of the advertising revenues at Axel Springer are derived from its digital business. Other companies have not yet progressed that far. What do you do better?
The important thing is: Have no fear of self-cannibalisation. Those who do not do something for fear of harming their existing business have already lost. Because others will do what you fail to do yourself. What helped us further was that we brought cross-media advertising services to the market at an early stage. Ultimately, we removed the silo mentality between print and online. Every journalist, every salesperson, every employee is responsible for both. This led us to success, because this meant there were no winners and no losers within the company. We are all a part of the digital success.
So there is no conflict between print and online?
No. The construction of such a conflict is completely unrealistic. If a media manager believes that the core of the business is the printing of paper, then his company has an existential problem.
Do you then still believe in paper?
Yes. This medium still has a long future ahead. In many situations, paper is an advantageous and pleasant reading medium. But we should be thinking much less about the carrier media or distribution channels. What is important is the content and the journalism. This is what we must remember. In the digital world of all places, content is the only distinguishing feature. It is no longer paper quality or dense distribution networks that matter, it has come down to two questions: How important is the information? How good is the story?
Is digital journalism as profitable as printed journalism?
Today we are very profitable with bild.de, welt.de, finanzen.net or aufeminin.com. In some cases we even achieve higher margins than in the print business. The problem is that only very few brands achieve this. It is not yet a diverse and healthy market.
Can online journalism work in the long-term without paywalls?
I am firmly of the opinion that journalism in the digital world only has a future if it is also paid for by readers. The “free culture” was a serious strategic error on the part of publishers – a collective error. Advertisers alone cannot finance research and journalism. Of course there will continue to be free offers, but brand-related quality journalism will more frequently come at a cost. Subscriptions will dominate the Internet.
Thus far, however, there are hardly any media that are successful behind a paywall.
And as long as we continue to use terrible terms such as paywall this will continue to be the case. It sounds like border, turnpike and bad-tempered turnpike keepers. We don’t need walls, but rather purchase prices and subscription offers. Our digital subscriptions for DIE WELT are successful, even though there are still a lot of free offers. In any case, we currently sell more digital subscriptions per day on average than print subscriptions.
Digital subscriptions are much cheaper than print subscriptions.
At the moment. First we have to establish the market. In the long-term, I see no reason why digital subscriptions should be cheaper than print subscriptions.
Perhaps because the costs are higher for a print subscription. You need neither paper nor printing presses and also no distribution network for digital subscribers.
But exceptionally high investments in technology at the moment.
The paywalls currently in use are extremely porous. There are simple ways for readers to get behind the payment barrier. Are you an advocate of impervious paywalls?
A payment system can be hacked in the same way as a newspaper can be stolen in any supermarket. Nobody is immune to theft and criminal energy.
Are you comparing an Internet surfer who deletes his cookies in a browser in order to bypass the paywall with a shoplifter?
Intellectual property is at least as valuable and worthy of protection as material property. I can see no moral difference in terms of theft.
Do you see the trends for business media going the same way as for the media in general?
Yes. With one difference, which is that business titles have been hit particularly hard by the digital transformation. Because many professional users of economic information need to be interested in fast news. Where possible in real-time. This means: Company news or price movements have to be published as soon as possible – online.
Economic journalism is dominated by a few global brands – the Financial Times, the Wall Street Journal and the Economist. Do regional or local services have a chance to compete?
Certainly. The more specific a service, the greater its chances on the market. The general-interest-shotguns suffer the most.
Axel Springer’s share price has been developing well recently. Would you recommend it to good friends?
That is something a board member should never do.
Because if things go well, there’s the reek of an insider’s tip. If things go badly, the friendship can suffer. I can only observe in general terms that the Axel Springer AG share still has the sustainable and really significant upward trend towards the true value of the company ahead of it. With regard to the valuation multiples we are, in many cases, still regarded as a print company with a few nice online activities on the side. That has nothing to do with our actual corporate structure today.
Competition has increased sharply in the media sector, above all from other players from outside the industry. Google, Facebook, Twitter – how are you responding?
Journalism today is no longer conceivable without technological expertise. That is one aspect. We must learn from these new providers and use their skills for ourselves. However, it is important that there are great differences between tweets or posts and news. Twitter is not a curated medium, nor is Facebook. Anyone can distribute everything on these platforms, whatever he wants. The truth, falsehoods, the important and the unimportant. Our media brands however, stand for curated content, for which we also take full responsibility. That is what gives brand-related content its value – also on the Internet. That is what people will pay for.
You are the Media Executive of the Year. What does that mean for you?
Anyone who isn’t happy to receive awards is a sad little creature. Yet he who takes them too seriously is living dangerously.
What will the media landscape be like in five years from now?
More digital and more mobile. Tablets and smartphones will be the main media for media consumption. And maybe we will already have electronic paper. However in five years, no one will be talking about carrier media, but rather only about content.
Good prospects for media companies such as Axel Springer?
The short answer is: Yes.
And the long answer?
Good is not optimistic enough. The better word to describe the prospects is excellent. The best times are yet to come. In this context I am very glad that Germany finally has an ancillary copyright that protects journalistic performance as a value. I also hope this becomes a model internationally. Without this protection I would be much more concerned. With this milestone however, I believe, that even with search engines and news aggregators, commercial relations will develop which will strengthen the publishers’ economic base – in keeping with the interests of journalistic diversity, quality and thereby above all: in the interests of the readers.Christophe Leclercq