The day Pearson, owners of the Financial Times newspaper, detailed a weak trading update for 2012 the paper’s editor Lionel Barber has revealed plans to cut jobs and push deeper into what he calls a “digital first” environment which will see the paper move from a being “a news business” to a “networked business”. The move is important: of all the world’s major papers, FT has gone furthest (and deepest) in transforming its business model to a digital world.
It leads with more than half its subscribers being digital, while revenues from digital areas such as advertising and subscriptions now make up more than 50% of total revenues for the FT Group. But Barber believes the paper has to change even further.
In its trading update, Pearson revealed:
“The Financial Times Group will report good revenue growth for the full year, in spite of a slow fourth quarter caused by weaker advertising sales. Our digital and subscription-based revenues continued to grow well at both the FT and Mergermarket. The FT Group’s full-year profits will be significantly lower than in 2011, reflecting the absence of a contribution from FTSE International following its disposal and further actions to accelerate the shift from print to digital.”
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That profit fall is self-inflicted though because Pearson sold the 50% stake in the FTSE index business to the London Stock Exchange for 450 million pounds cash in late 2011. That 50% stake contributed 20 million pounds of profit to the FT Group in 2011, so the loss of that money is hurtful.
There was no mention of the profit impact in the email to staff detailing the changes that was published in London overnight. Barber said the changes would be a “big cultural shift” for the business daily, with 35 jobs to go (after adding 10 new jobs to the digital business). The move will save £1.6 million (about $A2.5 million) a year according to the memo.
In the memo, Barber said the FT needs to be “reshaped for the digital age”:
“We need to ensure that we are serving a digital platform first, and a newspaper second. This is a big cultural shift for the FT that is only likely to be achieved with further structural change … We need to do less in certain areas and more in others, we need to be much more nimble, and we need to reshape our teams.
“Our common cause is to secure the FT‘s future in an increasingly competitive market, where old titles are being routinely disrupted by new entrants such as Google and LinkedIn and Twitter. The FT‘s brand of accurate, authoritative journalism can thrive, but only if it adapts to the demands of our readers in digital and in print, still a vital source of advertising revenues.
“My visit to Silicon Valley last September confirmed the speed of change. Our competitors are harnessing technology to revolutionise the news business through aggregation, personalisation and social media. Mobile alone, for example, now accounts for 25 per cent of all the FT‘s digital traffic.
“It would be reckless for us to stand still. Of course, we must stick to the tested practices of good journalism: deep and original reporting based on multiple sources and a sharp eye for the scoop. But we must also recognise that the internet offers new avenues and platforms for the richer delivery and sharing of information. We are moving from a news business to a networked business.”
“In order to engage more deeply with our readers, we need to introduce a more intelligent, balanced and efficient deployment of our investment and our people. So we are proposing a shift of some resources from night work to day and from print to digital. This requires an FT-wide initiative to train our journalists to operate to the best of their abilities. And it requires decisive leadership.
“I am determined that we do everything we can to secure the FT’s future as a world class, financially sustainable news organisation. Our earlier decisions to raise prices, charge for content, and build a subscription business have proven to be bold and wise. While many of our rivals have struggled to find a profitable business model, and have therefore announced heavy job losses, we have been industry pioneers. This is not the moment to falter.”
Some of the changes outlined seem simple enough. Among them:
- Common ad shapes across editions — reducing unnecessary tweaks and edits between editions
- A more common international edition with common fronts and second fronts
- A possible move to a common running order between UK and international editions with World at the front of the run
- Restrictions on the number of changes requested for US second edition
- A paring back of the UK third edition
- A far more disciplined adherence to copy delivery times, and improved forward planning.
These and other changes (such as restricting the number of page changes between editions and making sure the digital edition’s needs predominate, instead of the newspaper, should have been done a long time ago. That he has had to detail such basic changes means there is a culture of resistance among newspaper journalists to these changes which will reduce their importance.