Growing the news business by building a global readership online

My JSK year began with a few simple premises, lots of questions and a heavy dose of pessimism. The first premise was that readers in the United States — and many other places — had access to quality journalism about their own nations but a shrinking supply about the rest of the world. The second premise was that the economics of overseas coverage were inherently hard in a digital market: It costs far more money to send a correspondent to Liberia to cover the Ebola epidemic than to cover the first few cases that reach U.S. shores, and yet the overall readership — and revenue potential — tended to be higher for the story about the few American victims than the thousands overseas. This dilemma was especially vexing at a time when traditional news products such as newspapers and evening newscasts were unbundled by consumers free to pick and choose digital content at will, and often for free.

The first real step in attempting to grapple with these issues came in Prof. Susan Athey’s remarkable “Platform Competition in Digital Markets” class in the Graduate School of Business, which helped make clear to me why some companies thrive online while most fail. The news was not good for the news business, which had lost much of its traditional role as a market platform — bringing together buyers and sellers of goods, for example — to Google and Facebook and had failed to find a stable, viable alternative source of profits. What became clear was that in the online world, only the largest players have the scale to compete effectively. The digital world fosters many competitors but concentrates profits among the few strongest ones that can reliably attract advertising or subscription revenue from many customers. This prompted me to sharpen my focus on the opportunities for major news organizations rather than a new startup with limited scale.

I then began interviewing news analysts and executives in hopes of discovering the best emerging ideas for tackling the problem that I had identified. This process proved more heartening than I had expected. Despite major obstacles, including the fractured nature of digital advertising markets, I learned that many of the world’s largest news organizations were beginning to approach a saturation point in their own national markets and were, by necessity, exploring overseas opportunities as the only way to continue growing. These forces prompted moves by Politico into Europe, The Huffington Post into India, BuzzFeed into Australia and The Guardian into the United States. The Washington Post has made significant efforts to target its journalism at broader global audiences. And The New York Times has announced a $50-million effort to expand its international reach in pursuit of more subscription and advertising dollars from overseas.

What has become clear is that while traditional U.S.-based players have closed many foreign bureaus, there is rising competition for global readership online. This suggested that existing market forces already could be creating incentives for coverage, meaning the key challenge was fostering high-quality, rigorous news gathering as opposed to click bait. While online revenue is skewed toward U.S. markets, there is far more money potentially to be made beyond the nation’s borders than within it. Stanford Business School Prof. Magid Abraham, the executive chairman of ComScore, calculated that the global digital advertising market is worth roughly $600 billion a year. Of that, less than one-third is spent targeting readers in the United States, meaning more than $400 billion is being spent in other markets. The most lucrative non-U. S. markets tend to be English-language nations such as the United Kingdom, Canada and Australia. And nearly every nation in the world has English speakers who, as a demographic group, tend to rate highly in the education and income metrics that major advertisers often seek. The key to winning over these markets may be replacing the concept of “foreign” news in favor of “global” news — meaning news aimed at readers with broad interests, wherever they happen to be.

The challenges, of course, remain substantial. The U.S. news market is unusual for its concentration of relatively high-income online readers who largely share a common language, similar interests and a unified advertising market dominated by a finite number of nationally recognizable brands. Foreign marketplaces, by comparison, have dozens of major languages and widely divergent interests. Online ad markets overseas also are badly fractured along national borders, as are the brand identities of the potential major advertisers. Efforts to gain subscription revenue faces similar issues. Overcoming these challenges will require major new innovations from news organizations, including more sophisticated study of readership behavior and a better ability to deliver the right content to the right readers on a granular scale based on their locations and interests. A new, global digital advertising network could provide steady revenue to news organizations determined to build international audiences, making them appealing to premium international advertisers. News organizations also must continue to build partnerships across national boundaries in hopes of building brand awareness in new global markets and continue to work with Google, Facebook, Twitter, Snapchat, Instagram and the other online platforms.

To make global expansion work from a business perspective, the key will be adding readers (and the advertising or subscription dollars they bring) in a cost-effective manner. News organizations that want to compete for larger global readerships will have to attract more revenue than they spend acquiring these new audiences. That may be the most difficult challenge ahead for the news organizations determined to compete for the billions of dollars of global advertising revenue. More widespread use of freelancers likely could help, but maintaining the quality and distinctiveness of the journalism will be of paramount importance. Winning the fight for a worldwide readership will demand, perhaps above all, a journalistic strategy focused on delivering the most urgent, compelling news to a divided, distracted world.

The first real step in attempting to grapple with these issues came in Prof. Susan Athey’s remarkable “Platform Competition in Digital Markets” class in the Graduate School of Business, which helped make clear to me why some companies thrive online while most fail. The news was not good for the news business, which had lost much of its traditional role as a market platform — bringing together buyers and sellers of goods, for example — to Google and Facebook and had failed to find a stable, viable alternative source of profits. What became clear was that in the online world, only the largest players have the scale to compete effectively. The digital world fosters many competitors but concentrates profits among the few strongest ones that can reliably attract advertising or subscription revenue from many customers. This prompted me to sharpen my focus on the opportunities for major news organizations rather than a new startup with limited scale.

I then began interviewing news analysts and executives in hopes of discovering the best emerging ideas for tackling the problem that I had identified. This process proved more heartening than I had expected. Despite major obstacles, including the fractured nature of digital advertising markets, I learned that many of the world’s largest news organizations were beginning to approach a saturation point in their own national markets and were, by necessity, exploring overseas opportunities as the only way to continue growing. These forces prompted moves by Politico into Europe, The Huffington Post into India, BuzzFeed into Australia, The Guardian into the United States and much more. The emphasis was on affluent English-language markets, but was not limited to them. The New York Times is making a major push into Spanish-speaking markets, for example, and news organizations in Germany, China and Russia are expanding internationally as well.

What became clear was that while traditional U.S.-based players had closed many foreign bureaus, there was rising competition for global readership online. This suggested that existing market forces already could be creating incentives for coverage, meaning the key challenge was fostering high-quality, rigorous news gathering as opposed to click bait. If a scramble for the attention of global news consumers is underway, is a golden age of foreign news coming?

I don’t quite know yet, though I’ve gradually become more optimistic about that potential. I remain in a research mode during which I am attempting to map out the various global news initiatives now underway, with an eye toward illuminating both opportunities and challenges that each face. By the end of my JSK year, I hope to have fewer questions, more answers and maybe a few clear thoughts on a way forward.