The last twenty years have seen a significant divergence in the evolution of German media. On the one hand, giant legacy companies like Axel Springer have cemented their status as digitally-driven key global players establishing important footholds in English language markets.
Yet at the same time, there has been a section of German media that has largely been untouched by the digital revolution. A country that traditionally cherishes privacy has been slower than its English language counterparts to embrace online content and in some sectors print is still very much central to the media.
Yet are these two trends now starting to evolve? Has the German media land grab finished as companies retrench and focus on their core market? And will a wave of new entrepreneurs push German media to a digital future?
One man who is ideally positioned to offer his take on the current status, and indeed the direction of travel of German media is Berlin-based consultant Marco Olavarria.
***Marco will be one of several high-profile speakers at our Mx3 Barcelona innovation summit on 12-13 March. Take a look at the draft agenda and speaker list to get a glimpse of what to expect. Our exclusive, discounted pre-agenda offer is available until 7 December 2023. Sign up here to save.***
Marco started his media career as a consultant working for IDG in the late 90s and since then has worked across the sector becoming a certified change professional along the way.
These days he works with several German media companies advising them on everything from tech implementation to assessing emerging business models.
A lot of his work is tech-based. As Marco says
“With tech it’s mostly about selecting the right tool, the right system, and then managing the implementation. So we do a lot of requirement management. We help customers not only identify what they need, but also to document it in a way that the vendors can actually work with.”
Creating better media leaders
In tandem with the tech innovation Marco and his team work with management groups in a bid to help them become better leaders. He thinks that this is a problem that while not unique to Germany is perhaps more pronounced in the country than other parts of the globe.
“In Germany, we have this culture of looking at the best experts and making them managers, which is not always the best thing to do. That’s because people cling to their expertise and they tend to micromanage based on what they know and not based on being a leader.”
“And for a lot of publishing houses that’s become a real problem. Because, in these times, we need to be very innovative. You don’t really need as many experts on the leadership level because the problem with experts is that they tend to be reluctant to change their minds, which is really not helpful when it comes to innovation.”
Inevitably our conversation drifts along to the role of print media in the German market. The Anglo-centric myth is that print is still king in the DACH region. I ask Marco if that is still the case, and if so does he see the reliance on print-based media products as an impediment to future growth?
“Well, the media market here in Germany still does have a strong print legacy. Looking at b2b media, if you assess the market’s development from 2021 to 2022, there were only 40 fewer print publications in the market. Circulation was down, but it was only down by like around 2% which I think is not that much. So I think that’s still a pretty strong foothold.”
“But the other part of the story is how much is actually being read in print. And there the data of course gets quite problematic. Just because you’re selling a print product in a subscription doesn’t really mean that the same amount of people are still reading it with the same intensity. So yes, we still are selling a lot of print but are people still using it in the same way that they used it say five or 10 years ago? I’m not sure I don’t think so.”
Robust reader revenue
However, in spite of the robust nature of the print market, Marco sees potential pitfalls in the future driven by a decline in advertising revenue.
“Advertisers are not spending the same amount of money that they were in the past. To counter this German media companies have managed to actually raise subscription prices. So there’s been quite a switch from having this dual business model of strong advertising revenues and also a lot of reader revenue. The reader revenue has risen, and advertising revenue has been declining.”
I wonder if Germany has been an outlier then in terms of Europe. Given the strong print heritage it has and the consequence that consumers are in the habit of paying for content, I suggest that it could be that they are also more willing then to pay for digital products?
Marco says that this might be the case but adds that the journey from print to reader-revenue-based digital products is often a long and tricky one.
“It’s a marathon. You cannot expect people here in Germany to switch from print to digital within months. So, it’s still a struggle and it’s been slow, but companies need to be persistent. They need to keep on going. They need to keep experimenting,to try out different things. How does this model work? Is the pricing working? And so on.”
“So there’s been a lot of experimentation, which is paying off for a lot of publishers. Not all publishers though as we have a lot of small publishing houses here in Germany that are struggling to be able to invest the type of money that you need to invest to become a true digital publisher.
Germany also has a history of sustaining a significant number of smaller companies often in the b2b media space who can boast a footprint that stretches across the DACH region. I wondered how they have been impacted but he shifted towards digital content? Also whether venture/angel backed startups are starting to make a mark.
Developing holistic content-rooted solutions
“Well, there are a lot of small publishing houses that have been in the market for a long time. So it’s not only about startups and new ventures. There are some new ventures but the biggest part of the market is still traditional publishers that have been around for a long time.
“And you asked about whether they are still innovative? Well, yes. The main focus is on digital and looking at the b2b segment again, what I find interesting is the way publishers are getting really good at developing holistic solutions for the b2b target groups. So we’re seeing a lot of innovations that are integrating different aspects. For instance, for different professions, they are providing solutions that support people in performing the processes. So integrating content with the process and building a solution around that. That’s what we’re seeing a lot of. I think that’s important for future subscription revenue. After all, you’re not only providing the content, you’re also providing the support that the people need to do the work.”
One way in which b2b media companies might innovate in the future is around the integration of knowledge centres accessible via chatbots and AI which they offer their customers as a paid service. Marco acknowledges that German companies are starting to experiment with AI-driven solutions but are simultaneously aware of the challenges of integrating AI into their workflows.
“If you ask me ‘what are the biggest challenges for publishers?’ I would probably answer Artificial Intelligence. Artificial Intelligence, and Artificial Intelligence. It really is a big issue. The first challenge is, ‘how do we use it?’ How do we use AI in our company to become better at publishing and providing all these services?
“The second question is ‘how will that alter the way people consume media?’ How will that change the way they perform processes and how do we need to adapt to that so that we can still have a competitive edge over people solely using Artificial Intelligence? Because we’re absolutely at the beginning of this.”
“Companies are working on integrating AI, connecting it to their data. So once you have AI that’s connected to your own data and to the data that’s available, worldwide, you can create some very, very powerful tools. That’s a tough one because now we’re not talking about media companies anymore. We’re actually talking tech companies.”
Media companies morphing into tech companies
So having discussed AI and reading revenue, I quizzed Marco on what he perceives are the other biggest issues facing German media at the moment? I wondered what the execs he speaks to on a weekly basis are worrying about?
“Well, an issue that has been worrying them for years is managing people, because the more important technology becomes, the more you must care about your people. And how do you manage it? How do you manage the transformation that is needed going from being a publisher to being publisher plus a tech company? Because that’s a huge change for people. There’s a lot of things that need to be taken into account. How do I stay innovative? How do I build up new capabilities? So it’s actually a huge management leadership task to transform from being a traditional print-oriented publishing house to becoming a content-oriented tech company that’s fit for the next 10 years?
Finally we return to one of the key defining characteristics of German media and indeed the country as a whole – privacy. I wonder if the traditional German championing of privacy which has been shaped by its journey in the second half of the twentieth century, will remain strong, and what the implications are for innovations in advertising and technology.
I point out too that some German companies are quite keen on ChatGPT and are willing to work with OpenAI while other companies have basically blocked them.
Marco acknowledges privacy is still very much a live issue in Germany.
“Yes it is a pain point, of course, because there’s a lot of things that you did in the past that you really still can’t do. But it’s just something that you have to work with. And as long as you’re competing in, say, the German language, you’re on the same level as other publishers. But as soon as you then start competing with international players, who may use more aggressive marketing tactics, then of course, it is a disadvantage. It’s not like you can’t market your products. Of course, you can market your products. And of course, in b2b there’s a lot more leeway than there is in b2c but you have to make sure that things are compliant.”
Media Makers Meet – Live
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There is more from Marco in the video below