Naresh Khanna: Apart from word processing in English, the use of computers for Indian languages was mostly restricted to phototypesetting on film until 1984. At that juncture Adobe Postscript changed the game of non-Roman scripts in general and particularly for Indic languages in publishing here. Eventually, some editorial systems came to India but ERP and ad booking seemed more important to publishers. In ppi Media’s experience, do digital transformation and monetization happen simultaneously or does one have to come after the other. Also, can you help in implementing paywalls?
Hauke Berndt: As you said, right from 1984 with the digitization of fonts and ad systems, many papers started by doing these together and not in sequence. Every digital solution is opening possibilities for circulation and hence for monetization. It is an iterative process in which a lot of publishers are really creating new structured relationships and background actions are enabled by technology. A lot of monetization ideas are added such as paywall and these are also integrated. So these really go hand in hand and not as a sequential process.
That’s how we entered the Indian market with TOI. They were looking for ad booking and ERP systems. If you look at the Indian newspapers, most of the money is earned by the ad revenue, which is a huge share compared to other markets. The German newspapers for example have a high newsstand price and significant revenue coming from subscriptions.
What we understand about digital transition is something that has been happening for many years now. This includes the automation of many manual processes, such as planning, production and editorial. These are undertaken to reduce cost and naturally for enacting the possibilities of new revenues. For instance, in advertising, fewer people are needed when we digitize the process and upselling and cross-selling become realities.
When we begin the automation process, there is the possibility to add revenue opportunities. Every digitization brings monetization opportunities so these go hand in hand but these require processes with structured change. This is really one step ahead of creating and bringing new ideas to life, creating new revenue models.
For our customers, ppi is the backbone of the planning and production process. We have interfaces to SAP4 and to various other solutions and since we are very strong in planning and integration, we can integrate the paywall and other solutions. We do not develop all the segments ourselves, which would be like reinventing the wheel. For paywalls we usually work with MPP Global, which is a globally active organization with paywall solutions.
NK: What are the first steps in your interactions with news media organizations?
HB: We have an information department which is just addressing clients with the information to bring about transformation. This has design thinking experts, experienced people in the digital transformation process and they know how to turn ideas into successful products. What we recommend is to start with what we call innovation camps where we discuss startup methods and where we explain how to bring ideas into life.
NK: Are these innovation camps done as a conference with many newspapers at the same time or in some other way?
HB: We can do it in a conference where we explain what we do. The shortest time would be 90 minutes in which they can get an impression of what we can do. However, it’s best to have a one-day workshop conducted in a secure environment with a customer. Every customer has some ideas on what they want to do. When we come into a media house with an innovation camp, they may come up with as many as 200 ideas sometimes.
This is the ideation phase to look at the possibilities and together with the customer we have to choose which ideas are the easiest to implement and will have the most impact. In this one-day workshop you can already create results, which means you may already have a prototype which you would like developed or you can come up with a short list of say three ideas which can be focussed on.
We can even go out together with them to the market and ask if it is something readers or advertising would use or if there is a need for it. It can either be an idea that is carried out within the publishing media house – a new process or a better working environment, something that can improve the process internally or something that they can sell to their customers or clients or a completely new idea.
NK: Is the innovation camp only for signed customers or also potential customers?
HB: It is for both. For instance, we have recently done this in Germany with a huge hospital chain with 3,000 employees and together we developed three ideas and now the next step is to give them a new solution and an offer. Innovation camp gives a publisher an idea of what we can do and what is possible and yes of course we also learn how they think, which is a win-win situation.
NK: Since you work in many regions, what are the differences or commonalities of global publishers and media markets that can be useful?
HB: We have done this many times, sharing our past learnings from other markets. Every time we are with a customer we are talking about their market and our experience in other markets. I think this is one of the benefits in working with ppi, since we are active in so many regions of the world and can usefully transfer know-how and information from one continent to another.
Although there are many parallels, none of the markets are exactly the same. For instance, if we look at the marketing possibilities on how to leverage social media, there is a lot of difference between the US and German newspapers. What we didn’t expect is that US customers are in a situation that our German customers may have been in 20 years ago and there is a lot of room for process improvements. They have several isolated solutions, many things which are fragmented and not integrated so there is a lot of manual work for their publications which is not there in Germany, because of many process improvements over a long time maybe because of the huge cost of labor here.
We just realized that there is a kind second wave of automation in North America. For instance, we just went live with one of our customers there, Advance Local (formerly known as Advance Central Services) with many well-known print and digital properties and forty print sites. Now they are working in a centralized news site and implementing measures for optimizing various processes. I think this is similar to the situation in India where it is also not really about labor costs but for the need to simplify complexity. We still see some growth in print circulation in India where they add local editions and new print sites in local languages. The production is getting more and more complex, which means we need to integrate workflow solutions for all these remote locations.
[In Ron Dawson’s] Newspaper Extinction Timeline (in which the exact years may not be correct since there would no newspapers left by now), you can still see a perspective of the difference in the pace of change or extinction globally. You see some very developed markets with high digital subscriptions but in other markets like Africa and India, you still have high print circulation and the rate of the digitization is picking up. In India you have print circulation that is still growing because new people are reading or papers were not reaching some regions earlier.
NK: I must caution you Hauke, that newspaper circulations in India are not really growing that much and with the new custom duties on newsprint and other economic and media transition factors, there may be some consolidation in the future even if not extinction. Also, mergers and acquisitions take some effort to optimize.
HB: This is also happening in Europe when large media groups buy out smaller companies. This affects our business because many of the larger groups are our customers and after consolidation they can use our help to efficiently integrate their acquisitions.
NK: Do you think media organizations have a good understanding of the cost of technology and its components?
HB: I think if you simply look at the capital and maintenance costs, they have good figures at hand. However, they may not have as good an understanding on the total costs of ownership of a solution. I am not sure that every media manager or how many of them know how much it would cost to set up a new title. Or the indirect costs or how much work I have to do to manage my vendors or how many complaints do I get because of manually entered errors, or how many ads do I have to reject because of our editorial deadline to time to start printing – these may not be as well evaluated.
We know from some of our customers in India that when they introduced the ppi workflow, they were able to increase their ad booking closer to the time of going to press and increase their ad revenue. We also know from Indian customers that there are ads in the paper from a source which is not in the system. There are more such questions and every answer has an effect on the total cost of ownership.
The real answer is that when we are talking to our clients, we try to give them insights that give them different possibilities to add integration or streamline the process. This then gives them the total price of technology.
NK: Are you able to help in all processes – editorial, ad booking, subscription?
HB: This is our competence; we know a lot of workflows and when we come into a newspaper we can look into the situation and see the potential and say that maybe we can save one workflow step.
NK: You say you are very good at streamlining and automating processes. Looking at workflows and some of the pain points, observing and coming up with a solution. Skipping steps. Combining all this but are the solutions unique for every customer?
HB: Actually every customer has the same standard software. We have a lot of room for configuring it for the needs of the customer and only the configurations are special for a customer. There are a lot of benefits from a standard software for every customer so that they all get the updates and that they are part of the new releases. They also benefit from the new functionalities that we may have developed for other customers. This also reduces the maintenance cost and the support from our software support department becomes a lot easier since the software is the same although the processes may differ from site to site. They immediately understand the problem when any customer calls.
NK: Is the software installation done onsite or remotely?
HB: Nowadays most of the installation and configuration can be done remotely by experts in Germany but when you come to a complete new installation, you also need to be onsite. This is for meeting the detailed specifications that were talked about with the customer. There are things that have to be done on site such as training and perhaps fine-tuning. For instance, there are steps that can be done in either of two or more ways so these have to be demonstrated on site and together with the customer a call is taken for the preferred workflow. This fulfillment of their needs can be done better onsite.
NK: What are your ideas about what types of human resources should be developed in-house and which resources should be outsourced? As you know there is also a historical tradition of newspapers everywhere developing their own technology.
HB: Generally most media organizations should be able to fulfill their core business with their own personnel, which can vary between companies. Large newspapers that are offering services for sale or distribution can afford more in-house development. For instance, some large German newspapers provide ad-layout services for other publications so they need to have these resources. It always depends on the core business, but if you look at the technological side, only a few large companies like Axel Springer or The Washington Post who define themselves as tech companies can afford to have a strong focus on digital solutions development in-house.
Although every news media needs to have some technical expertise such as in web development, only a few publishers would be able to develop their solutions completely on their own. This is where industry partners like ppi Media can work very close together with media organizations by helping them in creating and giving them standard solutions for planning, production, editorial and so on but also helping them developing and implementing their individual ideas. This is what we do. We have a lot of standard resources in-house but when we come to a specific project, we are able to help them with creating a specific platform.
NK: With the rise of analytics, optimization and automation of stories and ads with the use of AI and algos to position and time stories, do you think that news media organizations need to have data scientists on board?
HB: Yes definitely, data scientists are needed because news companies have to know who their readers are. They must have people who understand and analyze the data and tell the editors what is working and what is not. They have to know how to read the data.
A key issue is also of removing the silos. How employees are working together is important. Top management has to build cross-functional teams. New products need to combine the resources with small active teams with product managers and designers together – tearing down the walls between departments is necessary to create new ideas and revenue models. Actually, you don’t have to develop any new tools because there are so many that you have to simply put them together to create many opportunities.
NK: Facebook and other technology giants are taking over the delivery and content. In India also, you see consolidation between the distributors and the owners of content. The pipe is becoming dominant. Where do you see this as going? Shouldn’t technology make things easier for smaller and medium papers?
HB: This cuts both ways. The big tech companies could be frenemies since they are offering completely new ways for interacting with their readers. They are doing many new and interesting projects but at the same time they are vacuum cleaners of content. However, newspapers shouldn’t forget that they are creating content and they can create local content. At the same time, because of the large tech companies they are losing touch or contact with their readers.
NK: Is there any chance with technology to take on the big five?
HB: I think this is a big challenge but maybe this should not be the agenda and there are many other possibilities of how publishers can earn money. This can also be a political issue and a very strong idea may be to get some more money out of the large tech companies by taxation.
In Europe publishers have had some very interesting conversations about this. However, in Germany you have a very distributed situation so that the publishers are amenable to working together and perhaps the situation is not as competitive as in India.
NK: What about automation of news publishing? Can publishers add news value and style automatically?
HB: There are new digital platforms using blockchain and even robot journalism for soccer game reporting. Some of it is indistinguishable from those created by humans and it is pretty good and it will likely get better. It may not be good enough for the top tier national leagues but it is good enough for the third and fourth tier regional soccer games where a certain number of statistics and facts can be adequately put together. This can be done in a short time automatically and it is much cheaper.
Automated semantic analysis can bring or make visible all the related articles to a new story as well as the related image database. One can even automatically monitor and analyze what other newspapers are doing on the same event. Thus, a lot of functionalities are provided by AI.
Apart from editorial there are a lot of papers in Germany who are using AI to analyze subscriber churn. This is the value of data whereby you can personalize your response to subscriber behavior. By analyzing all the data you can pro-actively convince leaving subscribers to stay for instance by using loyalty programs or even by interrupting distribution when a subscriber is on vacation. The more the data and information you have, the more you can analyze and act on.
Blockchain is being used for secure payment, and for storage but it is in the early stages. It may offer more opportunities for selling smaller bytes of content and could also potentially be used for identifying fake news. We see some publishers in this area but it is early days. It is of immense interest to publishers. We are also looking for the most relevant use-cases for us to be able to contribute in this area.
NK: In India there has always been a large following amongst newspaper for Quark Xpress and this has recently been rekindled with QX18 and QX19 that are particularly friendly to Indic languages and which can be owned at a one-time cost by publishers. Is ppi Media thinking of working with Quark Xpress for the newspaper layout and other functions?
HB: We had versions that worked with the earlier versions of Quark Xpress but then Adobe InDesign became more and more relevant. However, with Adobe’s subscription model we are seeing greater interest in Quark Xpress. We are very interested in talking to publishers if they are moving in the Quark Express direction. It’s possible we may be able to talk more about what we are doing in this at the WAN-Ifra India event in September.
NK: Any other thoughts for the Indian market?
HB: India is perhaps the third largest market for ppi Media after Europe and North America. We have a good market share among the larger newspapers in India, particularly on the planning, page production and ERP side. We have made a good start on the editorial side with Deccan Herald two years and with ABP this year. I think we will have more. Our AdSelf software for remote ad booking using even a smartphone is an idea that is of particular relevance to this market also.