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Feb. 15, 2012, 11 a.m.

Looking to Europe for news-industry innovation, Part 3: The Swiss “mikrozeitung” small community news model

In the third and final part of our series on European models of news industry innovation, Ken Doctor looks at a small community publisher in Switzerland that has a local model he’s trying to spread through franchising.

In the first two parts of this series, we’ve focused on Schibsted’s classifieds and online services innovations and on Sanoma’s pioneering digital circulation initiatives.

Today we look at a small community news model. That’s hugely important. Much of the news world focuses on the twists and turns of national/global news players and of largely devastated metros. But smaller community papers deliver much of the news to readers in the U.S. and across the world.

Gossweiler Media, for that reason, offers an intriguing model, built on straightforward arithmetic. It’s a family story, as newspapers were a family story for centuries. Rolled up and corporatized in the 20th century by chains, we’re now seeing the early sprouts of individuals and families once again expressing ownership interest. If that movement continues to pick up steam, examples such as this small Swiss news operation are instructive.

Urs Gossweiler, CEO of Gossweiler Media AG, is the grandson of a newspaper founder. Running the company out of Brienz, a large hamlet in Switzerland, Gossweiler’s newspaper/news site Jungfrau Zeitung has become well known in European newspaper circles.

Their hallmark: focusing on news creation and community service first, divorcing the news business from the means of distribution. Their model: low costs, high margins — a model that Gossweiler is now franchising. I spoke with him at last fall’s WAN-IFRA World Newspaper Congress in Vienna. He spoke on an “Opportunities” panel there, one of his many speaking engagement spreading the gospel of news-without-paper throughout Europe.

It’s not that Gossweiler doesn’t like paper; he just doesn’t feel wedded to it. Jungfrau Zeitung publishes two papers a week — on Tuesday and Friday — but it has long supported non-print products, and now offers a set of robust mobile apps in addition to its thoroughly updated website.

Gossweiler was multimedia before it was called multimedia. In 1983, at age 14, he founded a youth-radio outfit, purposely taking a twist in his family’s saga. “My father was a capitalist, and I was a communist,” he says with a smile.

“My father bought the first Macintosh computer. It was like taking down the Berlin Wall.” Today, Gossweiler Media has grown from its early days as a print publisher of the Brienzer. It publishes its “mikrozeitung”, or micro-newspaper, twice a week in print — and throughout the day online. Jungrau Zeitung serves an area of about 45,000 people — small enough for people to feel a sense of real community, but large enough to create a market. (Curiously, that’s around the size of many of Patch’s markets. As Patch head Warren Webster has noted, his company can create lots of local news at a fraction of traditional seven-day print costs.)

The mikrozeitung example, then, gives traditional businesses a path of thinking and acting differently about their own transitions. Thinking differently includes everything from press ownership to ad selling to staff responsibilities.

Jungfrau Zeitung is profoundly local. “We have no local section,” says Gossweiller. “We are purely local, with separate sections for politics, sports, arts and classifieds.” Gossweiler Media makes this point cleanly on its own site, showing a hierarchy from the global International Herald Tribune to the national Neue Zürcher Zeitung to the local Jungfrau Zeitung.

At WAN-IFRA last fall, Gossweiler showed a photo of Barack Obama and noted: “This man has never been in our newspaper.” He switched to a picture of the local mayor: “This man is always in the paper.” The message: Use others for the rest of the world; for local, depend on us.

Most importantly, it sells advertising in a totally integrated way. When advertisers buy ads, they’re forced into a combination of print, online and, newly, mobile inventory. That inventory is allocated by formula. “It used to be they’d say ‘we’re buying print, and we’ll take online.’ Now they say, we’re buying online, and we’ll take print,” says Gossweiler. While its print circulation (now around 8,800) is in decline, its overall reach has grown, now including 57,000 monthly unique visitors.

To that end, the company sold its presses way back in 1994 and began outsourcing that work. “A lot of publishers are not publishers,” he told me. “They are printers.”

Given the new economics of the business, Gossweiler says he earns more than a 30 percent profit — a number that’s led him to begin franchising the business to other communities. Where smaller newspapers were bought up by the Gannetts of the world in the late 20th century, Gossweiler is trying to spread his model through a different model. The company launched its first licensee last year, in a neighboring town, and the company is now actively pitching other potential publishers in Austria and Germany.

For $250,000 a year, franchisees receive a package of services, ranging from marketing to its self-built technology platform named G-OS. The first licensee is a consortium of 40 local owners, publishing Obwalden und Nidwalden Zeitung. No single investor owns more than 8 percent of the company, making it itself an intriguing model of what ownership of local “newspapering” could be about in our hybrid era.

Behind the scenes, the organization of Gossweiller Media parallels that of big news organizations that have won headlines transforming themselves. Each micro-newspaper sports a staff of 15: Eight editors, four ad sales people and three producers.

The company recently won a SwissCom Business Award for services, and that award noted as much about how slickly multimedia journalism is produced, as how it is distributed:

The media company impressed the jury with the innovative and integrated approach…The solution enables journalists to produce a fast and extensive report at the scene of an event without technical overheads and to publish the contributions online. Journalists can thus produce multimedia coverage by integrating text, pictures and web TV. This is made possible by the award-winning combination of a smartphone, laptop, fast mobile data connection and a fibre-optic connection with a workflow system developed by Gossweiler Media.

All Gossweiler’s journalists produce video in this multimedia landscape. The current production pace is two per day for the site, or about 14 video segments a week. Jungrau Zeitung’s iPad app won Apple approval in November; it builds on mobile-optimized smartphone products. Gossweiler says building out in HTML5 is a next priority. The company also produces a weekly 12-minute TV show — the Funky Kitchen Club — which is both webcast and broadcast.

Business and revenue models

The microzeitung business model appears fairly straightforward. As offered to potential franchisees, each local media site, serving a population of about 45,000, would run an annual budget of 3 million Swiss francs. (A Swiss franc is worth about US$1.08.) Here’s the breakdown:

  • How the budget gets allocated: 1.5 million Swiss francs for people costs, 1 million for tech, print and delivery costs, 250,000 for “general costs.” Each licensee also pays 250,000 Swiss francs annually for the license/technology/marketing services package.
  • Gossweiler says revenues come in at 4 million francs, which would leave franchisees with a profit of 1 million a year.
  • Those numbers line up well with the numbers Gossweiler says he is earning at Jungfrau Zeitung: a profit margin of over 30 percent.
  • Jungfrau Zeitung charges 165 Swiss francs a year for a one-year, all-access subscription. Gossweiler doesn’t charge separately for digital access, believing that “people won’t pay for news because it’s nothing you want to collect.”

    Key metrics

    • 30-percent-plus profit margin.
    • 45,000 target audience potential and service area.
    • 250,000 franc annual license fee for franchise package.

    Takeaways for publishers:

    • Advertisers are forced to buy across all media. With a two-day-a-week print publishing schedule, the mikrozeitung model shows how bigger dailies dropping print days, first to six-days-a-week (some MediaNews announced they were doing so recently) and then to fewer, can move their advertisers along with them.
    • Keeping costs down, and concentrated in a multi-role staff, breaks the old newsprint/newsroom model. Smaller newspapers, stripped of much overhead, operate more efficiently.
    • We see an evolving new formula here that could work in Brighton or Braintree as well as in Brienz. A consensus has evolved around the content and ad-selling parts of the enterprise as being the core of the next-generation news enterprise. Mikrozeitung provides one more example of that model in action.

    Urs Gossweiler photo by Beat Rechsteiner.

    POSTED     Feb. 15, 2012, 11 a.m.
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