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Worldwide, news publishers face a “platform reset”
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May 12, 2017, 8:30 a.m.

These Slovak journalists quit their paper and built an independent rival with 23,000 digital subscribers

“We were scared to start a newspaper. We started small…We started with people who were ready to act very honestly and bravely. And then we realized there is a place for us.”

In 2014, staff at Slovak national newspaper Denník SME, one of the country’s most popular, discovered that Penta Investments — a financial group they had regularly reported on — was bankrolling the purchase of a 45 percent stake in the firm that paid their wages.

Penta, whose companies employ over 37,000 people and has assets of €7 billion, had been at the center of the country’s 2011 so-called Gorilla scandal — named after a leaked document — which suggested corrupt links between the company and Slovakia’s government, a charge that Penta denies.

The paper’s editor-in-chief Matúš Kostolný quickly knew he would quit. Targeting a gap in the market for quality, independent news, he and his four deputies launched a rival daily newspaper, Denník N — the N stands for Nezavislost, or independence. (Denník means daily newspaper.)

The outlet attracted €1 million of private investment and advanced subscriptions of around €300,000. They launched their daily website in January 2015, and a printed paper shortly afterward. Now, just over two years later, they are among the top five quality newspaper websites in Slovakia. In a country of 5.4 million people, the paper has 23,000 paying digital subscribers, the most nationally, and 110,000 registered readers.

“Our journalists could get paid more money elsewhere quite easily, as they are respected as the best on the market,” says Kostolný. “But they aren’t leaving. They are bound to the newspaper. They are part of the story. They created the story. They are doing it because it’s part of their purpose. They are doing it for themselves.”

Such independent ventures have some regional precedent. Staff from the Czech daily newspaper Mlada fronta Dnes launched the weekly magazine Reporter in September 2014 after businessman Andrej Babiš, now the Czech Republic’s finance minister, took over their publication in 2013. Staff from that country’s oldest daily newspaper, Prague’s Lidové noviny, set up political journalism website Echo24 after Babiš’s business Agrofert bought their title the same year.

In 2013, Media and Democracy in Central and Eastern Europe, a research project funded by the European Research Council, highlighted foreign media ownership retreating from the region after the 2008 financial crisis, with local businesses stepping into the vacuum. This has placed newspapers’ independence under pressure.

Denník N’s autonomous setup has advantages, says Kostolný. “We don’t count on advertisements or money from print, giving us an independence which is unique,” he says. “I definitely talk more to our readers than I did before. I try to respond to every email or letter I receive and every discussion on Facebook. We are very transparent.”

Readers receive interim reports on the newspaper’s finances and plans. “There is no company or political group, there is nobody stepping through my door asking for nice words,” Kostolný said. He says he has been inspired by other independent operations like Dutch news website De Correspondent, which launched in September 2013 after crowdfunding €1 million in eight days.

Most of Denník N’s revenue comes from digital subscriptions, and the company has had a positive cash flow since July 2016. The publication’s head of online is Tomáš Bella, another former Denník SME staffer who co-founded Piano Media, the precursor to Piano, the largest provider of metered paywalls worldwide. A partial paywall limits access to around 80 percent of Denník N’s stories.

“The business model works so we don’t need any additional funding apart from our standard revenue,” says Lukáš Fila, who had been Denník SME’s deputy editor-in-chief and is now the chief executive of Denník N’s publisher, N Press.

Google’s Digital News Initiative announced last year it was funding development of the newspaper’s digital subscription platform, which Fila says amounts to €300,000 over two years. Denník N’s 50 staff members, most of who moved from Denník SME, are shareholders owning 49 percent of N Press, with the rest belonging to private investors who have no editorial control.

According to Fila, the brand has established itself swiftly in a crowded newspaper marketplace, where the bestselling tabloid Nový čas has a circulation of 120,000. Denník N’s daily printed sales are just a few thousand copies, overshadowed by its web presence, with around 120,000 unique users daily.

“Our main focus is on longer stories,” says Fila, emphasizing that they are hardly any wire service or mid-length articles on the website. “A lot of original added value has been our strategy from the beginning. People are not willing to pay for things they can read elsewhere.” Journalists receive data on their articles daily, broken down on how well their work converts to subscriptions and hits: “It’s something we follow very closely.” Its in-depth articles attract the most subscribers; domestic politics and economic stories are key strengths. Big recent articles relate to the European refugee crisis, tax fraud, and police corruption, often leading the country’s news agenda.

The liberal paper has had frequent run-ins with the Slovak authorities. In May 2015, after Denník N published satirical stickers of prime minister Robert Fico, government departments were instructed to “cut all communications” with the publication citing “long-term tendentious reporting”. The newspaper lodged a complaint with the Constitutional Court of Slovakia and the decision was overturned.

Fila is circumspect about replicating their rise elsewhere but says their flexibility has been one of their key advantages. “People in Slovakia are used to paying for digital content,” he concludes. “We had expertise. It’s a huge plus having a company without too many layers of management, or tradition to prevent you from experimenting. There’s a very direct link between the quality of the journalism and the success of the business. The team spirit is very difficult to recreate. The uncertainty of leaving and starting something new is a huge part of our achievement.”

Kostolný agrees. “We were scared to start a newspaper. We started small. We knew if we left the paper we used to work for, there would be no real independent newspaper in the country. We started with people who were ready to act very honestly and bravely. And then we realized there is a place for us.”

Photo courtesy of Denník N.

POSTED     May 12, 2017, 8:30 a.m.
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