The FT's warning to its media rivals: 'If you're trying to play a game of scale, you're going to lose'
As the Financial Times uploads animated GIFs onto its Instagram page while rapidly expanding its video production team for Facebook Live streaming and YouTube documentaries, it has a chilling prognosis for much of the rest of the British news business.
For although the FT is embracing social media as part of its “Reach & Return” programme of ﬁnding thousands of new readers and drawing them into subscriptions, the view of the Pink Un’s leading strategic thinkers is that news organisations chasing raw audience scale as a means to advertising income are on a perilous path. And in the UK, that’s much of the industry.
The FT’s social media experimentation is founded on a digital subscriber base of 587,000 (or nearly 800,000 sales, including print buyers). “When I look around other sites now I am very glad that we have a subscription business – I wouldn’t want to be a site that didn’t,” says Robert Shrimsley, managing editor of FT.com. “The advertising model on its own doesn't seem to me one that will sustain the kind of serious quality journalism that we are in the business of providing. We see ad blockers, we see the downturn of display advertising in general.” Most of all, he sees Facebook “hoovering up so much of the advertising revenue” generated by openly distributed news content.
Jon Slade, the FT’s chief commercial ofﬁcer, is even more stark in his warning. “I've seen data recently that says that of all the pages on the internet less than one per cent of them are from newspapers – the vast majority of time spent is with social channels and they are always going to be much bigger than you are – so if you’re trying to play a game of scale then you’re going to lose.”
Which is not to say that the drawbridge is being raised at One Southwark Bridge Road. Shrimsley, whose insights are occasionally interrupted by the John Coltrane’s Blue Train ringtone on his mobile, talks of an “open approach to the ecosystem around us”, which means the famous old title is even experimenting on WhatsApp.
Most obviously, the FT is focusing on video. It has a ﬁlm studio on its fourth ﬂoor and a 14-strong video team (including three in the US, and one in Asia). Under its FT Features brand it has made two longer-form pieces (The End of the Chinese Miracle on migration, and Rhino Poaching: inside the brutal trade). More of these high-quality productions are in the pipeline. It has worked with independent producers on ﬁlms about Brexit and the US elections.
“We are expanding,” says Shrimsley. “We are looking to really understand and script and have a proper exec producing process, rather than say we’ve got a big story, let’s send a [ﬁlm] team out.” He does “not rule out” the possibility that the FT will strike a deal with a TV partner. “Conversations happen,” he says.
In collaboration with David McWilliams, the Irish economist and co-founder of the Kilkenomics festival, the FT has launched a new animated video series on economics called, not Pink FT, but Punk FT. “There are two words which don’t obviously sit together,” Shrimsley concedes. Nearly 80 per cent of FT video runs outside the main website, because its primary function is promoting the FT brand. “Video for us,” says Slade, “has been about audience development rather than direct advertising monetisation."
From the early days of online journalism, the FT has been regarded as a model to admire and learn from. But in April 2015 it abandoned its former metered strategy (allowing a set number of articles for free before asking for a subscription) in favour of £1 monthly trials. Shrimsley compared the metered model – which allowed too many users to resist buying a sub – to “opening a bed shop and people were living in it – at some point you actually want them to buy the bed”. Monthly trialling has proved more effective in converting what the FT terms “prospects” into paid subscribers.
The paper promotes itself online by allowing free access to some articles over 30 days old (such as explainer pieces on the EU referendum). It gives “one-click-free” direct access to those arriving on FT.com from Google, Facebook, Twitter, LinkedIn or Reddit, and seeds free content on news-based platforms Facebook Articles, Google Accelerated Mobile Mages (AMP) and Apple News to allow new audiences to taste its wares.
For all this, the FT remains wary of giving away too much content on social and undermining its subscription model. “No publisher, the FT included, has ﬁgured out the extent to which distributed content is bringing them incremental value to their business,” Slade admits. “Without any question the opportunity to reach the audience is profound – whether that comes at too high a price when you are ceding both distribution and monetisation to another platform remains to be seen.”
What differentiates the FT in the market place is its access to data, allowing exceptional insights into its audience’s interests and reading patterns. Shrimsley says the organisation never takes an “important decision of a strategic nature” without the input of chief data ofﬁcer Tom Betts and his team, which has introduced the Lantern dashboard system to the newsroom, giving every FT journalist access to detailed analytics on who is reading their stories.
The FT runs on data. Slade says: “It’s a central tenet of our business model that we have a direct relationship with the customer and it underpins every decision that we make around partners that we work with.”
This means problems with Apple, the most security-conscious of the Silicon Valley giants. When the FT launched an app it pulled it off the App Store because it wasn’t being given access to important data. Despite this, Shrimsley says the FT “was very keen on” the Apple News service for publishers when it launched in the UK in October. But the relationship continues to be difﬁcult.
Shrimsley says: “We are not getting the data we need at the moment and that’s limiting the amount of engagement – there’s only so far we can take it.” The FT posts only around six articles a day on the platform. Slade doesn’t sound overly optimistic that things will improve. “The FBI cannot get data out of Apple, so it’s going to be hard for news publishers to do that… it’s fair to say we get less data from Apple than we do from other platforms.”
The paper has an “evolving” relationship with Facebook, which in Shrimsley’s view is the key player. The FT has 3 million followers on the site. “When people talk about distributed content and the power of platforms I think they’re talking about Facebook,” he says. “Facebook is giant in this ﬁrmament – far more important and powerful than anybody else.” Facebook-owned Instagram (where the FT has 194,000 followers) is taking the paper beyond its “natural audiences” and connecting with “more women and younger readers – both areas where we want to push harder”.
Google, once derided by a Wall Street Journal editor as “tapeworms in the intestines of the internet”, is now regarded by the FT as a best buddy. “We have built a very strong relationship with them,” says Shrimsley. “They built a subscription channel within AMP, in a way validating subscription news sites which is very important to us. I’m not going to pretend that Google just rolled over and gave us everything we wanted but we felt we were part of a very constructive dialogue in which they took on board what we needed and appeared to try to help.”
Unsurprisingly, there is positivity towards Nikkei, the Japanese news media group which bought the FT last July for a stunning £844m (35 times the paper’s adjusted operating income). Shrimsley goes so far as to suggest it’s a better ﬁt than the previous owners, publishers Pearson. “I don’t want to be critical of Pearson, they were very supportive owners for a long time, but there’s a world of difference between being owned by somebody for whom you are a sideshow and being owned by somebody in the same business as you.”
The FT is not immune to pain. An internal memo, leaked to Politico in April, warned of “daunting trading conditions in 2016”. It set out areas for saving money, including cuts to travel and entertainment expenses. At a recent City breakfast a senior FT journalist appealed to attendees to “support independent journalism” by buying tickets for an FT event. “When even the FT is reduced to begging, you know the news business is in trouble,” said one.
The FT is trying to ﬁnd more effective forms of advertising. Last week it bought a controlling stake in Alpha Grid, a video specialist branded content company that will strengthen its FT² content marketing studio, founded last year. Shrimsley accepts that the FT, for all its subscriber base, still needs advertisers. “We can be hit by ad blockers like anybody else but it’s not the whole ball game,” he says. “I think it’s prudent to see if you can hold your costs a bit here and there. We are not feeling it too badly in editorial – but this is the world we are in.”
A former news editor of the paper (he is part of a journalistic family and his late uncle, Bernard Shrimsley, was editor of the Sun and the Mail on Sunday), he remembers harsher economic times. “I was here ten years ago when competitors would enjoy referring to us as ‘the loss-making FT’. That’s a bad place to be if you’re a business news publication. We now make a proﬁt and don’t intend to stop making a proﬁt.”
He hopes to expand the newsroom and covets more market share in the Wall Street Journal’s backyard. “Nobody has an impenetrable fortress,” he says. “People in America already understand that the FT provides interesting and innovative journalism and that we have a global perspective rather than an American perspective looking outwards. I absolutely believe there’s a lot more we can do in the US.”
The FT last week backed the Remain campaign in today’s EU Referendum vote with an editorial which argued: “This is no time to revert to Little England.” Commercially and editorially, the paper considers Europe to be “part of our backyard”, says Shrimsley. “We are clearly originated as a British news organisation but I think we think of ourselves as a European news organisation as well.”
Later this year, the FT will ﬁnally launch its new website, which it has been developing “in plain view” for over a year with the interactive help of thousands of subscribers. Shrimsley says it will combine user-personalisation with editorial curation. Today’s FT must compete not only with other news, he says, but “with Candy Crush and the episode of Game of Thrones that you downloaded to watch on the train”.
In 2018, Nikkei will symbolically take the 128-year-old paper back across the Thames to its old headquarters, Bracken House, named after its modern founder Brendan Bracken and made from pink Staffordshire stone to match its pages.
Shrimsley says the print edition – which has fallen in circulation to 203,000 but makes a proﬁt from sale price alone – still has a future. “We are very fond of the newspaper and it’s also one of the greatest ambassadors for the website,” he says. “People walking around with the pink paper is the best advertising we could have.”
That and the Instagram GIFs, the WhatsApp updates, the Facebook posts, the YouTube clips…
The News Business column is published on The Drum each Thursday. Follow Ian Burrell on Twitter @iburrell