The European Digital News Market: Confronting emerging innovations & new practices
Michael Thelen
Editor: Marlen Komorowski
The Covid-19 pandemic has only accelerated many of the past decade’s long-term trends in the European digital news market; namely, media that is progressively digital, mobile, and platform-driven. In an everchanging market, news publishers must respond to recent disruptive innovations which have revolutionised the way in which news is made available and consumed. Its success is dependent on the uptake of several innovations and whether they can be leveraged effectively. This White Paper outlines the principle shifts presently occurring in the European digital news market.
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1. Out with the old, in with the new
Europe is digital: in the wake of the COVID-19 crisis, digital adoption in Europe increased from 81% to 95% between 2019 to 2020 — a shift that would have otherwise taken two to three years in normal circumstances.[1] More specifically in the news sector, the pandemic has sped up several of the long-term trends that have impacted the European digital news market, to which news publishers need to respond and adapt to accordingly. Currently, 72% of Europeans use the internet to access the news more than once a week and 45 % every day.[2] However, only around 15% of people in Europe actually pay for online news.[3] At the same time, quality news reporting is increasingly going behind paywalls, as print and online publishers turn to subscription, membership, and donation models to move away from their traditional online advertising model (a space that has become dominated by the likes of Google and Facebook). Even more, revenue generation became a much more pertinent issue during the first COVID lockdowns in Europe (March 2020), when the media market experienced a 30-50% drop in advertising revenue.[4]
Considering trust in the news, the COVID-19 pandemic might have played a role in the increase in trust in traditional news sources during this time, with an increasingly visible trust gap between conventional news and aggregated news on social media, due to concerns around fake news and online disinformation. At the time, public service media websites (e.g. VG in Norway, TV2 in Denmark) also reported increased consumption. The above demonstrates how the digital news landscape is on the one hand expanding into new spheres, yet also facing challenges amidst accelerated digitization and audience changes. The following sections will exhibit how the digital transformation has transformed the news market in recent years and which future trends are set to make an impact.
2. If you can’t beat them, join them
At present, the news publishers have had to enter and compete in the areas of three main emerging innovations: podcasts, social media and news aggregators.
Podcasts
There has recently been a rise in news podcasts, which in this case would be audio(-visual) news broadcasts that are digitally stored and made available for download.[5] Generally, podcasts have increased in popularity during the pandemic, with higher at-home consumption despite overall less people commuting daily (which is often regarded as the peak time for consuming podcasts). While the overall demand for podcasts in Europe is still not growing at the rate of supply, podcasts are particularly popular in Ireland, with 41% having listened in the past month, followed by Spain (38%), Sweden (37%), Norway (37%), and fewer listeners in the Netherlands (28%) and Germany (25%).7 Recently, podcasts have attracted large amounts of global investment,[6] and the prominence of audio(-visual) podcasts has further increased amidst the pandemic; however, its growth is now plateauing. The podcast market in Europe is led mainly by Spotify, YouTube, Apple, Google and public service broadcasters (such as in Germany and UK). Currently, on a broader European scale, Spotify is the podcast market leader.[7] Some European news publishers which have news podcast offerings on Spotify include but are not limited to: the BBC, Financial Times, The Times, The Economist, NOS and VRT.[8] This is a part of some public service broadcasters’ multi-channel strategy (e.g. BBC and VRT), as they opt to spread their offering to third-party platforms, e.g. Spotify, in addition to their own platforms. Although podcasts are generally a recent development, some technical innovations in the space are underway, such as Spotify combining a visual element with its podcasts for a more immersive user experience.[9] Lastly, 17% of Europeans to date still have no knowledge of a podcast, which further represents an untapped market in this area.[10]
Social Media
As part of the general shift towards using smartphones for accessing news,[11] there is a growing trend of consuming news via social media. In 2019, 65% of the 2.4 billion worldwide internet users bypassed conventional news mediums and consumed their news from either Facebook, Twitter, YouTube, Snapchat or Instagram.[12] This trend is more pronounced among the younger generation and the lower-educated. More precisely, those under 35 years old worldwide are consuming news via social media platforms almost twice as frequently as direct mainstream sources. Although trust in social media news is much lower than conventional news, many Europeans are still using social media as a news source, with 41% of Europeans accessing news via Facebook, and 22% via YouTube. This is more pronounced in countries such as Italy, where the share of individuals using Facebook for news is 50%.[13] Although mainstream news has concentrated its efforts into expanding onto Facebook and Twitter, internet personalities (so-called “influencers”) remain prominent news sources on Instagram, Snapchat and TikTok – all of which cater to a younger audience.[14] Not only does this increase the potential for misinformation, but this has also opened up discussions on whether the mainstream news has lost its vigour at the cost of (amateur) influencers.
News Aggregators
Equally importantly, news aggregators are on the rise as easy access points to a large variety of news sources, which are often hyper-personalised and localised to user profiles.[15] Here, the space is mainly dominated by Apple News, Google News and Yahoo! News. In Europe, the proportion of people that use Apple News has almost tripled in the last five years. Some aggregators, e.g. Apple News (notably not Google News nor Yahoo! News), operate a freemium business model, whereby articles from certain publishers are free with the possibility to pay a monthly subscription to access premium news content. However, these news aggregators have come to prominence at the cost of traditional news publishers. As newspapers in Europe struggle with substantial losses in advertising revenue due to news aggregators, newspapers such as Spain’s El País and El Mundo have started to enact stronger subscription-based paywalls on their sites. Notwithstanding, the presence of paywalls has to date not fundamentally changed the proportion of individuals who pay for online news in Europe.[16]
Considering who pays for digital news, there are considerable disparities across Europe (see Figure). On average, 28% of people in the Nordics pay for news, up 2 percentage points from last year.[17] Specifically, Norway remains the world leader when it comes to purchasing digital news (45%) followed by Sweden (30%), Switzerland (17%), the Netherlands (17%), France (11%), and Germany (9%).7
Additionally, running paywalls on mainstream sites run the risk of further solidifying the trend of online news consumption via aggregators, as there is a certain resistance against paying for online news.[18] On the other hand, aggregators could be seen as a complementor to mainstream channels and useful for directing traffic to mainstream news sites’ content. For example, a study showed that a closure of Google News would cause a 20% drop in overall news consumption and a 10% drop in consumption on mainstream news sites.[19]
Additionally, the prominence of news aggregators has created discussions on copyright infringement and fair remuneration principles for news content creators in Europe. Following individual member states medias’ clash with Google News over proper remuneration for hosting their content, notably in Spain and France,[20] the EU’s Copyright Directive was passed in 2019. The Directive stipulates the publishers’ right to bargain for fair remuneration concerning neighbouring rights (Article 13). Although the Directive is still being transposed by some member states, some effects have already taken shape, with Google News recently making remuneration deals with more than 300 European news publishers for transmitting their content on its platform.[21] It remains to be seen whether and to what extent news publishers in Europe can recoup lost advertising revenue.
3. The future is here
Increasing economic pressure and the dependency on global platforms characterize the European digital news market at present.[22] News companies that offer ‘free’ digital news therefore will have to focus on profitability and the optimization of revenues. Bhandari (2020)[23] summarizes future trends that are set to deeply impact digital news’ business models in the next decade:
- Future distribution: Through ongoing technological advancements, there are a variety of ways to distribute content to consumers. With increasing competition for consumers’ attention, their demands and expectations are rising. Video-on-demand (VoD) has proven to be a mega-trend in the last decade. Especially among younger generations, the rise of streaming on mobile devices is apparent. Watching videos instead of reading long explanations has become the new norm. Like VoD, the popularity of live streaming is growing as it represents an engaging way of distributing content. Here, interaction with consumers and the answering of questions in real time are part of the value proposition.[24]
- Future mediums: The news industry is facing audiences with diminishing attention spans and selective blindness towards traditional distribution strategies; the test of whether newspapers can offer the consumer a news experience rather than merely focusing on content will become increasingly important. The use of augmented reality (AR) and virtual reality (VR) represent exciting new means to engage consumers. Additionally, the Internet of Things and Interactive Public Artifacts will reach consumers at different times during their days; integrated screens that display digital news content in cars, wallpapers, wearables or even fridges.[24]
- Future advertising: AI-supported media scanning, whereby text or video content is scanned by an AI system that labels the context (contextual media) or video sequence (video intelligence) and links it to potential advertising topics, provides a multitude of data for digital news platforms to improve their advertising services. This brings about new forms of personalised advertising, which could also serve as a critical source of advertising revenue.24 Algorithm-based advertising has been implemented on a large scale in the past years and will only continue to grow. Digital news platforms can make use of programmatic ad arbitrage by linking user data, publisher data and third-party data to further refine their advertising output. When it comes to VoD or live streaming, new ways of ‘dynamic ad insertion’ and ‘real time campaign optimization’ will play an important role in next-generation consumer targeting.[24]
4. Conclusion
To sum it up, the news sector is increasingly confronted with several emerging innovations, to which it needs to answer to. The changes taking place in the digital news market revolve around a new audience commodity: the digital audience, who has both traditional and new media at their disposal and whose loyalty for specific channels is predictable and everchanging. Overall, their attention is increasingly limited, they have a propensity to express distrust in the news and they prefer entertainment formats and free content. We have entered the so-called “attention economy”, whereby content providers have to make the trade-off between producing excellent quality of content or an extremely high quantity of new content to entice consumers, often at the cost of the smaller news companies with less resources at their disposal.[24] Additionally, the incorporation of future trends, such as AR/VR, AI-enabled advertising, IoT devices and VoD only seem to make the digital news space more intricate. It remains to be seen whether the digital news sector can accommodate and adopt these technologies to their own advantage.
| Recommendation 1 –LEARN BEST PRACTICES FROM OTHER COUNTRIES | |
| In a fast-changing digital news sector which involves adopting new practices, stakeholders are recommended to examine others’ success stories regarding their implementation. For example, the Nordic’s success in having customers pay for digital news, Ireland’s success with podcasts or El País’ effective campaign to erect paywalls. | |
| Recommendation 2 – INCREASE SOCIAL MEDIA PRESENCE AND NEW FORMATS | |
| The digital audience, who is also younger, are increasingly drawn to “bite-sized” entertainment digital formats. News publishers can capture this demographic’s shorter attention span by incorporating short video formats, such as TikTok videos or Instagram Reels. By erecting new formats and collaborations, news publishers’ audience losses can be recouped. | |
| Recommendation 3 – REMAIN AT THE FOREFRONT OF EMERGING INNOVATIONS | |
| AR/VR, interconnected IoT devices, AI-enabled advertising and VoD present new growth opportunities in the digital news space. To configure an effective positioning, it is recommended that news publishers experiment with these new methods of production and distribution. In turn, one can also establish a first-mover advantage in an early market. |
Footnotes
[1] Fernandez, S., Jenkins, P., & Vieira, B. (2020). Europe’s digital migration during COVID-19: Getting past the broad trends and averages. See https://www.mckinsey.com/~/media/McKinsey/Business%20Functions/McKinsey%20Digital/Our%20Insights/Europes%20digital%20migration%20during%20COVID%2019/Europes-digital-migration-during-COVID-19.pdf
[2] KEA 2021. Research for CULT Committee – Europe’s media in the digital decade, European Parliament, Policy Department for Structural and Cohesion Policies, Brussels
https://www.europarl.europa.eu/RegData/etudes/STUD/2021/690873/IPOL_STU(2021)690873_EN.pdf
[3] Press corner (2022). Speech by Commissioner Breton at European News Media Forum. European Commission.
https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_21_6432
[4] Euromedia Research Group (2020). CoViD-19 and the Media: Devastation or Renaissance?
https://euromediagroup.org/mdm/policybrief01.pdf
[5] Cambridge Dictionary. (n.d.). Podcast. https://dictionary.cambridge.org/dictionary/english/podcast
[6] British Broadcasting Corporation. (2021). Annual report and accounts. https://downloads.bbc.co.uk/aboutthebbc/reports/annualreport/2020-21.pdf
[7] Reuters Digital News Report 2021 (2021). Reuters Institute for the Study of Journalism.
https://reutersinstitute.politics.ox.ac.uk/digital-news-report/2021
[8] Spotify. (n.d.). News & Politics. https://open.spotify.com/genre/news_politics_v2_podcast-page
[9] Perez, S. (2021, October 21). Spotify opens access to video podcast publishing to Anchor creators. TechCrunch; TechCrunch.
[10] Reuters Digital News Report 2021 (2021). Reuters Institute for the Study of Journalism.
https://reutersinstitute.politics.ox.ac.uk/digital-news-report/2021
[11] Watson, A. (2021, July 5). Smartphone news use UK 2021. Statista. Retrieved May 17, 2022, from https://www.statista.com/statistics/297831/mobile-news-preferences-uk/
[12] Reuters Digital News Report 2020 (2020). Reuters Institute for the Study of Journalism. https://www.digitalnewsreport.org/survey/2020/
[13] Statista. (2021, June 18). Facebook usage for news in European countries 2020. https://www.statista.com/statistics/298038/platforms-used-to-share-online-news-uk/
[14] Reuters Digital News Report 2021 (2021). Reuters Institute for the Study of Journalism.
https://reutersinstitute.politics.ox.ac.uk/digital-news-report/2021
[15] Isbell, Kimberley, The Rise of the News Aggregator: Legal Implications and Best Practices (August 30, 2010). Berkman Center Research Publication No. 2010-10, Available at SSRN: https://ssrn.com/abstract=1670339 or http://dx.doi.org/10.2139/ssrn.1670339
[16] Reuters Digital News Report 2021 (2021). Reuters Institute for the Study of Journalism.
https://reutersinstitute.politics.ox.ac.uk/digital-news-report/2021
[17] Nordicom (2021). Nordic news outlets highly trusted and lead in paying subscribers https://www.nordicom.gu.se/en/latest/news/digital-news-report-2021-nordic-news-outlets-highly-trusted-and-lead-paying-subscribers
[18] Reuters Digital News Report 2021 (2021). Reuters Institute for the Study of Journalism.
https://reutersinstitute.politics.ox.ac.uk/digital-news-report/2021
[19] Athey, S., Mobius, M., & Pal, J. (2017). The Impact of Aggregators on Internet News Consumption.
[20] Rosemain, M. (2021, February 12). Exclusive: Google’s $76 million deal with French publishers leaves many outlets infuriated | Reuters. U.S.; Reuters.
https://www.reuters.com/article/us-google-france-copyright-exclusive-idUSKBN2AC27N
[21] Euronews. (2022, May 11). Google is paying more than 300 publishers in the EU for news with more on the horizon . Biztech News; Euronews. https://www.euronews.com/next/2022/05/11/google-is-paying-more-than-300-eu-publishers-in-the-eu-for-news-with-more-on-the-horizon
[22] Meese, J., & Hurcombe, E. (2021). Facebook, news media and platform dependency: The institutional impacts of news distribution on social platforms. New Media & Society, 23(8), 2367–2384. https://doi.org/10.1177/1461444820926472
[23] Bhandari, K. (2020, March 30). 4 emerging trends and challenges shaping the future of the media industry. https://www.nagarro.com/en/blog/emerging-trends-shaping-future-media-industry
[24] Hindman, M. S. (2018). The internet trap: How the digital economy builds monopolies and undermines democracy. Princeton University Press.
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*This White Paper is part of the Student White Paper Series on European Media Markets. It was written with further contributions by Tabea Wagner, Paul Dressler and Nithin Nath.
The student White Paper Series is part of the European Media Markets course at the VUB. The course was headed in 2022 by Prof. Dr. Marlen Komorowski (marlen.komorowski@vub.be)
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