Piano lessons for Central Europe's media
Two entrepreneurs are breathing life into news media in some of the EU's newer members, including Slovakia and Slovenia, writes Marius Dragomir.
Marius Dragomir is a London-based media analyst and writes the Fourth Estate column for Transitions Online, where this commentary was first published.
"The Internet will be to my generation of journalists what alcohol was to our predecessors: a destroyer first of thought and then of productivity, destructive of both the capacity to reflect and to react. Just like alcohol, it seems an inevitable part of the job. Stories are found on the net just as they once were in bars. This won't kill journalism, or thought, of course. There were always many journalists who functioned drunk.”
That’s a quote from the blog of Slovak journalist Tomáš Bella.
Bella belongs to that generation of journalists who experienced the bitter transition to democracy in Eastern Europe. For six years until 2006 he covered the technology beat for the largest serious Slovak daily, Sme, before he moved on to handle the daily’s online operations.
Five years later, he moved on again, helping bring to Central Europe a new business model that could save some of the region’s media from sinking.
When Piano Media, where Bella is now chief executive, brought together all major Slovak publishers under the same roof in May 2011 to sell their content online, I, like many others, was sceptical that it would succeed.
But during the past year, Piano Media has met targets, expanded into Slovenia, and even gotten a hefty infusion of capital. Its launch into the 38-million-strong Polish market weeks ago puts the company in a new league.
Co-founded by Bella and Marcel Vass, a Slovak entrepreneur with advertising expertise, Piano Media bundled the content of a dozen of the country’s largest publishers, who produce more than 50 websites. In January, the company expanded to Slovenia, signing a deal with eight Slovenian publications, including all the major dailies.
In July, the company began operations in Poland, where it sells content from seven major media outlets. The Polish Piano Media paywall offers 42 websites that include mainstream newspapers, magazines, and even the Polish public service radio.
Piano Media is now in talks with publishers in a dozen European countries to expand its business. It hopes to launch operations in a few other countries this year.
The company’s financial model mirrors the cable television sales formula, in which customers pay a monthly subscription rate for a clump of channels, many of which they never watch. Piano Media’s subscribers pay once and have access to all the content offered by the paywall operator in a single market. Weekly, monthly, and yearly subscriptions are available.
Piano Media keeps some 30% of the income and distributes the remainder to the media outlets that put their articles behind the wall: 40% to the publisher through which the subscription was bought and the remaining 30% to publishers according to the consumption of their content.
Media outlets put only part of their content behind the wall. The Polish edition of Forbes, for example, locks away only about 10% of its content in the Piano Media box, mostly commentary and analysis. Subscription fees are kept low to attract readers. In Poland, clients pay the equivalent of €4.80 a month. In Slovakia, the company increased its subscription fee in March by 25% to about €3.80 per month.
The company hasn’t released detailed figures, but it claims to have achieved its financial goals so far. In its first month in operation in Slovakia, for example, Piano Media netted €40,000 . In Slovenia, it pulled in sales revenues worth €26,000 in the first month.
The paywall as a business model for journalism is not new, but where Piano Media saw potential was the market as a whole.
The main problem in the region is the mentality rooted in the communist days that media content is free of charge (a mentality that has taken hold in the West with the advent of the Internet). In Slovakia, the aversion to paying for content is not a social or economic issue, but rather philosophical, Bella says. On the other hand, many young, connected readers have a hard time finding the information they need, and they are willing to pay for it. In Poland, for example, some 40% of printed content is not accessible online, according to Piano Media’s research. The company recommends to publishers what information should go online.
“General news, sports, general business news, weather, horoscopes and those sorts of things are simply impossible to monetise. If they were placed within a payment system, users would simply turn to another site to find them,” said David Brauchli, Piano Media’s spokesman. He said that up to half of any publisher’s content is premium content that can’t be found elsewhere. That is what Piano Media tries to sell.
Another problem that Piano has faced is the still-infrequent use of credit cards in the region and the widespread belief that using them online is dangerous. To get around this, Piano arranged with mobile phone operators in Slovakia and Slovenia to allow customers to pay for subscriptions via text messages, with the providers pocketing a fifth of each payment.
Once those hurdles are cleared, the model catches on fast. The company does not reveal subscriber numbers, but more and more publishers have been impressed enough to sign on.
On average, participating websites earn about €1,100 in Slovakia and €1,500 in Slovenia per 100,000 monthly users. Some publishers can make twice as much. Before joining, some of these websites made zero euros.
Editors in Slovenia say that in the few months on Piano, there has been increasing pressure to deliver better content. Other publications in the same country said the Piano platform helped them bolster their brand.
The company is poised to continue its expansion. In April Piano Media received a boost of €2 million from 3TS Capital Partners, a Central European investment fund.
When looking to expand, Piano avoids large countries with heterogeneous populations in favour of smaller countries or regions that have a critical mass of media outlets, 20 or so, where audiences have similar tastes and interests that can be corralled into a subscription package.
The Piano model may not work in every media market, but where it does, it offers a lifebuoy for an industry in disarray that needs fresh capital. If publishers are ready to rise beyond their rivalries, it’s a formula that could help journalism become a viable job again.