Italian newspapers have been struggling to keep up with new technologies during the country’s eight-year recession, Executive Editor-in-Chief of Class Editori Gabriele Capolino, told Christophe Leclercq.
As part of the Media4EU series, Capolino spoke with Christophe Leclercq, founder of EURACTIV.
What role does the media play in this time of growing populism, in the aftermath of Brexit and Trump’s election, as well as the rise of Grillo’s Movimento 5 Stelle?
What we call populism is a pan-European and now also pan-American crisis of the middle class. This is the result of the first ten or twenty years of so-called ‘globalisation’, which started with the WTO treaty. Now that we are making the first assessment of the process in Italy and in other countries, we realise that it has basically destroyed the middle class.
So what can the media do about it?
We, the media, did not understand how bad this situation was. We tend to follow the stream and the stream lead us to polarisation. We did more and more news about the rich and the powerful and we forgot what was happening to the middle, let alone the bottom. So we totally didn’t expect Brexit and the Trump victory. What we need is to help the people understand what’s going on, and this is something that we haven’t done very well.
So far, people blame each other at growing levels, but nobody has found a solution. So when Trump says “I will allow our companies to pay fewer taxes, but they will bring back all their factories to the US,” this is a solution. However, the media need to carefully assess three things: one if it’s feasible, two if is exportable also to Europe, and three if the results would be better than the current situation.
In Italy, a trend towards media concentration is emerging. We are observing similar movements in France, Spain and other countries, too. How far will it go?
The crisis of the Italian media is the perfect storm. We had an eight-year-long recession, so the impact of the decline in advertising revenues was very tough, especially because all the new ads generated during those years were basically collected by Google and Facebook. Google is now by far the second-largest Italian advertising seller, and nobody knows it.
This concentration is a result of the fact that it is difficult to fight Google and Facebook on your own. They are more powerful than you. At this point, all these mergers are driven by the need to cut costs at back-office level, not to find new sources of revenue.
Do you think this will happen across borders, or is it just the big internet platforms that will be transnational?
The big international platforms can rely on their brands, their technologies and their capital, which is something that a national publishing house doesn’t normally have. Business Insider, BuzzFeed, Vice etc. have good brands that can be exported easily, because there are no big natural barriers. But concentration at the cross-border level of traditional publishing houses is less sexy, because they are not quite healthy at the moment.
Sharing IT development could be a big cost-saver and also an accelerator of change.
Absolutely, yes! I think that [the publisher that] has the brightest solutions in terms of production, marketing and big data will be a significant aggregator of other publishing houses.
Could that happen within the classical media sphere?
Maybe it’s too late. Companies like Axel Springer, for example, have decided to focus their investments in activities very far from traditional media. So I think that in order to create something really brilliant for the media, you need to have outstanding new technology combined with lots of capital. I don’t see it happening in big traditional groups. I’m watching with growing interest what the Financial Times and the Wall Street Journal are doing. I see some changes, but we are still in uncharted territory.
Our strategy has been clear since we started 30 years ago: we were not that big and we were independent. So in order to survive, we needed to be connected with international groups that could give us authoritativeness and independence. We started out with Dow Jones and CNBC and now we are partners with Xinhua. They provide us with good content we need to cope with people who are richer and more powerful than us.
Does it make a big difference in terms of business, or is it mainly for brand credibility?
It’s great for both, because our credibility is also very appreciated on the advertising side. EURACTIV is the last one. With Xinhua, we made an agreement concerning the business newswire and the organisation of events, which are very popular with Chinese tourists visiting Italy.
How do you handle Xinhua’s lack of independence?
We were very pragmatic. We decided to only talk about lifestyle. As you know at Class Editori, we have two segments. One is business news and the other one is lifestyle magazines, on the Italian way of living. We decided to focus on the second section, understanding that we do not pretend to export democracy to China.
Like other media groups, you are currently diversifying your business model with events such as the Milano Fashion Global Summit. Are these events profitable enough to cross-subsidize your core media activities?
Absolutely. Now the old ‘advertising on the page’ is no longer a value proposition that you can rely on. More and more companies have a more profiled way of communicating and there is money in this. Traditional commercial ads are not profitable anymore. But when we organise a legitimate event like our Fashion Global Summit with the WSJ, where we invite an exclusive range of people to speak, people will go and advertisers will want to be closer to our brand. We need to become more like entertainers to survive and to make a profit.
Before this interview, we discussed two possible training programmes that could facilitate change management in the media sector. One is an ERASMUS4media programme for young professionals. The other, Media4Europe, is still undefined. It will be some kind of benchmarking and training for top management people both on the editorial and commercial side. How could that help?
I think there is a very clear demographic issue within publishing houses, especially the older ones. Fewer and fewer young people are hired today, so there is a lack of fresh blood. At the same time, we have an enormous problem with the forty and fifty-somethings, who know very well the old way to make papers and business, but who have no experience on how to cope in a changing world in terms of technology, marketing and innovation.
By the way, I’m one of them. I’m 55. So, I think that this ERASMUS training is a brilliant idea. However, we also need to develop this Media4Europe programme for middle and top management because their age is critical. They are still very far from retirement and they will need to work at their best for ten to fifteen more years. So they need to go back to school, because the technology, the marketing and the way to sell advertising has changed.
Should the media sector feature in any way in the EU’s priorities?
The media has not been considered as a sector by the EU, so the institutions have never invested time into understanding its difficulties and its crisis like they did for other sectors. I hope this will change.
Today, the idea of Europe is basically funded by fear and the eurozone is not perceived as a good thing in itself, but as something we don’t know how to live without. The EU has to communicate better how valuable it is to live in Europe. This is the communication strategy the institutions should invest in at every level. They need big media to understand and to support this idea because people do not like to be blackmailed. Look at what happened in America. Everybody said Trump will be terrible, but it wasn’t enough.