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Lessons from Finland: How the News Industry is Managing Digital Transformation and Trying to Stay Profitable

Lessons from Finland: How the News Industry is Managing Digital Transformation and Trying to Stay Profitable

Compared to most other countries taking part in Reuters Institute Digital News Report, the national news media in Finland seem to have survived the digital transformation pretty well. People use digital sources for news more than in most other countries, their trust in news is more solid, and the sources used – even online – are mostly traditional Finnish media companies. The problem is not reaching people with news but keeping journalism profitable.

The Finnish media environment is characterized by a strong regional press. Daily papers are mainly purchased by subscriptions, often covering both print and online editions. The two national afternoon tabloids both reach over half of the population weekly (mainly online). Tax-funded Public Broadcasting Company YLE and commercial MTV3 dominate TV news and have a wide reach via digital platforms.

Finland belongs to the group of forerunners in the transformation into digital. According to our survey, the weekly online reach of news (90%) is slightly greater than the reach of traditional news sources like print, radio and TV (88%). Urban Brazil is the only other country we look at where the reach of online news is greater than that of traditional sources. Online media is also rapidly increasing its share. Almost half (46%) named it as their main news source compared with 37% in 2014.1 This share is also greater than in any other country in the survey. As in other countries, younger generations in Finland prefer online with older groups more likely to prefer television. However, it is striking that in Finland, television is the most popular main source of news only in the oldest age-group. In every age-group under 55 years, online is now more popular.

In terms of devices used for accessing online news, the trend in Finland is similar to most other countries. Smartphones are rapidly increasing their popularity while the use of computers is declining. The use of smartphones for accessing news increased from 41% in 2014 to 50% in 2015, and the use of tablets increased from 23% to 26%. The use of computers declined from 80% to 75%.

News media seem in many ways to be important part of the people’s daily life. Over 90% of Finns catch up with news at least daily, with more than a quarter (27%) accessing at least five times a day. In most other countries in the survey, the share of those accessing at least five times in a day remains well under 20%. This, of course, points to the popularity of using mobile devices for accessing news. What is also striking in Finland is the high level of trust in news. Of the respondents, 68% say they trust “most news most of the time” while 73% say they trust “most of the news that I use most of the time”. The difference between trust in news in general and in news one uses most of the time is much less than in both the US and Mediterranean countries. This suggests that the Finnish news media is thought to be quite homogeneous both politically and when it comes to journalistic quality. The media in generalis acknowledged as trustworthy – not only those outlets that reflect one’s own political opinions or that are of particularly high quality. The trustworthiness of news may also be related to the strong position of traditional media companies – both state owned YLE and private owned news media – and their still relatively strong journalism-professional cultures that value objectivity and professional independence from both commercial and political pressures.

Newspapers are moving towards paid news, but there is not much willingness to pay

The traditional Finnish media companies have sustained their position well in online competition. Online weekly reach is up to 79% for traditional newspapers and 55% for broadcasters – only 24% for pure players. The most popular pure player is a national news aggregator Ampparit, which has a 12% share. The Finnish language and small market seem to shield national news brands somewhat against international competition. For example, the weekly reach for MSN is only 4% and for Buzzfeed only 1%. Another reason for the popularity of traditional Finnish media companies online is the amount of free content still available. The digital reach for each of the afternoon tabloids is over 50%, and for YLE news about 40%.

Offering free contents makes sense for YLE which receives its revenue from a public broadcasting tax while the strong online reach of the afternoon tabloids puts them in a good position in advertising markets. Elsewhere the situation is more difficult. Revenues from both subscriptions and advertising have been declining, and the new digital services have not yet brought incomes that can compensate declining revenues from printed newspapers. Google and Facebook are picking up a significant share of online national advertising spend, although in local advertising, the regional media companies still have a relatively strong position.2

The strategy adopted by most newspaper companies in Finland seems to be moving towards paid news in their online offerings. Helsingin Sanomat, Finland’s best known national daily, has been using a paywall online since 2012, and now half of its subscribers pay for online content, either by bundled subscriptions or pure digital subscriptions. Some of the regional dailies have already erected paywalls – either metered or freemium. The rest are planning to do so in the near future. For those already subscribing to print, the additional cost of online is relatively small, or the printed newspaper is being made available only by bundled subscriptions. Where they exist, digital-only subscriptions are typically markedly cheaper than print subscriptions. For example, ongoing subscription for print Helsingin Sanomat for one year costs €349, bundled €397. Online subscription with all services costs €178.80, and a more restricted online subscription is also available at €118.80.

Although the percentage of those paying for online news is somewhat higher in Finland (14%) than in most other countries, the outlook for new payers to come is not very promising. Only 8% of those who do not pay online news now say they would pay in the future. What is striking is that this share has diminished 3 percentage points from 2014 while the share of those already paying has stayed the same. It seems that most of those who are likely to pay for digital news already pay, and most of the others are satisfied with free digital news available. There will be new online payers who make bundled subscriptions with only small extra money to print-only subscription. It will probably be more difficult to make people to pay for only-digital subscriptions. In the case of Helsingin Sanomat, the share of digital-only subscriptions is 14%, compared to 51% for print-only and 34% for bundled subscriptions.

Paying for online news and likelihood of paying in the future – Finland 2014-2015

2014 2015
Paying for news 14% 14%
Likely to pay* 11% 8%
Q7a. Have you paid ONLINE news content, or accessed a paid-for ONLINE news service in the last year? (this could be digital subscription, combined digital/print subscription, or one-off payment for an article or app.) Base: Total sample 2014/2015 Finland = 1520/1529.Q7aii. You said you have not paid for online digital content in the last year… How likely would you be to pay IN THE FUTURE for online news from particular sources that you like?Base: All who had not paid for online news in the last year 2014/2015 Finland = 1272/1275. * Showing very likely to pay/somewhat likely to pay.

Cutting costs and developing videos

The problems in business have led media companies to cut costs at the same time as trying to create innovative new services to attract larger audiences and new revenues from advertising. One effort for cutting costs is a new joint venture Lännen Media to create shared non-local content for syndication across 12 regional newspapers. Another example is Alma Media’s decision to merge newsrooms of two regional newspapers in Northern Finland. During the last decade, there have been downsizing processes in most Finnish newsrooms.

It terms of new services, one somewhat promising option for newspaper groups has been investment in online videos and television programming. In Finland, services run by evening tabloids (IL-TV and ISTV) and Helsingin Sanomat (HSTV) are best known. Ilta-Sanomat says that its ISTV service is accessed 4 million times in a week, and that advertisements also sell well. The popularity of news-videos has been rising more generally. In Finland, the share of those who watched news videos last week rose from 18% in 2014 to 22% in 2015. The trend was also similar in most of the other countries in our News survey.

In addition to opportunities, the study also illuminates some problems related to news-videos. In spite of their increased popularity, only one fifth of respondents say that they watched news videos last week. Most of the respondents also say that they like more reading news online than watching news-videos. Reading is felt faster and more convenient, and the pre-roll advertisements irritate many. However, attitudes may be changing. Online-videos are a new medium for both users and media companies, and its formats and watching habits are still evolving. For many, news-videos may be a clip attached to a written news story that does not bring much benefit to text. On the other hand, a news-video can be an excellent showcase of what happens on the spot, and be a different way for journalists to discuss news events and provide context and analysis. Because advertisements were often said to be the reason not to watch news videos, the media companies must find out, how long advertisements the users are ready to accept.

Conclusion

News is a trusted and important part of people’s daily life in Finland – even more so than in most of the other countries in the survey. National print and broadcasting companies hold a strong position in online news competition. However, the problem is how to keep business profitable when revenues from printed papers are declining. The Finnish news industry is cutting costs, innovating new services and moving towards paid news in their online offerings. According to the survey, though, the outlook for attracting new payers is quite challenging.

  1. The base for these percentages is “those who have used news sources in the last week”. This is almost all the respondents (2015: 1500/1509; 2014: 1369/1520).
  2. Grönlund, Mikko (2014) Sanomalehtien liiketoiminta ja toimintaympäristö 2000-luvulla (Newspaper business in the 2000’s). In Lehtisaari, Katja (ed.) Sanomalehti uudessa mediamaisemassa: Helsinki: TAT, 34–43.

Esa ReunanenSenior Research Fellow, University of Tampere, Finland

Source: http://www.digitalnewsreport.org/essays/2015/lessons-from-finland/