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Online advertising and new content fees have helped Europe’s largest news publisher become the latest to reach a print-to-digital tipping point. But Axel Springer also warns this digital growth is jeopardised by mobile apps competition from publicly-funded rivals.
“The group was able to more than compensate for the slight decline in national print media revenues through the dynamic growth of digital and international print media activities (in 2011),” Axel Springer said with its annual report on Wednesday.
Warner Music Group (NYSE: WMG) and Future Publishing (LSE: FUTR) were amongst those to reach the same tipping point in Q4, as digital gains begins to offset decline across the industry. Through 2011, Axel Springer’s digital revenue rose 35 percent to €962.1 million, while digital profit rocketed 84 percent to €158.1 million.
And, for 2012, it forecasts, “slightly lower revenues in the national and international print business will be more than made up by higher revenues in the digital media business“.
Axel Springer publishes the highest-circulation English-language newspaper in the west, Germany’s Bild, as well as Die Welt. And it has moved rapidly in to online services, including the Hamburg.de, Gamigo.de, Motortalk.de, Auto.cz, Students.cz, AuFeminin, OnMeda.de and FondsDiscount.de, classified sites like CarWale.
It led the second paid content wave in 2009 when, ahead even of News Corp. (NSDQ: NWS) it introduced content fees for mobile apps,. Now it has 35 paid mobile apps, 24 paid tablet apps and has introduced web fees for several of its news and magazine titles, along with a recently-introduced tablet aggregators for its titles, iKiosk and MyEdition.
But Springer’s annual report warns of trouble ahead: “The growing popularity of paid-content offers in the online business (could) lead not only to higher revenues, but also increased competition. Therefore, it is entirely possible that future revenues could be offset by higher costs to win and retain customers.”
And the company is concerned about “the expansion of state-owned TV stations into the internet”…
“ARD (license fee-funded federal broadcaster) in particular has intruded into the business sphere of the private-sector press and distorted the competition environment with a text-oriented news app for Tagesschau (TV news service) financed by license fees, in a blatant contradiction of the Interstate Broadcasting Agreement.
“Faced with competition from this cleverly designed ‘free offer’, it is naturally hard for publishing companies to successfully offer paid apps.”