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Postmedia and its Digital Reinvention

Postmedia is one of the largest newspaper companies in Canada, housing many well-known and widely-read papers, such as The Calgary Herald, The National Post, and The Ottawa Citizen. The current CEO, Paul Godfrey, brought together the publishing rights of the bankrupt Canwest to form the new company in 2010. One of the major initiatives that has been announced by Postmedia is the Digital First Strategy, which attempts to digitally reinvent the company by developing digital editions of the newspapers. Smartphone and tablet applications, social networking integration and online newspapers are some of the innovations that have been implemented so far. Also, the company announced organizational changes which involved the expanding of a Chief Financial Officer's responsibilities to include Postmedia’s Business Technology Group, and the Chief Transformation and Revenue Officer's to include all revenue generating areas of business operations including digital operations, sales and business ventures. Similarly, a Digital Board Advisory Board has been established in the company to better develop digital strategies. These initiatives reflect on the extent of the digitalization efforts that are occurring in the company, ensuring that employees have specific tasks to improve the uses of digital technology. To further emphasize that fact, Paul Godfrey comments, “As we accelerate our business strategy, the continued focus for this fiscal year is on transformation and revenue development. This year our success is linked to ensuring that our product and sales teams work more closely than ever so that we maximize returns on our digital investments." The specialization of the work allows for a more focused outlook, providing a more effective method of developing the digital portion of the company.

According to comScore Inc., Postmedia's digital audiences reached 7.9 million unique visitors in its first month, demonstrating the success of its online newspaper websites and reaffirming its position as one of the top news sources for Canada, and explained by the Executive Vice President, Malcolm Kirk, to be a "strong showing [that] reinforces [the] Digital First Strategy.” On a broader note, online revenues in Canada rose 16% in 2010, as opposed to the 8% increase in the United States. These numbers demonstrate that Canadian newspapers are doing well, as John Hinds, CEO of Newspapers Canada, comments, contrary to popular belief. In addition, the fact that Canwest was bought for $1.1 billion shows that investors are willing to pay for Canadian newspapers because of their potential profitability. However, on a darker note, while digital sales have grown quickly, it only accounts for 8 per cent of the company's total revenue. Although the numbers tell of the improving situation of Postmedia's financial situation, there is still more work to be done.

Furthermore, Postmedia's digital strategies are incorporating the idea of technology transfer, the process of transferring technology and knowledge among institutions to make it accessible to a wider range of users and develop them into maturity. It is being applied in a narrower setting than it would be traditionally, moving knowledge and technology within the company's various newspapers to make them available to more people and further develop the technology. There is much debate on the new direction of the newspapers, as some view the digitalization as a threat, but there are also increasingly more people believing that the "idea of journalism isn't changing," but just the tools, arguing that historical transformations have always involved a long period of evolution before the acceptance of change. The process of the digitalization of newspapers is still in a transitory stage, as proven by the varying number of successes and obstacles that Postmedia is facing. However, the underlying idea in Postmedia's digital initiatives is contributing to the increasing possibility of the breakthrough of digital newspapers by testing and improving new strategies, although there are inevitably some weaknesses due to the technology use being relatively new and unexplored. As Phillip Crawley, The Globe and Mail's publisher, comments, "At the moment, nobody could be sure what's the winning formula."

General Trend towards Digitalization in Newspapers

The newspaper industry is currently experiencing a critical time of experimentation and innovation, and once it adapts to the new digital changes, there may not be a standard way of publishing newspapers. Although there are more risks associated with new innovations for newspapers, there is also a wider room for experiments because the industry is facing a radically different time than the past and trying to find the right solutions to the problems. The print newspaper has become more of a niche activity rather than a daily thing for many people, suggesting that most of the audiences are buying and reading them for specific needs and the associated values, such as prestige or exclusivity. According to data compiled by NADbank, about 85% of Canadians read newspapers in print, and of the 15% online readers, most of them are also still reading print versions, as well. Phillip Crawley believes that print and digital are a complementary activity, and newspapers should not have to choose one of the two. The print newspapers are competing for readers on smartphones, tablets, and the internet, forcing them to re-evaluate their business models, which have traditionally been reliant on ads that made up 80% of their entire revenue. The Wall Street Journal and Financial Times have started to use paywall on their websites, and The New York Times has its own version of a paywall that allows users to view some content for free before having to pay for further access. In various ways, many newspaper companies, like Postmedia, are testing and experimenting with new methods to maintain their readers and generate revenue.

There is also an emerging idea of the open newsroom, with journalists sharing and posting information in an open and public environment while connected to wi-fi, moving away from the traditionally private and closed method of information gathering; more emphasis is being placed on citizen journalism and interactive content. Some, like Alan Rusbridger, believe that the idea of digitalization is to reconfigure print for the current circumstances, and that it is "the next natural step [that] all newspapers will eventually have to take.” Most major newspapers have introduced smartphone apps to suit the increasingly interactive community, and tablets have been promising for the industry. The iPad, for instance, has been referred to as the "pioneer of the next level of digital journalism," illustrating its significance and potential. It is a device that allows people to read comfortably and be updated on the go, and Apple Inc.'s new Newsstand application allows publishers to test free-trial apps and in-app paid subscriptions. Several newspapers, such as The New York Times, have taken advantage of this recent innovation. The iPad has thus been one of the most significant innovations for the newspaper industry, being the latest addition to its list of "would-be saviours." Martin Nisenholtz of the New York Times comments, "It's something you can really immerse yourself in, lean back and enjoy," as it combines portability with readability. Even Rupert Murdoch, the chairman of News Corp. who has always been critical of newspapers that offer news for free, is reportedly working on a newspaper that would be available exclusively on mobile devices like smartphones and the iPad. An estimated three million e-readers were sold in the U.S. in 2009 and research firm Forrester expects sales of these devices to double in 2010, demonstrating the rise in popularity and usage of digital devices for reading newspapers. This fact explains why many newspapers, such as those of Postmedia, are developing more applications for tablets and smartphones. The increased sense of immediacy, connection and openness associated with the new media is driving the digitalization, radically transforming the delivery of news. Even journalists rely on mobile devices to speed up the sending and receiving of information. Twitter, for instance, is a major social networking site that many journalists have began to take advantage of for its quick and widespread delivery of content, further emphasizing the need for speed and connectivity. The new challenge and trend for newspapers, thus, is to deliver content over the various new available platforms.

The Calgary Herald

Postmedia claims that out of its newspapers, The Calgary Herald has become the most profitable division through its extensive digitalization. The new online website and digital downloads are aimed so that one can read "anytime, anywhere," and to ensure it is "available to you at home or at work, and is the same edition as the printed copy available at the newsstand... but complemented by a variety of digital tools which enhance the printed newspaper's look and feel." The sense of news having to be available whenever and wherever the reader desires it is strong and effective, and is supported by the recent influx for the markets of smartphones, laptops and tablet PCs. There are incentives that set it apart from the print version, such as portability, the ability to zoom in on the text, and having it read by a digital voice. The Herald was the dominant print newspaper in the local market before the Web, and has managed its resources to maintain the leading position in the highly competitive networked environment. According to comScore, the market reach of calgaryherald.com, measured in the number of unique visitors per month, is more than twice the nearest competitor: 636,000 uniques in October 2011, compared to 244,000 for the calgarysun.com, and 212,000 for CTV Calgary, during the same month. The Herald also takes advantage of social networking sites such as Facebook and Twitter, which allows the paper to create a community with a wider variety of users and gives the opportunity for the readers to receive fast updates of news. With much effort in working with new technology and innovations, the Calgary Herald has managed to maintain its popularity and readership, and is still going through a progress of experimentation and testing.

The Successes of Postmedia

Postmedia explains that the apps for its newspapers are a way of localizing news by accessing the location of the user and specializing the content, while also enhancing the experience by allowing one to share with friends via Facebook and Twitter and making the content being available 24/7 online and offline. Localization relates the news more strongly to the reader, allowing the filtering of desired information and creating a stronger sense of connectivity to a specific community. Incorporations of social networking media on the websites also allow the reader to easily share with others, reflecting on the social nature of humans and their desire to share information. The strategy reflects on the realities of technological changes in the present day society, as the uses of such social networking sites have increased tremendously over the last few years and is where the bulk of the reading market is. The use of digital technology is thus redefining the purpose of the newspaper by including the values of specificity and community, contributing to the spread of Postmedia's content. Also, since the company's takeover from Canwest in July 2010, has been more tightly focused on making more revenue from its digital operations and responding quickly to the evolving environment. This kind of vision is successfully leading the company away from its bankruptcy and working to improve its standing in the newspaper industry.

The Calgary Herald is a key newspaper that demonstrates the successes of Postmedia's direction of the Digital First Strategy. The newspaper serves Vancouver, one of Canada's most vibrant cities in terms of economic activity and population growth. According to the Canadian Newspaper Association, while the average daily circulation of newspapers fell in Canada in 2009 by 4.1% over the year, the Herald’s rose by 2.3%, illustrating its success in comparison to other Canadian newspapers. The Herald's website also reported a 22.9% increase in unique visitors for the month of October in 2010, compared to the previous year. Comparing the newspaper to other multiplatform daily newsrooms within Postmedia, only the much larger Vancouver Sun is consistently ahead of the Herald in website audience size, further emphasizing the successes of the paper. The Herald has implemented the Postmedia goal of being a “digital first newsroom,” breaking and updating stories on the web throughout the day then publishing final versions in print for the next day. Through the digital connections that this kind of newsroom provides, such as Twitter, smartphones and blogs, journalists are able to communicate efficiently with one another in order to update information on their newspapers at a much faster pace than the past. As more and more journalists become trained and familiar with the new technology, more methods of improvement and development of the uses of digital devices will inevitably come up. The digital vision of Postmedia that the Herald has incorporated, thus, demonstrates the successes of the strategy, and provide room for development by allowing different people to access information using newer innovations and provide feedback.

The “continuous newsdesk” is a term for the group of editors who manage the Calgary Herald's web and print assets from 5:30am to midnight, seven days a week; in this way, the digital journalists are able to respond to breaking news quickly, and across several platforms, because of the multi-skilled, flexible nature of the hybrid operation. This concept relates to the idea of the open newsroom, as the journalists make use of social networking sites and mobile devices to stay connected to the community and update the news consistently using the internet. Technology and knowledge is being transferred from user to user, making it available to a wider range of people to create more opportunities for feedback and development. Paul Godfrey comments, “Reporters are going to have to become more than just a reporter,” and points to the company's print journalists who can send video clips from the field for online articles, embracing the idea of the open newsroom. David Hedley, the Digital Producer of the Herald's website, describes a situation that powerfully illustrates Godfrey's vision and its advantages:

"About 11:30 Monday evening, just after the main newspaper was put to bed as it turns out, Calgary police and bylaw officers swooped in on the Occupy Calgary encampment in the downtown core and began removing empty tents. The reporter, Deb Tetley, and photographer/videographer, Colleen De Neve, were there to cover the event. Scott Crowson, one of the assistant city editors, uploaded Deb’s text and several of Colleen’s photos around 1 a.m. Scott also produced an email alert, while several writers in the newsroom including Deb tweeted about the developing story. When I awoke Tuesday morning about 3:30 a.m. – I’m the early-morning web editor – I fired up my laptop from home and logged into the website. I added the rest of Colleen’s late photos, uploaded the video Colleen had edited from home about 4 a.m., added a poll to the story, reworked the headline to improve searchability, and posted it to secondary pages on our website. I would later post a conversation-starter on our Facebook page and also retweet the story with a new angle. By 7 a.m., the beginning of our peak website traffic period for the day, we had a full multimedia package on our website’s homepage about the overnight news event. In this example, you see a multiplatform newsroom in full flight: decentralized and team focused; not bound to the hard constraints of a daily press run and the printed newspaper page; and serving multiple networks in multiple media."

The ideas of connectivity and openness are prevalent in the Herald's organization, making use of a wide range of digital technology and social networking platforms to maximize productivity and allow journalists to stay connected with one another and their readers. Information is transferred from user to user at a fast speed, reinforcing the importance of immediacy in news. Moving away from the closed newsroom of the past, in which journalists worked in a private and guarded setting, the open newsroom allows journalists to maximize the advantages of the new media. They are not only connected to one another, but with their readers, and because of the increased number of users and their interaction with technology, there are more opportunities for improvement and development. The effectiveness of the management illustrated in this story demonstrates the successful aspect of the digital initiatives of the Calgary Herald, and of Postmedia's Digital First Strategy.

The Obstacles of Postmedia

Digital sales have indeed been strong, but they only count for 8% of the total revenue for Postmedia, and the company's print circulation and sales have been decreasing rapidly, as well. Despite the fact that the company is doing better than before, there is still a crucial need for further development and innovation. If Postmedia is going to push forward with the Digital First Strategy, it must be initiated in a way to increase the digital revenue. The company has also been cutting jobs due to its cost-cutting strategies, eliminating many of the work force. This action is justified as Postmedia doing what many other newspaper companies are doing, which is to get its costs in line with its revenues; the job-cutting does not necessarily reflect on the success or lack of success of the digital initiatives. However, despite its efforts, they are still losing money, having reported a loss of $3.9 million. The loss of profits illustrate the struggles arising while experimenting with new and different methods of generating more income for the digital and print newspapers. Also, it is notable that Postmedia already had a rough financial start, due to its origins being in a bankrupt company; while still under Canwest, the company wrestled with financial difficulties and lost digital momentum. The financial burden is a large obstacle that must be overcome in the near future. Furthermore, some of their smartphone apps have been rated harshly on shallow content and unattractive presentation. These apps, while gaining audience, are not attracting a large one. To gain more popularity and usage, the applications must be redeveloped and redesigned to better suit the market, or it will be increasingly difficult to maintain a steady momentum of improvement. Thus, while the company is having successes with some of its initiatives, such as with the Calgary Herald, there are major problems that must be solved.

Furthermore, although going digital is theoretically more cost-effective due to the cheaper expenses required for publishing, Postmedia, like other companies, is faced with the challenge of encouraging customers to pay for the material. News content is being handed out for free on many sites on the internet, forcing many newspapers to "give away" digital news. Since the rise of the internet, the general perception is that the price of any information is free, as noted by Chris Kubas, Vice-President of Kubas Consultants, and newspapers have to convince consumers that it's worthwhile to pay for their information. According to Tim Currie of the University of King's College, there is also a problem from the fact that online advertising brings in only about one-tenth of print advertising revenue in the industry. Newspaper websites are increasingly unsustainable due to the costs and expenses outweighing the ad revenue, which forces them to desperately search for methods to make people pay for the content. Paul Godfrey states that he feels news executives in the past made a mistake when they decided to offer a valuable service at no cost to the reader, leading to the company to experiment with different types of user-pay models in Victoria and in Montreal. The Calgary Herald is also facing problems due to their giving information for free, which alerts the company to seek a solution. An effective method of receiving payment for the digital services must be sought out, or Postmedia may become bankrupt once more. Godfrey's ideas are similar to that of Robert Murdoch's, as the latter also believes that free newspaper sites are not going to work. Godfrey also says the user-pay trials have met with some resistance at first from the company's marketplace, since people don’t want to pay for something they’ve had for free in the recent past. The problem of profitability will be a difficult obstacle to overcome for Postmedia, as it is an issue that the entire newspaper industry is struggling with, due to the widespread use of the internet and availability of free news.

Additionally, the iPads may be seen as saviours to some in the industry, but in reality, they have a long way to go. Paul Gillin, a consultant, says of the newspapers on iPads, "Profitability though. . . that's another matter. These tablets are a bit of a lifeline to the print media because they use a format that's familiar to them and people seem to be okay with paying for a subscription, which they don't do on the web. That's not going to replace the revenue that's being lost from advertising - it will be a small alternative revenue stream." Devices like the iPads may appear to be promising in generating revenue, but they need to be further developed, and the online versions need to also find a method of profiting in order for the companies to prosper. Although Postmedia is still struggling with its pay models, Godfrey believes that they are producing the improvement in financial results the company is looking for, and is optimistic this path is the correct one for the company; eventually, there will be some type of metered pay model across the company to head toward the goal of improving profitability. The initiatives of the company are mostly at an experimental stage, and the challenge for Postmedia is to continue to experiment and test strategies, making their newspapers available to a wide range of users as they are doing now to make more opportunities for feedback, development and improvement.

The Future of Postmedia and the Newspapers

Gerould Kern, Senior Vice President of the Chicago Tribune, comments that society is currently going through a historic transformation in which newspapers will have a strong future if the industry embraces the new and plentiful delivery platforms and becomes more than just news media, accepting the journalism tradition of public service. Another encouraging sign for the industry is the increasing flexibility from newspaper publishers and printers, recognizing the need for increased creativity in product development and adding value. The industry is beginning to repair itself from its losses, with ad declines lessening and fewer publications closing. Next Issue Media predicts that US newspaper and magazine companies could earn $3 billion in consumer revenue by 2014 from sales of interactive publications on iPad devices, alerting the newspapers to develop and improve their iPad apps. However, print advertising remains challenged as audiences and ad shed 38% of its revenue since 2005, and it is projected that newspapers total revenue will fall another 16% over the next three before beginning a modest rebound in 2013. The traditional medium is faltering, and the new technology needs to be embraced, experimented and developed in order for the industry to survive.

The Calgary Herald's vision is to maintain and grow the brand as the major news and advertising source in the Calgary market; Postmedia aims to have a solid presence in emerging networks, while continuing to publish the respected print version. Rather than moving entirely away from the traditional print, the significance of the potential of the digital medium must be recognized and utilized. From a newsroom perspective, the focus must be on growing the audience and creating engaging digital experiences in journalism, and both tasks imply new skill sets and a new understanding of communication in the global postmodern culture. By transferring new technology and information among different users, these new skills will be more familiarized and developed. Also, the goal of Postmedia, and of the Herald, is to deliver news as it happens on the most popular platforms. The Herald has jumped into an ambitious Postmedia rollout of a number of digital initiatives, such as increasing the use of video to cover stories, launching new iPad and mobile apps, and ramping up the presence on the pages of community bloggers and citizen journalism. Immediacy and connectivity, as well as the idea of the open newsroom and "continuous newsdesk," are inevitably strong factors and advantages of the digital devices. However, the nature of the digitalization of newspapers is new and largely unexplored, making many ventures to appear as "breaking new ground." Yet, the company's direction towards the open newsroom and experiments with digitalization appears to be working positively for Postmedia, although the company has to find a ultimate method to overcome the issues of profitability and gain a strong readership base.

Robert RL, the Marketing Director of Newspaper Society, comments, "So innovation is everything that will develop further our unique relationship with audiences including different newspaper distribution models, niche publications, webcasts and beyond." Although it is a very young, Postmedia has been experimenting extensively with different initiatives and heading towards the development and improvement of digital technology, such as tablets, smartphones and the internet. The company is taking advantage of the unique interactions that websites, Twitter, Facebook and other mobile platforms offer, transferring knowledge and technology within its setting and making their news available to a wider range of users. As more people test and use the technology, becoming familiar with the new form of delivery and seeking ways to improve it, there will be an increased possibility of a breakthrough method of digital newspapers. Pam Laycock, Interim VP of Digital for Star Media Group, states, "When you've got first movers in an environment, they can set the initial rules of the game - but the rules keep changing. As things evolve, everything rightsizes itself." In this transitory stage of trial and error, no firm conclusions can be made about what is the right method for the newspapers of Postmedia, but experimenting, testing and developing different digital initiatives through the application of technology transfer is crucial for the company's success.