Is that an early Christmas Carol of Consolidation and/or Consolation I hear in the air. As CBS/Simon and Schuster Books prepares to surrender to the breathless embrace of that ardent wooer, Rupert Murdoch (Harper Collins), the UK is entranced by the appearance of David Montgomery as the saviour of the regional press. Despite the remarks made here in “Monty’s Flagging Circus” two weeks ago, it seems only fair to warn the brave man of the possible pitfalls that lie ahead and give him any advice and guidance that may be available. Media casualties help no one, and people like me who have spent a lifetime in media should do more than hop up and down on the sidelines prophesying doom. So here goes:

Dear David (everyone, me included, seems to call you Monty without ever asking, so I will try to be more correct in future),

Congratulations on the launch of the Local Worlds business, and upon your statement re-emphasizing your belief that people will always want local news and information. I have written about your intentions since they were first rumoured, but since those statements might be seen as a bit negative, I wanted to write to you publicly to say that I wish you every success, and would like to contribute something of my own amongst the more tangible contributions of your other stakeholders. You see, in 1996 I played a role as a strategic consultant in helping Trinity, Newsquest and Northcliffe to establish a joint web branding for local content called “This is…”, and, experimentally, and based in my own offices, began work on developing a service for concentrating all of the regionals classified advertising called ADHunter, directed by Marlen Roberts of Northcliffe. A year or so later this was relaunched in Hammersmith, by a brilliant manager called Jonathan Turpin, as Fish4…Homes, Cars, Jobs etc. It still exists, owned now by Trinity Mirror. From its inception and for the next four years, I was its non-executive chairman, refereeing a board of directors comprised of the CEOs of each of the major UK local newspaper groups, who were the shareholders and content contributors. Johnston Press joined twice – but also left twice. Sometimes the CEOs did not show: how well I recollect a substitute turning up for one of them, and volunteering, just after the minutes had been signed, “My mandate for this meeting is to say “NO” “!

I rehearse this escapade on the nursery slopes of British attempts to get the media to respond to a networked world simply to say that I have some knowledge and sympathy for the world through which you are now moving. But I started this letter to offer 5 points of advice. Here they are:

1.  Investors. They are your worst enemy. Having investors who want a return and don’t mind how you get it is one thing: having investors who want results, but not results that deteriorate the quality of their other businesses is really tough. Is London Local as far as your investors are concerned? Will Trinity Mirror compete with what you do? Boards that cannot make decisions make chaos, and then, if you could get Newsquest or even Johnston, or Archant, to invest in you, compound the rivalry, suspicion and eventual stalemate.

2.  Editors are a real liability when it comes to change. They are above all committed to the “push” world. They want to select and define. But you cannot let that happen, since, online, you cannot define “local”. Do you mean my village, this town, this suburb, this county or, indeed, this region? People define local for themselves, and “pull” it to their access point. While I agree that we all want local news and information, you have to provide an interface through which they can focus – on a smartphone, or a tablet, but certainly not primarily on paper.

3.  Journalists are too expensive. Many, if not most, of your stories will cover local football , the Women’s Institute meeting or the town council. Look at the way in which excellent artificial intelligence software is now formatting and templating factual input and archived recall to create the news: a prime example is www.narrativescience.com which builds automated stories for newspapers and B2B magazines. Save your journalists for so-called investigative reporting where you can make an impact; once the editors have gone and the journalists diminished and printing severely cut back to a national centre you may come by a cost base that suits the circumstances in which you now find yourself.

4.  Relaunch as an online service. Call it LocalWorld if you like. Allow users to set their own limits, by content subject as well as geography. Make it a content experience that people will pay for and add their own content to it – and they will – not an advertising experience that delays and distracts them. Make it Local Google with no ads: and, as Google gets into predictable difficulties as a local provider, use your increasingly trusted pure content brands (I know you will use the old newspaper brands in the background to suggest this trust) for lead generation and customer referral. Get it right and you could end up with a local community presence, under the radar of Facebook. Make local a place to go for education, or to recommend (and then) buy eBooks or music if you like, but not for conventional click-through advertising. But your investors must give you time to sort this.

5.  Watch the winners and losers. At the moment Axel Springer and Schibsted are gaining ground with a pure digital classifieds play. Could work for you, but Trinity wouldn’t like it. Keep content and classifieds apart though – they represent different channels in a networked world. The terror to be avoided at all costs is trying to drag the newspaper online and make it work in trad business model terms. Time to turn off the life support systems: people do want local news – but they want it on their own terms.

Oh, yes. And keep having lunch with that nice Ashley Highfield chap over at Johnston Press. When you get a technology focus which does for local news what his iPlayer did for Broadcast television, then you and he will want to proliferate it as widely as you can across the localities of Britain, and shared tech investment makes more sense than competing standards. All this can be done, but not of course if the business plan is to simply cut costs and reheat the margins of existing newspapers ahead of their eventual obliteration. The newspaper at Manassas Junction shuttered last week, despite being saved by Warren Buffet, no less. Lets make local work, but lets make it work on the terms that local people want.

Best wishes for your new venture.

David Worlock

 

 

 

Two days at the Old Billingsgate conference centre last week, but for investors  and early stage and post start-up information service and technology players the annual Noah conference, moderated by Noah’s co-founder and genial ringmaster/moderator, Marco Rodzynek, has never been a chore but an exhausting pleasure. The meeting seems to go by in a blur – I  seem to have written notes on 55 short presentations – and the food, drink and parties all add to the atmosphere. Even the Prime Minister’s office talking about the Shoreditch Tech City sounded upbeat (and a bit spaced out!). Marco and his colleagues shifted the focus a bit this year, and while there were a satisfying number of UK, French and German companies, there was special emphasis on Turkey, Israel and Russia, releasing some really interesting perspectives on those marketplaces.

There were specialist break-out groups for those who wanted to get closer to the action than the variety show on the main stage permitted. And there were a couple of really interesting panel sessions and investor recaps/case studies. Two of these – a session on the digital investment strategy of Axel Springer, and a strange panel on the future of television, which oddly sounded like “everything will change except the primacy of broadcast, schedule and channel” (ie nothing will change) – were mentioned here in Friday’s blog (“Monty’s Flagging Circus”). Both gave food for thought. And it was a good idea to put Priceline (the forgotten man, but now a critical investor), Facebook and eBay up to talk about their strategies. On the other hand there was a muted atmosphere to the music industry panel, with a strong feeling that while some would still like to play the old tunes, the band has moved on for this sector.

It was in the agenda sessions that the real value lay, as a wonderful diversity of information and tech players each gave a 10 minute toot on the trumpet. It almost feels invidious to mention names, but who could fail to be impressed by Fiverr? The global marketplace for services – “turn your hobby into a revenue stream” – is now in 200 countries, has a million listed businesses, and 15% of those see Fiverr as their primary income stream. AVAST, the consumer antivirus player from Prague, now has an installed base of 170 m computers and works in 43 languages. Naturally, it shifts into mobile, with 1 million new Android users joining per month. They have their incremental cost of a adding new customer down to 2 cents per year – and currently, on all devices, 250,000 are joining each day. In conversations around the hall, I heard advocates for Klarna, the online payment system that started in Sweden, has Sequoia and General Atlantic amongst its investors and says it will do 140m euro in revenue this year. Wix (Bessemer, Mangrove, Benchmark) have 27 million users for their quick build website service, and have now built 23 million sites. MyTaxi, meanwhile, one of the start-up school of 2009, report 2.5 million downloads of their taxi calling service as they move it out from Hamburg, across Germany and into Washington DC, Madrid and Warsaw this year. 90 million people download IronSource per month to ease software download problems in a market where 40% of consumer downloads fail. Or consider Schibsted’s LeBobCoin.fr (a mirror of blocket.se), a classifieds site with revenues of 63m euro and an ebitda of 70%. I sat wondering whether this market would turn into matchmaking services, but at the moment, as with Axel Springer, the classifieds business, now unrelated to news and newspapers, is forging ahead.

Are you getting breathless? Have a look at Nordeus, from Serbia, whose TopEleven game has 2.1 million daily active users. Then dash over to hepsiburada.com, Turkey’s most popular shopping mall. In a country without nationwide branded departmental stores, and 50% of the population between 15-45 (40% of internet users are under 25) there has to be a future for shopping. Then check out Russian fashions on KupiVIP.ru, or, if growth is your magnet, look at Spain’s Privalia, strongly selling end of season fashions and competing for Spanish speaking populations of over 500m with only 50% current internet penetration (USA is around 80%). Their demographic profile is the 20-40 age range, they claim more Facebook connections than any other fashion site, 1 in 4 sales are on mobile devices, and their 300 m euro revenues are rising at 100% (400% in Latin America) CAGR. And if you are fed up with stores, try Stuffle for an online flea market – they have done 450k in revenue in the first six months.

And still I have not done justice to the show. WyWy is an interesting Shazam-style service for television. Wynsh has 3 million users who record their wants photographically while the brilliant and beautiful Busuu.com goes from strength as a language learning environment for consumers. The peer to peer element is interesting here, as is the mobile apps angle. Since it is estimated that 2 billion will speak English by 2020 improving performance is going to be a big market. Or Cooliris, claiming to be the no 1 app on the iPad in 75 countries as it helps people manage and present their photographs.  I would also like to talk about Skobbler, the navigation site, or the very impressive small loans site Kreditech from Hamburg. Given space, we could look at Wrapp, the social gifting service, or Burda’s HolidayCheck travel review site or Israel’s Conduit (or ask.fm from Riga with 9 m users). But you are now tired and I am exhausted – you need several days to sleep off a Noah conference.

I left with a profound impression of huge growth and energy in Europe on the internet, and a feeling in consumer markets that building a base of a few million users is no longer the problem. Sustaining and renewing that audience is the issue, and it is interesting that the Noah seedlings are now very various in size and shape. And the Noah people are right about something else as well: this is now a dynamic investment market with real growth prospects, especially where European players are able to seek global markets as well as local ones.

Star of the show goes to Yossi Vardi, veteran Israeli investor and doyen of the tech community. Peering into an audience of 1400 paying delegates, he said that while giving  a recent speech in Tel Aviv he noticed that a man in the third row had fallen fast asleep. So Mr Vardi pointed to the man next to him and said “Wake him up, he’s fallen asleep”. To which the man next to the sleeper replied “You wake him up – you put him to sleep in the first place”.

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