The Secret Of Schibsted Media’s Success

The Norwegian company's bold transition to the Web is now a model for media groups around the world

OSLO - On December 1, Schibsted officially took over Leboncoin, a French online gem specialized in classified ads. Already a Leboncoin shareholder, the Oslo-based media group put down another 200 million euros, including 140 million in cash, to buy the company outright. A nice deal indeed for the 30-person French start-up with an annual turnover of 40 million euros.

This pricey buyout of Leboncoin is emblematic of Schibsted's strategy. For the past several years, the Norwegian company has been a model for media groups around the world. "It is looking toward the future and isn't afraid to invest outside its traditional activities," explains Peter M. Zollman, founder of the Miami-based consulting firm, AIM Group.

Like many other media groups, Schibsted began as a simple newspaper company. Founded in 1849, it grew out of the , still a leading Norwegian daily. Since then, it has bought the tabloid VG, the top-selling paper in Norway with a daily circulation of 260,000; expanded to Sweden, where it owns the best-selling daily Aftonbladet (350,000 copies); and has since moved southward to the rest of Europe; and beyond. Today, Schibsted employs 7,500 people in 26 countries.

Going digital

But the real reason the Oslo group is increasingly used as a model, is its standout success transitioning to the Web. Its digital activities are currently valued at 425 million euros, accounting for 29% of the group's total turnover (1.46 billion euros in 2009), the highest proportion for any major group from the so-called "legacy" media. Moreover, Schibsted's online activity is also extremely profitable: having generated 59% of its 95 million euros in earning last year.

Has Schibsted found the winning formula that CEOs are so desperately looking for at this transformative moment in the media business? Its strategy is based on two elements: reinforcing its leading newspapers' websites and developing a strong online classified ads section. It is a vision that began several years ago: Kjell Aamot, the visionary and charismatic CEO (who gave his position to Rolv Erik Ryssdal at the beginning of the year), understood early on the revolution that the Internet would bring. The group's leading papers like VG launched their websites as early as 1995.

"We started early. In 2000 we created a separate company in order to be more mobile and responsive. We didn't downsize during the 2001 crisis, nor in 2009 for that matter," explains Torry Pedersen, VG"s Executive officer. The tabloid's website is today by far the industry leader in Norway with 3,7 million unique visitors a week. Not bad for a country of 4.8 million residents! It became profitable in 2003 and generated 36 million euros in revenue last year.

The recipe for success is not necessarily about the amounts that are invested, which according the VG"s boss "aren't huge, just a few million euros." It has more to do with making yourself essential – without fear of cannibalizing the newspaper. "If Norwegians think something important is going on, they have to go to VG Nett," says Pedersen.

As an example of its agility, during the eruption of the Islandic volcano in April, VG Nett set up a hitchhiking system in the span of just seven hours. "This initiative allowed thousands of Norwegians to go home," he says. VG Nett also figured out early how to charge for some of its services, like transmitting soccer games, subscribing to its dating site or its weight-loss groups (which brought in 200,000 clients). These activities represent 20% of VG Nett revenue. "We cannot copy newspapers' business model on the Web," he says. "You need multiple streams to create revenues."

An online yard sale

The other aspect of the Schibsted strategy looks equally promising and was also built step-by-step. The online classified ads section was launched in 2000 with the Norwegian website FINN. The website became instantly successful, again without fear of cannibalizing its newspapers where classifieds represented up to "30 or 40 % of revenue", says Ryssdal. In 2003, they bought the Swedish company Blocket, whose approach Schibsted then adapted everywhere possible following its two basic principles: proximity and extreme simplicity in using the ads.

"It's an online yard sale," says Olivier Aizac, the creator of Leboncoin, who used Blocket as a model. In November, Schibsted CEO Rolv Erik Ryssdal had to defend the high price paid for the French site: "We are very happy with this deal. Leboncoin is a real trend in France and its development potential is huge." The website, which was launched in 2006 gets four times as many hits as its top rival eBay, France (4.5 billion per month).

By now, Schibsted has launched "Baby Blocket" in 17 different markets. In 2006, it bought Trader Classified Media's activities in Western Europe and in Latin America. And it won't stop there. "We have launched seven Blocket clones this year, and there will be more next year," says Terje Seljeseth, Schibsted Classified Media's Executive Officer.

For now, this section only generated 300 million euros in turnover, "only" 21% of the group's total revenue. But it's the group's cash cow, accounting for more than half of its profits last year, with margins often exceeding 40%.

Schibsted wasn't spared by the financial crisis. In 2008, while ad markets were on a historic downfall, the group's financial results suffered. Investing, experimenting, taking risks also means exposing yourself to backlashes. The Sesam search engine, launched in 2005 and shut down in March 2009, cost about 60 million euros according to Arild Nysaether, a financial analyst for Fondsfinans in Oslo. But the crisis also highlighted another major asset of the group: its impressive reactivity. It didn't wait to start a important restructuring plan (closing its Segundamano classified ad papers in Spain, cutting 1,400 jobs), to give up its non strategic activities (television, databases), pushing for an increase in capital. As a result, Schibsted came out with record results this year, without giving up on the possibility of investing in forward-looking activities. At VG, the website's staff went from 50 to 100 in five years, while that of the print version dropped from 460 to 320.

Tablets of hope

But Schibsted can't afford to be complacent. Even though its newspapers are leaders in their market, they still represent about 70% of the revenue and are affected by the worldwide decline of press distribution. Even its Internet activities remain fragile. "Audiences can dwindle quickly, as we've seen with Nettby," says Arild Nysaether. Less than a year ago, the social network launched by VG had about 800,000 active users, or about a quarter of Norway's adult population. But it was crushed by Facebook in just a few months, so much so that VG decided to shut it down at the end of the year.

The group has started working on new ideas to keep monetizing its success. "We're thinking about how to make people pay for our online content; we don't believe in paywalls but we will try different models and subscriptions on the iPad," says Ryssdal. Like elsewhere, they are putting great hope in tablets and last week they launched paying iPad applications for VG and Aftonbladet. "In 2011, we will concentrate on cell phones, tablets and Web TV," says Pedersen.

It may not have won the war, but Schibsted is certainly ahead of the game. "Of all the media groups out there, it's the one with the best vision of the future," says Zollman. But don't go running to Oslo in search of miracles: Schibsted bosses are said to have stopped giving out their secrets to other media groups.

Read the original article in French

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!

7 Ways The Pandemic May Change The Airline Industry For Good

Will flying be greener? More comfortable? Less frequent? As the world eyes a post-COVID reality, we look at ways the airline industry has been changing through a pandemic that has devastated air travel.

Ready for (a different kind of) takeoff?

Carl-Johan Karlsson

It's hard to overstate the damage the pandemic has had on the airline industry, with global revenues dropping by 40% in 2020 and dozens of airlines around the world filing for bankruptcy. One moment last year when the gravity became particularly apparent was when Asian carriers (in countries with low COVID-19 rates) began offering "flights to nowhere" — starting and ending at the same airport as a way to earn some cash from would-be travelers who missed the in-flight experience.

More than a year later today, experts believe that air traffic won't return to normal levels until 2024.

But beyond the financial woes, the unprecedented slowdown in air travel may bring some silver linings as key aspects of the industry are bound to change once back in full spin, with some longer-term effects on aviation already emerging. Here are some major transformations to expect in the coming years:

Cleaner aviation fuel

The U.S. administration of President Joe Biden and the airline industry recently agreed to the ambitious goal of replacing all jet fuel with sustainable alternatives by 2050. Already in a decade, the U.S. aims to produce three billion gallons of sustainable fuel — about one-tenth of current total use — from waste, plants and other organic matter.

While greening the world's road transport has long been at the top of the climate agenda, aviation is not even included under the Paris Agreement. But with air travel responsible for roughly 12% of all CO2 emissions from transport, and stricter international regulation on the horizon, the industry is increasingly seeking sustainable alternatives to petroleum-based fuel.

Fees imposed on the airline industry should be funneled into a climate fund.

In Germany, state broadcaster Deutsche Welle reports that the world's first factory producing CO2-neutral kerosene recently started operations in the town of Wertle, in Lower Saxony. The plant, for which Lufthansa is set to become the pilot customer, will produce CO2-neutral kerosene through a circular production cycle incorporating sustainable and green energy sources and raw materials. Energy is supplied through wind turbines from the surrounding area, while the fuel's main ingredients are water and waste-generated CO2 coming from a nearby biogas plant.

Farther north, Norwegian Air Shuttle has recently submitted a recommendation to the government that fees imposed on the airline industry should be funneled into a climate fund aimed at developing cleaner aviation fuel, according to Norwegian news site E24. The airline also suggested that the government significantly reduce the tax burden on the industry over a longer period to allow airlines to recover from the pandemic.

Black-and-white photo of an ariplane shot from below flying across the sky and leaving condensation trails

High-flying ambitions for the sector

Joel & Jasmin Førestbird

Hydrogen and electrification

Some airline manufacturers are betting on hydrogen, with research suggesting that the abundant resource has the potential to match the flight distances and payload of a current fossil-fuel aircraft. If derived from renewable resources like sun and wind power, hydrogen — with an energy-density almost three times that of gasoline or diesel — could work as a fully sustainable aviation fuel that emits only water.

One example comes out of California, where fuel-cell specialist HyPoint has entered a partnership with Pennsylvania-based Piasecki Aircraft Corporation to manufacture 650-kilowatt hydrogen fuel cell systems for aircrafts. According to HyPoint, the system — scheduled for commercial availability product by 2025 — will have four times the energy density of existing lithium-ion batteries and double the specific power of existing hydrogen fuel-cell systems.

Meanwhile, Rolls-Royce is looking to smash the speed record of electrical flights with a newly designed 23-foot-long model. Christened the Spirit of Innovation, the small plane took off for the first time earlier this month and successfully managed a 15-minute long test flight. However, the company has announced plans to fly the machine faster than 300 mph (480 km/h) before the year is out, and also to sell similar propulsion systems to companies developing electrical air taxis or small commuter planes.

New aircraft designs

Airlines are also upgrading aircraft design to become more eco-friendly. Air France just received its first upgrade of a single-aisle, medium-haul aircraft in 33 years. Fleet director Nicolas Bertrand told French daily Les Echos that the new A220 — that will replace the old A320 model — will reduce operating costs by 10%, fuel consumption and CO2 emissions by 20% and noise footprint by 34%.

International first class will be very nearly a thing of the past.

The pandemic has also ushered in a new era of consumer demand where privacy and personal space is put above luxury. The retirement of older aircraft caused by COVID-19 means that international first class — already in steady decline over the last decades — will be very nearly a thing of the past. Instead, airplane manufacturers around the world (including Delta, China Eastern, JetBlue, British Airways and Shanghai Airlines) are betting on a new generation of super-business minisuites where passengers have a privacy door. The idea, which was introduced by Qatar Airways in 2017, is to offer more personal space than in regular business class but without the lavishness of first class.

Aerial view of Rome's Fiumicino airport

Aerial view of Rome's Fiumicino airport


Hygiene rankings  

Rome's Fiumicino Airport has become the first in the world to earn "the COVID-19 5-Star Airport Rating" from Skytrax, an international airline and airport review and ranking site, Italian daily La Repubblica reports. Skytrax, which publishes a yearly annual ranking of the world's best airports and issues the World Airport Awards, this year created a second list to specifically call out airports with the best health and hygiene standards.

Smoother check-in

​The pandemic has also accelerated the shift towards contactless traveling, with more airports harnessing the power of biometrics — such as facial recognition or fever screening — to reduce touchpoints and human contact. Similar technology can also be used to more efficiently scan physical objects, such as explosive detection. Ultimately, passengers will be able to "check-in" and go through a security screening anywhere at the airports, removing queues and bottlenecks.

Data privacy issues

​However, as pointed out in Canadian publication The Lawyer's Daily, increased use of AI and biometrics also means increased privacy concerns. For example, health and hygiene measures like digital vaccine passports also mean that airports can collect data on who has been vaccinated and the type of vaccine used.

Photo of planes at Auckland airport, New Zealand

Auckland Airport, New Zealand

Douglas Bagg

The billion-dollar question: Will we fly less?

At the end of the day, even with all these (mostly positive) changes that we've seen take shape over the past 18 months, the industry faces major uncertainty about whether air travel will ever return to the pre-COVID levels. Not only are people wary about being in crowded and closed airplanes, but the worth of long-distance business travel in particular is being questioned as many have seen that meetings can function remotely, via Zoom and other online apps.

Trying to forecast the future, experts point to the years following the 9/11 terrorist attacks as at least a partial blueprint for what a recovery might look like in the years ahead. Twenty years ago, as passenger enthusiasm for flying waned amid security fears following the attacks, airlines were forced to cancel flights and put planes into storage.

40% of Swedes intend to travel less

According to McKinsey, leisure trips and visits to family and friends rebounded faster than business flights, which took four years to return to pre-crisis levels in the UK. This time too, business travel is expected to lag, with the consulting firm estimating only 80% recovery of pre-pandemic levels by 2024.

But the COVID-19 crisis also came at a time when passengers were already rethinking their travel habits due to climate concerns, while worldwide lockdowns have ushered in a new era of remote working. In Sweden, a survey by the country's largest research company shows that 40% of the population intend to travel less even after the pandemic ends. Similarly in the UK, nearly 60% of adults said during the spring they intended to fly less after being vaccinated against COVID-19 — with climate change cited as a top reason for people wanting to reduce their number of flights, according to research by the University of Bristol.

At the same time, major companies are increasingly forced to face the music of the environmental movement, with several corporations rolling out climate targets over the last few years. Today, five of the 10 biggest buyers of corporate air travel in the US are technology companies: Amazon, IBM, Google, Apple and Microsoft, according to Taipei Times, all of which have set individual targets for environmental stewardship. As such, the era of flying across the Atlantic for a two-hour executive meeting is likely in its dying days.

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!