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Brazilian newspaper with majority print subscribers closes daily paper edition and increases profit margin



As of June 1, Gazeta do Povo, the newspaper with the largest circulation in the Brazilian state of Paraná, will no longer publish its daily print edition. The transition to a business model focused on digital mobile platforms is bold, considering the newspaper's audience: more than half of Gazeta's subscribers come from the print edition.

This year, the company decided to close its printing press, outsource the job and keep only one print edition, re-designed, for weekends. Meanwhile, Gazeta invested R $23 million (about US $7 million) in technology to change internal workflow, exchange equipment and systems and leverage digital subscriptions. The measures increased print’s profit margin and contributed to increasing the sustainability of the business as a whole, Guilherme Pereira, president of GRPCom, the group to which Gazeta belongs, told the Knight Center.

Guilherme Pereira, president of GRPCom(Credit: André Rodrigues)

Pereira explained that the print edition was still financially viable, but that the decision to close the daily newspaper was strategic.

"The margin of the print edition was slightly positive, but the team, in a very visionary way, decided not to keep it, because, with that, we take a step forward and become more focused. By stopping [the daily print edition] we accelerated the creation of a new organizational culture," Pereira said.

According to the executive, three years ago the company monitored the behavior of the audience and its impact on the newspaper's economic model. However, there wasn't still, according to him, a clear sign as to which way to go.

"We realized that there was a gradual change in advertising, revenue and digital audience. But it was only in the last two years that it was very clear that the product model is digital and mobile first. While the business model is subscription first, that is, digital subscriptions in first place," he said.

Thus, the company set up a transition plan that, in principle, did not include the end of the daily print edition. "The paper was in the background," Pereira said. The main objective was to discover how to deliver the necessary editorial and technological quality in digital to attract subscribers - the Gazeta do Povo site has a paywall model.

In addition to a change in internal culture and workflows, closing the daily print edition allowed the company to have a large reduction in fixed costs. The printing press was closed and the printing of the weekend edition was outsourced - a much more economical option, according to Pereira.

Despite ending the daily paper, the company decided to keep a special weekly edition. "We think the paper experience remains fascinating, we believe in physical products, there is still room for them," Pereira said.

The weekend edition will circulate on Saturdays and only in the state capital, Curitiba. The product will be printed on a paper of better quality,more elaborate news design and more in-depth material. The idea is to value the experience of reading on paper. "On a daily basis, on the screen, you read the news leaning forward. At the end of the week, when you have more time, you read leaning back," Pereira summarized.

Leonardo Mendes Jr., director of Gazeta (Credit: Rubens Nemitz Jr)

The editorial director of Gazeta do Povo, Leonardo Mendes Jr., said he sees the printed newspaper like a vinyl record. "You consume it because of the format. It is what we look for with our weekly product, a slower read, that you can appreciate better, something more pleasurable. Because we even consume matters of more depth at an amazing speed on a daily basis. The digital format leads to this," he told the Knight Center.

Another reason to keep a weekend edition, according to Pereira, is to make a gradual transition to digital, keeping the brand close to more traditional readers until they get used to the new format.

Additionally, the option for the weekly product allowed the newspaper to keep some of the print advertising, which is often higher in value than digital advertising.

"We're going to have a reduction in print editions, from 7 to 1, but paper-based advertising does not fall in the same proportion. It was already more concentrated over the weekend, and we were able to transport some of the publicity from the other days to the weekly edition. So we offer a higher quality product with a higher profit margin," Pereira said.

With print being more financially sustainable, the growth of digital subscriptions also promises to make the paper more profitable. "Even with a lower value, the digital subscription's profit margin is much higher than that of the print. And since we're managing to migrate the advertisers from the daily to the weekly print edition, advertising loss is lower and ends up being compensated by the decrease in costs,” the president said.

The executives also celebrate the high rate of adherence of readers to the new model: 92 percent have agreed to migrate to the weekly print format or to the purely digital subscription. Only 8 percent stopped subscribing to Gazeta with the changes, which were announced on April 6.

"In our plans, we had calculated 60 percent conversion. But, we are having a spectacular response," Pereira said. According to the president of the business group, before the change, there were about 18 thousand digital subscribers and 44 thousand for print. The goal is to reach 50,000 in digital by the end of June and 300,000 by the end of 2018. With this, Gazeta seeks to accelerate a change that is already underway in the budget. The goal is to have 30 percent of revenue from advertising and 70 percent from subscribers. "Advertising this year is still going to be bigger, it's going to be about 60 percent of revenue," the president said.

Investment in technology

In recent years, the company invested around R $ 23 million (about US $7 million) to change the internal workflow and turn production to digital. Gazeta now claims to be the “country's first newspaper originally made for mobile platforms.” 

"In 2015, the amount of entrances on mobile has surpassed desktop. And that distance has been steadily rising. Currently, 66 percent of our digital audience comes from mobile and one-third from desktop.This made it very clear that our production logic needed to change," Mendes Jr. said.

Today the newsroom already produces the text while visualizing how the content will appear on mobile, the director explained.

Gazeta’s new publisher (Screenshot)

One of the main investments of Gazeta do Povo was a new publisher, a mobile application from EidosMedia, a company that developed platforms for newspapers like The Washington Post, The Wall Street Journal, The Financial Times, Le Figaro, Le Monde, among others. The application, called Méthode Memo, allows the journalist to publish texts, photos, videos and live transmissions directly from the cell phone.

"The reporter will be able to publish by mobile phone, from anywhere, without having to go through the newsroom. Without the journalist having to stop somewhere and open the notebook, or even go back to the newsroom," said Mendes Jr. For him, this will lead to more proximate accounts.

"There is an idea that technology has taken the journalist off the street because it was very practical to produce from the newsroom. With this mobile publisher, we can be on the street more, attached to what is happening and with a quick publication," the director explained.

Another innovation at Gazeta is the editorial organization of the site with respect to the reader’s geolocation.

According to Pereira, there are three levels of information: Curitiba, Paraná and outside of the state. Depending on the user's location, the most relevant news appears at the top of the page. Hierarchy is automatic, but the reader can also choose from the site menu which information group to view.

Still in the test phase, the newspaper is also developing an integration with Facebook that would indicate, to the user, which material from Gazeta’s site were read by their friends. "It rescues a bit the idea that the newspaper is a reason for conversation among people," Pereira explained.

The media outlet’s changes go beyond technology. Gazeta has also hired well-known columnists, who will produce multimedia content on various platforms, with the goal of increasing the site's audience.

On the other hand, three new journalists were called to reinforce the coverage of national politics in Brasilia, previously done by a single correspondent.

Gazeta also decided to value journalism with social impact. "It is a form of accountability for our subscriber. To show that we are doing relevant journalism, which helps transform and improve society," Pereira said. For this, the newspaper uses quantitative metrics, such as pageviews, shares and likes, but also adopted its own method of measurement that is more qualitative.

"We called Pedro Burgos, a Brazilian researcher at Columbia University. He developed an impact metric for The Marshall Project and is implementing the same process at Gazeta," Pereira said. "We want to measure the social impact of what we produce."



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