Teemu Kammonen

Master’s program of Media Management

MEJOS6 The Structure and Economy of Media Industries
30.10.2009

Case Uusi Suomi in national online news business

Uusi Suomi is web-based national newssite. Originally well-known national
newspaper was closed in 1992 due economic crisis in Finland. In year 2006 former
journalist Niklas Herlin bought Uusi Suomi brand from media corporation Alma
Media. Site launched october 2007.

On this paper I will study Finnish online news business and it’s characteristics. As
Uusi Suomi is fully web-based news service, studying the firm and it’s operation
reveals some interesting points about Finnish media markets.

Explanation of the market, financial/cost, and operational

characteristics

Uusi Suomi has become one of the medium players is online news market since it’s
launch 2007. In this chapter I’ll study the national market of online news in Finland.

Finnish online audience is quite loyal to services based in Finland and published in
finnish language. Due this characteristic behavior competition is mainly between
domestic newssites. In last 4 years percentage of internet connections in finnish
households have grown from 54 % to 69 % (Finnish center of Statistics, 2009).
Access to internet at least once a week was 70 % of population (Finnstat, 2009).
Usage of online news has grown from 2004 to 2007 by one quarter (41 % to 50 %).
Viewing of tv or radio content online has grown from 17 % (2004) to 24 % (2007).

All the indicators show that online media consuption of finns is growing rapidly.
Basicly half of the finns, about 2,5 million people, are following news online. This
usage is divided mainly between traditional newspapers’ and tv-stations’ sites.

Competition for online audience is based on free content. There is, as far as I know,
no fee-based websites providing news in Finland. Main business model is to get as big
as possible amount of unique visitors to player’s website. This audience is then sold to
advertisers to cover the costs of online production. Online content is also used to
promote current content in paper product or tv-programs by traditional players.

Biggest players in the market are traditional newspapers and tv-cannels. Their online
production could be described as by-product of their everyday journalistic process.
Only Helsingin Sanomat has announced that their online actions make small profit
(this was in year 2002, current figures are not separated from overall profit).

One could say that online news providers are mainly in online business because
everyone else is. No-one wants to be left behind.
One final statement has to be done. Online news genre has clearly fragmented to 4
different categories. Domestic news content (including financial and it-news) compete
between about 6 big news proiders. Local / regional news category compete with
couple of national proiders and other local / regional players of different areas. Third
are entertainment news formulating one own sector of competition. Entertainment is
not in focus here, so I’ll not go there too deep. Still it is worth mentioning because
that category is only one actually developing real competition in finnish online scene.
A lot of new small players have come to market last 4 years. Fourth category is sports
news which has some smaller specialised competitors in market but is also mainly
covered by big media firms.

Web-based Uusi Suomi is a rare exeption in national online news business. It’s main
competitors are national paper-based newspapers and broadcast tv-news. By choosing
internet as medium Uusi Suomi limits competition to online enviroment. Uusi Suomi
focuses on domestic and financial news with some mainstream sport events.

Most of the news providers online are still quite confused with their business model.
As said earlier most of the traditional media companies have launched online
operation because everyone else have. By now firms have developed some plan what
to do online, though financial side of operation is still unclear.

Finnish advertisement online has been in huge growth last 4 years. In year 2005
overall internet advertising expenditure was 68 million euros (13 euros per capita),
while 2007 adertisers used 110 million euros (21 euros per capita). This expenditure
is still small compared to other nordic countries. Denmark had expenditure of 336
million euros (61 euros per capita) and Sweden 440 million euros (48 euros per
capita) in 2007.

Traditionally Finland follows trends of other nordic countries, so it is probable that

online ad business is going to grow in the future.

Advertisiment figures are important because customers are used to have their nows
free. That means just a small portion of people would pay for regular domestic news
content. So most income comes from ad banners and pop-ups newssites show along
the main content.

Web-based Uusi Suomi has tried some new approaches to this problem. Site gives
their content free to users and collects some income from banner ads. One big source
of income for Uusi Suomi are site sponsors. Their name is shown on site and also
these sponsors are allowed to publish articles in separated section.

Unfortunately I wasn’t able to get any figures from Uusi Suomi before deadline of
this paper. It would have been interesting to study revenue streams of this company.
In a conversation editor in chief Markku Huusko told me that company’s business is
somewhat balanced, but not yet profitable.

Application of the industrial organization model to the market

Most online newssites in Finland are supported by traditional newsroom organised to
produce tv-, radio or paper news. Most of the journalists producing online content
base their knowledge and professional experience on paper or traditional electronic
media.

Unfortunately Union of Journalists in Finland, or other sources, do not have statistics

of people working with online news production. It is not possible to say how many
journalists and other professionals participate in online news production.

Finnish web statistic from TNS Metrix counts 53 sites as online newpapers. This
means 53 sites have some kind on online publishing activities and therefore people
working for it.

Most common organisation model, based on my experience and discussion with

others, is to separate online service as own department (like culture, financials,
doemstic, local,..). In this model people working for web are independently managing
website side by side with other sections in newsroom.

This organisation leads in worst case scenario to confusing structure where other
sections neither know or care about online production. Written articles are published
as whole or partly online. In best case scenario online section work in cooperative
with other newsroom providing publicity for articles and breaking news important to
audience.

In Uusi Suomi organisation is quite lateral. CEO Niklas Herlin runs the finances,
editor in chief Markku Huusko runs the daily journalistic work and marketing with
one editor manager and 5 full-time employees. Also content is widely created by
contracted bloggers and voluntary commentators and bloggers.

Uusi Suomi has clear company brand it likes to harvest while marketing the product,
news. The whole organisation is trimmed to create content from different sources and
to control and scan through outsourced production (blogger, paid and voluntary). In
other words, newsroom is also managing the whole site along creating content.

Site development and tech support for web solutions are kept in company. This
decision was made by Markku Huusko due youth of firm and constant need for
development.

Review of trends and developments in the market

From the beginning Uusi Suomi has been innovator in finnish media markets. When
site was launched it got huge attention. Site’s editor-in-chief Markku Huusko has told
me that company didn’t have any funds for marketing the launch. He trusted that old
brand, and simple fact Uusi Suomi was the first fully web-based national newssite
with own content production, was enough. Industry’s attention was mainly in whether
it’s possible to launch profitable business of giving news free of charge to the people.
One fundamental point in finnish online news business is that most of the players do
not want to give their content away free. They just have no choise due high
competition with other news media and other online activities as well.

In 2007 online advertisement expenditure per capital in Finland was one third of
Danish industry. In future is expected that finnish ad markets will follow growing
trend.

Ads are just one possible revenue online. Internet has already changed business of
classified. Lately we have seen huge media companies aquiring smaller companies
that have developed popular web services (for example Sanoma corp bought
Blogilista, a service listing finnish blogs). Also every corporate have today their own
service for selling classifieds.

Traditional model selling news and advertisements on paper to the people is braking
down. In online world revenue will come from ever more smaller and more unique
sources. In my opinion this will develop business models that are in favor to big
corporations. Business is propably not long revolving around journalistic content of
media company but around a bundle of services offered to people. Journalism and
news production will stay as one part but will not be essential for media companies.
Old fashioned news machines will become media machines, but at the same time
revenue streams are directing towards larger corporations, and streaming directly to
corporation itself. Newspapers’ online income will not be the corner stone for
companies anymore.

One interesting experiement is Alma Media’s tabloid Iltalehti, which started an online
tv-series on their site. Iltalehti already has browser games, news videos, recruitment
classifieds and else. With this kind of approach Iltalehti wants to give audience
entertaining experience, not just provide news.

In Uusi Suomi main focus is in politics and opinions. Site offers free blog service to
it’s readers. Uusi Suomi also promotes voluntary bloggers’ best posts. Blog service is
part of extra value media firms can give to people visiting the site.

In my opinion survivors of news competition will see their role in wider sense than
just giving news or other special services to customer. Online news business will have
to see itself as a part of bigger brand and bundle of web services (Sanoma sites, Alma
sites,...).

The future of news is also heavily influenced by technology. It is possible to ”save”

traditional paper-like business model if e-readers, like Kindle or next Apple tablet,
will conquer the households.

Description of the business model employed

Right now online news business is heavily in deficit. In Finland traditional newspaper
business has been paid 60 % by advertisers and 40 % by subscribers. In online
enviroment subscribtion income is now total zero, meaning content providers have to
make do with a lot less money.
Mainly, as said, online news sites are run as some sort mandatory byproduct. News
site gives breaking news which strengthen paper-based products’ credibility and
status. Some players in market also use their site to promote paper content.

In Uusi Suomi there is no paper-based business to rely on, so the enterprise is

dependent of advertisement income. Another source of income is business angel and
owner Niklas Herlin, who is willing to cover the deficit. Third reenue stream comes
from sponsored content.

My conversations with Markku Huusko has let me to know that Uusi Suomi has kept
the cost as low as possible from the beginning.

Uusi Suomi targets it’s service to educated intellectuals who are mainly middle-aged
men (whom most own a car, I’ve been told). Site offers alternative to mainstream
national news, and specially in politics it wants to challenge Helsingin Sanomat as
main domestic forum for politics.

So far there is no financial value to Uusi Suomi’s main action, which is to gather
opinion leaders and thinkers with some political or ideological background. From
beginning Uusi Suomi has been trying to build up a community. This community is a
product they are ”selling” to politicians and readers to have them create content free
to be published on site. At the same time service is branding itself among audience.
The purpose of this is to built partly niche audience to service, which also helps to
aqquire more funding from advertisement.

Uusi Suomi’s main competitors are other national news services online. Firm can live
with tv-news and newspapers. Strategy is to circulate news and provide forum for
opinions of the readers. While not having much own original production value given
to customer is the community. Also readers’ comments are moderated quite loosely
(compared to rest of the mainstream news sites), so more radical views also get some
visibility.

As said, I could not aqquire promised financial figures from Uusi Suomi by the end of
this paper’s deadline. This is why I cannot asses how firm’s financial situation is
handled.

The main business model of Uusi Suomi is to gather people to their site and show
them advertisements (including sponsored content). In other words Uusi Suomi is in
business of selling banner space online.

Uusi Suomi has no classified section or other online retail connections.

Analysis of supply, production and distribution chain

activities

Here I will explain value chain of Uusi Suomi. It does differ little from traditional
media companies publishing content online due lack of ready functional newsroom.
Getting the content
News
Uusi Suomi relies heavily on other media companies. It’s main newsfeed is collection
of most interesting news published in other national websites. Core of newsfeed is
made by finnish news agency STT.

Uusi Suomi has some own news gathering which cover mostly national politics.

Blogs
Uusi Suomi has it’s own blog service. This service was launched in 2008 and it was
marketed mainly to candidates in municipal elections. After election blog service was
opened to public. Today Uusi Suomi’s blog service is widely popular among finnish
politicians.

Blog feed offers Uusi Suomi free content and position to cover politicians’ opinions
both first (the actual blog post) and second hand (pull most interesting posts from the
feeds).

Also Uusi Suomi has contracted bloggers who write on timely basis. These bloggers
mix opinions, analysis and world events.

Picture archieve
With brand Uusi Suomi Niklas Herlin aqquired also rights to company’s huge picture
archieve. Website publishes old pictures as galleries regulary.

Readers
From the beginning Uusi Suomi has invested in building a community around their
site. Every news item and blog post is open to comments. Some of the comments are
used to update or correct articles. Most importantly though comments keep up
community and provide new content to site.

Affiliates and paid content

Uusi Suomi has done cooperative work with a couple of companies and organisations
since the launch. Affiliates have been able to publish their own articles and
anouncements on the site. This sponsored content is separated from newsroom’s feed.

Production
Uusi Suomi employes 7 full-day workers and about 10 bloggers. Core of newsroom’s
employees gather and edit news from different news sources, mainly other media in
Finland and Scandinavia.

Also big amount of content comes from readers and voluntary bloggers contributing
both blogs and comments. Employees in newsroom participate in moderation both
comments and blog posts published on the site.
Distribution
As web-based news site, Uusi Suomi does not have any costs for aqquiring and
printing their content. It costs money to have servers and connections to keep the
content visible. Also constant development of site (including e.g. search engine
optimisation and social network tools) takes it monetary toll.

Service
Part of the value chain, after distributing content to customer, is service. Uusi Suomi
has active community which is built and kept up by the newsroom. From beginning
main strategy of firm ahs been involving readers to content producing. Due the nature
of circulating other media’s news, Uusi Suomi cannot offer real original journalistic
value by telling other media’s news (although journalistic value is added by regular
blog posts by journalists). Real value to customer comes from lively comments
readers leave.

References
Harrie, Eva. 2009. The Nordic Media Market 2009, Nordicom, Göteborg.
Values of Uusi Suomi, 2009. http://www.uusisuomi.fi/mika-uusi-suomi
TNS Metrix web statistics, 43/2009. http://www.gallupweb.com/tnsmetrix/site.aspx
Conversations and emails with editor in chief Markku Huusko, Uusi Suomi.
Lecture series of prof. Robert G. Picard, University of Tampere 28.9.-1.10.2009.
Statistics
Top20 popular newssites in Finland Week 43/2009