Two German entrepreneurs are setting up a new kind of home delivered newspaper among worldwide news print failures. On November 16th the brave young businessmen are venturing into the industry with an innovative newspaper service - the first of its kind in Europe - at arguably the worst time, and for a limited Berlin-only market. But its very unorthodoxy, the essence Wanja Oberhof's and Hendrik Tiedmann's Niiu personalized newspaper, could be its saving grace.
The Niiu started with an idea, two and a half years ago, ultimately about information convenience. Having grown up in a newspaper-reading household, Mr. Oberhof became used to reading multiple papers to pursue the news and information he was interested in. Having to juggle multiple national, local, and international papers to find one's interests would inevitably become a chore, especially vis-à-vis the speed and convenience of internet news. The same behavioral phenomenon is in fact the very reason why the internet seems to be ruining traditional newspapers; people, especially young adults and students, are tending find their news and information from a variety of sources on the internet rather than a single source that marked the newspaper's monopoly and success in the 20th century.
Oberhof's resulting idea was simple and clear: an individualized newspaper, composed of selected pages and sections from papers, delivered each morning to one's door just like a regular paper. This combination of paper format and internet convenience and accessibility found Oberhof a business partner in Hendrik Tiedmann, who shared the same idea. Together they founded InterTi GmbH, Niuu's parent company, funded out of their own pockets, and began doing their homework.
"The whole idea was based on our own behavior research and experience; [as young people] we're used to very different information sources. The main idea was to combine all the varying sources of news and information, because it is normal for young people who have grown up with the internet to have not one source of information but many," Mr. Obherof said in a telephone interview with The Editor's Weblog. But why a newspaper format? Surely a less risky and lower-cost alternative would be setting up a personal news aggregator.
Oberhof disagrees. "We asked this target group which is the most comfortable and which is the best distribution channel; is it an e-paper, is it only on mobile, is it printed or online? The feedback was that for now, paper is still the best distribution channel." Hence the simple combination of the internet and printed paper that is the essence of Niiu.
Interestingly, the founders have no particular allegiance to print, it just happens to be the currently favored distribution channel. "The vision that we offer is all the information that is relevant for the reader. As a next step it is the reader's choice which distribution channel they will use, whether it's a mobile phone, e-paper, the internet, or whatever else." Their focus is information amalgamation and distribution, the particular channel being largely irrelevant and ultimately the client's choice. This is quite an unusual position for a company entering the print industry, which these days seems to require a great deal of faith.
What Niiu is and How it Works (The Technical Bit)
On the client's side the process is very simple. After signing up for a short-term subscription (more on that later), they have until 2 p.m. to choose their news sources for the following morning's paper. On Niiu's website they can select from a wide variety of publications and online sources; from national, local or international newspapers like the New York Times, or internet news sources and blogs. A 24-page personalized paper, researched from and composed of their choices, then appears on the subscriber's doorstep the next morning.
"At this first step, for the reader it is only possible to select whole pages or sections," says Oberhof. From newspapers the readers can select pages or sections, from the internet providers they choose from over 600 very diverse rss feeds, from "Women's tennis blogs to local garden pages, we have lots of special interest content available." Clients currently cannot access their personalized paper online, as this would basically defeat the purpose of the delivered print format.
On Oberhof and Tiedmann's side, however, things are a bit more complicated. It is no easy feat to compile, print, and distribute thousands of individual papers. Over the past two years, InterTi GmbH has had to create a specialized software for compiling sources and setting the layout, arrange digital printing deals, close licensing contracts with news sources, attract advertisers, create a new business model and work out delivery schedules. So how did they do all that?
"We outsource everything," says Oberhof. "We don't have an editorial team, we don't have the printing machines, we don't have a delivery structure; we have partners. First we had to create software, so we got a partner with a Swiss web and print specialist service. They produced our software that combines all the pages and articles and news for each reader into a print-ready .pdf that is sent to the digital printing machines from the Netherlands, and a German copy house takes care of the actual printing. Then we have an agreement with a Berlin delivery service that delivers all the international newspapers that will also now deliver Niiu." Given all this outsourcing and subcontracting, one wonders whether circulation revenue will cover the costs.
Luckily there is another revenue source, the very one that is ruining traditional papers, and where the Niiu shines most brightly: it offers a space for highly targeted advertising, something already optimistic advertisers will pay dearly for. At first, during the 'trial phase' of the first few months, advertising will be more general because the Niiu is new and won't have a large circulation. But with an expanded subscriber base ads will become more targeted, focusing on neighborhoods their corresponding socio-economic groups.
Oberhof is confident of his advertising model. "We have had large amounts of positive feedback from advertising clients, and they have several different ideas such as at first only distinguishing between male and female readers, then differentiating by neighborhood and age in Berlin. Some big German car players are interested and have said 'different cars for different people' based on the interests of the readers, like the family man being interested in the new X5 or the young student being shown the BMW 1." Who the people are and more particularly what their interests are would be clear from their choice of news sources for their Niiu's composition.
Ignoring that their proclaimed audience is exclusively young students and not old people and family men, this raises some questions about whether using personal information for advertising violates some privacy protections. But this is doubtful as various advertisers and distributors have used similar techniques for years: think about those supermarket coupon promotional catalogues, also known as 'junk mail,' which you might get at your front door. They differ per neighborhood using the same concept (in my experience, I got Pioneer Supermarket rice coupons up in Harlem, while my friends downtown got brochures for Citarella).
Of course, a paper cannot live on adverts alone. In terms of subscriptions, Niiu continues to be innovative. The subscription packages are aimed towards young readers and students, the paper's perennial target audience (and probably one of the more difficult market sectors to enter, especially in media and technology).
Mr. Oberhof explains: "We have several different packages, not a traditional subscription but a pre-paid system. You load up money for packages, like the one-day trial, or the longer-term packages over 25, 75 or 150 days. It's not a classical subscription at all, that's an important point for us, because many young people, according to our feedback, don't want a subscription for a year because they do not know where they will be in the near future, whether studying in a different city, or doing an international internship or living at home, so they want short-term packages." Currently Niiu is priced at €1.80 per issue, €1.20 for students.
Is this really a good way to build subscriber loyalty? There is a risk of high turnover, potentially running through the market potential before they get established. However this model makes sense for their target demographic. Personally I find this an appealing arrangement. Not really knowing where I will be in six months has prevented me from subscribing to my publications of choice, so I read online news while I would prefer the print editions.
One of the biggest questions I had for Mr. Oberhof was regarding the licensing and use of articles and content from news providers. In the context of the current debate over paid online content and the associated problem of the cost of news and journalism, this is quite a pressing concern and I was most interested in what Niiu's arrangements were. Surprisingly, it was unsurprising and rather simple.
Niiu has a contract with each newspaper and online provider, in which "we have a little license fee which we pay for every used page," Oberhof explains. The licenses, and thus the copies of Niiu itself, are based on pages: "we pay a fixed fee for each page we use...because we take one-to-one pages from each newspaper," meaning the pages of Niiu are exact replicas of the original page from the source. This setup will be the working model for the first few trial months.
"The newspapers give us access to everything they have. That means every page and article that is used in the New York Times we can have the next day in Niiu," although details on how blogs and internet sources would be presented are a bit fuzzy. It would be safe to assume that they would appear in Niiu as they would in your browser, albeit reformatted and resized.
An obvious question regards how newspaper publishers feel about Niiu and why they would allow access to their articles, when this could very well cannibalize their own sales. While some certainly think so, the majority of publishers approached by Oberhof and Tiedmann have embraced the idea and accepted licensing contracts.
"Most of [the news publishers] think it's an interesting new project for a target group which doesn't read much newspapers. The young people, the students, in Germany don't read that much newspaper so for [the newspaper publishers] it's an experience; they want to have a look at the feedback and to test it out. Most of them also don't think that we will take the long-term single paper reader away from them, since our audience is the reader who doesn't know which paper is right for them or likes a variety of news sources," Oberhof asserts.
So, in theory, there is no direct competition because they target different audiences. However, the Niiu provides the same service as the internet but in print form; it is hard to see why publishers who would blame the internet and the news aggregators (which is basically what Niiu is doing) as the newspaper's bane would embrace that service in their own industry.
Some industry experts are not so optimistic. Joachim Blum, a digital media consultant, voices 'considerable doubts' over Niiu's future. He says the idea is interesting, but it just won't work because the target audience has left paper behind: "People who read newspapers are office workers, not students," Blum tells Spiegel Online. This is similar to the problem discussed above, where it seems that the assumption has been made that students who are used to getting news quickly and for free online will suddenly start paying for it to be physically manifested; they surely won't be paying for the service, as they can do it themselves. They would therefore be paying for the physical product, the newspaper, and its aesthetic appeal. But we all know how fickle young people and students are when it comes to aesthetics.
Another issue is more topical as to how Niiu relates to traditional newspaper and the internet, its status in between and bridging these media forms. For all its supposed innovation, "Niiu shares the same dilemma of print journalism in the age of the Internet: every paper you read in the morning only contains yesterday's news," says Stephan Weichert, a journalism professor at the Macromedia University of Applied Sciences in Hamburg. "The Web offers news every second and gives the option to link to blogs and other websites. Why would people read and even buy a story or information, which they select on the Internet the day before? It's old-school journalism," he tells Time. Again, the same underlying problem is pointed out; the combination of paper and internet has great potential, but it also combines the weak points of both and confuses the primary audiences of both mediums.
Time will tell whether these criticisms will stand or whether Niiu will live up to its potential.
For the time being it seems like the main challenges for Oberhof and Tiedmann have been surmounted. They are looking forward to the November 16th launch, for the time being to serve Berlin only. The circulation scope for now is limited because of the high quality but rather slow digital printing. "You can't compare it to a classical offset machine that could print 200,000 copies of Niiu in an hour; our digital printers can only do about 2000 in an hour," Oberhof explains. "That means it is not possible to deliver from one printing machine to several cities, so we start in Berlin. But obviously it's planned to expand to other cities in Germany and Europe," if the paper gets off the ground with the aim of around 5000 subscribers by the first 6 months.
However Oberhof knows there is much to be done, and that the work is far from finished. "For the next month the biggest challenge will be whether the whole work flows as we want it to. The first actual non-test paper will [hopefully] have around 5000 subscribers and this will be a lot to handle since every newspaper is individual. We might not actually know or can't imagine what the real work flow will be, what will come, and that's definitely the hardest thing." Meanwhile, he already has plans for future products and services once Niiu gets going and is established in the market.
Oberhof and Tiedmann's mission is more about giving the market what it wants, i.e. providing whatever information the reader desires in whatever format they prefer, rather than innovating the newspaper industry (which seems to be a side effect of their project). So if the market preference shifts, so will their products and services.
Having recognized that newspaper may only be around for so long, InterTi GmbH is planning "to offer an e-paper as a second step, probably by the end of this year," Oberhof revealed. Other editions are in the works, but no plans have been formally announced given that the formal launch is still a few days away. "For the future, I think that things like the Kindle will be very interesting for our product developments, but for now its not actually enough, not many people use e-readers at all," Oberhof confides. However, given the company's service-oriented vision, we can reasonably expect an e-reader version once the market for them takes off.
Whether you think newspapers are doomed or just in a rough spot right now, there is no denying the simple ingenuity and appeal (however limited) of Niiu. Its combination of the strengths (and unfortunately some of the weaknesses) of printed news and online news could make it a product to be reckoned with, even for those newspaper publishers who feel no competition from it. The potential for newspaper innovation through individualization is huge, and it remains to be seen whether Niiu will capitalize and profit from that potential
The Editor's Weblog wishes the best of luck to Oberhof and Tiedmann. It is now up to the Berlin public to decide the fate of Niiu.
Mr. Wanja Oberhof will be speaking at the WAN 2009 16th World Editors Forum in Hyderabad
Sources: Personal interview with Mr. Oberhof.