Old media embraces blogging and social networking

Burda looks beyond printing

By Thomas Crampton International Herald Tribune SUNDAY, NOVEMBER 13, 2005

MUNICH As a 102-year-old family-owned German company run by a 65-year-old man who is the grandson of the founder, Hubert Burda Media Group could be expected to be just another dull European corporation.

Such an analysis, however, would not factor in the energy and digital passions of Hubert Burda.

An avid art collector who peppers conversation with references to classical music and world literature, Burda has spent the past few years zealously pushing his media company into everything digital, even insisting that he will never open a printing plant again.

This is a strong statement from the man who started Focus, the most widely read weekly newsmagazine in Germany, and whose mother added considerably to the family fortune by starting the globally successful fashion magazine Burda Moden. Hubert Burda Media is also the largest magazine publisher in Russia and one of the biggest in Eastern Europe and Turkey.

In the past few years, however, Burda has insisted that his company's publishers, editors and investment arms concentrate almost exclusively on digital strategies.

The grease and machinery of the printing press have almost become a sideline to the tool that Burda sees as central to the next generation of publication: social software. This encompasses everything from Web logs to community-building Web sites that let readers create their own content through reviews and comments.

"Printing will not go away, but I do not plan to open a single new printing plant," Burda said. "We now concentrate on using social software to build closer relations with the communities of readers around our magazines."

The digital interests of the company have been stretched beyond publication Web sites to include peer consumer-review communities like Ciao.com; a ring-tone seller; the European franchise for the multiplayer game Ragnarok; and even a unit helping Lufthansa manage its in-flight Internet service.

"I would say Hubert Burda is kind of crazy about us going digital," said Jochen Wegner, deputy science editor at Focus. "I have never met a publisher so focused on connecting traditional print with online branches."

In recent months Wegner, who specializes in digital media, said he had found himself so distracted by helping colleagues with the company's internal changes that he has had little time to write for publication. "Every division and every publication is trying to figure out how they can reach out to their audience online," he said.

One of the company's most successful marriages of social software with a publication has been the integrating of blogs into the Focus Web site. The site, Focus.de, now has nearly a dozen blogs, with many correspondents and outside contributors writing on a daily or weekly basis. The blogs have generated revenue both through exclusive banner advertisements booked during critical time periods and through keyword advertising linked to Google.

The bloggers include a European Parliament member, Silvana Koch-Mehrin; a professional golfer, Alex Cejka; and a television personality known for financial analysis, Markus Koch. Two blogs are dedicated entirely to cars.

It is wrong to view digital content as poaching readers, said Stefan Winners, chief executive of Tomorrow Focus, the subsidiary charged with developing online businesses for many of the publications. As an example, Winners cites the 45,000 subscribers who pay a monthly fee of 4, or $4.70, to have nude photographs of 10 women sent to their mobile telephones each month through the company's links with Playboy. Burda holds the German license to produce Playboy.

"This additional subscription does not destroy our print business, it extends it, because people read the magazines and buy an additional online service," Winners said. "This does work best with naked girls, but the principle can be applied to other publications."

Increased interaction with readers will be more important than increasing printed circulation, Burda said. "We want to say, 'Good morning, Mrs. Robinson, what can we do for you?"' he said. "Interaction builds trust, confidence and revenue."

In many ways, Burda's digital push follows his pattern of running the company. Like other large German media groups, it started out as a simple printing business in the postwar era. Burda himself worked in a variety of jobs in his family's company until he was appointed editor in chief of the celebrity-oriented magazine Bunte in 1974.

Burda became a convert to digital scanning of photographs in the 1980s when he saw that it eliminated the need for the company's 250-person photo-retouching operation. He built relations with Marc Andreesen, a founder of Netscape Communications, after reading about an early version of the Web browser in 1995.

"News has now become a commodity, thanks to the Internet, so we must differentiate ourselves in other ways," Burda said. "Content alone can no longer win. You must build and interact with audiences."

Burda, which is privately held, does not publish financial results. The company has 7,000 employees and says its consolidated revenue has doubled over the past 15 years, to 1.5 billion in 2004, which also was the most profitable year in the company's history.

The digital push has driven Burda's one publicly traded division, Tomorrow Focus, into a position where it is now compared with U.S.-based Internet companies. "I do not find it useful to compare them to other German media companies," said Andre Remke, a Munich-based equity analyst for HypoVereinsbank. "Tomorrow Focus is the second-largest location for online advertising in Germany after T-Online, so their main competitors are really Yahoo and Google." The bank estimates that Tomorrow Focus has a 17 percent market share of German online advertising.

But there is also a risk inherent in Burda's strategy. "They really have tied the future of the company to online advertising," Remke said. "They are certainly in the lead for this fast-growing market, but advertisers of corporate Germany have not yet fully accepted the idea of online advertising."