The case of The Local, a Stockholm-based news network, is truly inspiring. With a core team of just 20 people, the company managed to build a huge network of English-language daily news websites in 9 European countries. Their combined audience reaches as high as 5 million users per month, driven by local editions in Sweden, Norway, Denmark, Germany, France, Switzerland, Austria, Italy and Spain.
The idea behind The Local is simple: European countries have large English-speaking expat communities who need information about the places they live and work. A clear target audience and well-thought out strategy appears to be working. The Local is now focused on building its membership model and has some 13,000 paying subscribers allowing it to become profitable in recent years.
We asked James Savage, the company’s CEO and publisher, how The Local defined its audience, how they manage to run 9 websites with just 20 people and whether Europe is starting to integrate into big media market.
This interview has been edited and condensed.
ZP: How many people work at The Local? You mentioned around 20, that’s about 1 person per one country?
JS: Pretty much. We have 2 journalists in Sweden, France and Germany, and then 1 in each of the rest. We have a centralized structure, with an editor-in-chief for the whole organization, and a managing editor who controls editorial strategy and makes sure every site is performing, that every site is learning from others. The great thing about having similar sites in all these different countries with relatively similar audiences – you can see what’s happening on one site and immediately replicate it on all the others.
Each individual site editor has some autonomy over immediate editorial decisions, but they’re also very strongly led from the centre. In terms of strategy, in terms of learning and in terms of what the site is all about.
Our concept could absolutely be replicated in other places. We’ve done it in Europe because we all are European … We extended one country at a time and so far we haven’t run out of Europe yet.
ZP: Are these separate sites? The CRM and internal software is probably the same.
JS: They are all separate websites. We have a unified CRM. Our paywall is in one place. We have one centralized product and advertising team. Instead of having advertising people all over Europe they’re based in Stockholm but they are multilingual and multicultural so they can work in different countries. Sales and advertising need to work as one team and we’ve learned they need to be physically in one place.
ZP: Could your concept be replicated in places other than Europe?
JS: Our concept could absolutely be replicated in other places. We did it in Europe because we are all European, right? It was the obvious place to start. We basically extended one country at a time and so far we haven’t run out of Europe yet.
ZP: When did you launch?
JS: We launched the company in 2004 in Sweden and have added a new country every couple of years since then. Germany is our second-oldest site, Spain is our newest.
ZP: How do you pick the countries to expand to? Do you have particular KPIs?
JS: We started in Sweden because that’s where we work. The KPIs for picking countries are a mixture of things. We look for places where we can make it work and earn as much money as possible. Since we’ve moved to a membership model we look for places with a really good potential to convert lots of members at a high enough price. We also look for places with vibrant expat communities.
Subscription is now somewhere between a quarter and a third of our total revenue and it’s growing.
ZP: How much do you charge for membership?
JS: It’s 4.99 euro a month – the same for all markets. There are different discounts but our price is 4.99 a month or 49 euros a year. About one third of our subscribers have annual subscriptions, which is high.
ZP: You plan to expand? Basically, territorial expansion, like an empire.
JS: Yeah, exactly. Not for the sake of it but when you have an audience that is so replicable from country to country… There are some subtle differences but broadly they are the same. It’s one language so we avoid lots of editorial problems. That gives a certain level of control. Also it’s easy to do business within the European Union because of freedom of movement, and a certain level of harmonization of things like copyrights etc. It’s increasingly easy to do business across borders. More so than outside the EU or EEA [European Economic Area – note]. But we are not saying we won’t.
Z: Which countries bring the most revenue?
JS: In terms of advertising revenue it’s Germany, and in terms of subscription – France.
ZP: Subscription vs. advertising?
JS: Subscription is somewhere between a quarter and a third of total revenue and growing. Our advertising revenue is growing as well, but subscription is growing faster.
ZP: Do think you need to pick sides: which type of revenue to develop?
JS: I don’t believe in picking sides. It is useful to diversify revenues. We can make money from our audiences in different ways and they are not mutually exclusive. It requires management and thought but it’s doable.
We have a very loyal and specific audience, which is very interesting to some advertisers. There’s travel and health insurance, particularly for people who live an international lifestyle.
ZP: You’re talking about native ads?
JS: Yes. Our focus is absolutely on native ads. We learn from the data and use it to help advertisers create a message that resonates with our audience. We have a Studio, called Client Studio, that works on native ads and learns from the editorial content.
ZP: What was the biggest failure in terms of new market entry?
JS: We’ve had lots of failures. Jesus. One thing that failed for us was franchising. We tried franchising in Austria and Denmark and didn’t find the right partner. I think you could make it work with the right partner, potentially with a media company, but that’s not what we did. We did it with smart individuals who took franchises of The Local and tried to do it on their own.
To make it succeed you need know-how but you also need funds. They didn’t have enough funds. So I think franchises is something that can work but that didn’t work for us then.
ZP: How many subscribers do you have right now? How many people manage them?
JS: Right now we have about 13,000 subscribers. One person is managing subscriptions. There are lots of things to be done in subscription strategy – new ways to monetize readers, increase average revenue per user. We could do all sorts of things with more people.
ZP: Your presence in Europe is clearly tilted toward the West. What about the East?
JS: It’s totally obvious for us that it would make a lot of sense. There are a few obvious next markets. We have some gaps in Western Europe like Benelux and Portugal, but we are absolutely interested in markets east of Berlin. Poland, the Czech Republic, and Hungary would be obvious places to go.
ZP: Any specific plans for the next launch?
JS: We don’t have specific plans, but it is something we’re actively pursuing. If we go to the East the analysis would be based on how large the market is. For example, it’s clear in the Netherlands and Belgium there is a huge market that is very similar to Germany or France. I know Poland is a significant and growing market. The challenge is to decide priorities and pinpoint which of those countries are the most promising.
ZP: At TheFix we like to think of Europe as one media market. Do you think we can call Europe one market or is it a bunch of national ones?
JS: Look, even an individual country is not just one market. You have a local market and you have a national market. But there is also a European market. You have a subgroup of people who live on a more or less European level. That is the European market. It’s not as uniform as the American one, but even that isn’t as uniform as we might think.