“Newspaper of the people” and “Conscience of the nation.”

These words appeared on the cover of the first edition of Kompas, Indonesia’s largest daily newspaper, published in 1965. They continue to guide the newspaper’s mission.

“Fast forward 58 years later, and the same words are still written on our masthead, and we still try to continue the mission that was stated by our founders,” said Andy Budiman, CEO of KG Media, the media group that publishes Kompas.

What began as a print newspaper has grown into a major media group with a wide range of print, digital and broadcast media brands. In total, KG Media employs 6,200 people, of which 2,000 are journalists working in more than 100 newsrooms across the country. 

Its newspaper readership (print and e-paper) is at 2 million per day and its digital reach is 50 million unique users per month.

Despite being a well-established media company, Budiman said that the company is not immune to the aftermath of the Covid pandemic and ongoing global uncertainties that are drastically changing the news industry. 

Speaking at WAN-IFRA’s recent Digital Media India conference, Budiman outlined the steps KG Media is taking to ensure future sustainability and success.

Print decline a “significant challenge”

Kompas has witnessed a 20-year decline in print circulation and advertising revenue, he said, and the pandemic significantly accelerated this trend. Before the pandemic, print revenue accounted for more than 50 percent of the newspaper’s revenue; three years later, about half of print revenue was wiped out.

Meanwhile, digital advertising has grown substantially over the years and through the pandemic but its growth has slowed significantly in the last few years.

About 70 percent of KG Media’s revenue comes from print, digital and TV advertising, while print and digital circulation bring in 10 percent. The reminder comes from events, book publishing, platform funding and research services.

Budiman referred to global survey results published in WAN-IFRA’s World Press Trends Outlook report, according to which about 50 percent of global news media revenues come from print circulation and print advertising.

“But in our case, at Kompas, these only comprise around 30 percent, which gives you some idea of the magnitude of disruption that we’re seeing in Indonesia in our print revenue,” he said.

Publishers in many Western countries are pinning their hopes on digital subscriptions (which account for 14 percent of global news industry revenue, according to World Press Trends). But at Kompas, while digital subscriptions have grown steadily over the past few years, they only represent about one percent of total revenue.

All this adds to a sense of urgency about the company’s future: “The decline of print […] poses a significant challenge for our sustainability as a news publisher,” said Budiman.

Strategies to unlock digital revenues

To tackle this challenge, Budiman said the company has adopted a “dual transformation approach”: increasing the resilience of the print product (and existing audiences), while building growth in digital (and attracting new audiences).

With newspaper circulations in Indonesia declining steadily at a rate of 12 percent annually, and with newsprint supply issues and additional distribution challenges likely on the horizon, the print product faces particular challenges.

The company’s overall goal is therefore to become digitally sustainable for a time when print is no longer viable, Budiman said.

See also: How Indonesia’s largest daily is growing its digital business

In terms of digital audiences, the company’s online traffic peaked around April 2020, when the Covid pandemic entered Indonesia. Since then, traffic has returned to pre-pandemic levels.

As for digital advertising, CPMs initially increased during the pandemic, but have since fallen back to previous levels.

According to Budiman, this is largely due to a decline in demand for traditional banner ads. Other alternative formats for online advertising have emerged in recent years, from video advertising to e-commerce and influencer and social media advertising, all of which are disrupting the market for display ads on websites.

To adapt to the changing online advertising landscape, KG Media has strengthened its offering with:

Social media advertising, which includes sponsored posts from brands on the company’s social media accounts.

An influencer marketing agency that helps brands sell their products on live shopping channels such as on TikTok.

Video ads on the company’s own OTT platform, which it launched a year and a half ago.

Content marketing.

These efforts have helped expand digital advertising, Budiman said, but there are signs that the huge 20–30 percent annual growth rates in this space are likely to be a thing of the past, replaced by a more mature single-digit growth rate.

Paving the way for future growth

Budiman also discussed other future revenue opportunities that can be built on the relationship with audiences: on “the engagement, the trust, the influence that we have with our readers.”

For KG Media, these include the following areas:

Digital subscriptions represent only 1 percent of the company’s total revenue, but this is growing at a very promising rate of 30-40 percent per year.

Related to this is the conversion of print readers to digital subscribers. ”This is crucial. If we are predicting that there is a finite life to a print newspaper, then we need to be able to convert existing newspaper subscribers into digital subscribers,” Budiman said.

KG Media’s events business has grown significantly since the pandemic, with the company organising a number of major signature events such as the Kompas100 CEO Forum, as well as offering event organisation services to clients.

The company’s book publishing division has also grown, thanks in part to a politically charged period (Indonesia held general elections in February 2024). “It seemed like every major political figure wanted to have their book or biography published,” Budiman said.

Finally, more funding from platforms may be on the way: in February, Indonesia’s president signed a new regulation that requires digital platforms to pay media companies that provide them with content, although the full impact of the new regulation still remains to be seen.

As well as investing in these growth areas, Budiman said the company also needed to carefully examine and control its fixed costs.

“Throughout the years, we are continually adjusting the size and the posture of our organisation to make sure that we are sustainable in continuing our business and our mission without sacrificing the journalistic quality that we aim to achieve.”

***

We asked Andy Budiman some additional questions about current industry trends and future opportunities.

WAN-IFRA: How would you characterise your personal journey in news media thus far?

Andy Budiman: News media is never short of disruption, from print being disrupted by digital for the past 20 years and digital itself being continually disrupted by other forms of digital.

Could you elaborate on your company’s greatest challenge/threat at the moment – first from a business standpoint then from a newsroom/journalism perspective?

The greatest challenge from a business standpoint is keeping our financial resilience when print revenue is falling at a rapid pace.

From a newsroom perspective, the challenge is how to maintain reach and influence on older audience while remaining relevant for the next generation.

What has been your company’s greatest success/project in the last year?

We manage to grow events revenue significantly in post pandemic years. But contribution profit of events business is limited compared to advertising revenue which translates almost 100% to profit.

News publishers told us in our World Press Trends survey this year that diversifying revenue streams is a top priority for the foreseeable future. How does your news organisation stand on this, in terms of opportunity?

Digital advertising trend is slowing down to stagnation after strong 20–30% growth during pre-pandemic and pandemic era. Therefore, we can no longer rely on digital ads for future growth. What makes us unique as news media is the trust and influence we have earned from the journalism we provide through the years. 

The question is how we turn influence into new income. New revenue in events, book publishing, research services have grown significantly in the past year, but these revenues contain relatively high direct costs to service which cause a decrease in our overall contribution profit; therefore, managing fixed costs (which is comprised mostly of employee costs) becomes extremely important.

How would you describe your company’s/newsroom’s approach to addressing disruptive trends/technologies like AI?

We have the culture to always embrace every disruptive (or potentially disruptive) technology in our industry. We form a cross-functional project team to explore ways we can use predictive and generative AI to increase productivity and audience engagement, and we compare the benefit that AI brings with the costs of the technology and scale up where we see a net benefit. In parallel, we created an ethical guidance on how AI should be used in the newsroom.

The post Tackling print decline and building a path to sustainability: Lessons from KG Media appeared first on WAN-IFRA.