Interview – the industry magazine Horizont with Clemens Pig – by Jürgen Hofer and Martin Wurnitsch, Friday, 16 October 2020
CEO Clemens Pig is committed to innovation. In this exclusive interview with HORIZONT, he describes how this was structurally established, how growth can occur and what new services are now being launched.
As CEO of APA – Austria Press Agency, which will be 75 years old in 2021, Clemens Pig is continually expanding the portfolio. An interview on the pressure of costs combined with a spirit of innovation and new services ranging from a fact-checking tool to regional moving images and login standards.
Horizont: A central question these days: from a financial perspective, how is 2020 going for APA, which, of course, is not directly dependent on advertising income?
Clemens Pig: APA has good momentum stemming from 2019, which we completed with EUR 66 million in revenue and growth of four percent. This figure is distributed fairly precisely at a rate of one third each between the classic news agency, APA-DeFacto/APA-OTS and APA-IT. Because we generate two thirds from the latter two areas, which are also highly competitive internationally, development this year has been anything but a given. We’re noticing the effects from the postponement of major events such as the Olympics and the European Championships, which would have generated sales in the core editorial business, as well as from the cancellations in the commissioned photography and video business at APA-OTS.
What does that mean in concrete terms economically?
Due to numerous marketing efforts, we can maintain or slightly increase revenue; in terms of material costs, we have taken drastic cost measures to be able to maintain our earnings level. As in 2019, we will be able to bring 2020 to a stable conclusion. I have always emphasized that, as B2B suppliers, news agencies will be affected by the crisis at a delay. Given that 2021 will be a far greater challenge for the entire industry than the current year, this will require some effort.
You undertook severe cuts in personnel costs in May of this year.
We implemented difficult measures very early on and, from the current perspective, are able to go into 2021 on a stable basis. From the cost perspective, it was urgently needed – not only because of corona, but especially due to rising costs as a result of the particularly difficult situation that there will be 70 quinquennial events in the APA cooperative in 2021 alone. Personnel costs are growing at a significantly higher rate than the revenue level.
The outcry over cutting staff was understandably considerable. How many people did it actually affect, and is the package now concluded?
From the current perspective, the cost-related measures in personnel have been completed. In the editorial department itself, there are four amicable terminations among the editors and one among the commercial employees. In total, we had to part with eleven employees across the group – all of them amicably. The remaining cost cuts concerning the 25 positions communicated were handled through redundancy. But that also means having to change processes so that the amount of work doesn’t increase to the extent it’s no longer feasible. All in all, every single job is painful – that’s indisputable. But with a view to the total workforce of 509 employees, with whom APA emerges as the largest national independent news agency in continental Europe by international comparison, it’s a manageable scale.
To what extent does this change the level of personnel in the editorial department?
Starting from 145 full-time equivalents, in the editorial office we have 15 fewer people. On the other hand, we have also created new jobs in the editorial office, for example the art director for digital native content and user experience and a head of newsroom development.
How much was the cost-cutting package in total?
At least EUR 2 million.
You mentioned the three pillars of revenue: which ones will bring revenue in the future? Is it also possible to generate earnings with the editorial office?
We will definitely continue to generate earnings with the editorial office in the future. When it comes to revenue, our management of the editorial office is growth-oriented, and we will also succeed at this next year. In terms of profit, our editorial office’s budget is tightly balanced. I don’t know of a single independent news agency in the world that works profitably with the editorial team on its own. APA is already a so-called total artwork, in which the aim is overall profitability with other business areas in the company. We generate growth in the editorial office because we are continually creating new product segments that we offer not only to the media, but also to businesses, policymakers and institutions. We can still succeed at this – not with such strong growth rates as IT or DeFacto and OTS, but our objective is to grow. APA organized itself in the area of verification and fact-checking for editorial products at an early stage and created a corresponding position as verification officer. For this, we are also in the process of getting certified by the International Fact Checking Network of the Poynter Institute and have been generating income from it for several months.
What does the business model behind it look like?
For example, we’re currently handling the fact checks for Facebook in Austria as part of an international contract in cooperation with the German press agency dpa. I think it’s good if the media-owned national news agency is entrusted with such responsibilities and that these agendas are handled in this country.
How does that operate in concrete terms? How many employees are working on it?
The project is part of the editorial office under the guidance of the verification officer. As part of this agreement, we verify a certain number of issues and receive corresponding revenues for each fact check.
Posts read and edited, right?
No, we aren’t the Ministry of Truth. Essentially, it is about examining issues related specifically to disinformation and conspiracy theories. We import the results into our basic service and into a shared platform with our colleagues from dpa. We also deal intensively with the technological aspects of this issue. One example is the automated check of moving image content.
What other services are you also working on?
We have a strong focus on data journalism, which is very well accepted by young media users. For the Vienna election, we’ve expanded our range of information for the third time to include texts on automated local results. With our latest data journalism project, the „Grätzl“ or neighbourhood analyses, we have also brought a new perspective to reporting. The story itself is, and always will be, a journalistic and intellectual one. But publishing thousands of data sets in text and graphics within seconds is only possible with technology and AI. Especially at major events such as elections, the editorial services – text, images, graphics, live video, data, automated „Grätzl“ analyses and streaming – enhance the overall image of APA as a digital news agency to an even greater degree.
Are these projects happening in the Medialab test lab, or is this already a part of the editorial team’s day-to-day work? What’s the culture of innovation like at the office?
All prototyping takes place at Medialab. By means of design sprints, clickable prototypes of digital applications are created and tested within just five days. A decision is then made as to whether the prototypes should be given product status. At this point, the prototypes leave Medialab and are programmed and used as fully-fledged services. Medialab is not meant to deal with existing products. All of this naturally requires an open-minded, tolerant culture of innovation in the company. For me, knowing a prototype has to be discarded is as valuable as the step to the next development stage. We save ample time and money when we recognize at such an early date that a certain approach to an issue isn’t expedient after all.
Is there a fixed percentage invested in innovation?
The area of innovation is staffed throughout and there are benchmarks for innovation-related budgets. For the first time, we have also established our own innovation fund with an appropriate amount of money, so we are able to quickly and easily enable digital projects at APA, like a start-up. Looking to 2021, we will also take on a couple of fewer topics and provide more intensive support to others in order to achieve results even faster. This also applies to the further development of APA-OnlineManager (AOM). Initial prototypes are already available for this. We will launch the service parallel to the existing AOM and are planning to finish the prototype specifics in mid-2021 and to offer the first version at the end of the year.
Where is development headed for AOM?
In the direction of a news platform, on which we can better present our own as well as third-party content to our customers. Technologically, we are traditionally very strong, but we will make a significant leap forward in content delivery, supplying it on a more thematic basis and with improved visuals. Thematic and event orientation includes the comprehensive preparation of all available sources, i.e. APA reports, content from third-party providers, social media feeds and the like. The service is to be geared more closely to the thematic and interest-related profiles of AOM users – always in connection with our original content.
So a Salzburg current events editor will not only receive the current events reports from APA in Salzburg and press releases from regional policymakers, but tweets and posts from Salzburg policymakers as well?
Yes, because it’s possible to see the bigger picture concerning the issues, and it also makes sense to provide trending topics from the digital world. These are highly data-oriented approaches. Ultimately, it is about making the workflows for journalists smarter and better so that they can concentrate on their core areas of competency.
You raised the subject of video a while ago. Are moving images as established as they’ve been made out to be for some years now?
Moving images will once again make a significant advance in the industry, also as a result of 5G. Here, too, AI can accelerate the processes dramatically. Among other things, we’re working on automated speech to text as well as automated image selection. In the event, this would mean, for example, that the editor has the film done and on the way to the studio the fully transcribed texts including suitable image suggestions available in the editorial system for designing the report.
Is APA also pushing ahead with its own production?
We will expand the Vienna camera team to three camera teams for the editorial office’s live video services. Through a series of collaborations, we will also set up a provincial network in order to be able to very quickly integrate issues from the regions that are of national relevance into the videos offered by our basic service. I am confident we’ll already be able to offer a significantly higher number of local videos in the first quarter of 2021.
How substantial is shareholder pressure to offer such services – or are they being proactively supplied to the market?
Ideally, something like this takes place in a positive context. It is firmly anchored in the culture of APA to also press ahead with such issues at the initiative of the company itself – and management. But I also quite like the fact that we are challenged by shareholders and customers.
The video editing office mentioned could ease the pressure on ORF with its Player plans. To what extent was that a specific wish of ORF as the largest member of the cooperative?
I can imagine that more moving images from a news agency would be a valuable element in the Player. Development happened independently of the ORF-Player, however, and tended to address media that aren’t producing moving images yet or have only just begun.
To what extent is it conceivable that APA will also build a joint marketing platform or a login solution for the market?
For three years, APA has been working on login and paywall solutions as part of a Google DNI grant and has completed corresponding prototypes. We screen the login solution issue for media on behalf of APA’s cooperative members, thus we have also joined the association “Meine Sichere ID”. An Austrian login system for all media must offer low-threshold access in every event.
This has been under discussion for quite awhile. Do you think it will succeed?
The major revolution is not the login per se, but the use cases for media – such as cross-ID access, with which the user can also access other pages with the ID of one medium, or there are relevant combined subscription models. I am confident that there will be a corresponding decision-making process in the media with the participation of APA at the turn of the year.
But the will to do this has been there for some time. Why should establishing something like this succeed now?
I meant a more specific statement of intent with specific characteristics and concepts. We’re already talking about implementation, not merely about the idea, and I anticipate a decision in the first quarter concerning the characteristics and use cases with which the media ID is to be implemented.
Let’s take a look outside of Austria: how is the holding running in Switzerland?
As part of a comprehensive cooperation agreement featuring a wide array of technology solutions, APA-IT supplies the Swiss news agency Keystone SDA, in which APA has a 30 percent stake as the largest single shareholder. With the subsidiary Gentics as well as APA-IT, we have recently been able to secure a major order in which we are realizing the entire front-end and portal for the eGovernment sector in Switzerland. Overall, I’m convinced that our internationalization strategy with IT works very well – we not only deliver to Switzerland, but also to Germany to SZ, G+J and dpa. Gentics, which we acquired in 2013, will strongly promote CMS solutions for corporates, consequently opening up new sources of income and areas of competency that can also be developed for other markets. We have also entered into a development cooperation with dpa.
The imagination is probably bigger in this case because IT is more scalable than editorial work.
That’s right. In itself, the editorial office of a news agency is perfectly scalable – but only in a big market. The basic service is a first-copy cost product that makes no difference whether you serve one or a hundred customers. Technology, on the other hand, is more easily scalable across borders.
So what’s the international business‘ share of revenue?
Based on the group and on total revenue, which is to increase to around EUR 70 million in the next year, we are at nearly ten percent.
APA’s turning 75 next year. What do you want – and what does the market want from APA?
The market wants what we’re doing at the moment – but always reinterpreted in a modern way: an excellent, independent agency service, stable IT systems and communication services – and all of it economically successful. Anniversaries can be celebrated in several ways. For APA, it is arguably best to go into its 75th year with a number of innovative themes.
The original Interview at horizont.at