1. 63rd WORLD NEWSPAPER CONGRESS
Session: Technology
Titel: The new digital paradigm
Speaker: Adam Bird
Mark your calendar
64th WORLD NEWSPAPER CONGRESS
19th WORLD EDITORS FORUM
Vienna, Reed Messe Wien
www.wan-ifra.org/kiev2012

2. The new digital paradigm
Perspective on the digital future
World Newspaper Congress
Vienna, October 14, 2011
CONFIDENTIAL AND PROPRIETARY
Any use of this material without specific permission of McKinsey & Company is strictly prohibited

3. The only certainty is …the pace of technological change will be relentless
Number of e-mails sent Data processed per Total minutes spent on
every second? day by Google? Facebook each month?
2.9
million
24
petabytes
700
billion
Content uploaded to Data consumed by Tweets per day?
YouTube per minute? households each day?
20
hours
375
megabytes
50
million
Data sent and received Products ordered on
by mobile Internet users? Amazon per second? Connectivity
creates data to
1.3
exabytes
72.9
items
be leveraged …
SOURCE: McKinsey McKinsey & Company | 1

4. The digital world is changing fundamentally across multiple dimensions
Technology is driving digital content
to mobile and multi-device use
Delivery of content is changing –
(social, mobile, location), users are
becoming more diverse
New ecosystems and platforms are
emerging – no clarity on the end
game yet
Younger readers are less interested
in news than older readers, but all
consider newspapers a good and
trustworthy source
SOURCE: McKinsey analysis McKinsey & Company | 2

5. TECHNOLOGY
Smartphones are increasingly becoming the digital all-purpose tool
Smartphone owners using phone Change
as primary device for activity, 2010 2009 - 10
Percentage PPT1
Non-voice
communication
81 +2
30%
Location-based of iPhone users
74 +3
services even prefer their
phones over
Audio/video 48 +2 PCs for e-mail
and Internet
Browsing/
43 +7
reading
Entertainment 43 +6
Commerce 34 +8
Growth in US mobile marketing spend
+74% per year in 2007 -12
1 Percentage points
SOURCE: iConsumer US 2009 - 10, 13 - 64 year-old Internet users McKinsey & Company | 3

6. TECHNOLOGY
Consumers with multiple devices spend more time overall and on each
device individually
Time spent on owned devices PC
Indexed, PC only = 100 Mobile (includes talk)
Tablet/iPad
340 Tablet usage to
evolve further
282
119 ▪ Home entertain-
100 ment hub
176 ▪ Home automation
65 147 ▪ Personal assistant
100 123
18 ▪ Productivity device
82 111 ▪ Focused experi-
59 74
ences
PC (and mobile PC and Smart- PC and Smart- PC and Smart-
phone) phone phone and phone and iPad
non-iPad tablet
SOURCE: iConsumer Survey US 2010; 13 - 64 year-old Internet users McKinsey & Company | 4

7. CONTENT AND USERS
Social networks becoming focal points for finding and sharing content
Daily time spent on social networks,
2008 - 10 Importance of social network activities
Indexed, 2008 = 100 PC Percent of responses, top 2 boxes
Mobile
Keeping up
27
257 to date
Searching for
22
content
166
153 Researching
22
126 products/services
100 100 Doing research
13
for work/school
Making/receiving
13
recommendations
2008 09 2010
Importance increasing with tenure
of membership
SOURCE: iConsumer Survey US 2010; 13 - 64 year-old Internet users McKinsey & Company | 5

8. CONTENT AND USERS
As content is getting personalized and turned into experiences,
the user base is becoming diverse and more willing to pay for content
Content is increasingly mobile, social,
and user-generated
Increasing share of localization, personal-
ization and gamification of content
Apps dominate mobile digital content
and users are willing to pay
The user base for digital content is diversifying, with
more older users and rapid growth in emerging markets
SOURCE: McKinsey analysis McKinsey & Company | 6

9. CONTENT AND USERS
Content is increasingly experienced using apps – IPAD EXAMPLE
consumers are learning to pay for content
91% of owners have
already downloaded … the majority have already paid to … and 60% of them paid
apps … download a wide variety of apps … for more than 10 apps
100% = all iPad owners Top paid app downloads
Percent of users Percent of users Percent of users having down-
loaded paid applications
Games 62
Did not down-
load an app Books 54 100% = 100
9 Music 50 1 to 5 21
Shopping 45
6 to 10 19
News and headlines 45
Celebrity and enter-
tainment news 44 11 to 20 25
Location and direction 42
91 Movie schedules,
41 More than 20 35
Downloaded buying tickets
an app Magazines 41
Banking 39
Early adopters spend
Financial updates 39 on average
Social networking 37 EUR 27/month
SOURCE: The Nielsen Company, "The increasingly connected consumer – connected devices", readwrite online poll,
McKinsey & Company | 7
Dec 20 2010, OTO research/FullFX conducted in October 2010 with 270 iPad owners in France

10. Another legacy of Steve Jobs: paying for digital content
Subscription Purchasing
Penetration by product Penetration by product
20 28 28 33
Video1
7 10
iPhone and iPad
22 30 44 43
Audio2 20 users are
8
2 - 4 times
more likely to
Gaming3 25 32 23 31 pay for digital
10 9 content
Reading4 21 29 23
14
7 4
Overall iPhone iPad Overall iPhone iPad
1 Subscription for premium video content, downloading movies/TV shows over the Internet
2 Streaming music subscription (e.g., Rhapsody), downloading music over the Internet (e.g., iTunes, MP3s)
3 Game subscriptions (e.g., World of Warcraft, multi-player games), purchasing virtual goods associated with online games
4 Online newspaper subscription (e.g., Wall Street Journal Online), digital books (e.g., books read on an eReader)
SOURCE: 2011 McKinsey iConsumer survey McKinsey & Company | 8

11. CONTENT AND USERS Different consumers
Consumers have distinct digital usage patterns Cross-experience
Deep in a single
experience
Online consumer segments and attributes relative to average respondent
Size of segment, percent Non-digital
"Digital media
"Traditionalists" junkies"
79% 3x
less time on 16 more likely to be
social early adopters of
networks 30 new technologies
14 "Digital communi-
"On-the-go workers" cators"
more time spent
3x more mobile phone
talk time vs. average
11
6
13 3.2x on social
networking
10
"Professionals" "Video Digerati"
44%
more online
2.6x
more
e-mail vs. "Gamers" videos than
more time
2.2x
average average viewer
spent on video
games/day
SOURCE: iConsumer Survey US 2010; 13 - 64 year-old Internet users McKinsey & Company | 9

12. ECOSYSTEMS
The ecosystem battle will heat up
From a
"PC world" ... ... to an ecosystem battle
Shipments by OS vendor What's next?
Percent (100% in million shipments)
▪ Will ecosystems converge to
100% = 55 100 an open standard or diverge?
Others 4 3 How will they differ?
7 3
Microsoft 15 ▪ What kind of content will be
RIM 20 consumed on which devices?
16
▪ Which players will shape
Apple
Nokia
16
44
30
the way forward?
– Ecosystem developers?
(Apple, Google)
– Content providers?
(Apple, Amazon)
?
33 – Hardware providers?
(Apple, Samsung)
Google 9
– Social networks?
Q4 2010 Q4 2011 (Facebook, Google)
SOURCE: CEA; Gartner McKinsey & Company | 10

13. READERS
Tablets are beginning to influence print formats
Daily time spent reading, indexed to non-tablet/non-eReader owner
Newspaper home delivery Magazine home delivery
subscribers subscribers
112 107
100 17 100
15 Tablets/eReaders
14 18
18 19 Magazines
38
39 45
43 Books
48 38 37 30 Newspapers
Without Tablet/ Without Tablet/
tablet/ eReader tablet/ eReader
eReader owners eReader owners
How can newspaper and magazine publishers
adopt to the changes while capitalizing
on their existing strengths?
SOURCE: iConsumer Survey US 2010; 13 - 64 year-old Internet users McKinsey & Company | 11

14. READERS
Newspapers can still capitalize on their reputation UK EXAMPLE
of providing trustworthy content
"Do you believe that news sections of general
Web sites are as trustworthy as newspapers?"
By age group, percent
No Yes
Newspapers should leverage
16 - 24 68 32 their reputation of providing
trustworthy information
25 - 34 62 38 to monetize consumer demand
for serious news in the
35 - 44 65 35 digital world
45 - 54 70 30
55 - 64 72 28
65+ 68 32
SOURCE: McKinsey Media and Entertainment News Survey, 2011 McKinsey & Company | 12

15. Newspaper publishers can tackle the digital shift by building on their
brand, delivering high-quality news, and structuring their offers
Deliver the integrated news experience
across platforms and media to reach different
consumer segments – pricing is key
Get to scale in mobile to reach consumers on
high-growth platforms with an increasing willingness to
pay for content
Push multimedia storytelling leverage videos
and images and provide an interactive news experience
going beyond reading
Be more social and connect with consumers when
they share or search for content
Leverage “big data” develop data capabilities to
enhance insights and innovation
SOURCE: McKinsey McKinsey & Company | 13

16. McKinsey & Company | 14