Keywords

These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

1 Market Structure and Media Ownership

While the Norwegian market is not large in terms of population (5.2 million (Mln), ranked as 28th in Europe), it is ranked 2nd on the IMF list of the wealthiest countries in the world in terms of GDP per capita (International Monetary Fund, 2014). Among the Nordic countries, Norway had an estimated GDP per capita two thirds higher than that of Sweden (ranked 7th) and Denmark (6th), and more than twice as high as that of Finland (14th) and Iceland (16th). Norway also has one of the most digitally sophisticated markets in Europe. In 2014, 88 % of the population between 9 and 79 years of age reported daily use of the Internet. During “an average day” these Internet users spend 144 min on various activities at Internet, such as reading news online (75 in percent), reading e-mail (63 in percent) or checking Facebook (64 in percent) (Norwegian Media Barometer, 2014).

Norway is a typical example for the Democratic Corporatist media system in Northern Europe (Hallin & Mancini, 2004) in the sense that (1) the newspapers have high circulation and readers from a broad section of the population, (2) a strong party political press has evolved to become more commercial, and to a greater extent politically neutral, and public broadcasting with a great degree of autonomy, (3) a high degree of professionalization and institutionalized self-regulation, and (4) a high degree of state intervention through regulation and subsidies.

Freedom of expression and media plurality have been the two main objectives of Norwegian media policy. The state’s responsibility to create conditions that facilitate open and enlightened public discourse was written into the Constitution in 2004. This provided a justification for the use of different policy measures to guarantee a degree of media diversity which is often assumed that the market would not be able to provide on its own (Krumsvik, 2011, 2013).

Digitization of media has lead to recent processes of change in three important areas of media policy: (1) press subsidies, (2) media ownership limitations, and (3) broadcasting licence privileges. Regulations in these areas have been rooted in the era of the party press and limited bandwidth for broadcasting. We argue that most of these measures have proven to be failed attempts to slow down unwanted developments (e.g. newspaper death and ownership concentration), and in the following we will discuss how the state interference in the news media markets has created barriers for media innovation, how reform of media policy in order to remove these barriers for innovation is negotiated between the authorities and the players in the media industry, and the relation to horizontal policies of relevance to all media and media platforms.

1.1 Newspapers

Schibsted Media Group is the largest media group in terms of revenues from the Norwegian market (see Table 1). This traditional newspaper owner has become a global player in online classifieds, and half of the total revenue was generated outside Norway in 2014. The second place was held by Egmont, a Danish media conglomerate involved in publishing, film- and video production, and owner of Norway’s largest commercial TV group. On the next two places the Norwegian Government becomes involved. with telecommunications company Telenor, and public service broadcaster (PSB) NRK respectively.

Table 1 Largest Media Groups in Norway, 2014 (in terms of sales/turnover)
Full size table

The three largest newspaper groups in Norway, Schibsted Media Group, Amedia, and Polaris Media, controlled 93 newspapers in 2014, or roughly two thirds of the Norwegian newspaper market in terms of total circulation, as shown in Table 2. The forming of large newspaper groups (by means of mergers and acquisitions) has been one of the key strategies to utilize the economies of scale and scope in operations. The presence of non-Nordic ownership in the Norwegian (and Nordic) newspaper market is limited. (Ohlsson, 2015).

Table 2 Newspaper ownership and market share (circulation), 2014
Full size table

Norwegian press has traditionally been linked to the party system formed in the late nineteenth century. The conservative, labour and social liberal parties all had close ties to specific newspapers. However, the Norwegian press has been characterized by a gradually declining structural connection between the party and press spheres, and traditional owners with political aims have been followed by industrial newspaper owners with long term economical goals (Krumsvik, 2011).

For several decades, the Schibsted Media Group has enjoyed the position as Norway’s largest newspaper owner, measured by circulation. It owns several of the largest media houses in Norway, including Aftenposten, Verdens Gang (VG), and the regional newspapers Bergens Tidende, Stavanger Aftenblad and Fædrelandsvennen. The Schibsted Media Group has been listed on the Oslo Stock Exchange since 1992. The Tinius Trust controls 26 % of the shares. The Tinius Trust was founded by Schibsted’s previously largest owner, Tinius Nagell-Erichsen. His justification for setting up the trust was to consolidate his ownership interest in the Schibsted Media Group in order to create confidence that their media outlets would always be able to maintain their position as free and independent. Other large shareholders are the Swedish newspaper group Nya Wermlands-Tidningens, and the US investment bank Goldman Sachs. The Schibsted Media Group consists of two divisions: Media Houses and Online Classifieds. Media Houses comprises the group’s newspapers in Norway and Sweden, as well as free dailies in Spain and France. Online Classifieds comprises websites in 31 countries. In 2014, Media Houses accounted for 68 % of the group sales. However, online classifieds share of EBITDA in 2014 was 62 %, and went up from 44 % in 2013 (Schibsted, 2015).

The second largest newspaper group in Norway is Amedia (previously A-pressen), a company originally created in 1948 to consolidate the newspaper holdings of the labour unions and the Labor Party. Amedia, which is currently unlisted, has two major shareholders: the Norwegian telco Telenor (44 in percent) and the Norwegian Confederation of Trade Unions (45 in percent) (see Table 1). The Labour Party sold their shares in 1995. In 2012, Amedia acquired Edda Media, a newspaper group comprising 36 local newspapers, from Mecom, a British media investment group. These newspapers were acquired from the Norwegian industry conglomerate Orkla in 2006, and sold back to their main competitor Amedia 6 years later. Until 2012, the labour press owned 50 % of TV 2. The shares were sold for NOK 2.1 billion to the Danish media conglomerate Egmont. This sale paved the way for the acquisition of Edda Media.

Polaris Media, Norway’s third largest newspaper group with 9.7 % of the national circulation in 2014, was founded in 2008 following a merger between Adresseavisen and the Harstad Tidende Group. This new media group was formed as a direct result of ownership regulations. Adresseavisen had partnership agreements with the other major regional newspapers, but could not be part of the consolidation process where these papers came under control of Schibsted Media Group, due to ownership limitations (1/3 of national newspaper circulation, see Regulations below). To avoid being marginalized, Adresseavisen (owning several newspapers in Mid-Norway) joined forces with the Harstad Tidende Group (in Northern Norway). Polaris Media is listed on the Oslo Stock Exchange. As of 2014, Schibsted Media Group (29 in percent) and Nya Wermlands-Tidningens (26 in percent) were the largest shareholders in Polaris Media (see Table 1). In 2013, the Danish media conglomerate Aller acquired Dagbladet, Norway’s second largest single-copy sale newspaper.

1.2 Television

In exchange for licensing privileges, which have been justified by the shortage of frequencies, the Government has traditionally issued strict demands on TV and radio content. The strong position enjoyed by public service broadcasters (PSB) during the twentieth century was in part due to a lack of competition. According to Hallin and Mancini (2004, p. 41), public broadcasting is the most important form of state intervention in a media market. The Norwegian Broadcasting Corporation (NRK) only had one commercial competitor in the national television market since 1992: TV 2, which enjoyed a monopoly on national advertising sales in return for PSB obligations. Digitization of the distribution has fundamentally changed this. By closing the Norwegian analogue terrestrial network for TV broadcasting in 2009, the main competitors in the advertising market obtained equal distribution, and there is now a low threshold for establishing new, national TV channels.

Because distribution is no longer a shortage factor, justification for the public service licensing demands fell away. The authorities feared TV 2 would move from Bergen to Oslo and follow the refocus of TVNorge, a competitor that has been transformed into a pure entertainment channel. An innovation in policy measures came out of negotiations between the commercial broadcaster and the Government: In 2010, TV 2 signed a public broadcasting agreement where they accepted certain PSB obligations in exchange for a must-carry regulation committing all cable distributors to offer TV 2.

In 2012, the Danish Egmont Group acquired the TV 2 Group. As a result, the entire Norwegian commercial TV market is controlled by foreign owners.

SBS Discovery Media was formed in 2013 as a result of Discovery Communication’s acquisition of SBS Nordic from ProSiebenSat.1. SBS Nordic had been a major commercial broadcaster in Scandinavia since the 1990s. The combined viewing shares of these two broadcasters make SBS Discovery Media the second largest commercial television group in Norway (see Table 3).

Table 3 Television ownership and market share (viewership), 2014
Full size table

Modern Times Group (MTG), a publicly traded media company controlled by the Swedish Stenbeck family, is the third largest commercial TV operator in Norway. The TV holdings of MTG include both free and pay channels transmitted from London by Viasat Broadcasting, hence bypassing Norwegian regulation on advertising. Both SBS Discovery and MTG are focused on entertainment programming.

Due to the level of digital sophistication, the Nordic region has been deemed an especially interesting market for over-the-top (OTT) content and services. Netflix, the American subscription-based movie and television program rental service, launched its service in Sweden, Norway, Denmark and Finland in October 2012. The Nordic markets were the first markets Netflix entered outside the English- and Spanish-speaking parts of the world (Ohlsson, 2015).

1.3 Radio Broadcasting

While the public service broadcaster NRK has a 37.7 % market share on television (Table 3), their position is even stronger in the radio market with a 66.1 share (Table 4). There are five national licences for FM radio, occupied by the Norwegian Broadcasting Corporation (NKR P1, P2, and P3), the Bauer Media Group (Radio Norge) and the Modern Times Group (P4). The latter two are commercial channels with various PSB requirements. However, the number of content-related requirements was significantly lowered in 2014, as part of the transition to digital distribution.

Table 4 Radio ownership and market share (listenership), 2014
Full size table

Norway also has 141 regions for local FM radio, comprising a total of 178 stations. These broadcasting rights involve a requirement of locally produced content daily.

Unlike the television market, where a significant share of the total turnover of the commercial broadcasters comes from audience revenues, commercial terrestrial radio depends on advertising as its sole source of revenue, hence exposing commercial radio broadcasters to the inherent volatility of the advertising market. With total ad sales of 81 million euros in 2012, Norway has the largest radio-advertising sector of all the Nordic countries, a fact that becomes even more prominent if population size and the strength of the PSB (NRK) are considered. The radio ad spending per capita was twice as high in Norway as it was in Sweden and Denmark (Ohlsson, 2015).

Major radio channels have national coverage in both analogue FM and Digital Audio Broadcasting (DAB), with plans underway to discontinue the analogue transmissions as early as 2017.

2 Regulations

The idea that ownership plurality leads to diversity of content has been dominating in Norway, and was used as justification for ownership limitations in the licensing agreements when TV 2 and radio P4 were established in 1992 and 1993, respectively, and for the introduction of ownership regulations for newspapers in 1999.

While subsidizing the press is a positive media policy measure, ownership regulation is a negative one. The similarity is that both measures aim to protect key parts of the existing structure and prevent unwanted development. The ownership law of 1997 was to a great extent made to fit the existing power structure. The media authority could interfere (1) if a owner controlled more than 1/3 of the daily press circulation, or (2) if an acquisition results in cross-ownership between two players who both control more than 10 % of this circulation, or 60 % of regional circulation (Norway is here divided into 10 regions). In reality this meant that it was very difficult for existing media groups to expand further. At the same time it has been fully possible for local media houses to establish a multimedia monopoly in a city or a municipality.

Since the introduction of this legislation, a conservative Government introduced more liberal limits in 2004. Radio, television and electronic media have been included in the law, and removed specific regulation of TV 2 and P4. However, a social democratic Government reversed these in 2005. Although the ownership regulation structure has been relative stable, ownership concentration has continued to develop in the Norwegian media markets. And growth limitation domestically has resulted in international expansion.

The two questions that influence the Norwegian debate on the need for ownership regulation most are: (1) is the threat to freedom of expression serious enough to justify strict regulation to be on the safe side, and (2) does specialized legislation in this area serve a purpose, or can competition regulations offer enough protection against misuse of market power? (Krumsvik, 2013).

In 2015, a conservative Government transferred the responsibility of ownership regulation from the Media Authority to the Competition Authority, and suggested removal of industry specific legislation.

While large media corporations are viewed as a problem for freedom of expression due to a potential limitation of media plurality, this kind of ownership might be a precondition for media innovations (see discussion of best practices below).

3 Media Innovation Policies

In order to determine how innovative are Norwegian media companies, we performed an analysis of Community Innovation Survey data in the period 2008–2012 on 174 newspapers, radio- and television broadcasting firms, and our analysis shows that they are significantly less innovative when it comes to product/service (F = 16.14**) and process (F = 4.47**) (p < 0.01) innovation than the other 5819 service firms in our data set. While 11.5 in percent of the other service firms had introduced new products/services in the period, only 1.7 in percent of the media firms had done so. For organizational and marketing innovation no differences in the level of innovativeness were found. Comparing media companies to the 1206 firms in the other parts of the Information sector, however, showed a significantly lower degree of innovativeness in media companies on seven out of nine types of innovation including product/service, process, organizational and marketing innovation.

Due to digitalization developments, media production and distribution becomes democratized and the boundaries between media and other digital services are blurred. This challenges current platform specific media policies, although these Norwegian policies have been developed to pursue other societal objectives than innovation. Innovation policies may be designed as vertical/horizontal, broad/narrow, supply/demand driven, and financial/regulatory, just to mention some of the dimensions of the complex innovation policies of well-developed countries (Borrás & Edquist, 2013). No systematic media innovation policy in either the vertical or complex sense of the term is found in Norway. This issue was also raised by a Green Paper (NOU, 2013) in 2013. It found no lack of priority of the Information sector in public funding of innovation projects. Around 15 in percent of funding from Innovation Norway (the Norwegian Government’s most important instrument for innovation and development of Norwegian enterprises and industry) and the Research Council of Norway (RCN) (a national strategic and funding agency for research activities) was given to Information sector projects even if this sector only represents 6.8 in percent of Norwegian GDP (newspaper publishing, television, and radio broadcasting estimated to represent 0.8 in percent of GDP). However, the news media industry as defined and covered in this book was significantly underrepresented in these funding schemes. News media projects are more often financed through humanistic programs where critical analysis of media innovation is more common than innovation support. For example, none of the 17 current research projects on business model innovation supported by RCN, totalling 60 million NOK, are dealing with innovation of business models in the news media industry. It is fairly obvious that this represents an imbalance in the use of supply side policy instruments to facilitate media innovation. It is difficult to determine if this imbalance is due to lack of relevance in the policy instruments or if the industry does not use these instruments for other reasons. The current Norwegian government favours horizontal and thus, industry neutral instruments, so it is not likely that vertical instruments correcting the identified imbalance will be offered in the near future.

However, the Government has addressed side effects of newspaper subsidies affecting innovation. Norway was one of the first nations in Europe to introduce this controversial governmental support in 1969 to ensure local competition of newspapers with different political party affiliations. 45 years later, most cities have a newspaper monopoly. While the market structure has changed, the policy measures have been stable, and the Media Support Committee’s Green Paper (NOU, 2010) identified two main challenges for innovation and development as a result of the existing subsidies:

  1. 1.

    The distribution of production subsidies according to the size of the print circulation led to a situation in which newspapers receiving such subsidies lacked incentives to develop offerings on new media platforms because they were doubly punished if some of their readers chose to migrate from print to digital: Both the subscriptions and the press subsidies would in that case be reduced.

  2. 2.

    The difference between the zero rate for the print edition and the full VAT rate (25 in percent) for digital services meant bundled products would be charged full or partial VAT: As a result such offerings were not created, despite the fact that the most likely strategy to allow charging for digital services was connected to the print edition.

These side effects of both direct and indirect subsidies are addressed by introducing platform-neutral criteria for awarding production subsidies and a possible harmonization of the VAT rates.

A positive side effect of the subsidy system has been the innovation of ultra-local newspapers. From 1972 to 1995 the communities served by a newspaper monopoly increased from 91 to 144. However, in the same period, the total number of newspapers increased from 199 to 218, most newcomers being ultra-local newspapers competing vertically with regional and national newspapers. This unintended effect has turned into one of the justifications of the system (Skogerbø, 1997).

Conditions for media innovations also are on the agenda as regulation of media ownership is debated. Inclusion of digital news media in the regulation limits new media growth of the major domestic media organizations, while international players such as Google and Facebook are increasingly gaining market dominance in the advertising market.

4 Summary and Best Practices

Our analysis shows that newspapers, radio- and television broadcasting firms are significantly less innovative in product, service and process innovation than the other service firms in the data set. The Norwegian Government is involved in the media markets through ownership regulation, subsidies, and ownership, however media innovation schemes do not exist. While regulations limit growth of media firms, size might be an important precondition for media innovations.

A recent study of strategies for iPad apps in Norwegian newspapers shows that the type of ownership is an important indicator of a newspaper’s approach to innovation (Krumsvik, Skogerbø, & Storsul, 2013). Ownership was more important than newspaper size in explaining tablet strategy. In fact, only newspapers owned by media groups had plans for iPad apps. In addition, executives of newspapers owned by media groups were systematically more active and optimistic concerning new media development. In a situation where media companies faced the “innovator’s dilemma” (Christensen, 1997), i.e. the choice between reinforcing their existing products or innovating, there was a significant difference between companies with different types of owners. Media groups may provide not only financial resources and joint product development, but may also be sufficiently distant from immediate concerns about the day-to-day-operations. They are more able to look beyond the mainstream markets for new opportunities. In other words, they not only have sufficient economic resources but also better strategic capability for innovation. The findings seem to indicate that these characteristics make newspapers more inclined to take risks and thereby be more innovative. This is an important factor that should be taken into account when ownership concentration is assessed (Krumsvik et al., 2013).

5 Innovation Policy Recommendations

Damvad (2012) identified 12 Norwegian laws and legislative regulations that directly affect innovation in Information firms including media companies. Three regulatory authorities strongly influencing media innovation add further to this complexity as almost all these regulations are enforced for other objectives than innovation (e.g. culture, equality and privacy). Innovation is mentioned in only one of the involved authorities’ mission statement (NKOM). It is highly likely that simplification of this complex regulatory framework and the inclusion of innovation at least as a secondary objective of regulation would strengthen media innovation in Norway. As shown above, demand side regulations are implemented through the differentiation of VAT rates, but the way public broadcasting is financed may also be considered a demand side policy instrument. For example, there is an on-going debate if NRK as a public broadcasting company should be allowed to innovate in online services competing head to head with commercial service providers. Again, more deliberate consideration for the innovation implications of using these demand side policy instruments would make them more efficient parts of the complete package of media innovation policy tools.

6 Note

Market structure and media ownership data is based on information from Nordicom (i.e. Ohlsson, 2015), the MediaNorway database (University of Bergen), and the Norwegian Media Authority. The Community Innovation Survey (CIS) is part of the EU science and technology statistics.