Swedish media company Bonnier News is closing its 2-year-old innovation hub, Bonnier News Next, and will task existing staffers at each of its publishing brands responsible for designing new, revenue-generating products instead.

On Monday, Nov. 25, chief commercial officer, Alexander Lydecker, sent a Slack message to employees announcing the closure of the hub and that Bonnier News’ individual operations will take full responsibility for their innovation processes. The publisher is negotiating with trade unions about Bonnier News Next’s six employees.

“Next hasn’t missed any specific targets, and the learnings we have made from its projects will now benefit other businesses within Bonnier News. We are growing and will launch more products,” said Lydecker in an emailed statement.

Nordic media giant Bonnier News has dozens of magazine and newspaper brands, including newspapers Expressen and Dagens Nyheter, which has successfully shifted its digital revenue model to rely more on readers than advertisers. But in a complex media market where publishers are competing more fiercely for ad revenue while simultaneously trying to maximize efficiencies and diversify their revenue streams, investing in siloed product development functions isn’t easy to justify financially.

“We’re reorganizing again as we always do in a very competitive Swedish market. Product development is a process that constantly is challenged by both the outside world realities and our own conditions,” Lydecker added.

At launch, the goal of Bonnier News Next was to develop new revenue streams from new and existing products alongside the group’s existing publishing businesses. Next was formed by merging an existing Bonnier-owned title’s innovation department under a new mission to create products for the whole group. Over the last two years, the hub won three grants from Google Digital News Initiative for designing products like interactive news reading using Google Assistant. Bonnier News Next began with closer to 14 full-time employees, as well as contractors working on specific projects, according to people familiar with the matter.

In its history, the hub has had successes. At least two ad products have been integrated into the wider publishing group: Data-driven ad tool, Pinjata and recruitment tool Smarta Jobb. The latter helped grow digital revenue from digital job postings by 38% in 2017, reversing a declining trend in job posting revenues. By comparison, revenue from print job postings decreased by 44% in 2017 and 34% in 2016.

But neither of these were cash cows, according to people familiar with the matter, and other products haven’t integrated as well into the newsrooms.

As a result, earlier this year, the innovation hub pivoted away from creating standalone products to a more consultative approach with the separate news titles in the wider group to understand the problems that needed solving. This coincided with wider structural changes at the publisher, and the gradual decentralization of its headquartered functions so that each part operates independently. Next also stopped reporting directly to Bonnier News CEO and instead reported to Lydecker, according to people familiar with the matter.

Bonnier’s many brands already have their own tech teams, road maps and partnerships, too. For instance, news title Expressen was one of the first Facebook Watch partners. This is showing results, according to Lydecker. In September, Bonnier News launched an initiative selling digital subscriptions across titles, which by last month had generated 1,000 digital subscribers. Now, just below half of its advertising revenue is digital and yearly growth is more or less flat, with a moderate decline, said Lydecker.

The publisher’s decision to reorganize product development and innovation is partly designed to move the function closer to Bonnier’s audiences.

“This is challenging for legacy organizations that have a tendency to favor traditional project-based innovation managed by top managers more relying on accumulated knowledge instead of real-time user data,” said Kjersti Thornéus, director of product management at Nordic publisher Schibsted, a Bonnier News competitor.

“Accumulated knowledge loses value when behavior changes. And when behavior is changing, it’s worth spending time on really understanding the problem before you start solving it,” Thornéus added.

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