JAAKKO RAURAMO:
FINLAND OFFERS COMMUNICATIONS

COMPANIES EXTREMELY SLOW GROWTH

Sanoma has grown rapidly from being a Finnish newspaper house into an international media corporation. Chairman of the Board Jaakko Rauramo says the other companies in the sector are mostly left with Finland as their arena of competition.

Jaakko Rauramo talks about the future in Erottaja in Helsinki, in the same block where the first issue of Helsingin Sanomat newspaper's predecessor Päivälehti appeared 119 years ago. Photographer Juha Salminen realises that the balcony jutting out over Erottaja would illustrate this vision, and invites Rauramo out onto it for a picture for the article. We then return to our topic: the future.
"I find it hard to believe that, apart from Sanoma and Hansaprint, no other Finnish media or printing house is internationalising signifi cantly."
Rauramo says many of the Finnish companies in the sector have already made their choice and are staying as local operators. It is, no doubt, possible to run profitable business operations in Finland, too, but then growth has to be sought through consolidation.
"Finnish communications companies should restructure, so they can use their resources more effectively."
Rauramo reckons there is no need to fear foreign ownership in Finland. No, because investors are not interested in newspapers, and the smallness of our Internet markets means they are not very attractive, either.
"The TV market has already sold off its best bits, and magazines run things using Finnish resources."
All this despite the fact that magazine publishers from the other Nordic countries have been trying to bite off a piece of the Finnish media cake for a long time now.

THE POWER OF THE INTERNET IS OVERESTIMATED

Sanoma is increasingly firmly rooted in printed communications. What will become of this and of home-delivered post?

"Print and home delivery have a shared destiny. I believe home delivery is very important. Can I be bothered even to glance at the commercial e-mails that companies send me? In contrast, I might even glance at a magazine from a company that is of no interest to me, as long as it has a good story on the cover."

Rauramo thinks the power of the Internet as a message carrier is overestimated. The Internet is a pull medium that is easy to bypass.

"Bypassing printed communications is not so easy. For example, if you have to launch a new model of car, it is harder to do via the Internet than with newspapers, magazines and television."

The Internet is, nevertheless, unbeatable when you have to find a piece of information quickly. The growth of the Internet does entail one of the media sector's problems: it is not part of mainstream growth.

"In Finland and the EU there is no growth, at least in the classic media," Rauramo says.

"Finnish companies, other than those in the media sector, have a problem with managing extremely slow growth, or even with downsizing. When management is based on continual growth, this becomes an interesting leadership problem." 

As regards current trends, Rauramo believes in the future of Internet video-on-demand and games. Traditional television will get a tough competitor from the Internet once broadband speeds up enough.

CONSUMERS CHALLENGING JOURNALISTS

Especially now, the Internet has forced newspaper houses to speculate about their own futures. Content produced by journalists is out of fashion, at least for the moment. Rauramo has also been astonished by the popularity of content generated by consumers themselves.

"During the development of the media sector, I have been most surprised by social or communal Internet services. Second on the list we could put the enormous popularity of ringtones."

Rauramo, nevertheless, believes that current user-maintained services, such as Facebook, could soon fi nd themselves giving way to new favourites. Whatever the case, they are a challenge to the paid content produced by journalists.

"Content produced for free by users places demands on the content for which someone should be paid," Rauramo says, continuing at least half seriously: "Journalists have got off easily thus far – now, there is competition."

According to him, people's enthusiasm for producing content is partly a fashion phenomenon, whose popularity will dwindle after the initial burst of enthusiasm.

"Magazines are an extremely good example of an area where customers are ready to pay for content. I find it extremely hard to imagine that content like theirs could come from readers – but it could no doubt provide added flavouring."

ADDING VALUE TO NEWS

The cost-free nature of the Internet has already thrown down a serious challenge to commercial news production. Content produced by users is also, for example, increasingly filling Helsingin Sanomat's website. What value will journalistic content have in the future?

"Ordinary news items are now made by the metre. People get money from them by compiling them, like STT [The Finnish News Agency] does, and by packaging them, as the radio and TV news do. We have to be able to create added value around these news items. Explaining the backgrounds and contexts, and the importance of the issues, can't be done by the metre. There will be a call for that in the future."

A lot of people are worried about the constant growth in the volume of information. For Rauramo this has been good news.

"We can produce added value by fishing the salmon out of the great river of information, and serving them up for readers and viewers. In order to keep up, we have to catch a lot of even bigger salmon. Articles have to be interesting, relevant and very well written and laid out."

SANOMAT AT A HALFWAY HOUSE

Sanomat made a real leap into the future nine years ago, when Sanoma and the magazine publisher Helsinki Media combined with book publisher Werner Söderström (WSOY). What emerged was Finland's biggest media house, of which Jaakko Rauramo was appointed CEO. The pace accelerated and, in 2001, they bought a Dutch media company's magazines. In the same year, Rauramo became Chairman of the Board.

"In my career, the current building up of the current Sanoma is the most important thing. In this kind of company nobody does things alone, but the development of the Group has been the main thing in my work."

Sanoma Magazines' number-one position on the Finnish, Dutch and Belgian magazine markets has provided the impetus for an expansion into Eastern Europe: now it also has a strong foothold in Bulgaria, the Czech Republic, Hungary, and above all in Russia. Almost unnoticed the operations outside of Finland account for over half of Sanoma's turnover. Rauramo says they have all gone a good way along the road, but they have to keep moving.

"If the first phase was the fusion of Sanomat and WSOY, the second phase a great leap forward for magazines, and the third phase the internationalisation of textbook publishing, then, now, we are thinking about the fourth phase.

We are not at the goal yet, not even half way."

But you have the pace and stamina for the long run?

"Yes, definitely," Rauramo laughs.