Two decades ago, when news organisations were global business titans able to buy fast-growing tech businesses, Stuff acquired Trade Me. This week’s transaction flips the script.
Yesterday was a landmark day in the history of New Zealand’s news media, with each of our largest news publishers undergoing major shakeups in ownership, governance or both. Stuff Digital, the most popular free-to-access news site in the country, has a new co-owner, with auction marketplace Trade Me taking a 50% stake in the business.
The timing of the announcement served to cast a lengthy shadow over a set piece that occurred a few hours later, at the headquarters of NZME, owners of the largest print newspaper and paywalled news audience in the NZ Herald. The company’s annual shareholder meeting saw its chair resign, having adroitly dealt with an attempted coup and graciously fallen on her sword. She has been replaced by a former senior minister in the National Party, Steven Joyce, after a lengthy campaign from Jim Grenon, a wealthy Canadian now resident in New Zealand. The latter is now a major shareholder, who decried the business’s performance, but also what he perceived as the quality and balance of its journalism.
Stuff and Trade Me – star-crossed lovers and a tale of tech and news
It’s the deal between Stuff and Trade Me that has rightly attracted the most attention. Stuff has a tortured ownership history, resulting from the steady accumulation of dozens of newspaper titles, and the early and prescient launch of a unified national news brand under the name Stuff more than 20 years ago. At the time, it was owned by Fairfax Media, later Nine, out of Australia. It has intimate history with Trade Me, having itself bought the auctions platform in 2006 for a reported $750m.
It was an adroit move from the news publisher, as news was still a vast and extremely profitable business at the time, but the challenge the internet would present to its business model was already becoming clear. In particular, classified advertisements, the small individual ads at the end of the paper known as “rivers of gold” in the business due to the profits they delivered, were under brutal attack from the likes of Trade Me, which had successfully replicated what Ebay had accomplished in the US and Australia. By purchasing the business it had reaggregated what the internet had disaggregated.
Unfortunately Fairfax was struggling with a debt load of its own, ultimately carving Trade Me off in a separate listing, and eventually exiting the business entirely in 2012. While it earned a healthy profit on those shares, the subsequent fates of both businesses tell an instructive story about the future of technology-driven businesses and digital news media – of classifieds, and the news they once subsidised, essentially.
The values continued to diverge at pace. Trade Me was taken over and delisted by Apax, a private equity firm, in 2019 for around $2.5bn, while Nine panic-sold all its New Zealand assets to then NZ CEO Sinead Boucher for a nominal $1 in the early stages of the Covid-19 pandemic. Now, five years on from that fateful transaction, Boucher has completed one of the most intriguing and provocative deals in recent media history. Stuff last year split into two distinct businesses in a clear preparation for a transaction of this nature, despite their denials. One is called Mastheads, encompassing its paywalled sites and print newspapers (like The Post and The Press), the other called Stuff Digital, comprising its free-to-access digital sites (mostly Stuff).
By selling 50% of Stuff Digital to Trade Me, long-rumoured and first reported by the NZ Herald’s Shayne Currie in March, it completes an astonishing 20-year turnaround, from news organisations as global business titans able to buy fast-growing technology businesses, to a moment when those same news organisations are so challenged in terms of their financial value that they can be bought by those same tech businesses simply to test a theory.
Why would the classifieds buy a news organisation?
In many ways this runs counter to business logic. The whole idea of breaking the classifieds away from the newspaper was that the skills and capital needed to create a tech marketplace business were very different from those needed to run a print newspaper, and the expense of journalism was unnecessary and onerous when internet audiences could access what they needed to buy and sell without the expense of buying an issue of a newspaper.
However, we are now operating in a different era. Trade Me is now a private company, so not required to release public data or financials. However, it has faced increasing competition in recent years, with NZME’s property portal OneRoof gaining ground on Trade Me Property, while Facebook Marketplace, with its free listings, has chewed into its secondhand goods and vehicles markets. (It’s instructive that Nine is currently assessing a giant bid for its property portal, Domain, while Bowen Pan, the New Zealander behind Facebook Marketplace, just yesterday joined the NZME board).
Yesterday’s press release contained only fairly glib statements from Boucher and Anders Skoe, Trade Me’s chief executive, with the only concrete announcement being a rebrand of Stuff’s fairly anaemic property section, Homed, to Trade Me Property. The potential synergies, however, are obvious and tantalising. Trade Me has what is likely the best and most powerful database of New Zealanders and their spending habits outside of Google’s parent company Alphabet and Meta, which owns Facebook and Instagram.
It is also a very mature business now, with a limit to plausible growth aspirations under its own steam. If it were able to thread what it knows of its users through Stuff, Trade Me should be able to markedly increase the value of Stuff to all advertisers – including, but not limited to, its own sellers – while also diverting some of Stuff’s vast audience (which represents over half of all New Zealanders in any given month) toward the myriad verticals on its platform.
Will it work?
It’s a very challenging idea, and one that runs counter to some firmly laid assumptions of the internet. It’s telling that both Nine, with its separate ASX listing for Domain, and NZME, which is testing doing the same for OneRoof, are moving in the opposite direction. And yet it is also a thesis worth testing, especially given that Trade Me likely paid very little for its share of Stuff Digital (terms have not been disclosed), particularly compared to the relative historic value of each business.
That gets at the almost existential question underlying the transaction. Stuff is a journalism business, one that still employs many of the industry’s best and brightest. Will its new part owners have the stomach to publish bold, challenging public interest journalism? Or will the incentives ultimately gravitationally pull it towards publishing quirky real estate stories, rave reviews of new EVs and explainers about the environmental benefits of buying used furniture?
The answer to these questions will become clearer in the months and years to come. But it also promises to test a different paradox: news still commands vast attention online, yet perennially struggles to monetise that attention. This deal is testing the thesis that you can turn the vast audiences news generates into something far more valuable through a more intimate commercial relationship than display advertising.
It’s a provocative idea, one with many opportunities to fail, from culture to costs. But if they’re right, it could open up a whole new operating model for news. One with a curious resemblance to the old one.
