In a controversial move, affiliates of the Industry Super Funds network (AustralianSuper, Cbus and Industry Super Holdings) have spent a combined A$3 million of member funds on an online news website, The New Daily.
At a time when newspapers are introducing paywalls to offset declining advertising revenue, and other online media startups like Business Spectator, The Global Mail and Guardian Australia have failed to deliver profits, the question is – why?
To some extent this could be seen as a direct investment into a potential profit-making venture, but there are also issues of journalistic freedom, political-aligned ownership, the use of super funds, and conflicts of interest. Is this a good use of members’ funds?
Content for The New Daily will be provided by the ABC and AAP, as well as its own contributors, including former editor of Vogue Kristy Clements, former cricketer Rodney Hogg and TV/radio personality Steve Vizard.
As The New Daily is a commercial venture, the ABC news content will be available alongside advertising content.
But the main controversial aspect is the funding by the industry superannuation funds.
For the benefit of members
The superannuation industry is a large one, with assets of more than A$1.6 trillion and 500,000 various superannuation funds in operation, including self-managed, retail, employer, public sector, and industry super funds.
These organisations are entrusted with their members’ retirement savings, and aim to make a return for members. In particular, the industry funds pledge that their funds are run “only to benefit members”.
This begs the question, how will the industry super members benefit from their funds going to the establishment of a website that is basically a collection of news content from other providers?
There are over 5 million members of industry funds in Australia who will be targeted to connect with The New Daily. What is in it for them?
According to The New Daily director Garry Weaven, the funding will enable communication, marketing and education on super matters, plus, after broadening its appeal beyond the members, “We should also get a reasonable rate of return on what is a very modest investment. We expect to turn this into a profitable venture over … three to five years”.
But if the use of funds is seen as a member investment, it would then have to meet rigorous prudential standards.
AustralianSuper spokeswoman Susan Fairley has said the fund does not see it as a direct investment, but a “communications vehicle” as part of the marketing budget. But if it is just a communication vehicle for members, why establish a news website with broad appeal that intends to make a profit? What will be the marketing return on investment?
Standing out in a cluttered market
With the increasing use of different media platforms and vehicles for advertising, the amount of clutter is rising, making it harder for brands to stand out. A number of brands have moved from advertising during a program to being in a program, with a well-placed product placement or branded content in a news story.
The move by industry super funds to to bankroll an online news network seems to be going a step further. It is a case of why buy a banner ad when you can buy the website? It certainly gives the owner more control of content, agenda setting, and what can and cannot be posted on the website aimed at its members.
There is strong doubt that any rival types of superannuation funds would be allowed to advertise on the website. “We don’t have any desire to make it easy to get to the membership base of industry super funds,” Weaven has said.
But could this be more than a way to communicate to fund members? The recent federal election has resulted in a new government which may be planning relevant changes to the industry. According to one article:
“Industry funds, with close ties to unions, are now operating in a less friendly political environment following the election of the Coalition government whose members have flagged plans to push for more independent, non-union-aligned directors on industry fund boards.”
So what do fund members think? From one blog comment:
“Being a member of AustralianSuper, I want to know why my super contributions are being spent on this.”
Ultimately it’s worth watching if The New Daily becomes more of a lobbying tool of the industry super funds in the face of a Liberal government, or is accepted by fund members, advertisers and the general public as a legitimate news source – thereby making the investment and marketing strategy worthwhile.