academic mindtrek 2013: making sense of converging media
DESCRIPTION
Presentation of EDGE research group studies in new media concepts and Business Models in the digital ecosystem. "Case studies" based on interviews with Publishers and media professionals in Finland, Sweden, UK. and USA in 2012-2013.TRANSCRIPT
Making Sense of Converging Media: Business Models and new media concepts
in the digital ecosystem Academic MindTrek Conference
October 3, 2013 Kim Holmberg, Timo Ketonen, Malin Brännback
School of Business and Economics at Åbo Akademi University
Content of presentation
1.
Research topic and methods
2. Background and Key Drivers of Change
3. Results and conclusions
Research Topic
o This paper looks at Newspaper Publishers’ approach to find new sources of revenue in the rapidly changing digital ecosystem.
3
Methods
The 2011 study: The Delphi method collects anonymous answers in iteraIons of a set of quesIons from a panel of experts. ALer each round the answers are summarized and the respondents are given the chance to comment or revise.
The 2012-‐2013 study: Interviews with media execuIves and industry experts in four countries (FI, SE, UK, USA). The interviews were conducted and analyzed in order to understand the change of the business environment and the strategic approach to Business Model innovaIon in the digital ecosystem. The research is planned to conInue with in-‐depth case studies in 2014.
Respondents
The 2011 study: The respondents included 9 experts that worked as chief editors, directors of research, or in related posiIons in Finnish media companies that publish newspapers. They answered 9 open ended quesIons between July and August 2011.
The 2012-‐2013 study: The interviewees included media execuIves (CEOs in Finland and Sweden), Editors-‐in-‐Chief, development managers and other industry experts from established media firms and associaIons . We also interviewed some new players represenIng start-‐ups in the media business. In-‐all 80 interviews were conducted in Finland, Sweden, UK and USA.
Background to the change in the media landscape
Key Drivers of Change
6
Background: Newspapers in decline
History o Old Business Model in
Publishing dates back to 1833, when ”The Sun” went on sale on the streets of New York
o Business Model originally based on adverIsing to keep the price of the newspaper down and circulaIon up
o AdverIsing conInues to fall
Adver6sing revenue (USA)
7
Background: Newspapers in the U.S.
Focus on digital subscrip6ons
o Print subscripIons have been in decline since the 1990’s
o The falling circulaIon of the US newspapers has slowed down as paid digital content is compensaIng for print
o Digital ediIons now account for 20% of subscripIons
Top US newspapers Q1/2013
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Key Drivers of Change o Consumer Behavior
– time spent on media and how media is consumed
o Cost of Print & Distribution – particularly the cost of
physical distribution o Disruptive Technology
– the new ‘ecosystem’ with tablets and smartphones
o The Change in Advertising – mass marketing vs.
targeted content marketing
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Digital Ecosystem: Devices, OS, services & applicaIons
Tech companies build their own ecosystems and want to sell content
The rise of mobile has nearly doubled the 6me we spend online since 2010
10
Consumer Behavior
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The use of applications and tech services is rising
o Consumers appear to like subscription services offering real value for money
• e.g. Amazon Prime, Dropbox Pro, Hulu Plus, Netflix, Pandora, Spotify etc.
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”Once locked in, consumpIon becomes painless”
Survey: ”Paywalls and apps are increasingly part of everyday life”
o 49% of 18- to 24-year-olds read a digital newspaper – the highest reach of any age group
o The survey of 11,000 internet users in nine countries found that 25- to 34-year-olds are twice as likely to part with their cash for digital news than older readers
Source: Digital News Report, Reuter’s InsItute for the Study of Journalism.
Paid-for digital news services grow
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DECISION
IDEA
RECOMMENDATION
PURCHASE
BROWSING
SELECTION
“Eyeballs”
Click
Lead Commission
Customer Loyalty
MEDIA CONTENT: News, games, videos etc.
Web shops
Cont
ent M
arke
ting,
loya
lty p
rogr
ams
etc.
Search engines CONSUMER
PROFILE: Attitude, interests, consumption patterns, demographics etc.
Trad. Media
Results and conclusions
Strategic choices by Publishers – a few case studies
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DIGITAL FIRST
DIGITAL TRANSFORMATION
PRINT & CONSOLIDATE
PRINT FOCUS + ePaper
ALMA ALUEMEDIA
+
STRATEGIC C H O I C E S
Digital Print
New
Current
technological focus technological focus
resource dependence resource dependence
Strategic choices in Publishing
DIGITAL FIRST
DIGITAL TRANSFORMATION
PRINT & CONSOLIDATE
PRINT FOCUS + ePublishing
ALMA ALUEMEDIA
+
STRATEGIC
C H O I C E S Digital Print
NEW
Current
Technological focus Technological focus
Resource dependence Resource dependence
Strategic choices in Publishing Efficiency-‐centered vs. Novelty-‐centered Business Models
“Digital First” publishers have applied a novelty centered business model and a more aggressive approach to crea6ng the future. These firms have invested both in the crea6on of digital publishing plaZorms and the analysis of reader engagement (collec6on of data related to the behavior of the subscriber base). These companies are most o[en “global brands”.
The interviews reveal that some firms have chosen to s6ck to the old business model with a technological focus on the print based business model for as long as possible. These companies are efficiency centered and the main part of revenue is derived from the old print based business model. Some forms of e-‐Publishing is applied at moderate cost.
Several publishers have invested into digital transforma6on with a certain degree of incremental improvement of the printed products. Digital transforma6on means investment into new products and services in the digital ecosystem, including mobile applica6ons. Is this s6ll a defensive strategy?
Some publishers look at even a greater degree of efficiency through industry consolida6on, which required investments into corporate acquisi6on and competencies in finding synergies within the acquired framework of newspapers.
Schibsted in Sweden
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o Schibsted has been leading the way – change of culture and ”cannibalizing its own business”
o BytBil.com introduced in 2002 and Blocket.se in 2003
o Digital services now account for more than 50% of revenue
o Aftonbladet has developed many mobile and tablet apps – Mobile usage is skyrocketing
o Svenska Dagbladet is putting more focus on its digital services – Paywall and mobile services
The Financial Times o 125-year old Financial Times
has its largest readership ever o Digital content and advertising
account for 30% of FT’s total revenues – Mobile devices account for 1/3 of
FT.com traffic and 15% of digital subscriptions
– App usage is growing particularly fast in the age group 25-34
o Measurement of audience behavior with regard to what you read – My FT – more personalization
features – Analytics tool 'Deep View’ offers
data into advertising campaigns
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The New York Times o ”Print is Dead: Long Live
the New York Times” – reporter David Carr in
”Page One: Inside the New York Times and the Future of Journalism”
o Business Model for paid content focus on Bundled Digital subscriptions – ’Paywall’ since March, 2011 – Already 699,000 paid
digital subscriptions (+35%) o Revenue from total
subscriptions overtook advertising in 2012
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The New York Times
o Focus on R&D, new innovations and new media platforms like Google Glass
o New Mobile Apps – Looking for more
”price points” in niche topics like culture and food
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“Magic Mirror” and Google Glass
The Washington Post – what’s next? Change of ownership: “Our strategy had been to innovate like hell in digital and other businesses and offset the declines in print revenues.” CEO & Chairman Donald E. Graham.
New Disruptor takes over: Amazon has more than 200 million customer accounts – customer data is key to success!
23 ”Culture eats strategy for breakfast”, Peter Drucker.
Aggregators and Curators Flipboard 2.0: 50 million users. Now you can create your own magazines.
NowThis News: Mobile video news service, available as an App and on Instagram.
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New media concepts in Finland
Teknari o Introduced in 2010 on the tablet
+ MTV3 program o Freemium-‐model based on
adverIsing
o Tested different forms for paid content in 2013 – no success?
Long Play o Launched in
January 2013
o Long form journalism
o Sold as ´singles´ o Priced at €3,99
Conclusions o Change in the media landscape is expected to
accelerate as consumers´ information behavior continues to change. New concepts and platforms for news are being introduced.
o The interviews reveal that that change has already started and that the Publishers feel an urgency in deciding which path to choose and where to invest.
o The results show how different companies have chosen different approaches to meet the digital demand for news.
What about printed newspapers? o Their importance will decrease o They may become a luxury product o Publishers that invest only in printed
newspapers will not be successful • Efficiency-based Business Model can only get
you so far…
Content? • Pressure for paid content will increase • Journalism is not very different • The content may be bundled according to different user groups
– the user experience matters as much as content • Better possibilities to target relevant content in the right context • Elements of multimedia and links to additional material are
included (content marketing, hyperlinks, web TV) • Unique and interesting content that readers are willing to pay for
One concern was how the advertisements can be displayed in e-newspapers and whether the consumers would want to see advertisements in e-newspapers. Overflooding the e-newspapers with traditional advertisements is the biggest risk for e-newspapers to fail, according to respondents.
Future? • Benefits from cost savings in production and distribution • Increased profits from increased reach and new audiences in the
digital ecosystem • More development work needed – crowdsourcing and open
innovation can be utilized to transform the media business • More research about consumer behavior needed • Increased cooperation needed – networks and partnership
Before e-newspapers break through Publishers need to invest and experiment in many different online activities and mobile applications that will not give immediate return in form of profits.
Analyzing and utilising customer data may be a key to success?
