“medianomics” strategic choices and business model innovation in newspaper publishing ·...

“MEDIANOMICS”STRATEGIC CHOICES AND

BUSINESS MODEL INNOVATION IN NEWSPAPER PUBLISHING

PROJECT REPORT17.12.2013

TIMO KETONENProject manager

EXECUTIVE SUMMARY

The$ focus$ of$ the$ research$ project$ has$ been$ on$media$ firms$ and$more$ specifically$newspaper$ publishers’$ approach$ to$ find$ new$ sources$ of$ revenue$ in$ the$ rapidly$changing$digital$ecosystem.$The$design$of$new$and$viable$business$models$is$a$real$challenge$ in$ the$ constantly$ changing$ media$ landscape,$ where$ consumers$ are$increasingly$ online.$ In$ fact$ Finnish$ Internet$ users$ are$ now$ among$ the$ most$ avid$consumers$ of$ online$ news$ and$ rank$ #1$ among$ European$ countries.$ Consumers$obtain$and$share$their$news$on$multiple$platforms$including$blogs$and$social$media.$Mobile$media$consumption$ is$ clearly$an$accelerating$ trend,$which$ in$ turn$requires$new$ business$ models$ and$ new$ ways$ of$ engaging$ consumers$ in$ media$ and$advertising$content$in$the$right$context.$$$

The$results$from$the$multiple$inFdepth$interviews$in$four$countries$(FI,$SE,$UK,$USA)$indicate$ that$ the$ change$ in$ consumer$ behavior$ is$ accelerating.$ Recent$ consumer$surveys$support$this$view.$The$willingness$to$pay$for$content$is$influenced$by$other$media$content$services$(e.g.$Netflix,$Spotify,$MTV$Katsomo)$and$the$introduction$of$‘paywalls’$ for$ news$ services$ has$ recently$ taken$ place$ in$ the$Nordic$ countries.$ The$monitoring$of$consumer$change$and$willingness$ to$pay$ for$news$will$continue$ in$a$longitudinal$ study$ during$ 2014F2016.$ Finland$ will$ be$ part$ of$ the$ study$ mapping$consumer$behavior$in$10$countries.$$

The$interviews$reveal$that$there$is$an$increased$sense$of$urgency$in$deciding$which$path$to$choose$and$where$to$invest.$New$concepts$and$platforms$for$news$are$being$introduced.$ Different$ companies$ have$ chosen$ different$ approaches$ to$ meet$ the$digital$demand$for$news.$Printed$newspapers$may$become$a$luxury$product$with$the$increased$cost$of$distribution.$Publishers$that$invest$only$in$printed$newspapers$will$not$ be$ successful$ in$ the$ future.$ The$ critical$ question$ is$ how$ to$ manage$ digital$transformation$ and$ utilize$ customer$ insight$ to$ develop$ new$ services$ to$ both$consumers$and$advertisers.$

An$ agile$ organization$ is$ a$ prerequisite$ for$ innovation.$ It$ is$ vital$ to$ nurture$ a$corporate$culture$that$supports$ ideas,$development$and$prototyping.$The$ability$ to$collect,$ analyze$ and$ utilize$ customer$ data$ is$ of$ essence.$ Service$ design$ based$ on$customer$ insight$ is$ required$ in$ order$ to$ be$ able$ to$ offer$ valuable$ content$ to$ the$consumer$ in$different$contexts,$on$different$platforms.$ It$ is$ important$ to$recognize$the$ various$phases$ of$ the$ consumers’$ purchase$path$ and$ to$ offer$ the$ right$ kind$of$content$ for$ each$phase$ including$advertising$ solutions.$The$ innovation$process$ for$new$products$and$services$needs$ to$be$shortened.$Trial$and$error,$ i.e.$ testing$with$consumers$is$part$of$the$service$design$process.$However,$it$should$be$noted$that$”no$service$concept$survives$its$first$contact$with$customers.”$$

‘MEDIANOMICS’ Åbo Akademi University – School of Business and Economics

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TABLE OF CONTENTS 1. FOCUS AND MOTIVATION OF THE RESEARCH PROJECT 3

FOCUS ON BUSINESS MODEL INNOVATION AND SERVICE DESIGN 3 MY MAIN MOTIVATION FOR THE RESEARCH PROJECT 3

2. INTRODUCTION: THE ONGOING CHANGE IN THE MEDIA LANDSCAPE 5 CHANGING CONSUMER BEHAVIOR 7 NEW OWNERSHIP IN TRADITIONAL NEWSPAPERS 7 WILL CONSUMERS PAY FOR DIGITAL NEWS? 9

3. RESEARCH DESIGN AND RESEARCH METHODS 11 RESEARCH METHODS AND THE MATERIAL 11

4. BUSINESS MODEL INNOVATION AND SERVICE DESIGN 12 DEFINITION OF A BUSINESS MODEL 13 DEFINITION OF MEDIA 15 BEING DIGITAL 17 DEFINITION OF DIGITAL ECOSYSTEM 20 DEFINITION OF SERVICE DESIGN 21

5. RESULTS OF THE INTERVIEWS AND KEY DRIVERS OF CHANGE 23 KEY DRIVERS OF CHANGE 23

6. STRATEGIC CHOICES: EFFICIENCY-CENTERED VS. NOVELTY-CENTERED BUSINESS MODELS 26

7. A FEW EXAMPLES: DIGITAL TRANSFORMATION AND DIGITAL FIRST 28 INTERNATIONAL PUBLISHERS OF GLOBAL NEWS BRANDS 28 THE ECONOMIST – DIGITAL TRANSFORMATION 28 THE FINANCIAL TIMES – DIGITAL FIRST 29 THE NEW YORK TIMES - DIGITAL FIRST 30 NEW MEDIA CONCEPTS IN THE U.S. AND SERVICE DESIGN FOR DIGITAL NATIVES 33 NORDIC EXAMPLES, SWEDEN 34 SCHIBSTED – DIGITAL FIRST 34 VÄSTERBOTTENS KURIREN – DIGITAL TRANSFORMATION 35 TWO EXAMPLES FROM FINLAND 37 THE NEW HELSINGIN SANOMAT (TABLOID, ONLINE AND MOBILE) – DIGITAL TRANSFORMATION 37 KSF MEDIA DIGITAL STRATEGY (HUFVUDSTADSBLADET) – DIGITAL TRANSFORMATION 37 NEW MEDIA CONCEPTS AND BUSINESS MODELS IN FINLAND 38

8. CONCLUSIONS AND FURTHER RESEARCH 41

LITERATURE AND REFERENCES 42 ARTICLES, TRADE BOOKS AND REPORTS 42


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1. FOCUS AND MOTIVATION OF THE RESEARCH PROJECT Focus on Business Model innovation and Service Design My$ research$ topic$ has$ had$ a$ clear$ focus$ on$ business$ model$ innovation$ and$ how$newspaper$ publishers$ are$ coping$ with$ the$ ongoing$ change$ in$ consumer$ behavior$and$ transition$ to$ digital$ news$ platforms.$ Service$ design$ is$ of$ essence$ “because$ no$service$ concept$ survives$ its$ first$ contact$ with$ customers.”$ (This$ is$ Service$ Design$Thinking,$Stickdorn$and$Schneider).$$Research(Question:$What$are$the$specific$requirements$for$newspaper$publishers$to$create$ innovative$ new$ business$ models,$ and$ how$ do$ they$ manage$ digital$transformation?$ The$ focus$ of$ the$ study$ is$ on$ strategic$ choices$ by$ newspaper$publishers$and$the$question$is$how$do$they$invest$ into$service$design$in$the$digital$ecosystem?$$The$Research$Question$is$further$specified:$

a) How$is$digital$transformation$met$by$international$publishers,$i.e.$owners$of$global$ news$brands$ (e.g.$The$Economist,$ The$Financial$Times$ and$The$New$York$Times.)$

b) How$is$digital$ transformation$met$by$Nordic$publishers,$ i.e.$owners$of$news$brands$in$Sweden$and$Finland.$Here$I$have$chosen$to$take$a$closer$look$at$one$large$and$one$smaller$publisher$in$Finland$and$Sweden.$$

c) The$study$is$put$into$a$time$frame$starting$in$2011$and$ending$in$2014.$

My main motivation for the research project My$main$motivation$for$research$in$this$field$is$driven$by$a$passion$for$trustworthy$news$services$and$‘quality$journalism’.$$Newspapers$and$access$to$well$curated$and$reliable$ information$has$been$regarded$as$one$of$ the$pillars$of$modern$civilization.$As$information$behavior$evolves$it$is$relevant$to$understand$how$we$get$reliable$and$relevant$information$about$current$events.$The$survival$of$reliable$media$is$a$bigger$issue$in$our$society$than$just$a$matter$of$business.$Social$Media$platforms$only$offer$a$glimpse$of$a$complex$world.$As$the$late$publisher$Arthur$O.$“Punch”$Sulzberger”$of$The$New$York$Times$put$it:$“We$sell$ judgment.”$What$he$meant$is$that$“The$Times$sold$ not$ just$ news,$ but$ judgment$ about$ the$ importance$ and$ interest$ of$ news,$ and$once$ invested$ in$his$choice$of$ subordinates$he$wanted$ them$to$ feel$ secure$ in$ their$labors,$comfortable$with$their$judgments.”$(Max$Frankel,$The$New$York$Times).$Newspaper$survival$ in$the$digital$era$ is$ literally$a$question$of$ life$or$death.$From$a$business$model$perspective$it$is$relevant$to$understand$how$traditional$media$firms$cope$ with$ this$ change$ and$ what$ strategic$ choices$ they$ make.$ Is$ incremental$improvement$ sufficient$ in$ order$ to$ survive$ or$ are$ disruptive$ business$ models$required$ to$ secure$ a$ profitable$ business$ in$ the$ future?$ ”Existing$ players$ in$ an$industry$ almost$ always$ fail$ to$ appreciate$ how$ disruption$ will$ affect$ them$ or$understand$how$to$adapt$ to$ it,$and$media$companies$are$making$all$of$ those$same$mistakes.”$(Harvard$professor$Clay$Christensen,$PaidContent.org,$February,$2013.)$As$ a$ separate$ question$ I$ will$ in$ the$ Finnish$ case$ studies$ illustrate$ what$ strategic$choices$ Finnish$ newspaper$ publishers$ are$ making$ and$ their$ approach$ to$ the$


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changing$consumer$behavior$and$service$design$in$the$digital$ecosystem.$The$media$industry$has$become$a$global$business$and$the$perspective$ for$ international$media$brands$in$quite$different$from$those$operating$in$smaller$markets$and$in$a$language$limited$by$the$size$of$the$audience.$$It$is$an$interesting$question$to$address:$how$will$journalistic$quality$and$the$supply$of$trustworthy$media$content$survive$in$countries$like$Finland$and$Sweden?$In$this$connection$ I$ refer$ to$ a$ publication$ by$ my$ late$ friend$ Hannu$ Olkinuora,$ emeritus$EditorFinFChief$ (Hannu$ Olkinuora,$ Marit$ Ingves$ and$ Lia$ Markelin:$ Journalismin$kohtalo$mediamurroksessa$–$Överlevnadsstrategier$för$minoritetsmedier).$$

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2. INTRODUCTION: THE ONGOING CHANGE IN THE MEDIA LANDSCAPE “We$are$entering$an$era$where$media(will(be(everywhere,(and$we$will$use$all$kinds$of$media$ in$ relation$ to$ one$ another.$ Media( convergence( encourages$ transmedia(storytelling,(the$development$of$content$across$multiple$channels.$As$producers$more$fully$ exploit$ organic$ convergence,$ storytellers$will$ use$ each$ channel$ to$ communicate$different$kinds$and$ levels$of$narrative$ information,$using$each$medium$to$do$what$ it$does$best.$The$multiple$ forms$of$media$ convergence$are$ leading$us$ toward$a$digital(renaissance—a$period$of$transition$and$transformation$that$will$affect$all$aspects$of$our$lives.”$ —$Henry$Jenkins,$Ph.D.,$“Convergence?$I$Diverge.”$MIT$Technology$Review$

Let$ us$ first$ define$ transformation:$ “Transformation$ is$ a$whole$ scale$ change$ to$ the$foundational$component$of$a$business:$from$its$operating$model$to$its$infrastructure.$What$ it$ sells,$ to$ whom$ and$ how$ it$ goes$ to$market.”$ (Howard$ King,$ The$ Guardian$Media$ Network).$ Businesses$ often$ build$ and$ develop$ new$ products$ and$ services,$move$ into$ new$markets,$merge$with$ or$ sell$ to$ competitors,$ but$ none$ of$ these$ are$necessarily$ transformative.$ Quite$ often$ business$ do$ not$ transform$ because$ it$ is$deemed$ to$ be$ expensive$ and$ risky.$ This$ has$ certainly$ been$ a$ major$ reason$ for$organizational$inertia$in$the$media$industry,$where$routines,$systems$and$processes$have$ been$ created$ to$ ensure$ efficiency,$ reliability$ and$ to$ reduce$ costs$ (Robert$ G.$Picard,$The$Success$Trap:$Why$doing$things$right$become$wrong$over$time).$$The$key$drivers$of$transformation$can$be$defined$as$1)$changing$consumer$demand,$2)$changing$technology,$and$3)$changing$competition$(e.g.$from$players$outside$the$industry).$ These$ key$drivers$ form$an$ ecosystem$and$ it$ is$ a$ convergence$of$ factors$that$brings$about$changes$in$a$market.$“When$any$of$these$factors$coincide$such$that$a$business’$operating$model$is$no$longer$fit$to$serve$its$customers,$the$business$has$reached$a$ tipping$point.”$ (Howard$King).$Evolving$businesses$do$not$ reach$ tipping$points,$ instead$ they$ spot$ opportunities$ as$ they$ are$ focused$ on$ their$ customers,$changing$ and$ adapting$with$ the$market.$ Or$ leading$ the$market$ like$ e.g.$ Apple$ has$done.$$

As$ the$ digital$ ecosystem$ continues$ to$ rapidly$ evolve,$ the$media$ industry$ is$ seeing$both$disruption$and$potential$for$growth.$We$are$now$experiencing$a$convergence$of$media$ formats$ online$ as$ crossFdevice$ experiences$ become$ the$ new$ norm.$ A$ good$example$of$this$is$the$decline$in$broadcast$TV$as$new$streaming$services$have$gained$an$ audience$ formed$ by$ both$ digital$ natives$ and$more$ senior$ consumers,$ who$ are$watching$their$favorite$movies$and$TV$shows$when$they$want$and$on$a$device$most$suitable$ with$ regard$ to$ time$ and$ place.$ $ Streaming$ services$ like$ BBC$ iPlayer$ and$Netflix$have$gained$a$ large$audience$and$an$ increasing$number$of$ commercial$and$cable$TV$operators$have$developed$their$own$services$ for$streaming$content.$With$regard$to$news$services$mobility$has$become$the$underpinning$of$every$trend:$“As$media$ is$ generated$ and$ consumer$ on$ many$ devices$ and$ in$ many$ contexts,$ it’s$increasingly$who$you$are,$where$you$are,$and$who$you’re$with$that$determines$what$kind$ of$ content$ you$ consume$ –$ not$ necessarily$what$ screen$ you’re$ using.”$ (Media$Map$2013,$Bonnier$R&D).$


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Journalism$is$also$entering$a$new$and$yet$uncharted$territory,$as$digital$tools$enable$an$enhanced$connection$between$news$reporting,$engagement$by$way$of$comments$and$ sharing$ topics$ for$ news,$ as$ well$ as$ social$ activism.$ Journalists$ increasingly$employ$data$analysis$and$visualization$ to$add$value$ to$reporting$and$stories$–$ this$new$ trend$ is$ called$ ‘data$ journalism.’$ $ There$ are$ also$ new$ forms$ of$ journalism$represented$ in$ the$ news$ business,$ as$ the$ increased$ use$ of$ video$ adds$ rich$media$content$ to$ both$ reporting$ and$ advertising$ online.$ The$ New$ York$ Times$ has$ been$using$rich$media$elements$in$its$long$form$journalism,$with$reference$to$the$popular$‘Snow$Fall’$article$on$NYTimes.com.$It$reached$2.9$million$users$in$its$first$week,$and$was$sold$separately$as$an$eFbook.$What$was$remarkable$with$this$case$it$reached$a$vast$ number$ of$ readers$ (33%)$ who$ had$ never$ visited$ NYTimes.com$ before$ and$showcased$the$impact$of$quality$journalism$combined$with$visual$data$and$video.$$The$digital$world$ of$ devices$ and$mobility$ is$ changing$ the$way$we$ consume$media$today.$The$modern$smartphone$market$ is$now$six$years$old.$When$the$iPhone$was$introduced$in$2007$the$vision$was$that$all$of$us$will$have$the$Internet$in$our$pockets,$and$now$that$is$truer$than$ever.$The$recent$report$by$Nielsen$shows$that$64%$of$U.S.$mobile$ phone$ owners$ have$ chosen$ a$ smartphone.$ In$ addition,$ 80%$ of$ Americans$who$had$bought$a$mobile$phone$in$the$past$three$months$purchased$a$smartphone.$$$The$rise$of$mobility$is$clearly$supported$by$data:$the$rise$of$mobile$usage$and$screen$jumping$ (multiscreen$ usage)$ has$ doubled$ the$ time$Americans$ spend$ online$ in$ the$matter$of$only$three$years$from$2010$to$2013.$Smartphones$have$a$share$of$39%$and$tablets$12%,$remembering$tablets$were$only$introduced$in$the$spring$of$2010$when$the$first$iPad$came$on$sale$in$the$U.S.$Interestingly,$while$smartphones$only$account$for$ a$ relatively$ small$ 25%$ share$ of$ online$ time$ for$ Americans$ aged$ 50$ and$ older,$whilst$tablets$represent$a$16%$share,$the$highest$among$age$groups$(Mediapost.com,$September$2013).$$Age$seems$to$be$a$large$factor$in$smartphone$penetration,$as$81%$of$young$people$between$ 25$ and$ 34$ are$ smartphone$ users$ and$ teens$ are$ not$ far$ behind$ with$ a$penetration$of$70%.$Among$older$people$aged$55+$half$of$the$people$are$still$using$feature$ phones.$ Obviously$ this$ bears$ relevance$ for$ service$ design,$ as$many$ of$ the$new$media$services$are$clearly$designed$for$the$digital$natives.$$News$ services$are$available$ for$ smartphones$and$ tablets$ in$a$variety$of$ apps$ from$traditional$ news$ organizations$ like$ BBC,$ CNN,$ The$ Financial$ Times,$ The$ Guardian,$The$New$York$ Times$ and$many$more.$ Almost$ half$ of$ UK$ Internet$ users$ are$ going$online$ via$ mobile$ phone$ data$ connections,$ according$ to$ the$ Office$ for$ National$Statistics.$ The$ most$ rapid$ growth$ was$ among$ younger$ people,$ where$ 71%$ of$internetFconnected$16$ to$24FyearFolds$used$mobile$devices.$BBC$has$ reported$ that$mobile$access$to$its$services$has$increased$rapidly$and$is$more$than$50%$of$all$traffic$on$weekends.$BBC's$popular$iPlayer$service$is$widely$accessed$on$smartphones$and$tablets.$Viewers$prefer$the$tablet$form$factor$for$TV$viewing,$with$accelerating$sales$of$ the$devices$ leading$ to$ an$ increase$ in$ streaming$media$ consumption.$As$ for$The$Financial$Times$15F20%$of$new$subscriptions$each$week$are$being$sold$on$a$mobile$device$and$advertising$on$mobile$devices$is$increasing.$FT$has$reported$that$mobile$devices$account$for$more$than$one$third$of$FT.com$traffic$and$app$usage$is$growing$particularly$fast$in$the$age$group$from$25$to$34$yearFolds.$$


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Changing consumer behavior In$the$Digital$News$Report$by$Reuters$Institute$it$was$found$that$49%$of$18$to$24FyearFolds$read$a$digital$newspaper,$the$highest$reach$of$any$age$group.$The$survey$of$11,000$Internet$users$in$nine$countries$revealed$that$25$to$34FyearFolds$are$twice$as$likely$ to$part$with$ their$ cash$ for$digital$news$ than$older$ readers.$According$ to$ the$study,$20%$of$25F$to$34FyearFolds$said$they$had$paid$for$online$news$compared$with$less$than$10%$of$those$aged$over$55.$This$should$be$good$news$for$all$media$firms$developing$new$services.$And$multiFplatform$availability$of$services$ is$ increasingly$important,$ as$ 33%$ get$ news$ on$ at$ least$ two$ digital$ devices$while$ 9%$ us$ three$ or$more$ devices$ (Digital$ News$ Report$ 2013,$ Reuters$ Institute$ for$ the$ Study$ of$Journalism,$Oxford$University,$2013).$Finland$will$be$included$in$a$longitudinal$study$during$2014F2016$as$a$partner$to$Reuters$Institute$and$it$will$be$of$utmost$interest$to$ media$ firms$ to$ follow$ this$ study$ closely$ as$ the$ digital$ ecosystem$ and$ new$platforms$for$paid$content$keep$evolving$(FinnMedia,$November,$2013).$$$In$a$ recent$study$by$EDGE$research$group$of$media$behavior$of$ representatives$of$generation$ Y$ (born$ between$ 1983$ and$ 1993)$ it$was$ found$ that$ they$ have$ formed$routines$ in$ their$media$ consumption,$ but$ different$ routines$when$ compared$with$older$generations.$The$media$landscape$is$fragmented$in$the$sense$that$information$can$ be$ accessed$ through$ various$ device$ and$ platforms$ at$ any$ time$ and$ anywhere,$this$also$affects$ the$way$ the$digital$natives$behave.$They$do$not$necessarily$define$media$ in$ the$ same$way$ as$ representatives$ of$ generation$ X$ do.$ A$ large$ number$ of$young$people$own$smartphones$(up$ to$86%$in$ the$survey$and$89%$use$apps)$and$tablets$ (27%$ have$ a$ tablet$ and$ 84%$ use$ apps)$ and$ they$ are$ willing$ to$ pay$ for$content.$(Changing$media$behavior$–$the$case$of$Generation$Y,$Academic$MindTrek$conference,$October,$ 2013).$Not$ surprisingly$ the$ survey$ shows$ active$ usage$ of$ the$smartphone$from$waking$up$until$going$to$sleep,$and$the$´heavy$users´$of$the$tablet$use$ it$ more$ than$ 3$ hours$ a$ day.$ The$ simultaneous$ usage$ of$ TV$ with$ a$ laptop$computer$ and$ a$ smartphone$ are$ clear$ trends$ in$ the$ survey.$ The$ report$ comprises$160$individual$media$diaries$written$by$students$at$Åbo$Akademi$University$in$the$spring$of$2013.$$The$consumer$research$conducted$by$the$EDGE$research$group$is$summarized$in$a$separate$report,$as$well$as$a$study$of$new$mobile$value$services,$measuring$the$way$consumers’$engage$with$the$service.$

New ownership in traditional newspapers The$ past$ summer$ has$ signaled$ a$ new$ era$ of$ ownership$ in$ media,$ particularly$ in$established$newspapers.$For$traditional$owners$of$newspapers$the$sale$of$the$titles$reflects$ a$ change$ in$ strategy$ and$ in$ the$ case$ of$ The$Washington$Post$ even$ an$ exit$from$funding$journalism.$$At$ the$ end$ of$ July$ the$ German$ publisher$ Axel$ Springer,$ one$ of$ the$ largest$ media$groups$ in$ Europe,$ announced$ that$ it$ will$ sell$ off$ its$ regional$ newspapers$ and$magazines$ to$ Funke$Mediengruppe$ for$ a$ significant$ purchase$ price$ of$ 920$million$euros.$Springer$will$however$retain$its$big$national$titles$including$Bild,$the$highestFcirculation$ newspaper$ in$ Europe$ and$ Die$ Welt.$ Strategic$ focus$ will$ shift$ to$investment$into$digital$media$platforms$without$journalistic$content$like$the$careers$


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platform$Stepstone,$the$housing$portal$ImmoNet.de$and$the$price$comparison$portal$Idealo.$For$a$traditional$publisher$this$represents$a$new$strategic$focus$and$it$signals$the$ end$ of$ an$ era$ where$ journalism$ was$ at$ the$ core$ of$ the$ operations$ of$ Axel$Springer.$Axel$ Springer$ founded$ the$ group$ in$ 1946$ with$ a$ daily$ newspaper.$ For$many$ in$Germany$ this$ shift$ of$ strategy$ has$ been$ a$ shock,$ not$ least$ to$ the$German$Journalist$Association.$As$for$Axel$Springer$AG$digital$business$already$accounts$for$approx.$40%$of$total$group$sales$and$45%$of$total$earnings.$Now$the$intention$is$to$drive$ this$ development$ further.$ Axel$ Springer$ has$ clearly$ chosen$ to$ distance$ itself$from$its$relatively$costly$classic$journalistic$products$in$favor$of$new$digital$business$models.$ This$ follows$ an$ international$ trend$ of$ shrinking$ circulation$ figures$ and$markedly$falling$advertising$revenues$in$print$media.$$$The$ news$ from$Germany$ can$ be$ compared$with$ the$ developments$ in$ the$USA.$On$Saturday$August$3$it$was$announced$that$The$New$York$Times$is$selling$The$Boston$Globe$ and$ the$ rest$ of$ its$New$England$Media$Group$ to$ John$Henry,$ the$ billionaire$who$is$the$principal$owner$of$the$Boston$Red$Sox,$for$$70$million$in$cash.$This$came$as$ no$ surprise$ as$ The$ Boston$ Globe$ was$ put$ on$ sale$ (once$ again)$ in$ February.$Financially$ the$ deal$ reflects$ a$ massive$ decline$ in$ the$ valuation$ of$ the$ regional$newspaper$business:$The$New$York$Times$Company$bought$The$Boston$Globe$back$in$1993$ for$$1.1billion.$This$ follows$a$sharp$downfall$ in$both$print$circulation$and$advertising:$ The$ Globe$ has$ seen$ its$ average$weekday$ circulation$ plunge,$ tumbling$51.6%$from$506,996$in$1993$to$just$245,572$in$2013.$It$is$easy$to$figure$out$why$the$transaction$ took$ place:$ The$ New$ York$ Times$ is$ a$ global$ brand$ with$ a$ digital$subscriber$base$of$699,00$while$The$Boston$Globe$has$only$attracted$39,000$digital$subscribers$ and$ is$ a$ regional$ player$with$ its$Boston.com$website.$ The$ buyer,$ John$Henry$ sees$ opportunity$ in$ the$ local$ marketplace:$ "The$ Boston$ Globe’s$ awardFwinning$ journalism$ as$ well$ as$ its$ rich$ history$ and$ tradition$ of$ excellence$ have$established$it$as$one$of$the$most$well$respected$media$companies$in$the$country.”$He$also$ cited$ the$ “essential$ role$ that$ its$ journalists$ and$ employees$ play$ in$ Boston,$throughout$ New$ England,$ and$ beyond.”$As$ for$ business$ model$ development$ it's$harder$to$see$what$will$happen$next.$The$only$thing$that's$obvious$is$that$The$Boston$Globe$will$now$have$an$owner$with$strong$local$interest.$$$For$ The$ New$ York$ Times$ Company$ the$ sale$ implies$ even$more$ focus$ on$ its$main$brand$and$its$digital$development.$Arthur$Sulzberger$Jr.,$the$Publisher,$representing$the$ last$of$ the$great$American$newspaper$ families,$released$a$statement$to$ its$staff$and$public:$"The$Times$is$not$for$sale,$and$the$trustees$of$the$OchsFSulzberger$Trust$and$the$rest$of$the$family$are$united$in$our$commitment$to$work$together$with$the$company's$board,$senior$management$and$employees$to$ lead$The$New$York$Times$forward$ into$ our$ global$ and$ digital$ future."$ (Christine$ Haughney,$ The$ New$ York$Times,$August,$2013).$$This$ statement$ followed$ the$ biggest$ news$ of$ all$ year:$ the$ sale$ of$ the$ iconic$Washington$ Post$ by$ the$Graham$ family$ to$ Jeff$ Bezos,$ the$ founder$ of$ Amazon.$ The$deal$was$announced$on$Monday$August$5$and$it$took$all$the$newsrooms$in$America$by$ shock.$ The$ journalism$ at$ The$ Washington$ Post$ has$ been$ respected$ and$ solid$throughout$the$years,$famed$for$reporting$on$the$Watergate$scandal$in$the$1970's$to$the$ Edward$ SnowdenFNational$ Security$ Agency$ surveillance$ story,$ along$with$ The$Guardian$in$June$of$this$year.$Losses$due$to$the$rapid$downfall$in$print$revenues,$not$


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unlike$The$Boston$Globe$case,$is$the$main$reason$for$the$sale.$The$company$was$in$its$seventh$ consecutive$ year$ of$ declining$ revenues,$ and$ in$ spite$ of$ a$ strategy$ "to$innovate$ like$ hell$ in$ digital$ and$ other$ businesses$ and$ offset$ the$ declines$ in$ print$revenues"$ it$ did$ not$ succeed.$ Hence$ the$ head$ of$ the$ family,$ The$Washington$ Post$Company$ Chairman$ Donald$ Graham$ was$ forced$ to$ find$ a$ solution$ to$ save$ The$Washington$Post,$and$he$found$the$savior$in$Jeff$Bezos$who$paid$$250$million$out$of$his$own$personal$wealth$for$the$Post$and$some$smaller$newspapers$included$in$the$deal.$$$The$ biggest$ question$ remains$ unanswered$ F$ will$ Jeff$ Bezos$ find$ a$ new$ business$model$to$fund$quality$journalism$at$a$profit?$As$a$cunning$businessman$he$issued$a$letter$to$the$Washington$Post$employees,$underlining$that$the$values$of$the$Post$do$not$ need$ changing:$ "The$ paper’s$ duty$ will$ remain$ to$ its$ readers$ and$ not$ to$ the$private$ interests$ of$ its$ owners.$ We$ will$ continue$ to$ follow$ the$ truth$ wherever$ it$leads,$ and$we’ll$work$hard$not$ to$make$mistakes.$When$we$do,$we$will$own$up$ to$them$quickly$and$completely."$(Jeff$Bezos,$The$Washington$Post,$August$2013).$$$Jeff$Bezos$certainly$has$deep$pockets$with$a$reported$fortune$of$approx.$$25$billion.$He$ has$ a$ provenFtrack$ record$ as$ an$entrepreneur$ who$ has$ disrupted$ the$ book$business$with$Amazon.com$and$Kindle$ eFreaders,$ and$he$has$ reinvented$ the$ retail$business.$ Amazon$ now$ has$ revenues$ in$ excess$ of$ $61$ billion$ and$ it$ continues$ to$invest$and$innovate$eFcommerce$not$just$in$the$U.S.,$but$globally.$$Expectations$are$high$for$a$turnaround$and$most$people$wish$to$see$an$injection$of$new$ideas$ into$the$troubled$publishing$ industry.$There$has$been$real$media$ frenzy$over$the$subject$of$an$'Internet$King'$buying$a$media$icon.$Amazon's$experience$and$knowFhow$can$be$utilized$as$to$how$media$content$can$be$reused$and$sold$in$many$forms$on$multiple$platforms$reaching$and$engaging$a$wider$audience.$And$there$will$more$than$likely$appear$new$delivery$platforms$for$content$over$time.$Amazon’s$eFreader$ Kindle$ is$ already$ in$ place$ as$ one$ digital$ delivery$ platform.$ LongFform$journalism$and$investigative$reporting$can$perhaps$be$published$both$as$part$of$the$content$of$the$Washington$Post$and$as$‘Kindle$Singles’.$Content$can$be$packaged$as$part$of$ the$Amazon$Prime$offering,$combined$with$advertising$based$on$the$use$of$personal$data$and$purchase$history$for$recommendations.$Amazon$is$not$the$owner$of$The$Washington$Post,$but$the$synergies$are$clearly$there.$$In$ other$ words,$ whilst$ Jeff$ Bezos$ is$ known$ to$ take$ a$ longer$ perspective$ on$ his$personal$ investments$ it$ will$ be$ more$ than$ interesting$ to$ see$ what$ this$ new$ownership$means$over$the$next$year$or$two.$He$will$certainly$not$rest$his$case.$In$the$meantime$ Jeff$ Bezos$ and$ John$ Henry$ are$ building$ on$ an$ image$ of$ not$ only$ being$successful$businessmen,$but$also$respectable$citizens$and$publishers.$

Will consumers pay for digital news? Providers$of$news$are$focused$on$increasing$digital$revenues$to$replace$income$lost$because$newspapers$and$news$broadcasters$have$experienced$declines$in$audiences$and$advertising.$Newspaper$publishers$beleaguered$by$digital$developments$for$the$past$ decade$ are$ starting$ to$ believe$ that$ business$ models$ to$ support$ digital$journalism$ have$ emerged.$ Their$ increasing$ optimism$ is$ driven$ by$ a$ number$ of$factors:$the$growing$revenue$from$‘paywalls’$and$digital$applications$for$tablets$and$


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smartphones,$as$well$as$a$more$favorable$shift$in$public$attitudes$towards$paying$for$online$news.$These$ trends$ are$ leading$more$newspapers$ to$ shut$ off$ or$ reduce$ the$flow$of$free$digital$news,$with$the$Daily$Telegraph$and$the$Sun$recently$introducing$pay$ services$ in$ the$ U.K.,$ and$ about$ half$ of$ U.S.$ newspapers$ currently$ charging$ for$some$ digital$ news$ services.$ Although$ there$ is$ reason$ for$ publishers$ to$ feel$ some$relief,$harnessing$the$new$revenue$streams$is$not$a$simple$choice$of$whether$or$not$you$ ask$ digital$ readers$ to$ pay.$ A$ lot$ of$ strategic$ decisions$ have$ to$ be$made$ about$which$of$ the$different$pay$ systems$ they$adopt,$ given$ they$produce$varying$ results$and$ some$ newspapers$ are$ better$ placed$ to$ benefit$ from$ pay$ systems$ than$ others$(Professor$Robert$Picard,$Digital$News$Report$2013).$$Publishers$with$a$global$audience$and$a$strong$brand$like$The$Financial$Times$seem$to$ be$ better$ off.$ A$ number$ of$ large$ publishers$ known$ for$ their$ traditional$ media$news$brands$are$now$generating$15F25%$of$ their$ total$revenue$from$digital$media$with$audiences$as$much$as$10$times$larger$than$their$print$editions.$The$New$York$Times,$ for$ example,$ has$ put$ mobile$ at$ the$ forefront$ of$ its$ bundled$ digital$subscription$options$that$include$online$access,$smartphones$and$tablets,$as$well$as$laptops$ and$ hard$ copy$ newspapers$ (Magda$ AbuFFadil,$ Huffingtonpost.com,$September,$2013).$$Even$for$these$publishers$advertising$remains$the$biggest$challenge.$$$

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3. RESEARCH DESIGN AND RESEARCH METHODS

Research methods and the material I$ have$ carried$out$ a$ desktop$ study$ and$ inFdepth$ interviews$with$media$ experts$ in$four$ countries.$ Altogether$ 80$ interviews$were$ carried$ out$ in$ Finland,$ Sweden,$ the$U.K.$and$USA.$The$interviews$have$involved$media$executives,$commercial$directors$and$editorsFinFchief,$as$well$as$business$managers$with$an$R&D$focus.$A$majority$of$the$ interviews$ were$ conducted$ with$ Finnish$ publishers$ and$ representatives$ of$related$ industry$ associations.$ Also$ some$ new$ players$ (aggregators$ and$ curators;$potential$disruptors)$have$been$studied$in$order$to$get$an$overall$picture$of$what$is$happening$ in$ the$news$business$with$ regard$ to$new$media$ concepts$ and$business$models.$ For$ the$ purpose$ of$ further$ analysis$ I$ will$ exclude$ those$ interviews$conducted$with$magazine$publishers$and$focus$on$newspaper$publishers.$The$main$focus$ of$ the$ analysis$ has$ been$ the$ interviews$ with$ CEO’s$ in$ Finland$ and$ Sweden,$together$with$the$interviews$with$global$news$brand$owners$in$the$U.K.$and$USA.$$It$ should$ be$ noted$ that$ the$ aim$ of$ the$ significant$ number$ of$ interviews$ was$ to$prepare$ for$ selected$ case$ studies$ in$ order$ to$ analyze$ the$ strategic$ choices$ of$newspaper$ publishers$ with$ regard$ to$ the$ performance$ of$ these$ firms$ in$ both$economic$terms$(measured$in$terms$of$revenue$from$digital$services)$and$in$terms$of$the$engagement$of$consumers$(measured$in$terms$of$digital$subscriber$base,$and$those$consumers$that$opt$for$a$‘combo’$package$including$digital$&$print).$$$The$ interviews$have$been$analyzed$based$on$the$key$messages$ in$accordance$with$the$ Interview$ Guide.$ The$ key$ questions$ in$ the$ interviews,$ particularly$ with$ CEO’s$have$focused$on$business$model$innovation,$how$digital$transformation$is$managed$and$ how$ the$ design$ of$ new$ services$ in$ the$ digital$ ecosystem$ is$ processed$ either$within$the$firms$or$based$on$open$innovation.$$With$regard$to$writing$the$PhD$thesis$there$ is$ a$ need$ to$ dig$ deeper$ into$ literature$ regarding$ content$ analysis$ and$ case$studies.$ For$ this$ purpose$ I$ will$ need$ to$ carry$ out$ a$ further$ literature$ review$(including$ Case$ Study$ Research:$ Design$ and$Methods,$ fourth$ edition$ by$ Robert$ K.$Yin,$2013).$$Supporting$ the$ interviews$with$media$ professionals$ a$ separate$ study$was$ carried$out$in$the$summer$of$2013$including$10$interviews$with$Finnish$advertisers$and$key$business$development$professionals.$This$study$was$done$by$Service$Design$Agency$Palmu$ for$FinnMedia$ in$order$ to$map$ the$ changing$needs$of$ advertisers.$The$ final$report$ was$ published$ in$ November,$ 2013$ and$ serves$ as$ a$ basis$ for$ strategic$development$by$FinnMedia$for$the$whole$media$industry$in$Finland.$$$Additional$ material$ comprise$ 40$ keynotes,$ seminars$ and$ work$ shops$ where$ the$researcher$ has$ had$ the$ opportunity$ to$ enter$ into$ a$ dialog$ with$media$ executives,$board$members,$ journalists$ and$ students$ in$Media$Management.$The$keynotes$are$published$ on$ SlideShare$ and$ the$ researcher$ has$ also$ written$ a$ blog$ featuring$material$from$interviews$and$seminars$on$Blogger.$$Links:(EDGE$&$MEDIANOMICS$blog:$http://timoketonen.blogspot.fi(Keynotes$on$SlideShare:$http://www.slideshare.net/timoketonen$$


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4. BUSINESS MODEL INNOVATION AND SERVICE DESIGN

The$ways$that$media$firms$obtain$income$from$their$activities$and$the$opportunities$for$continued$revenue$from$the$sources$are$changing$along$with$audience,$creating$the$ conditions$ that$have$brought$ the$ significant$ financial$pressures$ to$bear$on$ the$enterprises.$(Robert$G.$Picard,$Value$creation$and$the$future$of$news$organizations).$$$The$Media$ Industry$ including$ Publishing$ is$ facing$ a$ tremendous$ change$ as$we$ go$from$ a$ traditional$ business$ model$ based$ on$ printed$ products$ subscribed$ by$consumers$ and$ partFfinanced$ by$ advertising$ revenue$ to$ a$ new$ digital$ era,$ where$there$is$no$single$formula$for$success.$The$Business$Model$for$printed$newspapers$is$180$years$of$age:$On$the$morning$of$September$3rd$1833$a$new$kind$of$newspaper$“the$Sun”$went$on$sale$on$the$streets$of$New$York.$It$was$made$cheap:$at$one$penny,$it$was$oneFsixth$of$the$price$of$most$other$papers$and$it$appealed$to$people$who$had$not$ bought$ newspapers$ before.$ In$ hindsight$ it$ was$ a$ turning$ point$ because$ it$introduced$ a$ new$ business$ model$ to$ the$ industry.$ The$ Sun’s$ large$ circulation$attracted$advertisers,$ and$ the$ resulting$ revenue$enabled$ the$Publisher$ to$keep$ the$price$of$the$newspaper$down$and$its$circulation$up.$$ This$ model$ worked$ well$ for$ a$ long$ time.$ The$ flow$ of$ advertising$ revenue$ stream$increased$ enormously$ during$ the$ last$ half$ of$ the$ twentieth$ century$ making$newspapers$very$profitable$ firms$and$became$the$ impetus$ for$ the$growth$of$ large,$publicly$ traded$ newspaper$ companies$ (Robert$ G.$ Picard).$ Since$ the$ 1970’s$advertising$ income$ for$ newspapers$ nearly$ tripled$ in$ real$ terms.$ This$ growth$ of$advertising$income$created$a$fundamental$change$in$the$newspaper$business$model,$making$ the$ industry$ increasingly$ dependent$ upon$ advertising$ revenue.$ The$dependence$on$advertising$increased$from$71%$of$total$revenue$in$1956$to$82%$of$revenue$at$the$end$of$the$twentieth$century$(Robert$G.$Picard).$$ Today$ most$ American$ newspapers$ are$ in$ trouble.$ Indeed$ advertising$ revenues$(including$print$and$online$advertising)$ in$ the$U.S.$ is$now$down$to$ the$ level$of$ the$1950’s,$which$means$ that$ the$ bulk$ of$ newspaper$ revenue$has$ been$ eroded.$ So$ far$only$a$ few$newspaper$publishers$have$succeeded$ in$bringing$up$their$subscription$revenues$with$new$subscription$models$in$the$digital$ecosystem.$$In$ emerging$ markets$ (Africa,$ Asia)$ the$ news$ industry$ is$ roaring$ ahead,$ but$ the$challenge$of$the$rapidly$developing$digital$ecosystem$is$lurking.$$Also$in$Europe$the$readership$of$printed$newspapers$has$dropped$significantly$ in$recent$years$(WANFIFRA).$ Advertising$ sales$ is$ heavily$ dependent$ on$ a$ large$ readership,$ still$ the$fundamental$business$model$in$most$publishing$firms.$In$Finland$the$print$editions$of$ newspapers$ still$ have$ a$ relatively$ large$ readership,$ but$ the$ question$ is$ for$ how$long.$Will$ the$change$ in$consumer$behavior$ take$one$generation$(20$years)$or$will$there$be$a$faster$transition$towards$an$allFdigital$publishing$model?$The$majority$of$print$ subscribers$ represent$older$ generations$ (50+).$How$will$ the$ revenue$ stream$change$over$ time?$Today$approx.$50%$of$newspaper$ income$ in$Finland$ is$derived$from$subscriptions$and$50%$from$advertising$revenue$(FinnMedia$–$The$Federation$for$the$Finnish$Media$Industry).$


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Definition of a Business Model Definition$of$Business$Model:$there$are$many$definitions$of$business$models$in$both$academic$and$trade$literature.$Below$are$three$definitions$that$I$have$found$of$value$for$the$purpose$of$my$dissertation:$$

1. “A$business$model$ is$ a$ concise$ representation$of$how$an$ interrelated$ set$of$decision$ variables$ in$ the$ area$ of$ venture$ strategy,$ architecture,$ and$economics$ are$ addressed$ to$ create$ sustainable$ competitive$ advantage$ in$defined$ markets.” (Morris$et$al,$2005$p.$727)$

2. “A$business$model$is$a$useful$notion$that$(as$BadenFFuller$and$Morgan$find)$enhances$ the$understanding,$ labeling$and$classification$of$ firms’$operations.$Defined$ by$ Amit$ and$ Zott$ as$ ‘the$ content,$ structure,$ and$ governance$ of$transactions$ designed$ so$ as$ to$ create$ value$ through$ the$ exploitation$ of$business$opportunities’,$the$concept$fell$from$grace$at$the$time$of$the$dot.com$crash,$but$has$regained$visibility$and$importance$in$the$recent$downturn.$Its$renaissance$is$seen$in$the$growing$number$of$sources,$from$academic$articles$and$executive$reports$to$media$publications,$as$well$as$the$range$of$contexts$which$ have$ been$ studied:$ from$ internetFbased$ companies$ to$ ventures$ in$healthcare,$ biotechnology,$ and$ open$ source$ communities.$ “ (Svejenova,$Planellas$and$Vives,$2010).$

3. “A$ business$model$ is$ a$ conceptual$ tool$ that$ contains$ a$ set$ of$ elements$ and$their$ relationships$ and$ allows$ expressing$ a$ company's$ logic$ of$ earning$money.$ It$ is$ a$ description$ of$ the$ value$ a$ company$ offers$ to$ one$ or$ several$segments$ of$ customers$ and$ the$ architecture$ of$ the$ firm$ and$ its$ network$ of$partners$ for$ creating,$ marketing$ and$ delivering$ this$ value$ and$ relationship$capital,$ in$ order$ to$ generate$ profitable$ and$ sustainable$ revenue$ streams.”$(Osterwalder,$2004$p.$15)$

Alexander$Osterwalder$has$done$extensive$research$in$business$models$with$a$focus$on$business$model$ontology,$as$presented$in$his$PhD$thesis.$He$has$since$developed$a$commercial$ tool$ named$ ‘The$ Business$ Model$ Canvas’$ –$ a$ strategic$ template$ for$developing$ new$ or$ documenting$ existing$ business$ models.$ The$ business$ model$canvas$ is$ often$ used$ by$ startFups$ and$ existing$ ventures.$ It$ is$ a$ visual$ chart$ with$elements$describing$a$firm’s$value$proposition,$infrastructure,$customers,$costs$and$revenue$ streams.$ $ According$ to$ Osterwalder$ “Business$model$ innovation$ is$ about$new$ways$of$creating,$delivering$and$capturing$value.”$Whether$the$new$business$models$in$publishing$are$truly$disruptive$or$not$is$a$core$question$to$be$addressed$in$the$dissertation.$In$this$context$we$need$to$look$at$the$process$ of$ innovation$ in$ media$ firms$ backed$ by$ theory$ on$ how$ business$ model$innovations$are$different$from$technological$innovations$(The$Innovator’s$Dilemma:$When$New$Technologies$Cause$Great$Firms$to$Fail,$Christensen,$1997).$The$notion$of$a$business$model$is$further$discussed$by$Markides$in$a$series$of$articles$(Disruptive$Innovation:$ In$ Need$ of$ Better$ Theory,$ Markides$ 2006).$ Strategic$ innovation$ is$ a$fundamentally$ different$ way$ of$ competing$ in$ an$ existing$ business$ (Charitou$ and$Markides,$2003).$$


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$One$example$is$the$way$Amazon$competes$in$book$retailing,$i.e.$quite$different$from$a$traditional$retailer$like$Barnes$&$Nobles.$Amazon$invented$a$new$business$model$in$the$1990’s,$where$books$are$purchased$online$and$delivered$as$printed$books$or$electronically.$ Today$ Amazon$ is$ selling$ books$ across$ the$ globe$ and$ is$ the$ leading$player$ in$ the$book$business$ and$has$ also$become$a$publisher$of$ books.$More$ than$half$ of$ the$ books$ sold$ by$ Amazon$ are$ eFBooks$ for$ its$ Kindle$ devices$ and$ Kindle$applications$on$other$devices$such$as$smartphones$and$tablets.$For$ the$purpose$of$my$dissertation$I$will$look$at$disruption$in$other$industries$e.g.$book$publishing$and$the$music$ industry$ in$order$ to$get$a$ framework$ for$understanding$ the$ change$and$potential$disruption$in$publishing.$$Zott$ and$Amit$ argue$ that$ “business$model$ design$ is$ a$ key$ decision$ for$ a$ new$ firm$entrepreneur$and$a$ crucial$ –$perhaps$more$difficult$ –$ task$ for$managers$ in$ charge$with$rethinking$an$old$model$ to$make$their$ firm$fit$ for$the$ future.”$(Zott$and$Amit,$2010$p.$216).$ In$an$earlier$paper$the$same$authors$argued$that$any$given$business$model$design$can$be$noveltyFcentered$and$efficiencyFcentered$at$the$same$time.$The$essence$ of$ a$ noveltyFcentered$ business$ model$ design$ is$ conceptualization$ and$adoption$of$new$ways$of$conducting$economic$exchanges.$This$can$be$achieved$by$connecting$ previously$ unconnected$ parties$ (like$ book$ authors$ and$ readers),$ by$linking$ transaction$ participants$ in$ new$ ways$ (like$ eBay),$ or$ by$ designing$ new$transaction$mechanisms$(e.g.$Amazon$in$eFcommerce$including$payments).$Business$model$innovation$may$complement$innovation$in$products$and$services,$methods$of$production,$distribution$or$marketing,$and$markets$(Schumpeter$1934).$$EfficiencyFcentered$business$model$design$refers$to$the$measure$that$firms$may$take$to$ achieve$ transaction$ efficiency$ through$ their$ business$ models$ (Zott$ and$ Amit,$2010,$ p.$ 185).$ The$ notion$ of$ efficiencyFcentered$ business$ model$ design$ is$ not$intended$ to$ capture$ all$ means$ by$ which$ a$ firm$ can$ strive$ for$ efficiency$ (e.g.$ the$reduction$of$staff$or$production$cost),$although$these$measures$have$been$common$in$ the$media$ industry$ in$ the$recent$years$as$print$circulation$and$advertising$have$continued$to$fall.$$Part$ of$ the$ reason$ why$ media$ firms$ have$ not$ been$ innovating$ enough$ may$ be$“organizational$ inertia’$ (The$ Success$ Trap:$Why$ doing$ things$ right$ become$wrong$over$time,$Robert$G.$Picard,$lecture$at$Tampere$University,$October$2011.)$According$to$Professor$Picard$media$firms$face$three$choices:$$

1. Do$nothing$and$ignore$needs$to$innovate$(doom)$2. Disruptive$innovations$coming$in$are$beginning$to$take$their$toll$(not$only$in$

technology,$ also$ in$ products);$ leave$ innovations$ to$ outsiders$ and$ new$entrants$

3. Innovate$ internally;$ reshape$ themselves$ and$ the$ industry$ for$ greatest$advantage$

$Innovation$ challenges$ for$ established$media$ firms$ are$ listed$ as:$ innovations$ offer$less$ near$ term$ reward$ potential$ than$ current$ operations$ (current$ operations$ are$very$profitable$for$publishers);$organizational$resistence$and$inertia$inhibit$reaction.$Routines,$systems$and$processes$are$created$to$ensure$efficiency,$reliability,$and$to$


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reduce$costs.$However,$ these$combined$with$company$culture$ to$ stifle$ change$and$innovation.$ The$ end$ result$ is$ organizational$ inertia$ and$ the$ way$ media$ firms$ are$structured$and$complex$makes$this$inertia$even$bigger.$In$this$context$it$is$relevant$to$ cite$Peter$Drucker’s$phrasing:$ “Culture$eats$ strategy$ for$breakfast.”$Media$ firms$need$ to$ change$ their$ corporate$ culture$ to$ open$ up$ for$ new$ business$ models$ and$innovation.$

Definition of Media Marshall$McLuhan$was$a$professor$of$English$literature$and$Canadian$by$birth.$He$is$best$known$ for$his$work$ in$ communication$ theory,$ and$his$ theories$have$also$had$practical$applications$ in$the$media$ industry$and$advertising.$He$had$about$him$the$air$of$ a$man$who$believed$ that$ it$was$ the$business$of$prophets$ to$bring$prophetic$news$–$a$notion$that$has$put$its$stamp$on$many$editors$of$prominent$newspapers.$$$McLuhan’s$book$‘The$Gutenberg$Galaxy:$The$Making$of$Typographic$Man”,$published$in$1961,$discussed$the$‘Gutenberg$Era’$with$its$focus$on$mediaFinduced$events$(Ref.$W.Terrence$ Gordon,$ McLuhan’s$ Compass$ for$ the$ Voyage$ to$ a$ World$ of$ Electric$Words,$introduction$to$The$Gutenberg$Galaxy).$It$was$a$pioneering$study$in$the$fields$of$oral$culture,$print$culture$and$media$ecology.$Print$culture$gained$ground$in$the$middle$ of$ the$15th$ century,$ after$ a$German$ smith$named$ Johannes$Gutenberg$had$invented$the$use$of$movable$typing$ in$print$ in$around$1440.$His$ invention$was$the$printing$press,$which$allowed$the$mass$production$of$printed$books$(“Savitauluista$laseriin$–$kirjapainotaidon$historia”,$Lars$Gardberg,$2011).$Before$ the$ invention$of$the$printing$press$books$were$copied$by$hand.$ I$will$not$discuss$ this$ technological$innovation$ in$ any$ further$ detail,$ but$ it$ truly$ transformed$ the$ dissemination$ of$information$as$the$Gutenberg$press$was$economically$viable$for$printers$and$readers$alike.$Hence$ this$was$ the$biggest$ revolution$ in$ the$history$of$ communication$ since$man$discovered$alphabetic$writing.$Before$that$communication$was$represented$by$cave$paintings,$drawn$maps$and$ideographic$writing$like$pictographs$by$e.g.$Aztecs$and$native$Americans,$or$hieroglyphs$in$ancient$Egypt$(Gardberg,$2011).$$$McLuhan’s$focus$was$to$study$the$influence$of$communication$media$independent$of$their$content.$This$is$an$interesting$notion,$as$Steve$Jobs$said$when$introducing$the$iPad$in$January$2010:$“The$last$time$there$was$this$much$excitement$about$a$tablet,$it$had$some$commandments$written$on$it.”$(Steve$Jobs,$Walter$Isaacson,$2011).$$McLuhan’s$next$book$“Understanding$Media:$The$Extensions$of$Man”$first$published$in$ 1964$ introduced$ into$ the$ language$ our$ present$ usage$ of$ the$ term$ ‘media’$ (Ref:$Lewis$H.$Lapham,$ introduction$ to$Understanding$Media).$McLuhan$has$also$coined$many$other$terms$that$have$since$become$widely$used,$e.g.$“Age$of$Information”$and$“Global$Village”$predicting$the$World$Wide$Web$thirty$years$before$it$was$invented.$Perhaps$the$most$cited$term$is$‘The$Medium$is$the$Message”.$I$will$take$some$time$to$discuss$McLuhan’s$discourse$and$why$the$term$was$ later$reintroduced$ in$the$ form$“The$Medium$is$the$Massage”$in$a$new$book$published$in$1967.$This$book$was$to$be$his$best$seller$and$also$led$to$some$advertising$consultancy$work$later$in$his$career.$$$In$describing$the$term$“Medium$is$The$Message”$McLuhan$pictures$the$light$bulb$as$a$medium$without$any$content,$it$creates$an$environment$with$its$mere$presence.$$


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“Whether$the$light$bulb$is$being$used$for$brain$surgery$or$night$baseball$is$a$matter$of$indifference.$It$could$be$argued$that$these$activities$are$in$some$way$the$! content&&of$ the$ electric$ light,$ since$ they$ could$ not$ exist$without$ the$ electric$ light.$ This$ face$merely$ underlines$ the$ point$ that$ ‘the$ medium$ is$ the$ message’$ because$ it$ is$ the$medium$ that$ shapes$ and$ controls$ the$ scale$ and$ form$ of$ human$ association$ and$action.”$(McLuhan,$1964)$$$McLuhan$noted$that$all$media$have$characteristics$that$engage$the$reader,$listener$or$viewer$ in$ different$ ways$ –$ this$ is$ a$ particularly$ interesting$ notion$ that$ has$ been$further$ refined$ by$ researchers$ today$ in$ the$ field$ of$ media$ audience$ engagement.$What$ kind$ of$ media$ are$ more$ engaging$ to$ the$ consumer$ is$ a$ question$ which$McLuhan$ discusses$ in$ his$ chapter$ about$ ‘hot$ and$ cold$ media’.$ I$ will$ take$ the$opportunity$ to$ quote$ McLuhan$ by$ citing$ the$ following$ paragraph$ in$ his$ book$“Understanding$Media”:$$$“There$is$a$basic$principle$that$distinguishes$a$hot$medium$like$radio$from$a$cool$one$like$the$telephone,$or$a$hot$medium$like$the$movie$from$a$cool$one$like$TV.$A$hot$ medium$ is$ one$ that$ extends$ one$ single$ sense$ in$ ‘high$ definition’.$ High$definition$ is$ the$ state$ of$ being$well$ filled$with$ data.$ A$ photograph,$ is$ visually,$ F$high$ definition’.$ A$ cartoon$ is$ ‘low$ definition’,$ simply$ because$ very$ little$ visual$information$ is$ provided.$ Telephone$ is$ a$ cool$medium,$ or$ one$ of$ low$ definition,$because$ the$ ear$ is$ given$ a$meager$ amount$ of$ information.$And$ speech$ is$ a$ cool$medium$of$low$definition,$because$so$little$is$given$and$so$much$has$to$be$filled$in$by$the$listener.$Hot$media$are,$therefore,$low$in$participation$and$cool$media$are$high$ in$ participation$ or$ completion$ by$ the$ audience.$ Naturally,$ therefore,$ a$ hot$medium$like$radio$has$very$different$effects$on$the$user$from$a$cool$medium$like$the$telephone.”$$

$There$ are$ two$ points$ to$ observe$ here,$ recognizing$ that$ McLuhan’s$ thinking$ took$place$50$years$ago$when$a$telephone$was$just$that$–$a$telephone.$The$first$point$ is$that$he$has$ its$ focus$on$ the$medium,$not$ the$content$ i.e.$what$ is$being$ said$on$ the$phone$or$in$a$speech,$where$most$of$us$would$agree$that$the$content$is$of$high$value.$The$term$‘Content$is$King’$was$coined$much$later,$in$an$article$written$by$Bill$Gates,$the$founder$of$Microsoft,$in$1996,$when$announcing$that$the$television$network$NBC$and$Microsoft$had$agreed$to$enter$the$interactive$news$business.$David$Carr,$author$and$ journalist$ at$ The$ New$ York$ Times$ has$ stated$ there$ has$ been$ a$ long$ line$ of$“academics$who$have$made$a$career$out$of$deconstructing$McLuhan’s$effort$to$define$the$modern$media$ ecosystem”.$ This$ interpretation$ is$ owing$ to$McLuhan’s$ eclectic$writing$ style$ and$ his$ ignorance$ toward$ sociohistorical$ context.$ However,$ Carr$concludes$that$Marshall$McLuhan$figured$out$that$“electronic$interdependence$is$the$defining$aspect$of$our$time$50$years$before$anybody$ever$updated$his$Facebook$page$or$posted$his$whereabouts$on$Twitter.”$(Marshall$McLuhan:$Media$Savant,$article$in$The$New$York$Times,$January$6,$2011).$$$The$second$observation$on$McLuhan’s$use$of$ ‘hot$and$cold$media’$ is$that$it$reflects$the$ available$ technology$ at$ the$ time$ of$ writing.$ Today$ a$ smartphone$ would$ be$considered$a$ ! hot$medium$$as$you$can$do$so$many$things$with$it$and$it$has$become$everyone’s$ personal$ communication$ tool$ and$ source$ of$media.$ The$ content$ comes$with$ the$ application,$ so$ in$ a$ sense$ the$ smartphone$ is$ ‘the$ electric$ light$ bulb’$ as$ it$


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creates$an$environment$with$its$mere$presence$(just$to$cite$McLuhan$again).$A$TV$set$has$been$a$rather$‘cool$medium’$until$these$days,$when$we$have$learned$that$the$new$Smart$ TV’s$ give$ access$ to$ internet$ and$ a$ host$ of$ content$ services$ for$ news,$entertainment$and$gaming.$Netflix$is$a$content$service$typically$availably$on$modern$Smart$ TV$ sets$ or$ Apple$ TV$ with$ its$ abundance$ of$ content$ available$ through$ App$Store$and$iTunes.$$$McLuhan$ later$ refined$ his$ thinking$ in$ the$ book$ “The$ Medium$ is$ the$ Massage:$ An$Inventory$of$Effects”$published$in$1967.$By$adopting$the$term$‘massage’$he$denoted$the$ effect$ each$medium$has$ on$ the$ human$ senses,$ taking$ inventory$ of$ how$media$massage$the$sensorium.$According$to$McLuhan’s$biographer$W.$Terrence$Gordon$the$title$of$the$book$was$actually$a$mistake$–$a$typo$from$the$beginning.$However,$when$McCluhan$saw$the$typo$he$exclaimed$“Leave$it$alone!$It’s$great,$and$right$on$target!”$as$he$had$gained$insight$that$he$needed$to$revitalize$his$language$and$the$description$of$ media$ (Marshall$ McLuhan:$ Escape$ into$ Understanding,$ W.$ Terrence$ Gordon,$2002).$$In$the$foreword$to$the$biography$Gordon$states$poignantly:$$$“McLuhan$ wrote$ with$ no$ knowledge$ of$ galvanic$ skin$ response$ technology,$terminal$ node$ controllers,$ or$ the$ Apple$ Newton.$ He$ might$ not$ have$ been$ able$even$to$imagine$what$a$biomouse$is.$But$he$pointed$the$way$to$understanding$all$of$ these,$ not$ in$ themselves,$ but$ in$ their$ relation$ to$ each$ other,$ to$ older$technologies,$ and$ above$ all$ in$ relation$ to$ ourselves$ our$ bodies,$ our$ physical$senses,$our$psychic$balance.$When$he$published$Understanding$Media$in$1964,$he$was$disturbed$about$mankind’s$ shuffling$ toward$ the$ twentyFfirst$ century$ in$ the$shackles$of$nineteenth$century$perceptions.$He$might$be$no$less$disturbed$today.$And$he$would$continue$to$issue$the$challenge$that$confronts$the$reader$at$every$page$of$his$writings$to$cast$off$those$shackles.”$$

Being Digital In$the$middle$of$the$1990’s,$or$more$precisely$in$1995$I$had$the$opportunity$to$visit$the$ MIT$ Media$ Lab$ in$ Massachusetts$ on$ a$ trip$ arranged$ by$ Tekes$ (The$ Finnish$Funding$ Agency$ for$ Technology$ and$ Innovation).$ I$ was$ a$ young$media$ enthusiast$then,$a$Vice$President$at$a$regional$media$group$ in$Finland$with$business$ focus$on$the$ commercial$ printing$ operations.$ I$ had$ alreadt$ developed$ an$ interest$ for$ ‘all$things$ digital’$ including$ Macintosh$ software$ and$ hardware$ widely$ used$ in$ the$graphic$ arts$ industry$ at$ that$ time.$ I$ was$ also$ responsible$ for$ the$ development$ of$digital$ printing$ and$ our$ company$ was$ a$ partner$ in$ the$ Tekes$ funded$ project$“Electronic$ printing$ as$ part$ of$ the$ Value$ Chain”,$ started$ in$ order$ to$ develop$ the$printing$of$user$guides$out$of$a$database$to$Nokia$mobile$handsets.$$$This$is$when$I$came$across$the$book$“Being$Digital”$by$Nicholas$Negroponte.$In$the$introduction$to$the$book$he$confessed:$“Being$dyslexic,$I$don’t$like$to$read.$As$a$$child$ I$ read$ train$ timetables$ instead$ of$ the$ classics,$ and$ delighted$ in$ making$imaginary$ perfect$ connections$ from$ one$ obscure$ town$ in$ Europe$ to$ another.$ This$fascination$gave$me$an$excellent$grasp$of$European$geography.”$(Negroponte,$1995)$That$is$what$information$management$could$do$for$you,$long$before$we$had$Google$Maps.$Thirty$years$later$Nicholas$Negroponte$worked$as$director$for$MIT$Media$Lab$and$columnist$for$WIRED$magazine,$writing$about$his$visions$about$technology.$$


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$I$was$completely$awed$by$the$visit$and$saw$the$first$Internet$newspaper$called$the$‘Fishwrap’$on$the$MIT$campus.$In$fact$the$book$‘Being$Digital’$introduced$the$concept$of$ ‘Daily$Me’,$ an$ electronic$ newspaper$ customized$ for$ an$ individual’s$ taste.$ Today$one$may$think$this$is$commonplace,$however,$the$concept$was$introduced$at$a$time$when$the$World$Wide$Web$had$just$been$introduced$to$a$larger$audience$and$books$and$ encyclopedia$ published$ on$ CDFROM$ were$ gaining$ ground.$ In$ his$ book$Negroponte$ discusses$ the$ differences$ between$ bits$ and$ atoms$ in$ a$ chapter$ called$‘The$ DNA$ of$ Information’.$ In$ his$mind$ the$ best$ way$ to$ appreciate$ the$merits$ and$consequences$of$ ‘being$digital’$ is$to$reflect$on$the$bits$and$atoms.$Although$we$had$undoubtedly$entered$into$an$information$age,$most$information$was$delivered$to$us$in$the$form$of$atoms,$which$make$up$physical$tangible$objects$such$as$CD’s,$books,$magazines$and$newspapers.$Digital$information$is$made$up$of$bits,$the$smallest$unit$of$ information$on$a$computer.$Negroponte$wonders$what$business$the$information$and$entertainment$industries$are$in?$“Is$the$publisher$of$a$book$in$the$information$delivery$ business$ (bits)$ or$ in$ the$manufacturing$ business$ (atoms)?”$ (Negroponte,$1995).$ He$ argues$ that$ the$ historical$ answer$ is$ both,$ but$ predicts$ that$will$ change$rapidly$as$information$appliances$become$more$ubiquitous$and$userFfriendly.$Now,$nearly$20$years$later$many$publishers$are$still$pondering$are$they$in$the$business$of$bits$or$atoms,$or$both.$And$why$is$that?$Because$the$manufacturing$business$(atoms)$was$a$profitable$one$and$advertisers$had$ few$other$alternatives$ to$ choose$ from$ in$the$world$of$atoms.$$$On$ a$ notion$ mobile$ handsets$ had$ just$ been$ introduced$ in$ 1995$ (in$ Europe$ GSM$standard$cellphones)$and$they$were$just$mobile$telephones$at$that$time,$computers$connected$to$each$other$on$the$Internet$was$the$big$thing.$$$The$ book$ Being$ Digital$ offers$ a$ profound$ insight$ and$ visions$ of$ a$ digital$ future.$Negroponte$provides$a$general$history$of$ several$media$ technologies$and$analyzes$the$ advantages$ and$ disadvantages$ of$ the$ technologies,$ as$ described$ in$ the$ case$ of$publishing$above$and$is$discussed$in$more$detail$in$the$case$of$a$printed$book:$$$“Right$ now$ it$ is$ hard,$ but$ not$ impossible,$ to$ compete$ with$ the$ qualities$ of$ a$printed$book.$A$book$has$a$highFcontrast$display,$ is$ lightweight,$easy$ to$ ‘thumb’$through,$ and$ not$ very$ expensive.$ But$ getting$ it$ to$ you$ includes$ shipping$ and$inventory.$In$the$case$of$textbooks,$45$percent$of$the$cost$is$inventory,$shipping,$and$returns.$Worse,$a$book$can$go$out$of$print.$Digital$books$never$go$out$of$print.$They$are$always$there.”$$

$The$thinking$evolving$around$atoms$and$bits$leads$Negroponte$to$describe$the$book$he$is$writing$as$made$of$“unwieldy$atoms”$that$will$probably$be$replaced$by$a$digital$copy$by$the$time$anyone$reads$this$book.$Whilst$several$versions$of$eBooks$exist$of$Being$Digital$I$have$reread$the$book$in$paperback$format,$made$of$unwieldy$atoms.$$$Amazon$was$incorporated$in$July,$1994$and$the$site$went$online$as$Amazon.com$in$1995.$ It$ started$ as$ an$ online$ shop$ for$ printed$ books,$ with$ ordering$ online$ and$advanced$logistics$put$in$place$to$deliver$books$first$in$the$U.S.$and$later$in$Europe,$Latin$America$ and$China.$ Today$Amazon$ also$ offers$ eBooks$ and$ eReading$ devices$such$as$the$Kindle.$Today$Amazon’s$founder$Jeff$Bezos$carries$the$title$“CEO$of$the$


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Internet”$ as$Amazon$has$made$ full$ use$ of$ the$ bits$ by$ entering$ the$ fields$ of$ books,$movies,$ music,$ Kindle$ devices,$ cloud$ computing,$ IT$ infrastructure$ (ISP$ –$ Internet$Service$Provider)$and$social$media.$By$way$of$$“Being$Digital”$Amazon$evolved$to$a$“Media$ Powerhouse”$ with$ an$ eCommerce$market$ share$ of$ 60%$ in$ books,$ 22%$ in$video,$ 19%$ in$ music,$ 19%$ in$ consumer$ electronics$ and$ 19%$ in$ cloud$ services$(WIRED$Magazine,$December$2011).$ Jeff$Bezos$said$ in$a$ recent$ interview:$ “We$are$culturally$pioneers.$We$like$to$disrupt$even$our$own$business.$Other$companies$have$different$ cultures$ and$ sometimes$ don’t$ like$ to$ do$ that.$ Our$ job$ is$ to$ bring$ those$industries$along”$(Steven$Levy,$WIRED$magazine,$December$2011).$$$Another$example$of$“Being$Digital”$is$Apple.$The$company$has$been$a$forerunner$of$computing$ technology$since$ the$ introduction$of$ the$ first$Apple$Macintosh$personal$computer$ in$ January,$ 1984.$ Its$ visionary$ coFfounder$ Steve$ Jobs$ (1955F2011)$“revolutionized$ everything$ he$ touched”$ (Steven$ Levy,$ WIRED$ magazine$ special$edition,$October$5,$2011).$He$was$a$true$entrepreneur$whose$motto,$used$in$an$Apple$advertising$ campaign$ in$ 1997,$ was$ “Think$ Different”.$ The$ author$ of$ this$ thesis$confesses$to$being$an$Apple$“fanboy”,$whilst$I$also$acknowledge$the$achievements$of$the$other$ leading$tech$companies$ like$Amazon,$Google$and$Microsoft.$The$common$denominator$for$all$these$companies$is$that$they$have$been$founded$and$managed$by$visionary$entrepreneurs,$however,$very$different$in$terms$of$personal$character.$$$Back$ to$Apple:$ “Driven$by$demons,$ Jobs$ could$drive$ those$around$him$ to$ fury$and$despair.$ But$ his$ personality$ and$ products$ were$ interrelated,$ just$ as$ Apple’s$hardware$and$software$tended$to$be$as$if$part$of$an$integrated$system.”$(Steve$Jobs,$Isaacson,$ 2011).$ Job’s$ passion$ for$ perfection$ and$ ferocious$ drive$ helped$ Apple$revolutionize$ six$ industries:$ personal$ computers,$ animated$movies,$ music,$ mobile$phones,$ tablet$ computing$ and$ digital$ publishing.$ (Isaacson,$ 2011).$ One$ could$ also$argue$ that$Apple$has$been$driving$ the$paradigm$shift$ from$online$shopping$on$ the$Internet$to$mobile$platforms,$by$way$of$ introducing$its$App$Store$as$a$platform$for$development$of$various$entertainment,$gaming$and$eEcommerce$applications$for$the$iPhone$(smartphone$platform)$and$the$iPad$(tablet$platform).$$$From$a$business$model$perspective$it$is$of$interest$to$compare$Apple$with$Amazon,$as$ they$ have$ quite$ different$ business$ models.$ Apple$ designs$ upmarket$ devices$combined$with$userFfriendly$user$interface$(iOS$operating$system)$and$with$services$like$App$Store$and$iTunes,$forming$a$complete$ecosystem.$The$devices$are$priced$at$a$premium$and$Apple$takes$a$30%$provision$of$media$content.$Whilst$Apple$is$deviceF$centric$one$could$argue$that$Amazon$is$cloudFcentric,$who$do$not$develop$their$own$software$ (Kindle$ devices$ are$ operated$ on$ a$ version$ of$ Android$ OS,$ developed$ by$Google).$In$another$words$for$Apple$“hardware$is$king”,$whilst$for$Amazon$“content$is$king”.$Amazon$draws$ its$profits$ from$streamed$media,$whilst$Apple’s$profits$are$derived$from$selling$devices$and$downloaded$media.$$(((((((


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Definition of Digital Ecosystem The$original$definition$of$an$ecosystem$relates$to$biology.$An$ecosystem$is$a$complex$set$of$relationships$among$the$living$resources,$habitats,$and$residents$of$an$area.$It$includes$plants,$trees,$animals,$fish,$birds,$microorganisms,$water,$soil,$and$people.$$A$complete$digital$ecosystem$consists$of$hardware,$software,$and$services.$All$play$a$particular$role$in$the$ecosystem$in$order$for$it$to$function$as$a$whole.$Based$on$the$design$ of$ the$ hardware,$ the$ function$ of$ the$ software,$ and$ the$ services$ provided,$ecosystems$ can$ target$ specific$ parts$ of$ the$market$ or$ the$market$ as$ a$whole$ (Ben$Bajarin,$2011).$Microsoft’s$XBOX$is$an$example$of$a$hardware,$software,$and$services$solution$ targeted$ for$a$specific$part$of$ the$market,$ i.e.$gaming.$The$point$ is$ that$all$three$components$are$necessary$for$a$holistic$ecosystem.$The$important$thing$about$ecosystems$ is$ that$ they$ create$ dependencies.$ These$ dependencies$ can$ lead$ to$consumer$ loyalty.$ Microsoft,$ Google,$ and$ Apple$ are$ out$ to$ create$ ecosystems$ that$drive$loyalty.$They$all$have$a$different$approach$to$the$business$model.$Microsoft$has$until$ recently$ been$ a$ software$ company,$ but$ is$ now$ attempting$ to$ create$ its$ own$services$offering$content$like$games$and$music,$as$well$as$becoming$a$manufacturer$of$mobile$and$tablet$devices.$$It$is$a$clear$trend$that$consumers$make$purchase$decisions$about$products$based$on$whose$ecosystems$they$desire$to$be$a$part$of,$or$the$ones$that$work$better$for$their$life$ or$ environment.$ The$ hardware,$ software,$ and$ services$ will$ be$ important$ but$more$importantly,$consumers$will$commit$to$and$invest$in$ecosystems.$As$it$relates$to$ personal$ computing,$ there$ are$ three$ main$ companies$ who$ enable$ ecosystems$today.$ They$ are$ Apple,$ Google$ and$ Microsoft.$ Microsoft$ and$ Google$ are$ more$horizontal$(providing$software$to$manufacturers$of$smartphones,$tablets$and$PC’s),$where$Apple$ is$more$vertical$ (its$ focus$has$been$on$devices$designed$ for$different$consumer$ needs$ with$ ultimate$ user$ experience$ in$ mind).$ The$ history$ of$ the$technology$ industry$ informs$us$of$a$ fascinating$value$shift.$This$shift$begins$where$value$is$initially$in$hardware,$then$as$the$market$matures$it$moves$to$software$and$then$ eventually$ to$ services.$ One$ important$ part$ of$ the$ service$ offering$ is$ relevant$content$ and$ all$ tech$ companies$ are$ looking$ to$ attract$ developers$ into$ their$ecosystem.$Partly$Amazon$is$a$player$here$too,$with$its$Kindle$eFreaders$and$Kindle$Fire$tablets$and$its$customer$base$of$200$million$people$is$a$vast$market$for$content$like$ music,$ media$ and$ music.$ Unlike$ Apple,$ Google$ and$ Microsoft,$ Amazon$ is$ not$primarily$a$software$company.$$As$ for$ the$ mobile$ ecosystem$ Android$ (Google)$ and$ iOS$ (Apple)$ dominate$ the$smartphone$ market$ in$ the$ U.S.$ More$ than$ half$ of$ U.S.$ smartphones$ are$ running$Android,$while$40%$are$iPhones.$Windows$phone$has$a$market$share$of$only$2%,$so$Microsoft$has$ a$ long$way$ to$ go$ as$ it$ has$now$acquired$ the$mobile$device$business$from$Nokia.$$$Finnish$ Internet$ users$ are$ now$ among$ the$ most$ avid$ consumers$ of$ online$ news$according$ to$ the$ online$measurement$ firm$ comScore.$When$ ranking$ the$European$countries$by$reach,$ the$Nordic$countries$ lead$ the$ top$3$as$97%$of$Finnish$ Internet$users$visited$a$news$site$during$September,$20013,$followed$by$Sweden$and$Norway$(comscoredatamine.com).$According$ to$Ericsson$mobile$ Internet$ subscriptions$will$


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triple$ by$ 2019,$ including$ smartphones,$ mobile$ PC’s,$ tablets$ and$ mobile$ routers$(Ericsson,$Mashable.com).$$

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$Figure$1.$Number$of$mobile$Internet$subscriptions$worldwide$(Ericsson)$

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Definition of Service Design Design$ is$ a$ general$ term$ referring$ to$ the$ creation$ of$ new$ products$ and$ services.$Design$ refers$ to$ a$ plan$ or$ drawing$ produced$ to$ show$ the$ look$ and$ function$ or$workings$ of$ a$ building,$ garment,$ or$ other$ object$ before$ it$ is$ made$ (Oxford$Dictionaries).$$$Service$design$is$an$interdisciplinary$approach$that$combines$different$methods$and$tools$from$various$disciplines.$It$is$a$new$way$of$thinking$as$opposed$to$a$new$standFalone$academic$discipline.$(Stickdorn$and$Schneider).$ $Service$design$is$the$activity$of$ planning$ and$ organizing$ people,$ infrastructure,$ communication$ and$ material$components$of$a$service$in$order$to$improve$its$quality$and$the$interaction$between$service$provider$and$customers.$The$purpose$of$service$design$methodologies$is$to$design$ according$ to$ the$ needs$ of$ customers$ or$ participants,$ so$ that$ the$ service$ is$userFfriendly,$ competitive$ and$ relevant$ to$ the$ customers.$ The$ backbone$ of$ this$process$is$to$understand$the$behavior$of$the$customers,$their$needs$and$motivations.$$Customer$insight$is$of$essence$in$service$design.$$$$


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There$are$also$several$academic$approaches$to$service$design.$Service$design$aims$to$ensure$service$ interfaces$are$useful,$usable$and$desirable$ from$the$client’s$point$of$view$ and$ effective,$ efficient$ and$ desirable$ from$ the$ supplier’s$ point$ of$ view$(Professor$Birgit$Mager,$2009,$This$is$Service$Design$Thinking$2010).$“Service$Designers$visualize,$formulate$and$choreograph$solutions$that$are$not$yet$available.$They$watch$and$interpret$needs$and$behaviors$and$transform$them$into$potential$ future$ services.$ In$ the$ process,$ exploring,$ generating$ and$ evaluating$approaches$are$used$similarly$and$a$redesign$of$existing$services$is$just$as$much$a$challenge$ as$ the$ development$ of$ new$ innovative$ services.”$Birgit$Mager,$Professor$for$service$design$at$Köln$International$School$of$Design.$“Service$Design$helps$to$innovate$(create$new)$or$ improve$(existing)$services$to$make$ them$ more$ useful,$ usable,$ desirable$ for$ clients$ and$ efficient$ as$ well$ as$effective$ for$ organizations.$ It$ is$ a$ new$ holistic,$ multiFdisciplinary,$ integrative$field.”$Stefan$Moritz,$2005$(This$is$Service$Design$Thinking,$2010).$

$Service$ designers$ draw$ on$ the$ methodologies$ of$ fields$ such$ as$ ethnography$ and$journalism$ to$ gather$ customer$ insights$ through$ interviews$ and$ by$ shadowing$service$ users.$ Many$ observations$ are$ synthesized$ to$ generate$ concepts$ and$ ideas$that$are$typically$portrayed$visually,$for$example$in$sketches$or$service$prototypes.$$$

$Figure$2.$Service$design$process$(Service$Design$agency$Palmu)$

$Service$ design$ thinking$ and$ methodologies$ are$ used$ to$ design$ both$ physical$ and$digital$ services,$ and$ are$ now$ more$ commonly$ used$ in$ designing$ media$ related$services$in$the$digital$ecosystem.$Service$design$is$relevant$to$the$case$studies$in$my$dissertation,$where$I$will$take$a$closer$look$at$new$services$designed$especially$for$digital$and$mobile$platforms.$$((((((


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5. RESULTS OF THE INTERVIEWS AND KEY DRIVERS OF CHANGE Key Drivers of Change The$ results$ from$ the$ interviews$have$underlined$ the$notion$ that$ a$major$business$paradigm$ shift$ is$ underway$ in$ newspaper$ publishing.$ Four$ key$ drivers$ of$ change$were$identified$as$a$pattern$repeatedly$discussed$in$the$course$of$the$interviews:$$

• Consumer$behavior$(time$spent$on$media$and$how$media$is$consumed)$

• Cost$of$print$&$distribution$(particularly$the$cost$of$physical$distribution)$

• Disruptive$technology$(the$new$‘ecosystem’$with$tablets$and$smartphones)$

• The$change$in$advertising$(mass$marketing$vs.$targeted$content$marketing)$

In$ addition$ to$ these$ a$ few$ other$ topics$ came$ up$ in$ the$ interviews,$ including$ the$changing$society$and$the$polarization$that$affects$how$income$is$distributed$amongst$citizens$and$information$behavior$in$general.$Also$political$reasons$were$mentioned$as$there$has$been$an$increase$in$the$VAT$for$printed$products$in$Finland$from$zero$to$10$per$cent$over$the$years$from$2011$to$2013.$At$the$same$time$the$VAT$for$digital$content$remains$at$the$high$level$of$24$per$cent.$However,$this$ is$a$political$matter$and$ it$ relates$ to$ regulation$ and$ certain$ EU$ directives.$ Hence$ I$ have$ chosen$ not$ to$discuss$the$VAT$aspect$any$further$in$this$context.$$$Distribution$ cost$ i.e.$ the$ cost$ of$ physical$ distribution$ is$ the$ critical$ key$ driver$ of$change$with$ regard$ to$print.$ The$ recent$ trend$ in$ Finland$ is$quite$worrying$ F$ Itella$(previously$The$Finnish$Post,$a$distribution$company$with$a$monopolistic$position$in$the$Finnish$market)$has$declared$that$distribution$of$letters,$invoices,$magazines$and$newspapers$ is$no$ longer$ its$core$business.$ Instead$ it$will$ focus$on$eCommerce$and$logistics.$The$consequence$of$rapidly$declining$volumes$of$print$and$increased$cost$owing$ to$escalating$wages$and$ the$price$of$ fuel$has$a$doubleFeffect$on$ the$price$of$distribution.$And$these$price$changes$may$lead$to$print$becoming$a$“luxury$product”$that$consumers$cannot,$or$will$not,$pay$for.$$These$four$‘Key$Drivers’$are$all$interrelated$and$this$interrelation$will$be$argued$in$the$ dissertation.$ However,$ the$ change$ in$ consumer$ behavior$ (Audience$ Evolution:$New$technologies$and$ the$ transformation$of$media$audiences,$Napoli,$2011)$ is$ the$one$key$driver$that$affects$all$of$the$three$others,$including$the$way$consumers$are$able$to$consume$printed$products$in$the$future.$The$‘Information$Explosion’,$i.e.$how$many$ messages$ per$ day$ can$ we$ actually$ handle,$ has$ a$ lot$ to$ do$ with$ consumer$engagement$in$media$and$advertising$content.$$$Advertising$ is$ also$ affected$ by$ consumer$ behavior$ and$ the$ way$ we$ purchase$products$today$as$eCommerce$is$gaining$ground$and$we$use$a$number$of$sources$to$obtain$information$about$products$and$services$included$search$engines,$blog$posts$and$other$referrals$in$social$media$as$well$as$content$marketing.$$$


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$

Figure$3.$Consumers’$purchase$behavior$(Service$Design$agency$Palmu)$$There$ is$an$ increased$sense$of$urgency$ to$ find$new$business$models$among$media$firms$ in$ general$ and$ newspaper$ publishers$ in$ particular.$ The$ attitude$ of$ industry$leaders$has$changed$in$the$past$two$years,$which$is$clear$when$comparing$the$results$from$early$discussions$when$preparing$ the$research$plan$ in$2011$and$those$of$ the$interviews$conducted$later$from$April$2012$to$August$2013.$The$research$work$was$started$with$literature$studies$and$preliminary$discussions$with$publishers$in$2011.$At$ that$ time$ Nordic$ newspaper$ publishers$ did$ not$ feel$ the$ change$ in$ consumer$behavior$and$advertising$as$strongly$as$it$is$seen$today.$$$Now$the$general$sentiment$is$that$the$old$business$models$need$to$be$reviewed$and$investments$into$digital$transformation$are$a$necessity.$Based$on$the$interviews,$the$year$2013$seems$to$be$the$year$of$$‘paywalls’,$which$means$that$digital$content$is$no$longer$ free$ online$ and$ several$ models$ for$ offering$ digital$ content$ on$ mobile$platforms$have$been$launched.$Some$Finnish$newspapers$have$already$followed$the$example$set$by$The$New$York$Times$in$March$2011.$The$soFcalled$‘metered$paywall’$allows$media$audiences$to$read$only$a$limited$number$of$articles$for$free$in$order$to$build$a$digital$ subscription$base.$This$year$ can$ really$be$defined$as$ the$year$when$publishers$are$focusing$on$developing$new$subscription$models$for$paid$content.$$$Only$ a$ few$ international$ publishers$ offer$ content$ for$ free$ on$ the$ web,$ e.g.$ The$Guardian$ where$ the$ strategic$ choice$ seems$ to$ be$ to$ become$ one$ of$ the$ global$websites$ for$ news,$ underlined$ by$ investments$ into$ editorial$ staff$ in$ the$ U.S.$ and$


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Australia.$However,$The$Guardian$can$be$seen$as$one$of$ the$exceptions$seeking$for$global$ dominance$ in$ the$ EnglishFspeaking$ world.$ Moreover$ The$ Guardian$ Media$Group$is$owned$by$a$foundation,$without$the$immediate$necessity$to$make$a$profit.$$$(((((((((((((((((((((((((((((((((((((


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6. STRATEGIC CHOICES: EFFICIENCY-CENTERED VS. NOVELTY-CENTERED BUSINESS MODELS The$interviews$reveal$that$some$firms$have$chosen$to$stick$to$the$old$business$model$with$a$technological$focus$on$the$print$based$business$model$for$as$long$as$possible.$These$ companies$ are$ efficiencyFcentered$ and$ the$main$ part$ of$ revenue$ is$ derived$from$the$old$print$based$business$model$(bottom$left$in$figure$3).$In$ePublishing$they$strive$for$a$reduction$in$transaction$costs$and$offer$only$ limited$value$as$far$as$the$user$experience$is$concerned$on$digital$platforms.$$$Some$ publishers$ look$ at$ even$ a$ greater$ degree$ of$ efficiency$ through$ industry$consolidation$ (top$ left$ in$ figure$ 3),$ which$ requires$ investments$ into$ corporate$acquisition$and$competencies$in$finding$synergies$within$the$acquired$framework$of$newspapers.$The$focus$is$still$on$cost$efficiency$across$the$organization,$with$some$investment$into$new$ways$of$finding$revenue$in$the$digital$ecosystem.$$$

$Figure$4a.$Strategic$choices$in$publishing$(examples)$

$A$good$number$of$the$interviewed$publishers$(bottom$right$in$figure$3$below)$have$invested$ into$ digital$ transformation$ with$ a$ certain$ degree$ of$ incremental$improvement$ of$ the$ printed$ products.$ Digital$ transformation$ implies$ investment$into$ new$ products$ and$ services$ in$ the$ digital$ ecosystem,$ including$ wellFdesigned$mobile$ applications.$ These$ companies$ have$ typically$ also$ decided$ to$ set$ up$ a$‘paywall’$and$most$have$already$implemented$one$during$2013.$$


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The$ last$ category$ of$ publishers$ in$ the$ top$ right$ corner$ of$ figure$ 3$ clearly$ have$ a$noveltyFcentered$business$model$ and$ a$more$ aggressive$ ‘Digital$ First’$ approach$ in$order$ to$ create$ value$ to$ customers$ and$ to$ build$ a$ digital$ future.$ These$ firms$ have$invested$ both$ in$ the$ creation$ of$ digital$ publishing$ platforms$ and$ the$ analysis$ of$reader$ engagement$ based$ on$ collection$ of$ data$ related$ to$ the$ behavior$ of$ the$subscriber$base.$These$companies$are$most$often$ ‘global$brands’,$with$an$audience$across$the$world.$$$

$Figure$4b.$Strategic$choices$in$publishing$(description)$

((((((((((((((((


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7. A FEW EXAMPLES: DIGITAL TRANSFORMATION AND DIGITAL FIRST International publishers of global news brands The Economist – Digital transformation The$ Economist$ is$ an$ institution,$ established$ in$1843.$ It$ took$ The$ Economist$ 160$years$to$get$to$1$million$print$subscriptions$and$only$9$more$years$to$reach$a$total$of$more$than$1.5$million$subscribers$(latest$publicly$available$figure$is$from$ABC$data$and$ stands$ at$ 1,555,917$ representing$ the$ total$ average$ print$ and$ paid$ digital$editions$ circulation$ from$ January$ to$ June$ in$ 2013.$ This$ represents$ a$ yearFonFyear$growth$of$5.5%).$The$Economist$hope$to$reach$2$million$in$total$subscriptions$"in$the$next$few$years",$according$to$Nick$Blunden,$SVP,$Global$Head$of$Digital$and$Content$Strategy.$Focus$has$from$the$very$beginning$been$on$international$affairs$and$trade,$a$sound$base$for$the$interests$of$a$global$audience$today.$As$mentioned$in$a$recent$interview$ with$ Andrew$ Rashbass,$ CEO$ of$ The$ Economist$ Group,$ 'trust'$ and$transparency$is$the$core$of$the$content$of$each$issue$(interview$by$Chris$Smith,$The$Guardian).$$$The$ Economist$ online$ presents$ impressive$ numbers$ for$ its$ special$ content$ in$ the$digital$ ecosystem:$ 7.7$million$ unique$ online$ visitors$ per$month.$ The$ Social$ Media$sites$show$quite$high$figures$for$the$likes$and$followers$of$The$Economist.$$The$share$of$ print$ is$ declining,$ but$ Nick$ Blunden$ is$ still$ “rather$ bullish$ about$ the$ future$ of$print”$and$thinks$The$Economist$will$still$have$a$print$edition$in$10$years$time.$$As$ to$ audience$ measurement$ The$ Economist$ tracks$ downloads,$ but$ behavioral$tracking$is$not$yet$done$in$depth.$However,$reader$panels$are$conducted$on$a$regular$basis.$For$the$near$future$top$priorities$include$development$of$the$mobile$web$and$new$apps$ to$guarantee$availability$on$all$ relevant$mobile$platforms.$Advertising$ is$becoming$ much$ more$ a$ targeted$ process,$ according$ to$ Nick$ Blunden,$ who$ has$ a$background$of$heading$an$advertising$agency$prior$to$ joining$The$Economist$a$few$years$ ago.$ Advertising$ is$ according$ to$ Nick$ Blunden$ “working$ rather$ well$ on$ the$tablet$editions$for$premium$advertisers”,$e.g.$Intelligent$Life$magazine$published$by$The$Economist$ is$ free$ on$ the$ tablet$ and$ its$ content$ is$ sponsored$by$Credit$ Suisse.$Intelligent$Life$has$a$circulation$of$175,000.$$The$ Economist$ has$ now$ unbundled$ its$ subscriptions$ as$ of$ April,$ 2013.$ New$ price$points$have$been$set$up$accordingly.$The$pilot$was$started$in$the$U.S.$at$ the$end$of$2012$and$has$now$been$rolled$out$to$the$rest$of$the$world,$commented$Susan$Clark,$MD,$ The$ Economist$Digital$&$Group$Marketing$Director.$ "The$ rise$ of$ globalization$helps$ our$ business,$ and$ the$ fact$ that$ English$ has$ become$ the$ second$ language$ for$many$people"$boosts$growth.$$$Readers$of$The$Economist$can$now$choose$between$digital$only,$print$only$or$a$full$subscription$ across$ the$ platforms$ including$ mobile,$ online$ and$ print.$ The$ digital$subscriber$ base$ is$ growing,$ however,$many$ people$ still$ choose$ a$ bundle$ of$ digital$and$print$subscription.$"Many$of$us$still$lead$multiFplatform$lives."$In$fact$only$20%$opted$for$the$digitalFonly$subscription$in$the$U.S.,$where$60%$of$the$audience$of$The$Economist$ is$ today.$ Scandinavia$ is$ reportedly$ also$ a$ strong$ market$ with$ high$


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readership$ and$ interest$ for$ global$ affairs$ and$ international$ business.$ Currently$ a$digital$ subscription$ is$ priced$ at$€3.92$per$week$ (the$ same$as$ the$price$ for$ a$print$subscription),$while$the$print$+$digital$subscription$is$priced$at$€4.75$per$week.$$With$a$concept$of$expanding$onto$several$platforms$across$the$mobile$ecosystem$it$may$not$take$too$long$to$reach$2$million$subscribers?$The$digital$transformation$of$The$Economist$is$one$to$watch$in$the$global$media$landscape.$The$economic$results$for$The$Economist$have$been$among$the$best$in$the$news$industry.$ $Results$for$the$financial$year$ended$31$March$2013$showed$a$turnover$of$£346m$for$The$Economist$Group$and$an$operating$profit$of$£68m,$a$record.$Profit$after$tax$was$up$3%$to$£49m.$In$terms$of$revenue$60%$is$derived$from$selling$content,$up$from$44%$five$years$ago,$and$39%$of$revenue$is$from$digital$sources,$up$from$29%$three$years$ago.$$The Financial Times – Digital First The$125Fyear$old$Financial$Times$(FT)$ is$one$of$the$world’s$ leading$business$news$and$information$organizations,$recognized$internationally$for$its$authority,$integrity$and$ accuracy$ (FT.com).$ The$ Financial$ Times$ is$ a$ division$ of$ Pearson$ PLC,$ which$provides$a$broad$ range$of$business$ information,$news$and$ services.$The$FT$Group$has$a$50%$shareholding$in$The$Economist.$FT$is$reporting$success$with$its$web$app,$launched$ in$ 2012.$ The$ FT$ also$ publishes$ ‘How$ To$ Spend$ It’,$ a$ lavish$ lifestyle$magazine$ on$ private$ economy$ and$ luxury$ articles$ (also$ available$ as$ a$mobile$ and$tablet$ app$ and$ online$ on$ HowtoSpendit.com).$ The$ FT$ is$ quite$ progressive$ with$investment$into$its$digital$platforms$and$sees$the$future$of$the$newspaper$as$digital$without$the$shade$of$a$doubt.$$The$ FT$ has$ almost$ 600$ journalists$ worldwide.$ Although$ the$ circulation$ for$ the$printed$newspaper$has$been$sliding$down$the$FT$has$its$largest$readership$ever$and$FT's$ audience$ is$ comprising$ wealthy$ and$ powerful$ people$ across$ the$ globe.$According$to$Jon$Slade,$Commercial$Director,$FT$provides$"actionable$content"$to$a$quality$audience.$The$FT$has$a$combined$print$and$online$average$daily$readership$of$2.1$million$people$worldwide$and$a$combined$paid$print$and$digital$circulation$of$more$than$629,000$(up$5%$year$on$year)$according$to$latest$public$figures$presented$on$ the$ FT$ website.$ Digital$ subscribers$ now$ represent$ a$ larger$ portion$ than$ the$circulation$of$the$printed$newspaper$standing$at$387,00$at$the$end$of$October,$2013$(up$24%).$Mobile$is$an$increasingly$important$channel$for$the$FT,$driving$a$third$of$FT.com$ traffic$ and$24%$of$ digital$ subscriptions.$App$usage$ is$ growing$particularly$fast$among$the$25F34$year$old$people,$which$is$good$news$with$regard$to$the$future$of$ readership.$ More$ editorial$ resources$ are$ now$ shifted$ from$ print$ to$ online$reporting$as$focus$is$shifting$to$a$24Fhour$service$for$marketFmoving$news$(fastFT).$$Despite$ falling$ print$ sales,$ the$ revenue$ of$ the$ newspaper$ circulation$ has$ achieved$profitability$ as$ it$ exceeded$ the$ cost$ of$ print$ production$ and$ distribution.$ Price$increases$ have$ boosted$ profits$ and$ one$ could$ say$ that$ in$ the$ case$ of$ FT$ print$ is$becoming$“a$luxury$product”$for$those$subscribers$who$wish$to$have$a$printed$copy$of$the$content.$$The$ FT$ has$ been$ successful$ in$ its$ premium$ offer$ to$ subscribers,$ adding$ its$ well$followed$Lex$column,$eFpaper$access,$and$ letter$ from$the$editor$ to$ the$package.$As$many$as$33%$of$new$digital$subscribers$have$opted$for$the$‘premium’$offering.$They$


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pay$$2.49$a$week$more$ for$ the$privilege.$And$ for$FT’s$business$model$ this$ implies$they$get$more$revenue$for$almost$zero$in$extra$cost.$Premium$or$VIP$subscriptions$are$ one$ innovation$ any$ selfFrespecting$ quality$ publisher$ should$ be$ thinking$ about$for$2014$(Ken$Doctor,$Newsonomics).$$Measurement$of$audience$behavior$with$regard$to$job$title$and$personal$interests$is$of$ particular$ relevance$ to$ FT,$ allowing$ consultancy$ to$ advertisers$ utilizing$ an$analytics$ tool$ called$ 'Deep$View'.$ In$ this$way$FT$ can$help$ advertisers$ to$direct$ the$right$story$to$targeted$audiences$at$the$right$time.$However,$print$is$not$dead,$as$the$FT$still$provides$a$good$platform$for$premium$advertising$with$its$print$subscription$base.$Advertising$is$reported$to$remain$weak,$however,$FT$have$reported$growth$in$digital$ and$ luxury$ advertising,$ including$ a$ significant$ 23%$ increase$ in$ mobile$advertising.$$!The New York Times - Digital First As$ a$ researcher$ one$ tries$ to$ be$ objective$ dealing$with$ facts$ and$ looking$ at$ posing$questions$ hoping$ to$ get$ answers$with$ regard$ to$ the$ future$ of$ journalism$ and$ new$business$models$ in$ the$media$ industries.$With$ this$ respect$ I$have$ to$confess$ I$was$rather$emotional$when$watching$the$movie$“Page$One:$Inside$The$New$York$Times$and$ the$ Future$ of$ Journalism”$ produced$ and$written$ by$Kate$Novack$ and$Andrew$Rossi.$ The$ movie$ –$ and$ the$ related$ book$ edited$ by$ David$ Folkenflik$ –$ really$dramatizes$ the$ transformation$ of$ media$ and$ the$ difficulties$ traditional$ media$companies$were$ facing$ a$ few$ years$ ago.$ Both$ regular$ readers,$ the$ producers$ said$they$didn’t$want$ to$worship$The$Times,$but$wanted$ to$ tell$ the$ story$of$ journalism$with$the$notion$of$“The$Times$as$an$influential$institution$during$a$time$of$turmoil.”$$$Back$ in$ January$ 2009$ Michael$ Hirschorn$ had$ written$ the$ piece$ in$ The$ Atlantic$entitled$“End$Times:$Can$America’s$paper$of$record$survive$the$death$of$newsprint?$Can$ journalism?"$ asking$ the$ provocative$ question:$ “What$ if$ The$ New$ York$ Times$goes$out$of$business$–$like$this$May”.$And$the$company$was$then$making$huge$losses.$Clay$Shirky,$ the$New$York$University$professor$of$new$media$had$been$comparing$the$advent$of$the$Internet$to$the$invention$of$the$printing$press$in$the$15th$century,$before$ most$ of$ us$ got$ to$ understand$ the$ magnitude$ of$ the$ transformation$ of$ the$media$ landscape.$ Perhaps$ it’s$ against$ this$ background$ journalist$ David$ Carr$ –$ a$brilliant$ journalist$ and$ a$ colorful$ character$ in$ the$ movie$ –$ put$ a$ headline$ for$ his$section$ of$ the$ book:$ “Print$ is$ Dead:$ Long$ Live$ The$ New$ York$ Times”.$ He$appropriately$ writes$ that$ “the$ paper$ matters$ precisely$ because$ people$ don’t$ just$push$ a$ button$ when$ they$ have$ a$ random$ thought$ or$ merely$ give$ some$ TwitterFdriven$topspin$to$a$nice$little$bit$of$news$the$see$floating$by$on$the$Web.”$He$further$states:$ “I$still$believe$that$ the$ front$page$of$The$Times$can$convey$authority$unlike$any$ other$ media$ artifact$ on$ the$ planet.”$ David$ Carr$ writes$ the$ Media$ Equation$column$ for$ the$ Monday$ Business$ section$ of$ NYT$ and$ blogs$ regularly$ at$ Media$Decoder.$$$So$ how$ are$ The$ Times$ doing$ today?$ I$ had$ the$ opportunity$ to$ visit$ The$New$ York$Times$ Company$ Research$ &$ Development$ Lab$(R&D$ Lab)$ hosted$ by$ Matt$ Boggie,$Director$of$Technology$Strategy$and$R&D$at$The$New$York$Times.$Matt$Boggie$has$worked$at$The$Times$since$2010$and$was$previously$involved$with$media$as$a$Senior$Manager$at$Accenture.$


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$The$R&D$Lab$ "works$ to$ innovate$around$new$ technologies,$ anticipating$ consumer$behaviors$ and$ building$ new$ interfaces$ for$ news".$ The$R&D$ Lab$ has$ a$ charter$ of$“being$ahead$of$the$crowd”$i.e.$a$mission$of$looking$three$years$ahead.$The$emphasis$of$R&D$is$on$Development$of$new$media$concepts.$The$R&D$Lab$comprises$a$team$of$7$ creative$ technologists,$ who$ are$ together$ with$ Matt$ Boggie$ trying$ to$ find$ new$trends$ and$ create$ prototypes$ in$ order$ to$ illustrate$ what$ might$ work$ in$ the$ near$future.$Any$concepts$are$then$productized$and$launched$to$the$market$by$the$R&D$Lab$or$in$partnership$with$the$newsroom,$or$with$the$NYT$technology$organization.$So$ in$ this$ sense$ The$ New$ York$ Times$ Company$ has$ a$ very$ clear$ and$ markedly$forwardFlooking$ attitude$ towards$ new$ innovation$ and$ service$ design.$ Media$ is$regarded$ as$ a$ service$ to$ the$ audience$ involving$ an$ element$ of$ coFcreation$ and$serving$ the$ various$ needs$ of$ a$ fairly$ broad$ media$ audience$ forming$ the$ NYT$community.$$The$ ‘paywall’$ introduced$ in$ March$ 2011$ has$ worked$ well,$ and$ more$ people$ are$becoming$digital$subscribers$or$choose$bundles$e.g.$with$a$Sunday$print$subscription$supplemented$ by$ digital$ content$ on$ weekdays.$ The$ numbers$ show$ a$ continuing$decline$ in$ print$ subscriptions,$ however,$ these$ are$ still$ relevant$ with$ regard$ to$advertising$income.$$$Business$ Insider$ wrote$ a$ rather$ positive$ summary$ of$ the$ NYT$ financial$ report$ in$February$ stating$ that$ “its$ revenue$ from$ readers$ and$ subscribers$ overtook$ that$ of$advertising$for$the$first$time$in$2012,$as$the$media$group$reported$a$boost$in$profits.$For$the$full$year,$the$group$posted$a$profit$of$$133$million,$compared$with$a$loss$of$$39.7$ million$ in$ 2011.”$ The$ New$ York$ Times$ are$ back$ in$ black$ figures$ and$ this$progress$has$continued$in$2013.$$Mark$Thompson,$the$former$BBC$chief$who$became$president$and$chief$executive$at$the$ Times$ last$ November,$ claimed$ progress,$ noting$ that$ the$ number$ of$ digital$subscribers$is$growing:$"For$the$first$time$in$our$history,$annual$circulation$revenues$surpassed$those$from$advertising.$Our$pay$model$continued$to$prove$itself.”$$$NYT$ has$ introduced$ a$ subscription$ model$ offering$ flexibility$ to$ readers$ including$different$ platforms:$ print,$ online$ and$ mobile$ platforms$ with$ apps$ for$ tablets$ and$smartphones.$Visitors$to$the$NYTimes.com$website$only$get$three$free$articles$each$day.$ The$ New$ York$ Times$ is$ also$ available$ on$ new$ platforms$ such$ as$ Flipboard,$where$digital$subscribers$of$NYT$get$access$to$the$full$content.$$$In$terms$of$the$development$of$new$media$concepts$in$the$digital$ecosystem$NYT$are$not$focusing$on$any$particular$ecosystem,$as$the$players$tend$to$change$over$time.$A$very$different$set$of$players$dominate$they$tech$industry$today,$compared$with$5F10$years$ago.$$The$ focus$ for$ research$ is$ to$ break$ down$ the$ content$ into$ smaller$ pieces$ and$repackage$it$into$different$experiences,$powered$by$content$consumed$on$platforms$at$home$or$for$example$moving$about$in$New$York$City.$An$example$of$this$would$be$how$to$improve$your$cooking$experience$at$home$and$what$you$see$in$the$streets$of$New$York,$i.e.$information$beyond$the$events$and$objects$that$you$see.$Work$is$also$


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put$down$on$guided$services$recommended$by$The$New$York$Times$or$for$example$the$best$election$coverage$for$those$interested$in$politics.$The$New$York$Times$also$has$a$very$good$technology$section$including$the$Bits$Blog,$focusing$on$the$business$of$new$technology.$These$stories$are$produced$by$the$newsroom,$i.e.$the$R&D$Lab$is$not$involved$with$the$actual$content$of$the$newspaper$or$its$blogs$on$the$NYTimes$website.$ Demos$ built$ at$ the$media$ lab$ are$ shared$with$ the$ newsroom$ a$ couple$ of$times$each$month.$$The$researcher$was$given$a$guided$tour$of$the$R&D$Lab,$together$with$a$small$group$of$students$from$Stanford$University.$Many$of$the$demos$are$presented$on$the$R&D$Lab$website$and$below$I$have$described$in$brief$two$of$the$prototypes$shown:$“Reveal"$ i.e.$ a$ "Magic$ News$ Mirror"$ –$ you$ can$ speak$ to$ the$ mirror$ and$ ask$ for$headlines,$ news$ in$ New$ York$ or$ the$ weather$ report$ for$ Manhattan,$ or$ even$ your$personal$ health$ information.$ The$ intention$ is$ not$ that$ the$ mirror$ is$ the$ actual$interface$for$reading$news$at$length,$but$you$can$pick$out$the$news$whilst$brushing$your$teeth$and$then$read$the$complete$news$at$your$breakfast$table.$$Another$interesting$demo$that$I$choose$to$call$"Data$Visualized"$F$i.e.$data$shown$on$a$large$screen$across$the$wall,$where$you$can$see$the$number$of$articles$published,$the$number$of$words,$pages$read,$and$tweets$shared$on$a$given$day.$This$could$be$a$tool$ for$ the$ newsroom$ to$ illustrate$ audience$ engagement.$ Other$ interesting$development$projects$include$the$creative$use$of$new$technology$platforms,$such$as$Google$Glass.$The$NYT$news$app$was$the$ first$of$ its$kind$to$be$ launched$on$Google$Glass$last$spring.$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$From$a$business$model$point$of$ view$NYT$ is$planning$ to$put$up$a$number$of$new$price$ points$ and$ diversified$ products,$ e.g.$ specific$ media$ services$ for$ elections,$sports$ updates$ for$ big$ events$ like$ The$ Olympic$ Games$ etc.$ The$ focus$ is$ on$ new$product$ groups$ that$ serve$ the$ needs$ of$ different$ people$ (not$ necessarily$ living$ in$New$York$or$in$the$U.S.).$Although$the$‘paywall’$is$driving$digital$subscriptions$NYT$is$ still$ looking$ at$ finding$ means$ to$ offer$ relevant$ content$ to$ people$ who$ are$ not$necessarily$ able$ or$ willing$ to$ pay$ for$ the$ current$ packages$ offered.$ There$ are$opportunities$ in$ developing$ the$ offering$ for$ parts$ of$ the$ content$ to$ certain$ target$groups.$ NYT$will$ be$ focusing$ on$ creating$ new$mobile$ products,$ according$ to$Matt$Boggie.$This$needs$to$be$looked$at$with$a$critical$eye$in$order$build$specific$content$that$people$are$willing$to$pay$for.$$Engagement$ is$measured$ in$ a$ number$ of$ways:$ how$people$ spend$ their$ time$with$media$ during$ the$ day,$ e.g.$mobile$ activity$ in$ the$morning,$ online$ browsing$ during$work$ hours$ and$ tablet$ usage$ in$ the$ evening.$ NYT$ is$ also$ analyzing$ data$ to$understand$ better$ how$ consumers$move$ towards$ digital$ subscriptions,$ as$ well$ as$patterns$of$sharing$on$e.g.$Twitter.$Linking$behavioral$patterns$to$purchase$behavior$is$a$little$more$difficult,$however,$NYT$are$working$on$mobile$tracking.$Advertisers$have$been$looking$at$The$New$York$Times$more$as$an$attractive$platform$for$brand$advertising,$ and$NYT$has$a$much$more$diverse$audience$when$compared$with$e.g.$financial$newspapers$like$FT$or$WSJ.$NYT$are$looking$more$for$textual$and$syntactic$analysis$of$what$people$are$reading$–$“if$I$read$a$certain$type$of$articles$e.g.$opinions,$what$other$kind$of$articles$am$I$likely$to$read?”$NYT$has$a$recommendation$engine$in$place$today,$and$are$looking$to$do$more$with$recommendations$later.$It’s$still$early$


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days$ in$ this$ process.$ As$ to$ the$ innovation$ process$ within$ The$ New$ York$ Times$Company$ it’s$ really$ everyone’s$ task,$ including$ the$ newsroom,$ R&D$ and$ other$departments$of$the$company.$$$One$ can$ sense$ a$ budding$ confidence$ at$NYT:$ three$ new$digital$ products$ are$ to$ be$launched$ in$ 2014,$ including$ new$price$ points$ and$ a$ premium$ tier$ for$ subscribers.$The$ digital$ initiative$ has$ been$ a$ success,$ 90%$ of$ print$ subscribers$ have$ included$digital$ services$ in$ their$ package$ and$ it$ all$ adds$ up$ to$ $150$million$ in$ new$ digital$reader$revenue.$NYT$leads$the$news$industry$with$56%$of$its$revenues$coming$from$readers$(Ken$Doctor,$The$Newsonomics$of$The$New$York$Times’s$Paywalls$2.0).$

New Media Concepts in the U.S. and Service Design for digital natives Service$design$ is$becoming$vital$ in$ the$new$media$ landscape.$ It$ is$quite$ important$that$the$user$experience$is$matched$with$the$device$being$used,$so$service$design$is$actually$about$the$combination$of$relevant$content$combined$with$the$right$kind$of$user$experience$on$each$platform$being$used$for$media$consumption.$Not$forgetting$the$relevance$of$building$elements$enabling$engagement$and$social$sharing.$$Many$ of$ the$ new$ services$ are$ being$ designed$ with$ these$ principles$ in$ mind.$ For$example$The$Washington$Post$has$just$launched$'Topicly'$F$a$highly$visual$platform$for$ its$website$ and$mobile$platforms.$Grouping$ articles$by$ theme$and$ then$ linking$these$under$an$image$in$a$grid,$the$homepage$is$a$collection$of$different$news$topics.$You$ can$ then$ navigate$ onwards$ to$ relevant$ stories,$ commentaries,$ graphics$ and$multimedia$surrounding$the$issue.$Topicly$is$powered$by$proprietary$technology$to$give$ users$ timely$ news$ that$ Post$ editors$ think$ will$ interest$ readers.$ All$ Post$journalism$—$ stories,$ blog$ posts,$ photos,$ and$ videos$—$ is$ being$ processed$ in$ 15Fminute$ snapshots,$ and$ topics$ are$being$determined$ in$ realFtime$based$on$ content.$The$more$content$that$is$published$about$a$topic,$the$higher$the$topic$appears$in$the$display.$Advertising$on$the$site$is$native;$so$all$adverts$appear$in$the$same$format$as$the$news$topics$around$them.$Land$Rover,$the$official$ launch$sponsor,$for$example,$has$ its$ own$ grid$ on$ the$ homepage,$ the$ only$ significant$ difference$ being$ that$ it$ is$qualified$as$ a$ ‘sponsored$ topic’.$ I$ guess$you$ could$ call$ this$ content$marketing.$The$new$service$ is$particularly$aimed$at$mobile$users,$and$ the$plan$ is$ to$ include$social$media$data$in$its$algorithm.$ BuzzFeed$ is$ a$ news$ service$ designed$ for$ the$ digital$ natives.$ In$ their$ own$ words$“BuzzFeed$ is$ the$ leading$ media$ company$ for$ social$ news$ and$ entertainment,$intensely$ focused$ on$ delivering$ highFquality$ original$ reporting,$ insight,$ and$ viral$content$across$a$rapidly$expanding$array$of$subject$areas.”$With$85$million$visitors$in$August,$it$is$fast$becoming$one$of$the$most$popular$sites$on$the$web.$Considering$the$1$billion$users$of$Facebook$and$where$they$get$their$news,$Buzzfeed$is$top$of$the$list$when$it$comes$to$stories$shared$by$users,$ahead$of$the$Huffington$Post,$CNN$and$the$BBC$ (Rory$CellanFJones,$7$ reasons$why$Buzzfeed$ is$ the$death/savior$of$news).$BuzzFeed$also$ integrates$ sponsored$ stories$on$ its$platform,$ i.e.$ this$kind$of$ ‘native$advertising’$is$hard$to$separate$from$the$media$content$in$its$service.$$Another$ interesting$newcomer$ is$NowThis$News$ F$ the$social$news$video$startup$ is$


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building$ its$ service$ on$ short,$ visual$ news$ videos.$ NowThis$ News$ is$ available$ as$ a$website$ and$ apps$ for$ Android$ and$ iOS$ users.$ Not$ unlike$ the$ popular$ BuzzFeed$service,$NowThis$News$is$aiming$at$the$diginative$audience$and$it$has$also$developed$a$shortFformat$video$service$(30s$video$clips$online$and$in$its$mobile$apps).$NowThis$news$has$also$introduced$even$shorter$15s$video$news$in$the$social$media$platform$Instagram.$ The$ photoFsharingFturnedFvideoFsharing$ app$ is$ one$ that$ a$ number$ of$news$organizations$have$played$around$with,$ but$ few$have$made$ the$ sort$ of$push$NowThis$has.$EditorFinFchief$Ed$O’Keefe$says$the$shorter$style$of$video$it$produces$for$ Instagram$ and$ Vine$ is$ now$ “the$ focus$ of$ our$ company.”$ (Caroline$ O’Donovan,$Nieman$Journalism$Lab).$NowThis$News$is$an$aggregator$i.e.$ it$gets$most$of$its$raw$material$ from$ other$ sources,$ but$ it$ curates$ the$ content$ to$ fit$ each$ platform.$ The$question$here$is$Instagram$the$right$platform$for$news$services$and$what$is$the$logic$for$building$revenue?$$

Nordic examples, Sweden Schibsted – Digital First A$Nordic$ example$ of$ a$ “Digital$ First’$media$ firm$ is$ Schibsted,$who$have$ started$ to$cannibalize$their$old$business$model$as$early$as$2002F2003,$when$they$established$websites$ to$ compete$ with$ the$ advertising$ sections$ of$ the$ newspapers.$ These$websites$ like$ BytBil.com$ and$ Blocket.se$ have$ proved$ to$ be$ a$ success$ and$ set$ a$benchmark$ for$ classified$ advertising$ on$ the$ Internet.$ Nowadays$ Schibsted$ Sverige$(the$ Swedish$division$of$ the$media$ firm)$ gets$more$ than$half$ of$ its$ revenues$ from$digital$services$and$mobile$traffic$and$revenue$is$on$the$rise.$In$fact$‘Aftonbladet’,$the$evening$newspaper,$was$the$first$Swedish$newspaper$on$the$Internet$in$1994.$Early$in$2013$Aftonbladet$was$the$first$newspaper$in$the$Nordic$countries$to$report$more$revenue$ from$ online$ advertising$ than$ print$ advertising,$ based$ on$ a$ total$ reach$ of$more$than$2.8$million$daily$readers.$$An$ interesting$ new$ service$ in$ Scandinavia$ is$ ‘Aftonbladet$ Flip’,$ available$ on$ the$tablet.$Aftonbladet$ is$already$the$most$popular$mobile$news$service$ in$Sweden.$ Its$brand$new$iPad$edition$is$quite$visual$and$simple$to$navigate$i.e.$you$can$tap$on$the$content$ on$ the$ home$page$ and$ open$up$ a$window$of$more$ articles$ relating$ to$ the$chosen$topic$of$top$news,$culture,$fashion,$entertainment,$sports,$TV$content$etc.$The$home$page$includes$sponsored$content$from$an$advertiser.$As$a$reader$you$can$log$in$on$Facebook,$get$recommendations$for$articles$from$your$friends$and$participate$in$ developing$ the$ service.$ In$ fact$ Aftonbladet's$ development$ team$ have$ actively$listened$to$users$in$the$process$of$designing$the$new$user$interface.$$The$daily$newspaper$FSvenska$DagbladetF$has$also$developed$its$digital$offering$with$focus$on$mobile$applications$and$its$tablet$app$(eSvD).$A$ ‘soft’$paywall$allowing$25$free$articles$per$month$was$ introduced$ in$April$2013,$and$according$ to$CEO$Raoul$Grünthal$of$Schibsted$Sverige$the$mobile$traffic$to$the$website$is$“skyrocketing”.$The$new$ EditorFinFChief,$ with$ background$ in$ digital$ development,$ said$ that$ the$ total$reach$ of$ Svenska$Dagbaldet$ is$more$ than$ 1$million$ readers$ daily$ combining$ print,$online$ and$mobile.$He$will$ focus$ on$ sharpening$ the$ content$ of$ the$newspaper$ and$online$journalim,$as$well$as$launching$new$digital$products$in$the$near$future.$$$Raoul$ Grünthal$ says$ that$ there$will$ hardly$ be$ only$ one$ “fixed$ business$model”$ for$news$ in$ the$ future.$ Instead$ he$ anticipates$ constant$ change$ and$ to$ “conquer$ the$


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market$ each$ year.”$ The$ focus$ must$ be$ on$ the$ customer,$ the$ reader$ instead$ of$focusing$inside$the$media$firm.$The$only$thing$he$regrets$is$that$Schibsted$has$been$too$ patient$ in$ dealing$with$ conservative$ attitudes,$ i.e.$ he$wants$ to$move$ faster$ in$creating$new$services.$And$having$said$ this,$Schibsted$has$been$ leading$the$way$ in$the$Nordic$countries.$$Schibsted$ have$ stated$ that$ they$ want$ to$ be$ the$ number$ one$ worldwide$ in$ online$classified$ ads$ by$ replicating$ its$ highFmargin$ business$ one$ market$ after$ another.$Today$free$online$classifieds$represent$about$25%$of$Schibsted$group’s$revenue,$but$it$ accounts$ for$ 47%$ of$ the$ groups$ EBITDA$ (earning$ before$ interest,$ tax$ and$depreciation).$ Through$ acquisitions$ Schibsted$ now$ operates$ more$ than$ 20$franchises$world$wide$ including$Finland.$The$operations$are$steered$ from$ its$head$office$in$Oslo,$providing$KPI’s,$guidelines$and$training.$$$Västerbottens Kuriren – Digital Transformation Sometimes$I$really$feel$privileged$as$a$researcher$when$I$get$the$opportunity$to$meet$new$people$who$are$prepared$ to$ change$ the$world.$Well,$ if$not$ the$world,$ at$ least$these$guys$seem$to$know$how$to$transform$the$media$business$in$Scandinavia.$This$kind$of$a$feeling$struck$me$as$I$boarded$the$plane$back$to$Stockholm$on$the$way$back$from$the$northern$city$of$Umeå$in$Västerbotten,$Sweden.$$The$ visit$ took$ place$ in$ early$ January$ at$ VästerbottensFKuriren$ (VK),$ where$ I$ was$welcomed$by$ Sture$Bergman,$ CEO$of$ VKFkoncernen$ (VK$Media$Group)$ and$ Ingvar$Näslund,$ EditorFinFChief$ of$ VK.$ VK$ Media$ Group$ comprises$ of$ two$ newspapers$ –$namely$VK$and$Folkbladet$published$in$the$north$of$Sweden,$in$the$city$of$Umeå$and$its$surroundings,$as$well$as$a$‘freebie’$named$Totalt$Umeå,$Nöjesmagasinet$and$some$external$ brands$ where$ VK$ are$ resellers$ (Daily,$ Mix$ Megapol$ and$ Radio$ Rix).$ All$except$ for$ Daily,$ a$ printing$ company,$ are$ directly$ related$ to$media$ content.$ Sture$Bergman$is$a$former$EditorFinFChief,$who$has$initiated$a$big$cultural$change$as$part$of$his$ job$as$CEO.$Sture$Bergman$claims$that$the$conditions$of$corporate$culture$at$VK$ and$ other$ media$ firms$ has$ been$ characterized$ by$ conditions$ in$ their$ market,$which$ is$ part$ of$ the$ history$ of$ how$ newspapers$ have$ evolved$ in$ the$ local$ and$regional$community.$$$The$most$ important$ aspect$ towards$ change$ is$ insight,$ i.e.$ becoming$ aware$ of$ the$need$ for$ change.$ Fundamental$ change$ cannot$ happen$ if$ people$ do$ not$ really$understand$why$ it$ is$necessary,$ both$on$an$ individual$ and$an$organizational$ level.$Sture$ and$ his$ management$ team$ carried$ out$ a$ survey$ and$ found$ that$ VK$ is$ a$company$ with$ a$ hierarchic$ culture,$ where$ clans$ rule$ characterized$ by$ internal$relationships$and$processes.$The$cultural$change$was$driven$by$the$need$to$focus$on$the$customers,$both$readers$and$advertisers$and$their$changing$needs$–$in$order$to$establish$an$'innovation$culture'$driven$by$entrepreneurship.$$$The$ management$ program$ was$ initiated$ in$ 2011$ with$ a$ focus$ on$ being$ at$ the$forefront$ of$ development.$ The$ objective$ has$ been$ to$ generate$ a$ passion$ for$experimentation$ and$ new$ ideas.$ All$ the$ departments$ were$ moved$ into$ the$ same$office$ and$ on$ the$ same$ floor$ (including$ previously$ competing$ newspapers$ VK$ and$Folkbladet)$–$without$any$silos$or$walls$between$functions.$VK$editorial$departments$now$ work$ with$ customer$ segments$ and$ are$ basing$ publishing$ decisions$ on$ their$


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situations$ and$ need$ for$ information.$ The$ key$ questions$ asked$ include:$ a)$ what$stories$should$be$published$and$where,$b)$the$right$platform$for$various$information$and$news,$and$c)$how$to$combine$different$platforms$to$maximize$reach$over$a$day$and$a$week?$This$kind$of$development$is$also$encompassing$the$mobile$and$online$services,$where$a$new$kind$of$a$‘semantic$web$approach’$is$in$progress.$$$Any$decision$on$a$‘paywall’$will$be$based$on$producing$enough$relevant$and$valuable$content$to$each$reader$(or$customer$segment).$This$is$a$true$challenge$and$requires$a$lot$of$proactive$thinking$and$data$analysis,$which$was$not$taking$place$previously.$Measurement$was$traditionally$based$on$the$number$of$readers$of$print$and$online$visitors.$VK$ranks$among$the$top$Swedish$online$sites$for$news,$in$spite$of$its$focus$on$ the$north$ of$ Sweden.$ Print$ is$ not$ forgotten$ –$VK$ are$ developing$ and$ launching$new$printed$products.$$As$ a$ publisher$VK$has$ both$ a$ passion$ for$ development$ and$ a$ structured$ approach$towards$ funneling$ new$ ideas$ into$ projects$ that$ can$ actually$ be$ launched$commercially.$As$Sture$Bergman$put$it$he$wants$“200$ideas$to$select$from,$not$only$2$as$ was$ the$ case$ in$ the$ past”.$ This$ emphasizes$ the$ management$ effort$ of$ getting$everyone$on$board.$VK$has$also$recruited$new$resources$on$his$management$ team$from$ other$ industries$ e.g.$ HRD$ Manager$ (with$ a$ background$ in$ ICA,$ Swedish$largest$retailer),$ a$Development$Manager$ (IT$and$ telecom$background)$and$a$Sales$and$Marketing$executive$(from$the$other$retailer$Coop).$And$the$proactive$approach$of$the$EditorFinFChief$$underlines$the$importance$of$change$within$the$editorial$team.$$The$project$initiated$by$the$management$has$taken$place$in$three$phases:$$(i)$ Information$and$analysis;$ (ii)$ improvement$of$efficiency;$and$(iii)$development.$Needless$to$say$efficiency$ is$required$ in$the$changing$media$ landscape,$as$Swedish$local$ newspapers$ have$ generally$ lost$ both$ in$ reach$ and$ advertising$ income$ in$ the$recent$ years.$ VK$ have$managed$ to$ achieve$ flat$ figures$ with$ this$ regard,$ and$ have$remarkably$improved$efficiency$at$the$same$time.$$$Now$ the$ focus$ for$ the$ next$ three$ years$ is$ built$ around$ three$ main$ areas$ of$development:$1. $A$new$Business$Model$for$online$publishing.$2. $The$development$of$ ‘Totalt$Umeå’,$ the$weekly$ freebie,$aimed$at$ fortifying$ its$position$as$#1$in$view$of$local$competition.$

3. $A$ unique$ mobile$ service$ platform$ including$ editorial$ and$ commercial$competence$(new$platform$for$a$media$service$concept).$

$The$ main$ challenge$ remains$ the$ change$ of$ culture.$ In$ order$ to$ achieve$ overall$success$and$to$remain$as$profitable$as$VK$has$been,$there$is$a$real$need$for$change$in$attitudes.$The$whole$media$group$needs$to$turn$from$inside$to$focus$on$people$and$businesses$on$ the$outside.$As$Sture$Bergman$put$ it$ in$his$ recent$presentation$at$ a$Media$Forum$in$Oslo:$“It$is$not$enough$that$we$know…$It$is$not$enough$that$we$have$to…$We$must$have$the$will$to…$It’s$scary!$It’s$ inconvenient!$It$ is$difficult!$But$great$fun!”$$It's$all$about$attitude$F$agility$F$and$a$new$innovative$culture.$


37

Two examples from Finland The new Helsingin Sanomat (tabloid, online and mobile) – Digital transformation Helsingin$Sanomat$ (HS)$ is$ the$ largest$ subscription$based$newspaper$ in$ the$Nordic$region$published$by$Sanoma$News.$HS$has$a$net$coverage$of$1.9$million$Finns.$The$number$ of$ print$ readers$ was$ 859,000$ at$ the$ end$ of$ 2012,$ with$ a$ circulation$ of$364,000$ in$ total$ (including$ digital$ subscribers).$ The$ website$ HS.fi$ has$ 1.4$ million$unique$ visitors$ per$week.$ The$HS$ brand$ family$ also$ includes$weekly$ and$monthly$supplements,$ two$ free$ sheets$ and$ Channel$ Four$ TV$ news.$ Why$ did$ Helsingin$Sanomat$need$to$change?$Well$the$reason$is$obvious,$consumer$behavior$is$changing$and$the$circulation$of$the$printed$paper$has$been$falling$since$the$millennium$shift,$and$ the$ curve$ has$ been$ steeper$ during$ the$ last$ 3F4$ years$ (F3,8%).$Meanwhile,$ the$number$of$unique$mobile$visitors$to$the$HS$website$has$surged.$$$Petteri$ Putkiranta,$ Business$ Director$ of$ HS,$ admits$ that$ previously$ the$ business$model$for$the$web$was$unclear,$with$free$content$and$income$only$from$advertising$and$banners.$The$‘Combo’$subscription$model$has$been$a$success,$in$2012$33%$of$HS$customers$paid$for$a$combination$of$digital$and$print$content.$Now$that$figure$stands$at$ 45%$according$ to$Pekka$ Soini,$ CEO$of$ Sanoma$News.$Tablets$ have$ changed$ the$usage$patterns$and$perception$of$digital$content,$the$HS$tablet$app$user$spends$11x$more$ time$with$ the$ content$ than$ an$ average$web$user,$ and$5x$more$ time$ than$ an$average$mobile$app$user.$The$tablet$app$was$introduced$already$at$the$end$of$2010,$and$HS$now$have$more$than$40,000$tablet$users.$Since$2010$there$have$been$many$new$steps$in$the$development$of$the$HS$offering.$The$‘paywall’$for$all$digital$content$(online$and$mobile)$was$implemented$in$November,$2012.$$The$printed$newspaper$was$relaunched$in$tabloid$format$in$January,$2013.$Mobility$in$ paper$ format$ has$ also$ been$ and$ important$ investment$ in$ order$ to$ stay$competitive.$ Both$ changes$ have$ had$ a$ positive$ impact.$ As$ for$ digital$ content$most$consumers$prefer$the$premium$package$including$all$content$and$archives$at$14.90$euros$/$month.$Since$the$paywall$was$introduced$the$number$of$unique$visitors$is$up$by$+3%,$whilst$page$views$are$down$by$F3%$(only$5$articles$per$week$can$be$freely$viewed).$ Many$ sections$ of$ the$ printed$ newspapers$ perform$ better$ than$ ever,$according$to$Petteri$Putkiranta.$Tabloid$has$been$a$good$format$with$regard$to$the$attention$ value$ of$ advertising.$ Advertisers$ and$ media$ agencies$ say$ Helsingin$Sanomat$ is$ now$ clearly$ more$ interesting$ than$ before.$ Petteri$ Putkiranta$ makes$ a$point$ of$ the$ need$ for$ continuous$ development$ and$ stressed$ that$ analytics$ is$ now$extensively$ used$ to$ track$ audience$ behavior$ and$ advertising$ performance$ on$ all$digital$ platforms.$ He$ stressed$ the$ importance$ of$ the$ 'HS$ Brand$ promise':$ Quality$content,$engaged$readers.$

$KSF Media Digital Strategy (Hufvudstadsbladet) – Digital transformation The$ newspaper$ Hufvudstadsbladet$ (HBL)$ was$ founded$ in$ 1864$ and$ is$ today$published$ by$ KSF$ Media,$ a$ media$ group$ which$ also$ publishes$ a$ number$ of$ local$SwedishFspeaking$newspapers$in$southern$Finland.$HBL$is$still$ the$largest$Swedish$language$ daily$ in$ Finland.$ Fredrik$ Nars,$ Director$ of$ Digital$ Media,$ presented$ the$digital$producs$of$HBL$including$eHBL,$the$new$mobile$services$and$the$redesigned$weekly$magazine$HBL+$launched$in$October,$2012.$$


38

$Fredrik$ Nars$ assesses$ that$ the$ media$ environment$ in$ Finland$ has$ been$ changing$rapidly$and$the$print$subscriptions$continue$to$slide$down$and$the$use$of$new$media$devices$is$up.$Newspapers$are$read$30$minutes$per$day,$while$the$Internet$is$used$2$hours$per$day$by$Finns.$And$more$ ‘media’$ is$ consumed$on$social$media$platforms.$Today$most$Finnish$newspapers$publish$‘oneFtoFone$replicas’$on$tablets$like$eHBL.$$Fredrik$ Nars$ puts$ KSF$ Media’s$ strategy$ in$ context$ and$ highlights$ particularly$ the$digital$ strategy$ for$ HBL.$ It$ started$ with$ eReading$ tests$ on$ Åland$ islands$ in$ 2010,$where$ the$ following$ insights$ were$ gained:$ the$ average$ consumers$ wants$ a$ ‘1to1$digital$paper’,$but$the$digitally$savvy$consumers$want$more$interactivity.$Hence$the$launch$ of$ the$ daily$ eHBL$ and$ the$ weekly$ digital$ magazine$ HBL+$ as$ separate$products,$ the$ latter$ targeting$ new$ digitally$ savvy$ customers.$ Today$ 22%$ of$ HBL’s$subscriber$base$are$digitally$active$and$the$number$is$increasing.$HBL$digital$future$issues$ includes$ the$ launch$ of$ digitalFonly$ subscriptions,$ paywall$ for$ the$ website$HBL.fi,$SpotifyFlike$payment$options$and$Studio$HBL.$Before$the$summer$the$online$platform$ was$ updated$ with$ more$ content$ and$ more$ frequently$ updated$ content,$behind$a$ ‘paywall’.$DigitalFonly$subscriptions$have$already$been$ introduced.$Studio$HBL$was$ launched$ in$May,$ i.e.$webFTV$with$ content$ relating$ to$ culture,$ sports$and$entertainment$ in$ a$ ‘talk$ show’$ format.$ Currently$ a$ new$ digital$ vision$ for$ 2015$ is$being$ drawn$ up,$ with$ the$ strategic$ question$ of$ HBL’s$ future$ engagement$ with$ its$customers:$ in$which$channels,$using$different$ technologies,$ considerations$ for$new$types$ of$ content$ and$ issues$ concerning$ the$ B2C$ and$ B2B$ business$ models.$Competence$is$an$equally$important$issue,$dealing$with$the$competencies$of$people,$and$the$need$for$alliancies$and$strategic$partnerships.$HBL$has$recently$worked$on$the$service$design$of$a$new$digital$product,$which$ is$planned$ to$ launch$ in$ January,$2014.$The$work$on$development$of$new$digital$services$will$continue$in$2014$at$KSF$Media.$$Fredrik$ Nars$ is$ a$ fan$ of$ Winston$ Churchill,$ citing$ “V”$ meaning$ that$ newspaper$revenues$ form$ the$ shape$ of$ "V"$ i.e.$we$ are$ now$ in$ the$ valley$ between$ analog$ and$digital$ revenues,$ where$ the$ digital$ revenues$ are$ not$ fully$ compensating$ for$ the$analog$ loss.$Another$quote$ from$Churchill:$ “A$pessimist$sees$ the$difficulty$ in$every$opportunity;$an$optimist$sees$the$opportunity$in$every$difficulty.”$

New media concepts and business models in Finland SUMMA$is$a$brand$new$concept$with$content$published$by$Talentum,$and$designed$as$ a$ media$ service.$ Talentum's$ core$ activities$ include$ publishing$ media$ and$literature$ for$ professionals$ of$ various$ fields$ and$ organizing$ topical$ training$ and$other$events.$Books,$magazines$and$events$focus$on$content$from$professionals$in$all$walks$ of$ life$ from$ business$ information,$ HR,$ health$ care,$ legal,$ and$ marketing$to$information$ technology$ and$ private$ investments.$ It's$ leading$ titles$ include$ the$weekly$'Talouselämä'$(business)$and$'Tekniikka$&$Talous'$(technology$and$economic$trends),$ as$ well$ as$ 'Arvopaperi'$ (private$ investment)$ and$ 'M&M'$ (marketing$ and$advertising).$As$a$professional$book$publisher$Talentum$publishes$a$vast$number$of$titles.$ SUMMA$sums$ this$ all$ up$ in$ one$ service,$with$ a$ SpotifyFlike$pricing$model$ at$69.50€/month$ including$ access$ to$ all$ books,$ magazines$ and$ online$ content.$ The$responsive$design$of$the$service$allows$easy$access$online$and$on$a$smartphone$or$tablet.$


39

$What's$nice$about$ the$UI$design$ it's$clean$and$easy$ to$navigate$on$any$device.$You$can$ customize$ the$ topics$ and$ titles$ you're$ interested$ in$ and$ it$ also$ allows$ to$ get$ a$glimpse$of$all$content$published$by$Talentum$at$one$glance.$According$to$CEO$Aarne$Aktan,$the$service$is$intended$to$be$a$gateway$to$all$content$of$interest$to$those$who$are$currently$perhaps$subscribing$to$only$one$specific$title.$$$There$are$several$price$points$for$those$not$opting$for$the$allFin,$which$to$my$mind$is$rather$ expensive.$ By$ subscribing$ to$ one$ title$ you$ get$ all$ of$ its$ content$ and$ limited$access$ to$other$content$as$well$at$ the$price$ for$ the$title$you$have$chosen.$The$price$for$ a$ single$magazine$ and$ its$ online$ content$ is$ 16.90$/month.$ If$ you$ subscribe$ to$three$titles$you$get$all$the$content$for$29.90$/month.$By$paying$20€/month$you$can$get$access$to$all$books,$and$you$can$download$them$in$e.g.$iBooks$and$order$printed$books$ through$ an$onFdemand$ service$ to$ your$ home$ or$ office$ address.$ Easy$ access$and$flexible$pricing$according$to$your$needs$is$to$my$mind$one$key$to$success.$This$is$quite$a$novel$concept$and$is$not$offered$by$any$other$publisher$in$Finland$yet.$$The$ Business$ Model$ is$ based$ on$ content,$ however,$ it$ seems$ obvious$ that$ content$marketing$ is$ well$ suited$ for$ those$ interested$ in$ certain$ topics$ like$ e.g.$ HR$development$ or$ legal$information.$ Aarne$ Aktan$ commented$ in$ the$ interview$ that$"banners$are$banned"$in$the$new$service$F$let's$wait$and$see$what$happens$next$with$regard$to$advertising$services$on$the$SUMMA$platform.$Customer$data$and$utilizing$different$user$profiles$ should$be$ a$ key$ to$ success$ in$ advertising$ sales$ and$ I$would$expect$ to$ see$more$ of$ this$ in$ the$ next$ few$months.$ SUMMA$was$ only$ released$ in$October$2013,$so$the$service$will$certainly$be$tweaked$on$the$go.$It's$really$inspiring$to$see$a$new$media$service$being$launched$in$Finland$and$I$trust$there$will$be$more$information$available$about$its$usage$and$success$in$the$new$year.$$Another$ 'new'$ service$ that$ has$ now$ been$ redesigned$ is$ Teknari.$Teknari$ is$ a$ true$innovator$ in$ digital$ publishing$ on$ both$ tablets$ and$ computers.$It$ is$ a$ publishing$concept$launched$already$3$years$ago,$just$when$the$first$iPad$was$out$in$the$market$(in$fact$before$it$came$on$sale$in$Finland).$Teknari$is$a$startup,$and$according$to$CEO$Sami$Kalsi$ they$are$ fulfilling$a$dream$to$provide$a$media$service$based$on$content$available$on$new$technology$platforms.$Teknari$has$its$focus$on$cars$and$consumer$electronics,$ with$ rich$ media$ content$ including$ car$ reviews$ and$ news$ about$ new$products$like$smartphones,$tablets$and$related$consumer$technology.$The$biweekly$tablet$'magazine'$is$complemented$by$the$website$with$online$news$and$a$program$on$ MTV3,$ as$ well$ as$ the$ Teknari$channel$ on$ YouTube.$Tests$ and$ reviews$ are$extensive$and$cover$a$wide$number$of$gadgets:$pictured$below$is$the$review$of$the$new$iPhone$5c$and$5S$featured$in$the$September$issue.$$$Teknari's$Business$Model$is$based$on$advertising$on$the$tablet$and$it$sells$its$content$to$MTV3$for$the$TV$program.$Last$spring$Teknari$experimented$with$'paid$content',$however,$ they$are$now$back$ to$ the$original$business$model$with$ free$content.$You$can$download$the$Teknari$app$on$an$iPad$(the$app$is$for$free$on$App$Store).$Android$tablets$ can$ be$ used$ to$ read$ the$ HTML$ betaFversion.$ Teknari$ are$ working$ on$ a$responsive$ design$ for$ smartphones,$ which$ will$ be$ launched$ in$ the$ near$ future.$Advertising$ is$ utilizing$ the$ advantages$ of$ the$ tablet,$where$ they$ are$ providing$ a$platform$ for$ interactive$ advertisements$ providing$ a$ rich$media$ experience$ for$ the$


40

user.$The$tablet$application$has$been$downloaded$on$more$than$85,000$devices$and$the$ FlashFmagazine$ on$ the$website$ gets$ 100,000F150,000$ unique$ visitors$ for$ each$issue.$The$number$of$ active$users$ varies$ for$ each$ issue,$ for$ instance$ for$ the$ above$issue$ the$aggregate$ number$ of$ unique$ users$ of$ the$ tablet$ app$ and$ website$ was$122,527.$ This$ can$ be$compared$with$ the$ circulation$ of$ Finnish$ car$magazines$ that$range$from$approx.$25,000$to$120,000$for$Teknari's$competitors$in$print,$according$to$Publishing$Director$Minna$Tuomisto.$$$EDGE$ research$ group$ is$ cooperating$with$Teknari$in$ studying$users.$Together$with$Teknari$ staff$ EDGE$ researchers$ have$ digged$ deeper$ and$ below$ the$ surface$ in$studying$ reader$ experiences.$ We$ are$ combining$ our$ experience$ and$ competence$within$ consumer$ research$ with$ experts$ on$ usability$ and$ user$ experience,$ i.e.$ our$colleagues$at$MediaCity.$The$collaboration$and$multiFmethod$model$will$deliver$inFdepth$ knowledge$ of$ Teknari$ users$ and$ most$ important,$ added$ value$ to$ Teknari$about$ the$ readers.$ We$ also$ believe$ that$ people,$ who$ enrich$ their$ lives$ through$technology$ and$ forerunning$ digital$ media$ services$ as$ Teknari$ are$ motivated$ to$contribute$ in$ improving$ these$ services$ even$ further.$ The$ results$ of$ the$ user$ study$have$been$wrappedFup$at$the$end$of$the$year,$and$give$valuable$information$to$both$the$publisher$and$the$advertisers.$$((( (((((


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8. CONCLUSIONS AND FURTHER RESEARCH

The$results$from$the$multiple$inFdepth$interviews$in$four$countries$(FI,$SE,$UK,$USA)$indicate$ that$ the$ change$ in$ consumer$ behavior$ is$ accelerating.$ Recent$ consumer$surveys$support$this$view.$The$willingness$to$pay$for$content$is$influenced$by$other$media$ content$ services$ and$ the$ introduction$ of$ ‘paywalls’$ for$ news$ services$ has$recently$ taken$ place$ in$ the$Nordic$ countries.$ The$monitoring$ of$ consumer$ change$and$willingness$ to$pay$ for$news$will$continue$ in$a$ longitudinal$study$during$2014F2016.$Finland$will$be$part$of$the$study$mapping$consumer$behavior$in$10$countries.$

The$interviews$reveal$that$there$is$an$increased$sense$of$urgency$in$deciding$which$path$to$choose$and$where$to$invest.$New$concepts$and$platforms$for$news$are$being$introduced.$ Different$ companies$ have$ chosen$ different$ approaches$ to$ meet$ the$digital$demand$for$news.$Printed$newspapers$may$become$a$luxury$product$with$the$increased$cost$of$distribution.$Publishers$that$invest$only$in$printed$newspapers$will$not$ be$ successful$ in$ the$ future.$ The$ critical$ question$ is$ how$ to$ manage$ digital$transformation$ and$ utilize$ customer$ insight$ to$ develop$ new$ services$ to$ both$consumers$and$advertisers.$A$ possible$ future$ research$ direction$ would$ be$ to$ investigate$ which$ approach$ has$proven$to$be$most$successful.$It$is$intended$that$the$research$will$continue$in$2014$with$ further$ data$ collection$ of$ key$ performance$ indicators$ (KPI’s)$ for$ the$ digital$transformation$ for$ the$ chosen$ case$ studies$described$ in$ the$previous$ chapter.$The$writing$of$the$thesis$will$continue$during$2014F2015$and$my$intention$is$to$have$the$manuscript$for$the$monogram$ready$for$dissertation$in$2016.$$Below$is$a$list$of$recommendations$drawn$up$for$media$firms$based$on$research:$1. Collect,$ analyze$and$utilize$ customer$data.$The$more$you$do,$ the$more$ it$ adds$

value.$$2. Test$and$tryFout$different$products$and$services$based$on$customer$insight.$$3. Offer$ valuable$ conent$ to$ the$ consumer$ in$ different$ contexts,$ on$ different$

platforms.$4. The$key$is$to$recognize$the$various$phases$of$the$consumers’$purchase$path$and$

to$offer$the$right$kind$of$content$for$each$phase$including$advertising$solutions.$5. Make$digital$payments$smooth$and$easy.$This$is$one$key$to$success,$as$shown$by$

several$successful$companies$selling$content,$e.g.$Amazon$and$Apple.$6. An$agile$ organization$ is$ a$prerequisite$ for$ innovation:$develop,$ test$ and$ learn.$

Emphasize$the$value$of$customer$insight$in$developing$new$services.$Nurture$a$corporate$culture$that$supports$ideas,$development$and$prototyping.$

7. Shorten$ the$ innovation$process$ for$ new$products$ and$ services.$ From$years$ to$months$or$cycles$of$a$few$weeks.$Trial$and$error$can$be$the$right$way$to$succes.$Remember$that$”no$service$concept$survives$its$first$contact$with$customers.”$

8. Don’t$be$afraid$of$cannibalizing$your$old$business$model.$The$print$business$has$served$you$well$long$enough.$

9. Think$ of$ advertising$ as$ a$ service.$ Combine$ relevant$ content$ from$ your$advertiser$ with$ journalistic$ content$ and$ add$ value$ targeted$ to$ the$ individual$consumer.$

10. Build$ networks$ and$ partnerships$ in$ e.g.$ customer$ analytics$ and$ content$marketing$services$


42

LITERATURE AND REFERENCES

Articles, trade books and reports $After$email,$getting$news$is$the$most$popular$activity$on$smartphones,$tablets$(comment$on$Pew$Research$Center$Report).$The$Poynter$Institute,$Poynter.org,$October$1,$2012.$$Amazon$owns$the$Internet,$December,$WIRED$Magazine,$2011.$$An$Individual$Business$Model$in$the$Making:$a$Chef’s$Quest$for$Creative$Freedom,$Silviya$Svejenova,$Marcel$Planellas,$Luis$Vives,$Long$Range$Planning$Vol.$43,$issues$2F3,$pp.$408F430,$Elservier,$2010.$$The$Art$of$the$Start,$Guy$Kawasaki,$Penguin$Group,$2004.$Audience$Economics$–$Media$Institutions$and$the$Audience$Marketplace,$Philip$M.$Napoli,$Columbia$University$Press,$2003$$Audience$Evolution$–$New$Technologies$and$The$Transformation$of$Media$Audiences,$Philip$M.$Napoli,$Columbia$University$Press,$2010.$$Being$Digital,$Nicholas$Negroponte,$Vintage$Books,$1995.$$Building$Theories$from$Case$Study$Research,$Kathleen$M.$Eisenhardt,$The$Academy$of$Management$Review,$1989.$$The$Business$Model:$Recent$Developments$and$Future$Research,$Christoph$Zottr,$Raphael$Amit$and$Lorenzo$Massa,$Journal$of$Management$Vol$37$No.4,$July$2011.$$Business$Model$Design:$An$Activity$System$Perspective,$Christoph$Zott$and$Raphael$Amit,$Long$Range$Planning$43,$pp$216F226,$Elsevier,$2009.$$Business$Model$Design$and$the$Performance$of$Entrepreneurial$Firms,$Christoph$Zott$and$Raphael$Amit,$Organization$Science$Vol$18$No.2,$pp$181F199,$2007.$$Business$Models$as$Models,$Charles$BadenFFuller$and$Mary$S.$Morgan,$Long$Range$Planning,$43,$pp.$156F171,$Elsevier,$2010.$$The$Business$Model$Innovation$Factory,$Saul$Kaplan,$John$Wiley$&$Sons,$2012.$$Business$Model$Generation,$Alexander$Osterwalder$and$Yves$Pigneur,$John$Wiley$&$Sons,$2010.$$The$Business$Model$Ontology:$A$Proposition$in$A$Design$Science$Approach,$PhD$thesis,$University$of$Lausanne,$2004.$$The$Business$of$Media:$A$Survival$Guide,$Larry$Dignan,$Amazon$Kindle$Single,$2011.$$Case$Study$Research:$Design$and$Methods,$Fourth$Edition,$Robert$K.$Yin,$SAGE$Publications,$2009.$$$Changing$Media$Behavior:$The$Case$of$Generation$Z,$Johanna$Lindström,$AnnaFGreta$Nyström,$Ron$Lindqvist,$Academic$MindTrek$conference,$October$2013.$


43

$College$of$Future$Could$be$Come$One,$Come$All”,$article$in$The$New$York$Times,$November$19,$2012.$$Designing$for$Growth:$A$Design$Thinking$Tool$Kit$for$Managers,$Jeanne$Liedtka$and$Tim$Ogilvie,$Columbia$University$Press,$2011.$$Digital$News$Report,$Reuters$Institute$for$the$Study$of$Journalism,$Oxford$University,$2013.$$Disruption$Guru$Clay$Christensen$says$incumbent$media$players$are$making$a$classic$mistaken,$Matthew$Ingram,$paidcontent.org,$February$28,$2013.$$Disruptive$Business:$Desire,$Innovation$and$the$ReFdesign$of$Business,$Alexander$Manu,$Gowere$Publishing,$2010.$$Do$Paywalls$Change$the$Engagement$Equation?,$Magda$AbuFFadil,$Huffington$Post,$September$30,$2013.$$The$Economics$of$Financing$Media$Companies,$Robert$G.$Picard,$The$Fordham$University$Press,$2002$(2nd$edition$2011).$$Emerging$Mobile$Strategies$for$News$Publishers,$Shelley$Seale,$INMA,$2012.$$The$entrepreneurs$business$model:$toward$a$unified$perspective,$Michael$Morris,$Minet$Schindehutte$and$Jeffrey$Allen,$Journal$of$Business$Research$58,$pp$726F735,$2005.$$Essential$Drucker.$Innovation$and$Entrepreneurship,$$Peter$Drucker,$Routledge,$2011.$$The$Evolution$of$Business$Models$and$Marketing$Strategies$in$the$Music$Industry,$Valerie$L.$Vaccaro,$Deborah$Y.$Corn,$The$International$Journal$on$Media$Management,$6,$pp.$46F58,$Mediajournal.org.$$Financial$Times$reaches$highest$circulation$in$its$125Fyear$history,$Roy$Greenslade,$TheGuardian.com,$October$30,2013.$$Finnish$Internet$Users$are$Most$Avid$Consumers$of$Online$News,$comscoredatamine.com$$November$15,$2013.$$Finnish$Media$Consumption:$Results$from$a$survey$in$2012,$Ron$Lindqvist,$AnnaFGreta$Nyström,$Timo$Ketonen$and$Anders$Dahl,$EDGE$research$group,$Åbo$Akademi$University,$July$2013.$$Fredric$Karén:$“Mormor$lärde$mig$att$aldrig$ge$upp”,$Svenska$Dagbladet,$September$9,$2013.$$Free:$The$Future$of$a$Radical$Price,$Chris$Anderson,$Hyperion,$2009.$$A$Guide$to$Open$Innovation$and$Crowdsourcing:$Advice$from$Leading$Experts$in$the$Field,$Paul$Sloane,$Kogan$Page,$2011.$$The$Gutenberg$Galaxy$–$The$Making$of$Typographic$Man,$Marshall$McLuhan,$with$new$essays$by$W.$Terrence$Gordon,$Elena$Lamberti,$and$Dominique$ScheffelFDunand,$2011.$$Gränspassager:$bildning$i$tolkningens$tid,$Bengt$Kristensson$Uggla,$Adlibris,$2012.$$


44

$The$Handbook$of$Media$Audiences,$Virginia$Nightinggale,$WileyFBlackwell,$2011.$$$Havaintoja$mediaFalan$jatkuvasta$muutoksesta,$Viestintäalan$toimialastrategian$esiselvitys,$Viestinnän$Keskusliitto,$Service$Design$agency$Palmu,$November,$2013.$$How$Kodak$Squandered$Every$Single$Digital$Opportunity$It$Had,$Pete$Pachal,$Mashable.com,$January$20,$2012.$How$people$use$tablets$and$what$it$means$for$the$future$of$news,$Journalism.org,$October$25,$2012.$$The$Innovator’s$Dilemma:$When$New$Technologies$Cause$Great$Firms$to$Fail,$Clayton$m.$Christensen,$Harvard$Business$School,$1997.$$The$Innovator’s$Solution:$Creating$and$Sustaining$Succesful$growth,$Clayton$M.$Christensen$and$Michael$E.$Raynor,$Harvard$Business$School,$2003.$$Instead$of$shoehorning$it$in,$NowThis$News$is$building$video$content$that$fits$in$where$the$audience$lives,$Caroline$O’Donovan,$Nieman$Journalism$Lab,$September$16,$2013.$$The$Intention$Economy:$When$Customers$Take$Charge,$Doc$Searls,$Harvard$Business$Review$Press,$2012.$$Itella$pohtii$lehtien$sopimusten$lopettamisia,$Teemu$Luukka,$Helsingin$Sanomat,$HS.fi$December$17,$2013.$$Jeff$Bezos$on$Post$Purchase,$The$Washington$Post,$August$5,$2013.$$Kodak$and$the$Brutal$Difficulty$of$Transformation,$Scott$Anthony,$Harvard$Business$Review,$Blogs,hbr.org,$January$17,$2012.$$Journalismin$kohtalo$mediamurroksessa.$Överlevnadsstrategier$för$minoritetsmedier,$Hannu$Olkinuora,$Marit$Ingves,$Lia$Markelin,$Tankesmedjan$Magma,$2012.$$The$Lean$Startup,$Eric$Ries,$Crown$Business,$2011.$$Making$Sense$of$Converging$Media,$Kim$Holmberg,$Timo$Ketonen$and$Malin$Brännback,$Academic$MindTrek$Conference,$October$2013.$$Marshall$McLuhan:$Media$Savant,$article$in$The$New$York$Times,$January$6,$2011.$$Mobile$Internet$Subscriptions$to$Triple$by$2013,$Source:$Ericsson,$Mashable.com,$November$22,$2013.$$The$Myths$of$Innovation,$Scott$Berkun,$O’Reilly$Media,$2010.$$New$Business$Models$in$the$Music$Industry$–$Rethink$Music$white$paper,$James$Martin,$Blog.midem.com,$June$26,$2013.$$The$News$Industry,$Special$Report,$The$Economist,$2011.$$Newsonomics:$Twelve$New$Trends$That$Will$Shape$the$News$You$Get,$Ken$Doctor,$St.$Martin’s$Press,$2010.$


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$The$newsonomics$of$The$New$York$Times’$Paywalls$2.0,$Ken$Doctor,$NiemanJournalismLab,$Niemenlab.org,$November$21,$2013.$$Nordic$giant$Schibsted$wants$to$be$world's$No$1$for$online,$theguardian.com$$December$3,$2012.$Open$Business$Models:$How$to$Thrive$in$the$New$Innovation$Landscape,$Henry$Chesbrough,$Harvard$Business$School$Press,$2006.$$Open$Innovation:$Researching$a$New$Paradigm,$edited$by$Henry$Chesbrough,$Wim$vanHaverbeke$and$Joel$West,$Oxford$University$Press,$2006.$$Paid$Digital$Content:$The$Journey$Begins,$World$Association$of$Newspapers$and$News$Publishers$(WANFIFRA),$2013.$$Personal$Media$Day$result$report:$Studying$consumers$everyday$media$consumption$with$eFdiaries,$Niklas$Kiviluoto,$Ron$Lindqvist,$Timo$Ketonen,$Malin!Bra nnback,* EDGE*research*group.,$Åbo$Akademi$University,$November,$2012.$$$$$$Page$One:$Inside$The$New$York$Times$and$the$Future$of$Journalism,$David$Folkenflik,$Participant$Media,$2011.$$Pearson$says$FT$is$not$for$sale$as$digital$subscriptions$overtake$print,$article$in$The$Guardian,$Monday$February$25,$2013.$$Punch$Sulzberger$and$His$Times,$Max$Frankel,$The$New$York$Times,$September$30,$2012.$

$Rebuilding$Your$Business$Model:$The$CEO’s$Role$In$Business$Model$Reinvention,$Vijay$Govindarajan$and$Chris$Trimble,$Harvard$Business$School$Publishing,$2011.$$$Responses$to$Disruptive$Strategic$Innovation,$Constantinos$D.$Charitou$and$Constantinos$C.$Markides,$MIT$Sloan$Management$Review,$2003.$$Savitauluista$laseriin$–$kirjapainotaidon$historia,$Lars$Gardberg,$2011.$$Screenjumpers$Double$Time$Online,$Jack$Loechner,$Mediapost.com,$September$19,$2013.$$Seven$Ways$iTunes$Changed$the$Music$Industry,$Alex$Pham$and$Glenn$Peoples,$Billboard.com,$April$25,$2013.$$The$Shift$from$Print$to$Digital…$and$beyond,$Thomas$Baekdal,$Baekdal$Media,$2011.$$The$State$of$the$News$Media$2013:$An$Annual$Report$on$American$Journalism,$The$Pew$Research$Center’s$Project$for$Excellence$in$Journalism.$$Socialnomics:$How$Social$media$Transforms$the$Way$We$Live$and$Do$Business,$Erik$Qualman,$John$Wiley$&$Sons,$2009.$$“Staten$måste$ta$ansvar$för$sin$mediepolitik”,$interview$with$Raoul$Grünthal,$Lena$Skogberg,$HBL.fi,$September$15,$2013.$$


46

Steve$Jobs,$Walter$Isaacson,$Simon$&$Schuster,$2011.$$Steve$Jobs$F$Revolutionary,$Steven$Levy,$special$edition,$WIRED$Magazine,$October,$2011.$$The$Success$Trap:$Why$doing$things$right$become$wrong$over$time,$Professor$Robert$G.$Picard,$Lecture$in$Media$Management,$University$of$Tampere,$October$26,$2011.$$The$Theory$of$Economic$Development :" An#Inquiry#Into#Profits,#Capital,#Credit,#Interest,#and#the$Business$Cycle ,$Joseph$Alois$Schumpeter,$Transaction$Publishers,$1934.$$This$is$Service$Design$Thinking,$Marc$Stickdorn$and$Jakob$Schneider,$John$Wiley$&$Sons,$2011.$$The$Times$Isn’t$for$Sale,$Its$Publisher$Declares,$Christine$Haughney,$The$New$York$Times,$August$7,$2013.$$Trends$in$News$Consumption:$1991F2012,$In$Changing$News$Landscape,$Even$Television$is$Vulnerable.$The$Pew$Research$Center$for$The$People$&$The$Press,$September,$2012.$$“Trust$is$the$key$for$media$owners”,$Andrew$Rashbass,$CEO$of$The$Economist$Group,$interview$by$Chris$Smith,$The$Guardian,$March$12,$2012.$$Understanding$Media$–$The$Extensions$of$Man,$Marshall$McLuhan,$with$a$new$introduction$by$Lewis$H.$Lapham,$1994.$$Understanding$the$Entrepreneurial$Mind,$Alan$L.$Carsrud,$Malin$Brännback$(editors),$Springer$Science+Busines$Media,$2009.$$Unzipping$the$Digital$World:$How$To$Thrive$and$Survive,$Keith$Willets,$TM$Forum,$2012.$$Vad$har$vi$lärt$oss?$Om$medieanvändarnas$roll,$Anette$Novak,$Stiftelsen$Institutet$för$mediestudier,$2012.$$Value$Creation$and$The$Future$of$News$Organizations:$Why$and$how$journalism$must$change$to$remain$relevant$in$the$twentyFfirst$century,$Robert$G.$Picard,$Formalpress,$2010.$$Viestintäalasta$voittaja,$Viestintäalan$toimialastrategia,$Viestintäalan$Keskusliitto,$Idean,$2009.$$What$is$digital$transformation?$Howard$King,$The$Guardian$Media$Network,$theguardian.com$November$22,$2013.$$What$is$Service$Design?$Professor$Birgit$Mager,$Service$Design$Network,$Design$Council.$$$Why$American$Newspapers$Gave$Away$The$Future,$Richard$J.$Tofel,$Now$and$Then$Reader,$2012.$$Why$It’s$All$About$the$Digital$Ecosystem,$Ben$Bajarin,$Techopinions,$December$16,$2011.$$7$reasons$why$Buzzfeed$is$the$death/savior$of$news,$Rory$CellanFJones,$BBC.co.uk,$October$15,$2013.$$!

“medianomics” strategic choices and business model innovation in newspaper publishing ·...

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