vs3: Where Else Is The Money?

Where else
is the money?
Notes from a study into innovation of
online business models at
newspapers in Britain’s 66 cities
François Nel
Director: Journalism Leaders Programme
School of Journalism, Media & Communication
University of Central Lancashire, Preston
FPNel@uclan.ac.uk

theagenda
2
1. What we found in our research
2. What (I think) it means
3. Where I think the opportunities lie
4. Questions – and contributions

the research
Chaharbaghi, K., Fendt,C. and Willis, R. (2003). "Meaning, Legitimacy and Impact of Business Models in fast-moving Environments." Management Decision 41(4): 372-382.
3

vanguard
4
old guard
vanguard

The old media world has ended – and the sooner we say so the better.
With it must go old thinking…
My main message today is:
we need to break out of this thinking and we can – but only if we look beyond our own backyards and see the bigger picture.
Andy Burnham, then Culture Secretary
5

the old
media world
the new
media world
Web 1.0
News as lecture
Broadcast model
Cyclists
Advertising
Web 2.0
News as conversation
Dialogical model
Structuralists
Beyond advertising
6

Bath Birmingham Bradford Brighton Bristol Cambridge Canterbury Carlisle Chester Chichester Coventry Derby Durham Ely Exeter Gloucester Hereford Hull Lancaster Leeds Leicester Lichfield Lincoln Liverpool London Manchester Newcastle Norwich Nottingham Oxford Peterborough Plymouth Portsmouth Preston Ripon Salford Salisbury Sheffield Southampton St Albans Stoke Sunderland Truro Wakefield Wells Westminster Winchester Wolverhampton Worcester York Aberdeen Dundee Edinburgh Glasgow Inverness Stirling Bangor Cardiff Newport St Davids Swansea Armagh Belfast Lisburn Derry Newry
Notes on the sample
Audited companion websites to the largest circulation newspapers in Britain’s 66 cities during summers of 2008 & 2009
7

Research Questions
RQ1: What revenue streams are featured on the companion websites of regional newspapers?
RQ2: Which online business models are the regional publishers not engaging in?
RQ3: To what extent could these activities be considered to reflect ‘new thinking’ about business models on the Web?
8

As the research aimed not only to identify the online business models the news publishers were employing but also to note areas that remained unexplored, it was decided to reference the taxonomy of general online business models identified by Michael Rappa(2001), who observed 41 distinct configurations of value streams, logistical streams and revenue streams that he grouped into nine categories: Advertising, Brokerage, Infomediary, Merchant, Manufacturing, Affiliate, Community, Subscription and Utility. Mindful of Rappa’s (2000) point that the Internet continues to evolve and that “new and interesting” variation can be expected in the future, the researchers were guided, but not limited to, Rappa’s models.
The data was collected between the 28th July and the 31st August 2008 by two coders. The findings were compared and any variances were investigated and resolved.
The findings were analysed using simple descriptive statistics; as the number of sites studied was small and the sample was not random, more sophisticated statistical measurements were not viable here.
9
More notes on method

10
Advertisingmodel1

11
Advertisingmodel2

Subscriptionmodel
12

Infomediarymodel
13

Merchant & Affiliates
15

Brokeragemodel
?
16

Manufacturingmodel
17

In 2009, 15 or 23% had mobile sites (.mobi or m.)
Of those sites, 0 carried display advertising and 2 had sponsorship
There were no adverts in the mobile alerts offered.
38 or 58% had Twitter sites
18
Manufacturing mobile

Communitymodel
19

20
Communitymodel

21
So, where else
is the money?

22
There's not enough advertising in the world to make all the websites profitable. We'd rather have fewer people come to our website, but paying.

23
NS Circulation Sales

24
Talk about “paywalls” around content limits the conversation
Consider: reciprocity* and how value is exchanged for a variety of activities
*Claude Lèvi-Strauss 1969. The Elementary Structures of Kinship.

Opportunities 1: Manufacturing
All the publishers had expanded their online content into areas not available in print, but there were no discernable revenue models to sustain these activities, beyond driving traffic to the host site where it could possibly contribute to increases in general advertising revenues.
Limited involvement on mobile platforms, which has also been considered an area with significant revenue potential for content makers.
Inventory of brand-integrated content was also very limited.
25

O3: Networks
Networks, considered by some (Niewiarra 2002 in Krueger & Swatman 2004) to be keys to success in content distribution, is another area that may provide publishers which further revenue opportunities. Again, while site audits alone are not sufficient to discern the logistics chains behind the content, it was clear that some, but not all, publishers were engaged in a variety of advertising networks that leveraged resources within companies (e.g. Johnston Press’ PropertiesToday), across publishing companies (e.g. Fish4) and with non-publishing companies (e.g. Echo Outdoor).
Most publishers were also building internal content networks that drew in traditional sources and formerly-passive readers through activities such as blogs. Some were also building links with outside content networks (e.g. netmums.co.uk). There was, however, no evidence found that these networks were providing unique value propositions that could allow them to be sustained by revenue streams, other than advertising (i.e. through sales, subscriptions, membership or donations).

26

O2: Networks
27

29
< 200 + regional papers

Locally Connected, the UK's first integrated print and online planning currency, launches on 24 November.
The launch follows the completion of a three-way project between the regional publishers' trade body, the Newspaper Society, with JICREG, the Joint Industry Committee for Regional Press Research, & the ABC. The planning currency uses a combination of ABC print circulation and ABCe web traffic data, plus research conducted by Survey Interactive to give the net reach of online & offline titles. Publishers on board are Trinity Mirror, Northcliffe Media, Newsquest, GMG Regional, Iliffe News & Media and the Midlands News Association. The Newspaper Society hopes all publishers will be involved in future. The planning currency will be used by the vast majority of media agencies at launch and includes 70% of the local media market.
www.locallyconnected.co.uk
http://www.mediaweek.co.uk/news/948279/UKs-first-print-online-planning-tool-set-launch/

31
25%
revenue share

32
2009
US Newspapers to lose $10bn
in classified job ads
Craigslist forecast to
make $100million
from job ads
Source: PaidContent, 10 June 2009

O2: Intermediary
While publishers were expanding their activities as intermediaries into a range of partnerships (such as dating sites), there is still limited involvement in e-commerce / retail and one related area identified by Rappa (2001) seemed unexplored: the broker model
33

34
Broker revenue opportunities
Introductory fee (rather than simply exposure to opportunity / ad)
% of transactions (in areas where legislation allows, typically non-financial)

Newspaper Society: Retail income
36

UK shoppers will spend £13.16bn online in the last quarter of 2008, 15% more than Q4 2007. [Source: IMRG / Capgemini via Econsultancy blog, Nov 2008]
This equates to £215 for every person in the UK, but represents a slowdown compared with the 54% year-on-year increase in 2007.
Online retail sales in the UK are predicted to reach £44.9bn in 2012, up from £19.5bn in 2008. [Source: Verdict Research via eMarketer, Sept 2008]
More than 85% of the world's internet users surveyed have purchased something online. [Source, Nielsen, Feb 2008]
37

38
[Source: YStats.com, June 2009]

39
Naspers, the South African media giant, is continuing on its online acquisition spree across Europe and now Latin America: it has acquired 91 percent stake in Brazilian online e-commerce group Buscape.com, for $342 million. Buscape provides comparison shopping solutions to more than 100 portals and websites in Latin America, including Microsoft (NSDQ: MSFT), Globo and Abril, among others. It also runs QueBarato, a free-classifieds network in Latin America. In addition it has an affiliate advertising network named Lomadee, an e-commerce research business, eBit, and a fraud risk assessment service, FControl.
Source: PaidContent.org, 29 September 2009

40
insanity: doing the same thing over and over again and expecting different results

Web Business 2.0 is
the opportunity to move on from just offering advertising, to providing solutions up and down the value chain to all customers – not only those “formerly known as the audience”, but those formerly known as ‘the advertisers’ and ‘the sources’.
41

Thank you.
I welcome questions & suggestions.
François Nel
FPNel@uclan.ac.uk
@francoisnel

http://blogs.journalism.co.uk	87
http://paidcontent.co.uk	51
http://forthemedia.blogspot.com	32
http://paidcontent.org	3
http://thespressionist.com	3
http://www.slideshare.net	2
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vs3: Where Else Is The Money?

by Francois Nel on Nov 16, 2009

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