Where else isthe money?A study of innovation in online business models at newspapers in Britain’s 66 citiesFrançois NelFPNel@uclan.ac.uk

The (requisite) academic abstract*Much like their counterparts in the US and elsewhere, British newspaper publishers have seen a sharp decline in revenues from traditional sources – print advertising and copy sales – and many are intensifying efforts to generate new income by expanding their online offerings. A study of the largest-circulation newspapers in the 66 cities in England, Scotland, Wales and Northern Ireland showed that while only a small minority did not have companion websites, many of the publishers who do have an online presence have transferred familiar revenue models. It has also been recognised that income from these sources is not enough to sustain current operations and innovative publishers have diversified into additional broad categories of Web business models. Significantly, this exploratory study did not only compare the approaches of various news publishers with each other, but it also considered how active newspaper publishers were in taking advantage of the variety of business models generally being employed on the Web – and which opportunities were ignored 2*a version of this paper will be published in a special edition of the journal, Journalism Practice, due out early in 2010

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 Secretary3

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. 4

the old media world the new media worldWeb 1.0 News as lectureBroadcast modelCyclists AdvertisingWeb 2.0News as conversationDialogical modelStructuralistsBeyond advertising5

Newspaper Society Industry Survey 2003 & 76

Research QuestionsRQ1: 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?7

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 NewryNotes on sampleCompanion websites to the largest newspapers in Britain’s 66 cities8

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. 9More notes on method

Advertisingmodel10

Subscriptionmodel11

Infomediarymodel12

13

14Brokers revenue opportunities: Introductory fee (rather than simply exposure to opportunity / ad) % of transactions (in areas where legislation allows, typically non-financial)

Introductory fee (rather than simply exposure to opportunity / ad)

% of transactions (in areas where legislation allows, typically non-financial)

Merchantmodel15

Affiliatemodel16

Brokeragemodel?17

Manufacturingmodel18

Communitymodel19

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. There was also very limited evidence from the audit alone of the extent to which regional publishers in the sample were involved in new manufacturing activities directly related to the newspaper brand, such as archives which other researchers found to be widely used by other publishers (Ihlstrom & Palmer 2002, Mensing & Rejfek 2005, Herbert & Thurman 2007). At the time of the audit, the regional publishers in the study had almost no involvement on mobile platforms, which has also been considered an area with significant revenue potential for content makers (Joakar & Fish 2006, Moore 2007, Herbert & Thurman 2007, Sylvie 2008). Inventory of brand-integrated content was also very limited. 20

O3: Networks21

O2: IntermediaryWhile publishers were expanding their activities as intermediaries into a range of partnerships (such as dating sites), one related area identified by Rappa (2001) seemed unexplored: the broker model22

23

24Naspers, 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 rundQueBarato, 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

25< 200 + regional papers

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, according to the Nielsen Company. [Source, Nielsen, Feb 2008] 26

To what extent could these activities be considered to reflect “new thinking” about online business models? 27

Thank you & questionsContact: FPNel@uclan.ac.ukwww.ukjournalism.org