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Academic MindTrek 2013: Making sense of converging media

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Presentation of EDGE research group studies in new media concepts and Business Models in the digital ecosystem. "Case studies" based on interviews with Publishers and media professionals in Finland, …

Presentation of EDGE research group studies in new media concepts and Business Models in the digital ecosystem. "Case studies" based on interviews with Publishers and media professionals in Finland, Sweden, UK. and USA in 2012-2013.


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  • 1. Making Sense of Converging Media: Business Models and new media concepts in the digital ecosystem Academic MindTrek Conference October 3, 2013 Kim Holmberg, Timo Ketonen, Malin Brännback School  of  Business  and  Economics  at  Åbo  Akademi  University  
  • 2. Content of presentation 1.     Research  topic   and  methods   2.  Background  and  Key   Drivers  of  Change   3.  Results  and   conclusions  
  • 3. Research Topic o  This paper looks at Newspaper Publishers’ approach to find new sources of revenue in the rapidly changing digital ecosystem. 3  
  • 4. Methods   The  2011  study:  The  Delphi    method  collects   anonymous  answers  in  iteraIons  of  a  set  of  quesIons   from  a  panel  of  experts.  ALer  each  round  the  answers   are  summarized  and  the  respondents  are  given  the   chance  to  comment  or  revise.   The  2012-­‐2013  study:  Interviews  with  media  execuIves   and  industry  experts  in  four  countries  (FI,  SE,  UK,  USA).   The  interviews  were  conducted  and  analyzed  in  order  to   understand  the  change  of  the  business  environment   and  the  strategic  approach  to  Business  Model   innovaIon  in  the  digital  ecosystem.  The  research  is   planned  to  conInue  with  in-­‐depth  case  studies  in  2014.  
  • 5. Respondents   The  2011  study:  The  respondents  included  9  experts   that  worked  as  chief  editors,  directors  of  research,  or  in   related  posiIons  in  Finnish  media  companies  that   publish  newspapers.  They  answered  9  open  ended   quesIons  between  July  and  August  2011.     The  2012-­‐2013  study:  The  interviewees  included  media   execuIves  (CEOs  in  Finland  and  Sweden),  Editors-­‐in-­‐ Chief,  development  managers  and  other  industry   experts  from  established  media  firms  and  associaIons  .   We  also  interviewed  some  new  players  represenIng   start-­‐ups  in  the  media  business.  In-­‐all  80  interviews   were  conducted  in  Finland,  Sweden,  UK  and  USA.  
  • 6. Background to the change in the media landscape Key Drivers of Change 6  
  • 7. Background:  Newspapers  in  decline   History       o  Old  Business  Model  in   Publishing  dates  back  to   1833,  when  ”The  Sun”  went   on  sale  on  the  streets  of   New  York   o  Business  Model  originally   based  on  adverIsing  to   keep  the  price  of  the   newspaper  down  and   circulaIon  up   o  AdverIsing  conInues  to  fall   Adver6sing  revenue  (USA)   7  
  • 8. Background:  Newspapers  in  the  U.S.   Focus  on  digital  subscrip6ons   o  Print  subscripIons  have   been  in  decline  since  the   1990’s   o  The  falling  circulaIon  of  the   US  newspapers  has  slowed   down  as  paid  digital  content   is  compensaIng  for  print   o  Digital  ediIons  now  account   for  20%  of  subscripIons   Top  US  newspapers  Q1/2013   8  
  • 9. Key Drivers of Change o  Consumer Behavior –  time spent on media and how media is consumed o  Cost of Print & Distribution –  particularly the cost of physical distribution o  Disruptive Technology –  the new ‘ecosystem’ with tablets and smartphones o  The Change in Advertising –  mass marketing vs. targeted content marketing 9  
  • 10. Digital  Ecosystem:   Devices,  OS,  services  &  applicaIons   Tech  companies  build  their  own   ecosystems  and  want  to  sell  content   The  rise  of  mobile  has  nearly  doubled   the  6me  we  spend  online  since  2010   10  
  • 11. Consumer Behavior 11  
  • 12. The use of applications and tech services is rising o  Consumers appear to like subscription services offering real value for money •  e.g. Amazon Prime, Dropbox Pro, Hulu Plus, Netflix, Pandora, Spotify etc. 12   ”Once  locked  in,  consumpIon  becomes  painless”    
  • 13. Survey: ”Paywalls and apps are increasingly part of everyday life” o  49% of 18- to 24-year- olds read a digital newspaper – the highest reach of any age group o  The survey of 11,000 internet users in nine countries found that 25- to 34-year-olds are twice as likely to part with their cash for digital news than older readers Source:  Digital  News  Report,  Reuter’s  InsItute   for  the  Study  of  Journalism.  
  • 14. Paid-for digital news services grow 14  
  • 15. DECISION IDEA RECOMMENDATION PURCHASE BROWSING SELECTION “Eyeballs” Click Lead Commission Customer Loyalty MEDIA CONTENT: News, games, videos etc. Web shops ContentMarketing,loyaltyprogramsetc. Searchengines CONSUMER PROFILE: Attitude, interests, consumption patterns, demographics etc. Trad. Media
  • 16. Results and conclusions Strategic choices by Publishers – a few case studies 16  
  • 17. DIGITAL  FIRST   DIGITAL  TRANSFORMATION   PRINT  &  CONSOLIDATE   PRINT  FOCUS  +  ePaper   ALMA  ALUEMEDIA   +   STRATEGIC   C H O I C E S   Digital  Print   New   Current   technological  focus   technological  focus   resource  dependence  resource  dependence   Strategic  choices  in  Publishing  
  • 18. DIGITAL  FIRST   DIGITAL  TRANSFORMATION   PRINT  &  CONSOLIDATE   PRINT  FOCUS  +  ePublishing   ALMA  ALUEMEDIA   +   STRATEGIC C H O I C E S   Digital  Print   NEW   Current   Technological  focus   Technological  focus   Resource  dependence  Resource  dependence   Strategic  choices  in  Publishing   Efficiency-­‐centered  vs.  Novelty-­‐centered  Business  Models   “Digital  First”  publishers  have  applied  a   novelty  centered  business  model  and  a   more  aggressive  approach  to  crea6ng  the   future.  These  firms  have  invested  both  in   the  crea6on  of  digital  publishing  plaZorms   and  the  analysis  of  reader  engagement   (collec6on  of  data  related  to  the  behavior   of  the  subscriber  base).  These  companies   are  most  o[en  “global  brands”.   The  interviews  reveal  that  some  firms  have   chosen  to  s6ck  to  the  old  business  model   with  a  technological  focus  on  the  print   based  business  model  for  as  long  as   possible.  These  companies  are  efficiency   centered  and  the  main  part  of  revenue  is   derived  from  the  old  print  based  business   model.  Some  forms  of  e-­‐Publishing  is   applied  at    moderate  cost.   Several  publishers  have  invested  into  digital   transforma6on  with  a  certain  degree  of   incremental  improvement  of  the  printed   products.  Digital  transforma6on  means   investment  into  new  products  and  services   in  the  digital  ecosystem,  including  mobile   applica6ons.  Is  this  s6ll  a  defensive   strategy?     Some  publishers  look  at  even  a  greater   degree  of  efficiency  through  industry   consolida6on,  which  required   investments  into  corporate  acquisi6on   and  competencies  in  finding  synergies   within  the  acquired  framework  of   newspapers.    
  • 19. Schibsted in Sweden 19   o  Schibsted has been leading the way – change of culture and ”cannibalizing its own business” o  BytBil.com introduced in 2002 and Blocket.se in 2003 o  Digital services now account for more than 50% of revenue o  Aftonbladet has developed many mobile and tablet apps –  Mobile usage is skyrocketing o  Svenska Dagbladet is putting more focus on its digital services –  Paywall and mobile services
  • 20. The Financial Times o  125-year old Financial Times has its largest readership ever o  Digital content and advertising account for 30% of FT’s total revenues –  Mobile devices account for 1/3 of FT.com traffic and 15% of digital subscriptions –  App usage is growing particularly fast in the age group 25-34 o  Measurement of audience behavior with regard to what you read –  My FT – more personalization features –  Analytics tool 'Deep View’ offers data into advertising campaigns 20  
  • 21. The New York Times o  ”Print is Dead: Long Live the New York Times” –  reporter David Carr in ”Page One: Inside the New York Times and the Future of Journalism” o  Business Model for paid content focus on Bundled Digital subscriptions –  ’Paywall’ since March, 2011 –  Already 699,000 paid digital subscriptions (+35%) o  Revenue from total subscriptions overtook advertising in 2012 21  
  • 22. The New York Times o  Focus on R&D, new innovations and new media platforms like Google Glass o  New Mobile Apps –  Looking for more ”price points” in niche topics like culture and food 22   “Magic   Mirror”  and   Google  Glass    
  • 23. The  Washington  Post  –  what’s  next?   Change  of  ownership:   “Our  strategy  had  been  to  innovate  like  hell  in  digital   and  other  businesses  and  offset  the  declines  in  print   revenues.”  CEO  &  Chairman  Donald  E.  Graham.   New  Disruptor  takes  over:   Amazon  has  more  than  200  million  customer   accounts  –  customer  data  is  key  to  success!   23  ”Culture  eats  strategy  for  breakfast”,  Peter  Drucker.  
  • 24. Aggregators  and  Curators   Flipboard  2.0:  50  million  users.  Now  you   can  create  your  own  magazines.   NowThis  News:  Mobile  video  news  service,   available  as  an  App  and  on  Instagram.   24  
  • 25. New  media  concepts  in  Finland   Teknari   o  Introduced  in  2010  on  the  tablet     +  MTV3  program   o  Freemium-­‐model  based  on   adverIsing   o  Tested  different  forms  for  paid   content  in  2013  –  no  success?   Long  Play   o  Launched  in   January  2013   o  Long  form   journalism   o  Sold  as  ´singles´   o  Priced  at  €3,99  
  • 26. Conclusions o  Change in the media landscape is expected to accelerate as consumers´ information behavior continues to change. New concepts and platforms for news are being introduced. o  The interviews reveal that that change has already started and that the Publishers feel an urgency in deciding which path to choose and where to invest. o  The results show how different companies have chosen different approaches to meet the digital demand for news.
  • 27. What about printed newspapers? o Their importance will decrease o They may become a luxury product o Publishers that invest only in printed newspapers will not be successful •  Efficiency-based Business Model can only get you so far…
  • 28. Content? •  Pressure for paid content will increase •  Journalism is not very different •  The content may be bundled according to different user groups – the user experience matters as much as content •  Better possibilities to target relevant content in the right context •  Elements of multimedia and links to additional material are included (content marketing, hyperlinks, web TV) •  Unique and interesting content that readers are willing to pay for   One concern was how the advertisements can be displayed in e- newspapers and whether the consumers would want to see advertisements in e-newspapers. Overflooding the e-newspapers with traditional advertisements is the biggest risk for e-newspapers to fail, according to respondents.
  • 29. Future? •  Benefits from cost savings in production and distribution •  Increased profits from increased reach and new audiences in the digital ecosystem •  More development work needed – crowdsourcing and open innovation can be utilized to transform the media business •  More research about consumer behavior needed •  Increased cooperation needed – networks and partnership   Before e-newspapers break through Publishers need to invest and experiment in many different online activities and mobile applications that will not give immediate return in form of profits.   Analyzing and utilising customer data may be a key to success?
  • 30. Thank you. Questions and comments? Email: timo.ketonen@abo.fi Website: edge.abo.fi 30