Shifting business models

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Shifting business models

  1. 1. Shifting business models – newspapers to online
  2. 2. Focus How the business model has changed Why the business model has change The internet Paywalls The New York Times
  3. 3. Background 1702 – the first English daily newspaper was published called The Daily Courant 1830 – number of newspapers published in the US is 715 1856 – first full newspaper ad published in the New York Ledger 1870 – 5091 newspapers published in the US Early 20th century - radio and TV news became more influential
  4. 4. Background continued 1933 – war between newspaper and radio industries – American newspapers try to stop radio broadcasts delivering news – unsuccessful 1954 – more radios than newspapers 1967 – digital production processes of newspapers, including use of early computers 2007 – 1456 Daily Newspapers in the United States 2009 – worst year in print advertising revenue – big shift with newspapers moving to online
  5. 5. Very basic newspaper business model of old  Journalists employed to find and write-up stories – outgoing  Papers sent to print – outgoing  Newspapers advertised – outgoing  Copy sales revenue – retail and subscription - incoming  Display and classified ads - incoming
  6. 6. However Circulation is decreasing in addition to revenue from advertising
  7. 7. Problems the old business model faces  Increased competition from other formats – radio & TV – still have many viewers/listeners  Economic recession – double dip since 2008, not much investment, people not willing to spend  Broadband subscription increasing – June 2012 – estimated population of the US 348,280,154 – of this, there were 273,785,413 internet users  Hard to find exclusive stories – news breaks out on social media
  8. 8. Internet competition – the big one  News is available everywhere – big corporations like Microsoft and AOL now provide news, for free.  Blogs provide specific news to audiences  Example – TMZ broke the news of Michael Jackson’s death  http://www.tmz.com/2009/06/25/michael-jackson- dies-death-dead-cardiac-arrest/
  9. 9. Switch to online Online is becoming the format to read news Online magazines are constantly been set up, as well as iPad and other tablet and mobile devices – The Daily (later pulled) In the US, 65% of people aged 18-29 get their news from the internet 28% of people from the UK and US access news via their mobile every week
  10. 10. Switch to digital continued… The shift is taking place at different rates – varying business ideas and models – US far quicker to embrace and share content than UK Moving online can build greater online audiences and can use cookies to target content and advertising
  11. 11. The problem with the internet Most readers spend far less time online – larger audience does not mean larger revenue generation from advertising Difficult to cash in on innovation
  12. 12. Why don’t audiences pay for content?  People don’t want to pay for content on the internet – nothing physical, hard to adjust  In the UK – only 4% of people said they would be willing to pay for their news website  The news will always be accessible somewhere else for free  People in the US are far more willing to pay – again, different speed of shift
  13. 13. Paywall What are they? Hard paywalls – The Times (UK) / Wall Street Journal Combination – The Boston Globe Soft – The New York Times, Financial Times
  14. 14. Does it work? The Times (UK) and Wall Street Journal both very secretive NRS Padd survey found that The Times have nearly 8 million print followers but only 675,000 online readers The Times often makes things free for big events – e.g. Queens Jubilee Financial Times fairly successful - first half of 2012 – more people paying for digital than print
  15. 15. Case Study - New York Times Founded in 1851 America’s most popular newspaper site Largest local metropolitan newspaper in the United States and third largest newspaper overall First implemented the ‘TimesSelect’ subscription program back in 2005 – similar to paywall
  16. 16. TimesSelect
  17. 17. The New Paywall Implemented soft-paywall strategy in March 2011 Allows visitors to access 10 articles per month before prompting them to subscribe Their success far exceeded people’s expectations Have reached 640,000 paying subscribers recently
  18. 18. The New Paywall The company is expected to make more money from subscriptions that from advertising Douglas Arthur, analyst with Evercore Partners estimates total subscription sales will top $768.3 million this year ($52 mil. More than advertising.)
  19. 19. The New PaywallBarclays analyst Kannan Venkateshwar estimates that the paper will have more digitalthan print subscribers in a few years
  20. 20. Underlying Problems with Paywall  “When we launched our digital subscription plan we knew there were loopholes to access our content beyond the allotted numbers of articles each month. We have made some adjustments and will continue to make adjustments to optimize the gateway by implementing technical security solutions to prohibit abuse and protect the value of our content” – NYT cooperate communications Vice President Eileen Murphy (Feb. 12, 2013)  There are still plenty of ways to avoid paywall (Google chrome incognito mode, Firefox Private Browsing, clearing cache etc.)
  21. 21. The New York Times conclusion Although the paywall for The New York Times seems to be working, we feel that it is only a short term solution The New York Times also has a long way to go to close all loopholes in order to increase growth and revenue on its website
  22. 22. The future… The shifting model leaves uncertainty for Newspapers and their future http://www.telegraph.co.uk/finance/newsbysector/ mediatechnologyandtelecoms/media/9614953/Gua rdian-seriously-discussing-end-to-print-edition.html
  23. 23. What the theorists say? “By understanding identity and the relevant relationships, journalists can create a platform for their work that will have a meaningful impact in the Web 2.0 era.” – Rachel Davis Mersey “"Fifteen years after the commercial debut of the Internet, publishers on average still depend on print advertising and circulation for 90 percent of their revenues. Stop the presses and newspaper companies are out of business. Its just that simple.” - Alan Mutter
  24. 24. What do we think?

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