DissertationFinal

Cass Business School
MSc in Management 2011
Final Project
Revenue Models for Newspapers:
The Case of the Blick Group in Switzerland
Supervisor: Dr. Gianvito Lanzolla, Reader in Strategy
Candidate: Matteo Rezzonico
The Project is submitted as part of the requirements for the award
of the MSc in Management, June 2011

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Abstract
This paper addresses the thorny issue of revenue models for newspapers. In
the last decade, the industry has been under tremendous pressure due to the
effect of the development of new digital technologies. Trying to understand
better the mechanisms behind different revenue models is therefore useful as a
first step for changing the situation. The key findings, based on a case study
on the Blick Group in Switzerland, are not discouraging for the newspaper
industry as a whole, as it seems that in both print and digital worlds some
viable models exist, although deep change is inevitable.
Executive Summary
In order to address the topic of revenue models for newspapers and to improve
their understanding, this paper wants to: a) list existing models, organise them
into a coherent framework and find out which are the most relevant ones; b)
look at the key drivers underlying the selection of a model instead of another;
c) weigh the corporate influence on models for individual products; d)
develop hypotheses about the main trends for the future. The literature review
and the case of the Blick Group in Switzerland allowed to reach all of these
goals.
First of all, it seems that there are three main families of revenue models for
the future: traditional newspaper model (paid), free and free-mium.
Historically, the first model accounted for the vast majority of revenues,
although with the growth of online ventures and of free newspapers the
balance is gradually shifting toward the second one. The third family of
models (free-mium) is currently dwarfed by the other two in terms of total
revenues, but it will probably grow as the mobile channel, which is only at an
early stage of development, reaches a higher degree of maturity. In order to

Source for the cover image: www.ringier.ch

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organise these models into a comprehensive graphical framework, the
revenue/services matrix has been created.
The research also highlights the fact that there are many drivers that influence
the choice of a model instead of another. For example, capital requirements,
timing, the ability to reach a critical mass of readers/users, the willingness to
pay of different audiences, logistic issues and internal and external
competition have proven to play an important role in the selection process. In
more general terms, channel, target audience and type of content can be
identified as the crucial "meta-drivers" behind the choice of a model.
In addition, corporate strategy has a potentially significant impact on revenue
models by allowing to increase advertising and therefore total revenues and by
encouraging a rational segmentation of the market to reach different audiences
as well as to reduce overlapping and the risk of cannibalisation.
In general, findings suggest that there are sustainable revenue models for both
print and digital products and that the future of media and content producers is
not as cloudy as it might seem, although some degree of change and
adaptation is inevitable.
Finally, the project highlights possible patterns for future research, in
particular in the fields of model selection drivers and of the evolution of
revenue models for mobile apps.

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Acknowledgements
A special thanks goes to my four interviewees, who despite being very senior
and busy executives found the time to meet me and to share their priceless
knowledge and experience in a very open and friendly way:
Martin Werfeli, Member of the Board of Directors of Ringier AG
Christian Unger, CEO of Ringier AG
Marc Walder, CEO of Ringier Switzerland and Germany
Monika Bodewig, Project & Strategy Assistant to Group CEO

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TABLE OF CONTENTS
1. Introduction p. 8
2. Methodology 10
3. Literature review 13
3.1. Two main issues 13
3.2. Recent industry trends 16
3.3. New devices and platforms 17
3.4. Typologies and families of revenue models 19
3.4.1. The free model 19
3.4.2. Paid models 21
3.4.3. Free-mium models 21
3.4.4. Other sources of revenues 22
4. The Revenue/Services Matrix 24
5. The Blick Group case study 27
5.1. Key facts on the Blick Group 28
5.2. The relative importance of different revenue models within the Group 32
5.3. Key drivers of revenue model selection 35
5.4. The influence of corporate strategy on revenue models 39
5.5. Insights on future trends in revenue models 40
6. General findings and conclusion 43
Bibliography 48

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LIST OF FIGURES
Figure 1: The new revenue model mosaic p. 23
Figure 2: The revenues continuum 25
Figure 3: The services continuum 26
Figure 4: The revenue/services matrix 27
Figure 5: The structure of the Blick Group 29
Figure 6: The positioning of Blick products on the revenue/services matrix 33
Figure 7: Possible changes in revenue models for Blick products for the future 41
Figure 8: General model based on channels 44

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The difficulty lies not so much in developing new ideas,
as in escaping from the old ones.
J. M. Keynes

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1. Introduction
The media industry, and in particular the newspaper industry, have been under
tremendous pressure since the development of the Internet. On one hand, print
media readership in the developed world is declining as a consequence of deep
changes in consumer behaviour. The wide availability of free news in the
digital space, combined with the possibility of offering real-time updates, has
led many people to shift toward the Internet as their primary source of
information. On the other hand, digital advertising has proven not to be as
profitable as print due to an oversupply of page impressions that has
dramatically lowered the price needed to reach a certain amount of potential
customers. In addition, print advertising has stopped growing and in some
cases has also declined because of the loss of readership and of new
competing ways of conducting marketing campaigns, such as search engine
advertising popularised by Google.
In this difficult situation, the newspaper industry has a desperate need to
understand better its current and potentially new revenue models. This
necessity can be observed in the frequent attempts made by large media
groups to shift their models in order to increase revenues, especially in the
digital world. The latest example has been the prestigious New York Times,
which recently moved from a free to a "meter" pay model for its leading news
website (Glaser & Hiar, 2011; Moses, 2011; Rushe, 2011). This uncertainty
and sense of decline are frightening, but at the same time Albert Einstein was
certainly right when he said that in every difficulty lies an opportunity. This is
the main reason why this final project will try to deal with the topic of revenue
models for newspapers. However, before refining this broad area of study and
transforming it into more precise research questions, it is necessary to address
two important issues.

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Firstly, the term 'revenue models' has been preferred to the broader concept of
'business models'. The reason is that media companies around the world are
not troubling with how to create value for their customers, because in fact
they are able to produce terrific value in terms of information. The real
problem that the industry is facing since the development of the Internet is
how to capture it, how to transform it into revenues and ultimately into profits
(Lanzolla & Anderson, 2008; 2010). This is not meant to suggest that business
model innovation would be useless. Changing the value proposition is
definitely one way to tackle the problems the industry is facing. Nonetheless,
any new business model will have to deal with the thorny issue of finding a
sustainable revenue model, which is able to capture a significant part of the
value created.
Secondly, the boundaries of this paper have to be defined. The decision has
been to focus on both print and digital newspapers, the main reason being that
currently most firms have to develop a single coherent revenue strategy that
takes into account both realities. This trend has been strengthened by the
widely adopted practices of sharing content creators (e.g. shared newsrooms)
and sales teams. Furthermore, in the future with the introduction of a whole
array of new devices the distinction between on- and off-line will blur and
become much less relevant. As suggested by Carol Christopher, "electronic
newspapers will be thin, flexible and portable, like today's newspapers, and
always-connected via mobile Internet" (2008). We are already experiencing
this evolution with the recent development of tablet computers such as the
iPad.
Research Questions
Based on the existing literature, four research questions emerged as
particularly interesting for this paper. First of all, (Q1) which revenue models
are currently more relevant and widespread among those listed in the
literature? And, once those models have been identified, (Q2) which are the

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key drivers that led to the selection of them instead of other models? Then,
most media companies control more than one product. Therefore, (Q3) which
is the effect of corporate strategy (multi-channel multi-product) on revenue
models? And, finally, in such a changing industry (Q4) which will be the main
trends in revenue models in the future?
These questions are important, because by finding an answer to them it would
be possible to understand better the underlying mechanisms that affect the
industry as a first step in order to improve the situation. Furthermore, they all
address gaps in the literature, especially if we look at studies that take into
consideration both print and digital models. With these goals in mind, this
work presents the very interesting case of the Blick Group, which is part of
Ringier AG, the biggest Swiss media company. The case has been selected by
using several criteria, which can be found in the methodology section of this
paper. By looking at this firm, it was possible to answer all of the research
questions, although the case study method calls for caution when attempting
generalisation.
2. Methodology
Research design
In trying to answer the research questions, the case study design has been
selected as the most appropriate. An experimental approach would simply not
fit the type of questions and would not be feasible, whereas a quantitative
method would not allow to deeply understand the logic behind the choice of a
specific revenue model. Furthermore, some interesting revenue models are
still in a test phase and are experimented by a few innovative newspapers.
Therefore, it would be really difficult to collect enough data to be able to draw
statistically relevant conclusions. On the other hand, the case study approach
is perfect to address the problem from a qualitative point of view, gathering a

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broad variety of information and opinions. Moreover, this approach is more
suitable given the high level of complexity and the huge amount of variables
that have to be taken into account.
In particular, this paper is based on a single embedded case study (Yin, 2008),
because the comparison of revenue models for products within the same media
company seemed to be the most effective way to understand the logic behind
them. Therefore, the case is on an individual firm, but the unit of analysis is at
the level of single newspapers or digital products.
Selection process
Because of the decision of focusing on one company, the selection process has
been particularly important and a thorough preliminary analysis of potential
candidates has been conducted. The perfect case had to fulfil three key
requirements:
• the company had to control products that applied different revenue
models, in order to allow for a meaningful comparison between them
• those products had to cover the same geographical area, so as to
neutralise any socio-demographic and cultural variable that might
distort the comparison
• they also had to use different channels, and especially both print and
digital media (on- and off-line), as from the preliminary research this
variable seemed to be crucial
Ideally, some additional criteria were also important to get the most out of the
case:
• the selected company had to be active, innovative and experimental

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• it also had to be a market leader, so as to reduce the effect of
competition on the actual success or failure of a specific revenue
model
• finally, it had to allow access to both primary and secondary data, in
order to be able to collect enough information for the analysis
After having looked at some media companies, Ringier's Blick Group
appeared to be the perfect choice. Its products use many different revenue
models, and they are all located in the German-speaking part of Switzerland.
Furthermore, they are all published under the same "Blick" brand, which
further reduces the possibility of distortions due to external factors. The Group
deploys both print and digital channels, with the latest extensions of mobile
and tablet apps1
. In all of these fields the Group has been successful and has
reached a leading position in a highly competitive and oversupplied market as
the Swiss one. Finally, the mother company Ringier has been very open and
supportive in allowing access to executives and internal documents.
Data collection and analysis
The data collection process had three main pillars, as suggested by Yin (2008).
First of all, attention was focused on a wide variety of publicly available
documents. These included samples of the actual Blick products, Ringier
annual reports, press releases and other useful data, such as advertising rates
and readership volumes and demographics. Secondly, the Blick Group made
available several internal and confidential documents that will not be disclosed
in this paper, but that have been extremely useful for understanding better
some general trends and mechanisms. Finally, the third pillar was represented
by interviews with four very senior Ringier executives involved in all the key

1
Apps are relatively small pieces of software that run on new portable electronic devices,
such as smartphones and tablet computers.

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decisions concerning the Blick Group. These interviews, which were
conducted at Ringier headquarters in Zurich, were structured around the
research questions, but the focus was adapted according to previous answers.
This source of data has been by far the most relevant for the whole case study.
After completing the data collection process, the focus was shifted to
organising and analysing the information gathered. The goal was to summarise
the case study in order to be able to answer the research questions and to draw
some broader lessons and general findings.
3. Literature review
There is a rich literature on newspapers and on their business and revenue
models. The industry has often been taken as an example to show the broader
implications of technological innovation on existing business models
(Lanzolla & Anderson, 2008; 2010). This literature review will outline some
of the key issues in academic papers, the most relevant current industry trends
and innovations, and the attempts to classify revenue models into typologies.
3.1. Two main issues
There are at least two main issues that recur in an explicit or implicit way in
each and every article written on revenue models for newspapers. One is the
"free vs. paid" dilemma, and the other deals with the problem of
substitutability and cannibalisation between on- and off-line products. They
are two crucial topics, as they tackle the key elements of news pricing and
delivery.

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The "free vs. paid" dilemma
This is by far the most common debate in the literature on newspapers,
especially when it comes to digital ventures. The core problem is the presence
of a clear trade-off between advertising and sales revenues, which results from
two different but converging mechanisms. Firstly, if the price of a print or
digital newspaper rises, and especially if it goes from free to paid, its
circulation will be negatively affected, because for some readers the
willingness to pay will be lower than the new price (Chyi, 2005). If the
readership decreases, the medium becomes much less attractive from the point
of view of advertisers, because it allows them to reach fewer people.
Therefore, the advertising price has to be reduced. In this sense, free-to-fee
conversion strategies are "a double-edged sword: they increase subscription
revenue at the expense of advertising" (Pauwels & Weiss, 2008). Furthermore,
the loss of readers is leveraged by the presence of close substitutes, in
particular in the online environment. This means that "better substitutability
between the channels thereby puts a downward pressure on viewer charges.
Actually, the channels will not be able to set consumer prices higher than
marginal costs" (Kind, Nilssen & Sogard, 2009).
The second mechanism is related to the amount of advertising in a newspaper.
According to Gabszewicz, Laussel and Sonnac, "the larger the newspaper's
surface devoted to advertising, the higher the number of potential readers who
prefer, at a given price, to refrain from buying the newspaper" (2002). Again,
this effect is particularly strong when close substitutes are easy to find
(Anderson & Gabszewicz, 2005).
In conclusion, consensus has been reached in the literature on the fact that
sales and advertising revenues are inversely correlated. In addition, it seems
that the presence of substitutes is a key element in determining the strength of
this relation. Based on that conclusion, experts and academics believe that
general and widely available content should be free and supported by

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advertising. On the other hand, very specific and unique information, such as
high-quality financial data or exclusive investigative journalism, does not
offer free substitutes, and might therefore be able to charge readers without
losing a significant share of them (Carlson, 2003; Chyi, 2005; World
Association of Newspapers, 2010).
What is interesting about this trade-off and its underlying logic is the fact that
they can be perfectly applied to both the print and digital worlds. The only
difference is that online they are magnified because of a more open market,
easier distribution and lower switching costs. However, as highlighted in a
report by the World Association of Newspapers (2010), the idea of an either/or
proposition between free and paid is a myth. In fact, many digital businesses
are choosing a free-mium model that – as we will see in a while – is a mix of
them.
Substitution and cannibalisation between print and digital products
As we have seen, intra-channel substitutability can be very disruptive, but
what about print and digital news products? Are they complements or
substitutes? Is their consumption directly or inversely correlated? And, as a
result of that, are news websites cannibalising newspapers or not? Many
academic articles tried to answer these questions with different tools, because
cracking this critical strategic issue is key to develop revenue models for the
future.
Researchers tend to emphasise the fact that there is a certain degree of
substitutability between the two channels. For example, in a study conducted
on the area of Washington D.C., Matthew Gentzkov concluded that "the
magnitude of the crowding out of print readership is non-negligible".
Nonetheless, he found that "it is also small, however, relative to some earlier
predictions [... and ...] the advent of online newspapers does not appear to
threaten the survival of print media" (2007).

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Another study, conducted in Spain, highlighted the fact that substitutability
depends deeply on the reasons that lead people to look for news (Flavian &
Gurrea, 2006; 2009). According to the authors, there are four main
motivations for news consumption: searching for specific information, looking
for updated news, leisure and entertainment, and habit. In the first two areas
the Internet has a clear advantage, because of its ease of searching and its real-
time updates. Therefore, in these cases the web is a fierce substitute for
newspapers and the risk of cannibalisation is strong. On the other hand, print
is still perceived as more convenient and relaxing when looking for leisure and
entertainment, and the ritual of reading newspapers as a pleasure is well rooted
in readers' behaviour. In this sense, for some topics and situations the
substitution threat is much weaker.
The only way in which the two channels might be perceived as complements
is for brand building. As suggested by Hsiang Chyi (2005), keeping an online
news website would be valuable even if not sustainable, just because of the
buzz it generates and of the increase in newspaper brand equity.
In conclusion, there is general consensus on the fact that print and digital
products are mainly substitutes. However, it seems that the degree of
cannibalisation depends on the newspapers' ability to differentiate themselves
and to focus on their core strengths.
3.2. Recent industry trends
Some other debates occur frequently, especially in articles written in the last
two years. A very inflated one is the discussion on public aid to help the
newspaper industry, which is seen by many analysts as a crucial player in
modern democracies and as the best watchdog for politicians. The recent
economic crisis heavily hit advertising revenues and threatened the existence
of some of the world leading newspapers. As shown by Lenatti, "the recession

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didn't cause the newspaper crisis, but it did expose what has been a trend for
several years: readers and advertisers migrating to the Internet, first in a trickle
and then in a flood" (2009b). As a result of this, many experts called for state
subsidies and bailouts for media (Fitzgerald, 2010). On the other hand, some
industry leaders, such as Rupert Murdoch, said that government assistance
would be an even bigger threat for the future and freedom of newspapers
(World Association of Newspapers, 2010).
A second trend that has been extensively discussed in recent years is the
convergence of different media allowed by the new digital technologies
(Lanzolla & Andreson, 2010). In particular, we are witnessing the weakening
of boundaries between newspapers, cable and satellite TV, radio, news
websites, and so on (Christopher, 2008; Doctor, 2010). Furthermore, new
digital channels have emerged from what has been called "Web 2.0". In fact,
blogs and social media are also occupying this field and competing with
existing media (Lenatti, 2009a), that both need and fear them (Lovett, 2010).
The third trend of the last couple of years has been the decision by many
important media companies to try again to charge for online news
consumption after many unsuccessful experiments conducted in the last 15
years (Dutta, 2009). It seems that these attempts occur in waves, such as
fashion, but this time it might be different because of the recent development
of new mobile devices such as smartphones and tablet computers with no
established consumer behaviour (Standage, 2010).
3.3. New devices and platforms
The last trend is concerned with the development of new devices, models and
markets. This evolution is important enough to deserve a dedicated paragraph.
In recent years two new categories of electronic products appeared:
smartphones and tablet computers/e-readers. The last one, and especially the

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market innovator iPad launched by Apple, sparked a fierce debate within the
newspaper industry. Some players waved it with enthusiasm, like Mathias
Döpfner, CEO of Axel Springer, that recently said the "iPad will change the
newspaper industry as consumers are willing to pay for content on these
devices" (Bloomberg News, 2011). Others, such as Morten Holst, strategy and
business advisor for the Norwegian VG, believe that it is only the latest hype
and that it will lead to huge disappointment (Digital Media Europe, 2011). At
the current stage, it is difficult to figure out who is right, but what is sure is
that many newspaper companies are betting significant financial resources on
the success of tablet devices for reading news and on their ability to charge for
them. The most publicised example of this commitment is the launch of The
Daily, a tablet-only daily newspaper, by Murdoch's News Corporation (The
Economist, 2011; Schiller, 2011). The size and portability of tablets seem
perfect for consuming news content, and the lack of established behaviours
might allow media companies to escape the trap of the web. As highlighted by
Anderson (2011), "iPad offers perhaps the best opportunity for the newspaper
industry to create a pattern of charging for content". This is as true for tablets
as it is for dedicated e-readers, such as the well-known Amazon Kindle
(O'Brien & Shambora, 2009; Tribute, 2009).
The second part of this innovation, which seems to raise contrasting feelings,
is the creation of proprietary digital platforms for downloading and charging
for content. Such systems have been developed by big technology firms like
Apple (App Store), Google (Android Market and Google OnePass) and
Amazon. Nonetheless, other online companies such as Facebook might soon
enter the competition (Waters, 2011). On one hand, these virtual markets are
quite successful in giving newspapers a wide exposure, in preventing piracy
and in making it easier and safer to perform online transactions, which
according to a recent survey is the biggest concern of users (Nielsen, 2010).
On the other hand, however, many newspapers do not like the idea of an
intermediary between them and their readers. Furthermore, these platforms

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tend to be monopolistic in relation to a particular operating system, therefore
significantly reducing the bargaining power of media companies (Economist,
2010; Anderson, 2011).
In conclusion, by looking at the literature and at current debates, it seems that
the recent technological breakthrough brings with it both big opportunities and
significant risks for newspapers. What is interesting from the point of view of
revenue models is the fact that it seems a bit easier to charge for news on these
new devices than it is on traditional websites.
3.4. Typologies and families of revenue models
Two typologies of revenue models emerged from the literature as the most
meaningful and comprehensive for the purposes of this paper. The first one,
introduced by Mings and White (2000), identifies the four basic ways of
gathering revenues from news, both on- and off-line: advertisement,
subscriptions, transactions and bundling. Obviously, they are not either/or
solutions, and they can be combined in a variety of ways to generate mixed
revenue models. The second typology, proposed by Bleyen and Van Hove
(2007), is positioned at a more general level, and instead of trying to identify
single sources of revenues, it blends them to obtain three families of revenue
models: free, fee and fee+ (also known as "free-mium"). The following review
of existing revenue models is based on a combination of these two typologies,
with the final addition of some auxiliary sources of revenue that are growing
at a significant pace.
3.4.1. The free model
The free model, which has advertising as its sole source of revenue, is
dominant online and its importance is growing in the print world too. Recent

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surveys conducted by several well-trusted companies, such as BCG and
Nielsen, have highlighted how readers are reluctant when it comes to paying
for online news (BCG, 2009; Harris Interactive, 2009; Nielsen, 2010; Peskin,
2010). The percentage of customers willing to pay of digital content is steadily
between 5% and 10%. In general, what emerged is that people would rather
shift to another news website. The only exception is represented by high-
quality, high-value information, such as financial data, for which charging
might be a viable choice (Carlson, 2003).
On the other hand, online advertising has become a commodity with very low
prices, and maintaining a website only through that source of revenue is still
extremely difficult for most newspapers (Chyi, 2005; Conhaim, 2006). In
theory, online advertising should be more valuable than using traditional
channels, because it allows to target specific segments of the market and
ultimately to customise messages based on the interests of single users
(Christopher, 2008; Chandra, 2009; Marketing Week, 2010). However, for
many news websites with generic and widely available content the free model
is the only possible choice.
Free print newspapers are a completely different story. After having been
marginal for centuries, in the last decades this model has become well-
established and successful in many developed countries. By exploiting the
trade-off between price and circulation, these newspapers are able to reach a
wide readership and therefore to gather significant advertising revenues. For
many analysts, that model could be a viable long-term alternative to paid
newspapers, especially in urban areas where distribution is easier and cheaper
(Meade, 2005; Conhaim, 2006; Bainbridge, 2008; Chouede, 2009).

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3.4.2. Paid models
Paid models have been a core element of traditional newspapers for centuries,
and they are usually based on a combination of sales and advertising. In the
print world, they are still the standard, whereas on the Internet the fully paid
websites represent a tiny minority. The most well known example is the online
version of the Wall Street Journal, which is completely hidden behind a thick
paywall.
As stated by Mings and White (2000), there are three main ways to charge for
print and digital content. The first one is through subscriptions. In some
countries this practice is widespread for traditional newspapers, whereas in
others it is even illegal. For digital products, both on the Internet and on apps,
it is considered to be the more convenient solution for customers and at the
same time to be a safe instrument to avoid fluctuation in sales revenue
between single issues (World Association of Newspapers, 2010). The second
option consists in the purchase of a single issue. In the paper world it occurs
every time a newsagent sells a newspaper. In the digital space, it might be a
viable alternative to subscriptions in order to capture occasional readers
through micropayments (Ives, 2009; Graybeal & Sindik, 2011). The new
tablet platforms have eased this process and have educated consumers to
micropayments for any kind of apps. Finally, an option that seemed very
promising some years ago for online sales is the idea of bundling either with
other online content or with the print version of the newspaper (Mings &
White, 2000; Bleyen & Van Hove, 2010).
3.4.3. Free-mium models
This family of models sometimes seems a residual category to account for all
online revenue models that are neither completely free nor fully paid. As
stated by Pauwels and Weiss (2008), "conceptually, restriction can range

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along a continuum, from complete restriction to highly selective restrictions"
where most articles are free. In fact, many websites that are summarily
classified as paywall in reality are free-mium, because they still allow free
access to a certain amount of their content. There are two main subcategories
of free-mium models. The first one is the classic free/premium model, in
which some sections of the website can be accessed by everyone and others,
such as financial or exclusive content, are for subscribers only. In recent years,
a second strategy is emerging as relatively successful for some well-
established newspapers. It is called "meter model", because it measures the
number of articles that a user reads and, when a certain monthly or weekly
limit is reached, it is requested to pay in order to have access to new content.
This approach has been successfully pioneered by the Financial Times, which
has deployed it for several years (Flamm, 2010; Smith, 2010). The New York
Times has also recently adopted such a model, although some observers
wonder whether the loss of readers will be compensated by sales revenue
(Moses, 2011; Pulley, 2011; Rushe, 2011). What is interesting about the meter
model is the fact that it allows to charge for news, while at the same time it
does not stop the flow of occasional readers, which represent a significant
share of any news website. To a certain extent, we might label this model as a
differential pricing strategy that charges to customers according to the value
they get from news.
3.4.4. Other sources of revenues
The prior three families of revenue models are very effective in classifying the
wide majority of print and digital newspapers. However, in recent years some
new streams of revenues appeared as relevant. In particular, two sources seem
to be very promising for the future. The first one is represented by e-
commerce. Many newspapers have a wide and loyal readership that trusts their
brand. Therefore, they might be able to leverage that intangible asset by

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suggesting online purchases directly on the news website. Furthermore, they
might track readers to discover what they are interested in and to produce
tailored offerings (Dorrell, 2008). In conclusion, moving into retail could
represent a sustainable third pillar to be added to advertising and sales.
The other very interesting trend that newspapers might be able to exploit is the
phenomenal growth of daily deal websites like Groupon. The logic would be
the same applied to e-commerce. A long-lasting and trusted relationship
between the newspaper and its readers can represent the perfect springboard to
launch a daily deal platform. For example, the San Diego Union-Tribune is
already making more money in deals than in traditional online advertising
(Patel, 2011).
Figure 1: The new revenue model mosaic (Source: World Association of Newspapers, 2010)
To try to make sense of these and other new potential streams of revenues, a
report by the World Association of Newspapers (2010) suggests the adoption
of the "new revenue model mosaic" (Figure 1). The main idea hidden behind
the metaphor of the mosaic is that in the future news companies will no longer
collect the vast majority of their revenues from two sources (sales and
advertising), but will have to set up a whole ecosystem of smaller revenue

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streams that together will represent a viable revenue model (Miller, 2010).
This is what Torry Pedersen, CEO of the Norwegian VG, has called with
another fascinating political metaphor "confederacy of models". Some of the
new potential sources of revenues outlined by the mosaic model are: games,
gambling, events and conferencing, niche websites, special reports,
syndication, news cafes, coupons, auctions and sponsor posts (World
Association of Newspapers, 2010). However, what is really fascinating about
the mosaic model is its adaptability and openness to new opportunities that
will certainly emerge as a result of technological and value innovation.
4. The Revenue/Services Matrix
In the literature review, it was not possible to find any graphical or tabular tool
that tried to organise the different revenue models according to any criteria.
The only attempts to create a coherent exposition of the existing models were
some typologies (Mings & White, 2000; Bleyen & Van Hove, 2007) and the
mosaic approach (World Association of Newspapers, 2010), which
deliberately decided to avoid traditional structures in order to give that sense
of complexity and multiplicity that according to the authors is needed to
successfully deal with the current state of the industry. Therefore, there was
the need to develop a framework that put together the many interesting inputs
collected in the literature review and that allowed to understand the strategic
positioning of any news product in terms of revenue models.
The first step has been identifying the key variables that differentiate a model
from another. Here, if we look at print newspapers, there is a general
consensus among experts and academics on the fact that the two main sources
of revenues have always been sales and advertising. Some observers have
argued that classifieds are intrinsically different from normal advertising
(Stähler, 2009), and from many points of view they are. However, in an effort

25

to synthesise the models, that difference did not seem to be crucial, as for
newspapers they are still space on pages purchased by someone that wants to
communicate with someone else. Similarly, one could argue that in sales it
would be more correct to distinguish between subscriptions and single issue
purchases, but again, in an attempt to produce a very general synthesis, that
seemed a minor difference.
As already highlighted in the literature review, these two streams of revenues
lead to a trade-off, because as advertising increases too much sales go down
due to lower perceived quality, and with a higher selling price the newspaper
is less attractive for potential advertisers due to lower reach (Gabszewicz,
Laussel & Sonnac, 2002; Anderson & Gabszewicz, 2005; Chyi, 2005;
Pauwels & Weiss, 2008). Therefore, it is possible to state that for print
newspapers revenue models are reduced to different ads/sales ratios and can
be represented along a continuum that goes from the free 100% ad-supported
model to one only based on sales with no advertising (Figure 2). Obviously,
most traditional newspapers are somewhere in the middle, and their relative
position is determined both by individual characteristics and by the peculiar
national traits of the newspaper market.
Figure 2: The revenues continuum
As long as news products were only print, that simple one-dimensional
graphical representation was sufficient to account for any existing revenue
model. However, with the technological breakthrough that led to the
development of the Internet in the early '90ies, new technical possibilities
emerged. In particular, media companies were suddenly able to charge
selectively only for some parts of their product, while keeping the other
sections free. These are what in the literature review we called "free-mium"
100% Sales 100% Ads
100% Paid 100% Free
Source of revenues
(sales/ads ratio)
Servicesoffered
(free/paidratio)

26

models. As a consequence, a second strategic choice was needed in order to
select a revenue model. Firms had to decide how much of their websites had to
be free. The second crucial variable can therefore be identified as the ratio
between free and paid services or content. As in the previous case, this
measure has no discrete steps and can be represented as a continuum (Figure
3).
Figure 3: The services continuum
If we combine these two variables, we obtain a two-dimensional matrix that
can make sense of every existing revenue model both for the print and the
digital world (Figure 4). A final issue has to be highlighted to refine our new
graphical tool, and it is based on simple logic assumptions. First of all, if a
product is completely free it cannot get money from sales (grey area A). At the
same time, if it is 100% paid it cannot get all of its revenues from advertising
(grey area B).
Now we are able to position the four main families of revenue models
identified in the literature review according to their characteristics (dashed
areas). The free model is obviously in the bottom-right corner for both print
and digital products. The traditional paid newspaper revenue model is at the
top, but is stretched because of different ads/sales mixes. The digital paywall
model is very close to the top-left corner. Finally, the very variegate free-
mium family of models occupies a wide area in the centre of the matrix. This
graphical tool might give some insights for understanding better the revenue
strategies of the products within the Blick Group.
100% Free 100% Paid
100% Paid
Services offered
(free/paid ratio)
Servicesoffered
(free/paidratio)

27

Figure 4: The revenue/services matrix
5. The Blick Group case study
This case study is structured around the four research questions outlined in the
introduction, aimed at identifying (Q1) the most relevant revenue models,
(Q2) the key drivers of model selection, (Q3) the role of corporate strategy
and (Q4) some insights about potential future trends in revenue models. These
objectives are pursued through the selective description of relevant aspects of
Blick products for each of the four interlinked topics.
However, before dealing with specific issues, it is necessary to contextualise
them within the framework of the Blick Group and of Ringier AG. Therefore,
100% Sales 100% Ads
100% Paid
100% Free
Revenue / Services Matrix
Source of revenues
(sales/ads ratio)
Servicesoffered
(free/paidratio)
(A)
Very
Unlikely
(B)
Very
Unlikely
Paywall
model
Free
model
Traditional Newspaper model
Free-mium
models

28

the first part of the case study is dedicated to highlighting the key facts of the
Blick Group and of its sub-units.
5.1. Key facts on the Blick Group
Ringier AG
The Blick Group is fully owned by Ringier AG, which is by far the biggest
and most important Swiss media company, with a clear focus on newspapers
and magazines, and with a very promising digital division. Founded in the
small Swiss city of Zofingen in 1833 by Johann Rudolf Ringer, the company
quickly achieved national reach, and in the last decades developed into a
diversified multinational group with interests in Switzerland, Germany, Czech
Republic, Slovakia, Serbia, Poland, Hungary, Romania, Vietnam, and China.
The firm employs 7,700 people and controls more than 120 newspapers and
magazines around the world, as well as several radios, TV stations and
websites. Despite the lasting effects of the economic crisis that heavily hit
almost every media company on the planet, in 2010 Ringier reached a
turnover of CHF 1.3 billion (£975 million) with a net profit of CHF 61.8
million (£46 million) (Ringier, 2011e).
Recently, the company developed its new corporate strategy, that will focus on
the development of three main areas: the classic print media, which are still
accounting for the majority of revenues; the entertainment business, which is
involved in the organisation of major events and artist management; and the
digital operations, which are growing faster than ever due to both organic
growth and a focused acquisition strategy (Ringier, 2011e).

29

Blick Group
The Blick Group is a dominant player in the Swiss newspaper market, with a
rich and well-diversified portfolio of print and digital activities held together
by the "Blick" core brand and represented in Figure 5. The Group as a whole
has a weekly reach of 2.6 million people (Ringier, 2011d), which is roughly
50% of the German-speaking Swiss population. In the following paragraphs
there is a summary of the key elements of each product.
Figure 5: The structure of the Blick Group
Blick
With 623,000 readers, Blick is the most read paid daily newspaper in
Switzerland. Its customer base is well-balanced in terms of age, while when it
comes to gender it is possible to observe a prevalence of men (Ringier,
2011a), especially because of its very developed sport section. The revenue
Structure of the Blick Group
Ringier
Holding
Ringier
CH & Germany
Blick Group
Print
Blick
SonntagsBlick
Blick am Abend
Mobile
Mobile Website
Mobile News App
Sport + TV Apps
Web
Blick.ch

30

model is based on a mix of sales and advertising, with a slight prevalence of
the former (60/40 ratio). 60% of copies are sold through subscriptions and
delivered at customers' doors each morning. Except for the very high
percentage of subscriptions on total sales, the model is the typical one for
traditional and established daily newspapers in the world.
Blick am Abend
It was created in 2008 as the perfect complement for Blick. It is the only Swiss
evening daily newspaper, and it filled an important gap in the market. Its
broad and fast-growing readership (604,000) is not the same as the one for
Blick, as it is mainly composed of younger and wealthier commuters that work
in urban areas (Ringier, 2011b). Therefore, the two products are complements,
and not competitors, both in terms of the number of readers and of the
audiences that they can offer to potential advertisers. Also because of its early
stage of maturity, Blick am Abend is the fastest growing product in the Blick
Group in terms of readers, with a +22% in 2011 if compared to 2010 (Ringier,
2011e). The revenue model is completely different from the one of the more
established Blick, because is it a fully free and ad-supported model, as we can
find in many European cities. The daily issue can also be freely downloaded
from the web.
SonntagsBlick
It is the Sunday edition of Blick. It has a significantly broader diffusion with
873,000 readers (Ringier, 2011f), and it is a hybrid between a daily and a
weekly newspaper. The model is similar to the one of Blick, but because of its
slightly different customer demographics and of the more relaxed way people
read newspapers on Sunday, it is well differentiated in terms of advertiser
attractiveness. Furthermore, its sales/ads ratio is roughly 50/50.

31

SonntagsBlick Magazin
It is a magazine distributed with SonntagsBlick. It has a smaller readership,
but its characteristics in terms of content, paper quality, and reader
demographics make it perfect for some niche and high-end advertisers.
However, being this project focused on newspaper revenue models, this
magazine will not be part of the case study.
Blick.ch
With 1.2 million unique users per month in a country with less than 8 million
people (of which only 5 million speak German), the Blick.ch website is the
Swiss most widely used media portal. To reach these impressive user
numbers, Blick.ch chose to stay completely free. It is supported by several
types of advertisement: classic banners, TV ads, pop-ups, and so on (Ringier,
2011c). Its readership is younger and with a slight prevalence of men (Ringier,
2011).
Blick Mobile and Apps
This is the latest and more experimental activity of the Blick Group: entering
the new market of mobile news. The first way chosen is the development of a
mobile version of the Blick.ch website that makes it more user-friendly on
small portable devices. What is interesting from our point of view is the fact
that, although the revenue model is free, as for the normal website, the
advertising space and options are different and are sold separately.
Furthermore, the audience that can be offered to advertisers is different in
terms of demographics, and therefore it proved to be attractive for different
firm communication needs.

32

The second part of mobile activities is the creation of several apps, which are
small pieces of software that run on smartphones and that can be downloaded
or purchased from a central store directly on the phone. By creating a Blick
News app, the Group quickly discovered that, at least in this early stage of the
market, sport news apps are particularly strong in terms of downloads, and
therefore it focused heavily on them by developing specific apps for following
football, tennis, ice-hockey and ski. The model in this case is a free-mium one,
because the basic apps can be downloaded for free, but for some additional
features the user is asked to pay a very small one-off sum (micropayment).
Furthermore, the group spotted an opportunity to develop a new app called
BlickTV, which allows people to watch TV directly on their iPhone or iPad.
Here the revenue model is different. Advertising is virtually absent and the
system relies on a monthly subscription model.
5.2. The relative importance of different revenue models within the Group
First of all, each Blick product has been plotted on the revenue/services matrix
with the help of the interviewees (Figure 6) in order to try to assess the current
weight of different revenue models. By looking at the diagram, two models
emerged as dominant.
The first one can be called "traditional newspaper model". It is the standard
model for print newspapers, it is a completely paid model and its revenues
come from a combination of sales and advertising. Both Blick and
SonntagsBlick (SB) fall into this category. Until a couple of years ago, before
Blick am Abend was launched and the Blick.ch website grew in number of
users, this model was accounting for almost all of Blick Group revenues and
profits. As an executive highlighted, "it has been an extremely successful
model, and it hasn't changed for many decades". Now it seems to be under
pressure because of the competition brought by the Internet and of the

33

consequent reduction in circulation and advertisers. Nonetheless, it is still
profitable and according to my interviewees it will continue to be viable for
many years. The two products have very similar revenue models, although for
Blick the sales/ads ratio is 60/40, whereas for SonntagsBlick it is roughly
50/50.
Figure 6: The positioning of Blick products on the revenue/services matrix2
The second model is much newer for the Blick Group, and it is the free one.
Currently, there are two fast-growing Blick products that are deploying it
successfully: Blick am Abend (print) and Blick.ch (online). According to an

2
The
size of bubbles is a qualitative indicator of total revenues, as the actual figures are
confidential.

100% Sales 100% Ads
100% Paid
100% Free
Revenue / Services Matrix of Blick products
Source of revenues
(sales/ads ratio)
Servicesoffered
(free/paidratio)
(A)
Very
Unlikely
(B)
Very
Unlikely
Paywall
model
Free
model
Traditional
Newspaper
model
Free-mium
models
BlickAmAbend
Blick.ch
BlickTV app
Blick Sport apps
SBBlick

34

interviewee, "the rise of the free model as a viable alternative has been the
biggest revolution of the last decades in revenue models for print newspapers".
The Blick Group spotted this opportunity and in 2008 launched Blick am
Abend, the only Swiss evening newspaper, filling an interesting gap in the
market. After three years of astonishing growth in readership and advertising
volume, Ringier executives believe that the new venture could break even in
2011 and has still plenty of potential for further growth. All interviewees
agreed on the fact that it has been a huge success and that the free model is
proving to be viable and has a bright future in print.
The other free activity is represented by the news portal Blick.ch, the digital
branch of the Group. Here the story is more controversial. For many years the
free model did not seem to be sustainable on the Internet, although it was the
only choice due to very high competition and low switching costs. However,
after several years of red figures, in the last few years Blick.ch has become
profitable, although this result was achieved mainly by exploiting production
and marketing synergies with the more established paper editions.
Nonetheless, in answering a direct question on the sustainability of the website
as a standalone product (without any support by journalists and sales teams
from the print versions), an executive stated that "Blick.ch would probably be
profitable anyway". This finding is particularly interesting, because it suggests
that with the growth of users and advertising volume the free model might be
a viable solution for news websites "as long as you are number 1 or 2 in your
market". This might also be true for mobile websites based on the same
principle, such as the Blick.ch mobile version.
These two models together accounts for more than 99% of the Group's
revenues. However, with the recent development of smartphones and tablets,
new Blick ventures have been launched in the form of apps. The Sport apps
(Football, Ice Hockey, Tennis, Ski) are based on a free-mium model, in which
the app download and the majority of content are free, whereas some

35

additional features require the user to pay a tiny amount of money (CHF 1.10).
In fact, this premium content is an interesting test on the willingness to pay on
mobile devices. So far, the free-to-fee conversion rate for the Blick Group has
been around 10%, which is already good if compared to the average of other
apps. This is still a very immature market, but some of the brightest Ringier
executives strongly believe in "the free-mium model with upselling", which
means something very similar to this model with the only difference that the
services sold through the apps might non be directly related to the actual
content.
On the other hand, the BlickTV app for the iPad uses a completely different
model, which would fall into the "paywall" category and which will soon be
followed by the main Blick news app. The idea is to charge for content in the
form of subscriptions. As we said, this reduces quite dramatically the number
of downloads. In this sense, the free model with its advertisement revenues
would probably be a better choice in the short term. However, as pointed out
by an interviewee, "we already have to start charging in order to educate the
mobile market and to avoid the mistakes that the whole industry made in the
mid-90ies with the web".
In conclusion, the paper and the online ventures seem to have steadier and
more sustainable revenue models, which account for the vast majority of the
Group's turnover. On the other hand, in the new world of mobile devices
everything is uncertain and fluid, and no dominant model has already
emerged, although some sort of free-mium is currently seen by Ringier as the
most likely to succeed in the long run.
5.3. Key drivers of revenue model selection
The elements that came up while looking for the reasons to select a revenue
model instead of another are among the more interesting and insightful of this

36

case study. In particular, a very meaningful example of the drivers behind the
choice between the traditional paid model and the free model is represented by
the launch of Blick am Abend three years ago. At that time, Ringier believed
in the existence of an "evening gap" in the news market, especially for
commuters moving away from big cities after a day at work. Furthermore,
Blick daily newspaper was very strong outside of Swiss major centres, but was
relatively weak in big urban areas such as Zurich and Basel. Therefore, the
firm felt the need to enter the market with a new venture to fill the "city gap"
in the Group's strategy. As suggested by an interviewee that played a very
important role in that decision, "if you're defensive in our business, you're
gone". So, the decision was to target younger (16-40), trendy and urban
readers with a fresh evening daily newspaper. But should it be free or paid? In
this case we can see the driving forces pushing for the free model.
The amount of capital required was a first crucial element. According to a
very senior interviewee, internal analysts calculated that a new paid newspaper
would have taken 7-8 years to break even, and would have cost around CHF
100 million (£75 million). On the other hand, a free model was less
demanding from a financial point of view and was expected to break even in a
shorter period.
Secondly, timing played an important role. Ringier wanted to occupy that
market segment as quickly as possible in order to prevent other publishers
from entering the evening market. In this sense, a free strategy seemed more
sensible, because it would have allowed to build a broad readership in a
relatively short period and with a moderate investment in marketing.
At the same time, reaching a critical mass of readers was crucial to attract big
advertisers that look for big numbers. In this context, the interviewees
confirmed the existence of a clear trade-off between a newspaper's price and
its circulation and advertising revenue.

37

Then, there was also an issue of willingness to pay. Blick am Abend had been
conceived to target younger readers, but surveys proved this segment to be
much more used to the Internet and to its free model. Therefore, the
willingness to pay was significantly lower than for the segment targeted by
Blick.
Finally, logistic issues were also considered. Distributing a free newspaper
was much easier, because there was no need to set up a network for
newsagents or to buy very expensive automatic machines. By targeting
commuters, it was enough to make the newspaper available in some key areas
like train stations. Furthermore, as highlighted by an interviewee, delivering
an evening newspaper is easier than a morning one, because in the evening
people move from the city centre toward residential areas, and therefore the
distribution network can be more concentrated, thus reducing costs.
Interestingly, although before the launch there was a debate at Ringier on the
risk of internal competition and ultimately cannibalisation of Blick by a free
version of Blick am Abend, the potential benefits prevailed. In addition,
Ringier executives were aware of the fact that avoiding internal competition
by charging for Blick am Abend would not have stopped other publishers
from entering the evening free market. In the end, everybody agreed on the
fact that even if some degree of internal competition might have occurred, it
would still have been better than facing external rivals. Furthermore, the idea
was that by differentiating the content according to the respective target
audiences the cannibalisation effect could be significantly reduced.
In conclusion, in this case the sum of all the above-mentioned elements was
perceived to be more valuable than the additional revenues from sales.
However, in a different situation the same issues might have led to a different
outcome.

38

The other Blick products are divided into three categories in relation to drivers
of revenue model selection. The first group is composed by traditional paid
newspapers (Blick and SonntagsBlick). In this case the model has been
working for many decades and is perceived as the most profitable for those
products. Therefore, there is no need or interest in any change of model. If
publishers can choose, this is their favourite model, because it exploits both
classic sources of revenues (sales and advertising). Here the main driver is
simply the maximisation of revenue sources and ultimately of profits.
The traditional Blick.ch website represents the second category. In this case
the situation is the opposite. Media companies do not really have any option.
For general news content, the free model is not even a choice: it is a
requirement in order not to be pushed out of the market. In this sense, the
driver is the high degree of substitutability, that leads to the lack of viable
options.
Finally, in mobile apps the interviewees admitted that nobody knows exactly
which model will prevail, and at the current stage revenue models are chosen
on a "trial-and-error" base. The key drivers seem to be the willingness to
experiment for the future and, in the case of paid apps, the attempt to educate
the market to mobile micropayments to avoid the web mistakes.
In conclusion, there are many competing elements that play a role in the
revenue model selection. In mature markets like traditional print newspapers
and news websites the choice is quite straightforward, although for the
different reasons already highlighted. In immature markets such as in mobile
apps the exploration of different solutions has no predictable pattern behind it.
Finally, in the interesting case of the launch of a new print venture, where two
models seemed to be viable, a wide array of drivers had to be taken into
account. In the specific case of Blick am Abend, some of the main elements
considered were: capital requirements, timing, reach, willingness to pay,

39

logistics and internal competition. However, many of them can be grouped by
saying that the target audience is critical in choosing the revenue model.
5.4. The influence of corporate strategy on revenue models
The role of corporate strategy might be seen as another key driver in the
selection of revenue models. We have already spoken a bit about it when we
addressed the issue of potential cannibalisation between Blick and Blick am
Abend. In general terms, the existence of a coordinated strategy is a crucial
aspect of the Blick Group. The main idea is well summarised by the slogan
"one brand, many channels", which is the clue of a change of perspective
synthesised by a very senior interviewee that said: "we are running brands, not
newspapers".
In fact, from the point of view of readership and reach, the corporate strategy
of the Blick Group has two main objectives: to gain the broadest possible
audience with its products and to avoid excessive overlapping and
substitutability between Blick activities. From our point of view, what is
interesting is the fact that so far the Group has been successful in avoiding
cannibalisation between its products by using revenue models as a key
differentiator in combination with timing (morning, evening and 24/7 online),
channels (paper, computers and mobile devices) and content/interests
(different approaches and specific content). This is because the customer
willingness to pay is a critical criterion in segmenting the market.
Another very important aspect is the impact of corporate strategy on
advertising, which has a direct effect on the sales/ads ratio and therefore on
the positioning of revenue models in the matrix. By offering many products
under the big Blick umbrella, sales teams have been able to move up one step
in the value chain. Before developing a coordinated strategy, products were
sold separately to advertisers in a very classic way. Now the Blick Group is

40

able to approach big advertisers and say: "Tell us what your needs are, and we
can tailor a campaign on Blick products based on your specific target market".
In practice, it became possible to offer consultancy services that combined
with creative skills allowed to bypass advertising agencies. This is certainly
made easier by coordination, but the real strength of the Blick Group is that it
can offer products with very different reader demographics and therefore
allow targeted advertising. In this context, the choice of the free model for
Blick am Abend has been crucial for conquering a new and younger segment
of the market that was a perfect complement for the existing Blick portfolio.
As a consequence of this strategic evolution, the Group can rely on higher
total advertising revenues.
Finally, it is worth having a look at the other side of the coin, although not
directly related to revenue models: production costs. From this point of view,
it is interesting to notice that the new corporate strategy led to the creation of a
shared newsroom for all Blick titles, which improved communication and
coverage of news, while at the same time allowed to cut costs by 15%.
5.5. Insights on future trends in revenue models
The fourth research question is possibly the most difficult to answer, because
it tries to look into the future of revenue models for Blick products. First of all,
based on the interviews it is possible to say that there is a clear distinction
between two types of models, as can be seen in Figure 7. The first one is
represented by the established and tested "traditional newspaper model" and
"free model". Here, the situation seems to be crystallised and it is very
unlikely that major shifts in revenue models will occur (dashed squares). Blick
and SonntagsBlick will therefore keep their profitable model as long as
possible, although in the very long term it might become more and more
difficult to charge for news. Blick am Abend is proving to be successful, and

41

being free seems to be a key ingredient of its popularity. Furthermore, as we
already said, its free model is an important part of its differentiating mix,
because it allows to capture a new audience. Blick.ch will also probably
continue to be free, because the forces that prevented any attempt of charging
for online news are likely to last. Moreover, as stated by an interviewee, "it is
very difficult to change people's behaviour". These reasons make revenue
models for established Blick products rather static.
On the other hand, the situation of mobile apps is much more fluid. As we
said, the search for a sustainable model has just begun, but from the interviews
it seems that the vision (arrows) tends toward the centre of the diagram, which
represents the free-mium family of models.
Figure 7: Possible changes in revenue models for Blick products for the future
100% Sales 100% Ads
100% Paid
100% Free
Revenue / Services Matrix of Blick products (future)
Source of revenues
(sales/ads ratio)
Servicesoffered
(free/paidratio)
(A)
Very
Unlikely
(B)
Very
Unlikely
Free-mium
models
SBBlick
BlickAmAbend
Blick.ch
BlickTV app
Blick
Sport
apps

42

A second very interesting trend, already highlighted in the literature, is the
emergence of new digital revenue streams. The mosaic model did not
convince the interviewees, who focused mainly on two elements: classifieds
and e-commerce. The first one is represented by announcements of people that
want to buy or sell something, or that are seeking or offering a job. The Blick
Group has no direct activity in classifieds, but Ringier controls Scout24, the
leading network of online classified services in Switzerland. It is not clear
whether they will ultimately be integrated into Blick websites or whether they
will continue to appear as interactive advertisement on them. However,
according to many Ringier analysts this type of activity is already very
successful and has still a huge growth potential for the future. Furthermore, as
suggested by an interviewee, even traditional newspapers might interact with
them, for example, by dedicating one page to the most interesting online
offers. The second very promising stream of revenues goes under the broad
label of "e-commerce". The financial benefits from the development of this
new activity can be huge, but caution is needed, because the risk is to "hurt
our brand's credibility by stretching it too much", as stated during an
interview. News have to remain the core of the website, because "if you lose
you credibility, you lose your audience". Here, Blick strategy is to select only
quality e-commerce that fits with the brand and with the target audience. For
example, tickets for sports and events, travel, pets and gifts might fit with the
Blick positioning as a popular newspaper. Nonetheless, the strategic shift
toward e-commerce implies a deep change of perspective, that a Ringier top
manager synthesised by saying that "our clients are not readers anymore; they
are consumers".
Finally, a third trend that might positively affect both sales and advertising
revenues is customisation. In the digital world, technology allows firms to
track users and learn many things about their characteristics, preferences and
interests. This can help revenues in two ways. From the point of view of sales,
the possibility of offering readers very customised content tailored for them

43

might increase its perceived value and therefore the willingness to pay for it.
Furthermore, this might allow sophisticated differential pricing strategies that
were not possible on paper. On the other hand, if we look at customisation
from the advertiser perspective, it is obvious that very targeted messages are
much more effective than general ones, and therefore more valuable. These
concepts are not new, but they will reach a new level, especially with recent
technology developments in mobile devices, which are much more personal
than computers. According to the interviewees, Ringier is investing a
considerable amount of money in new data management systems that will
allow to gather more information on users and to organise it in a way that is
meaningful for targeted advertising.
6. General findings and conclusion
It does not make sense to draw any kind of statistical generalisation based on
a single case study. However, this does not mean that conclusions are
impossible. The case study method is a wonderful tool for identifying
mechanisms, trends and logical relationships between variables that can result
in qualitative generalisations (Yin, 2008). It is therefore possible to propose
some general comments and findings related to the research questions and to
the broader context of the newspaper industry.
Current and future prospects for revenue models
First of all, the case study allowed to identify the most relevant revenue
models and to associate them with specific channels based on general reasons.
We might therefore imagine the most likely positioning of products on the
matrix based on the channel they use (Figure 8). Traditional print newspapers
are usually within the paid model boundaries. Free print newspapers and news
websites are in a completely different group and fall into the free model.

44

Finally, apps are likely to opt for a free-mium model, because of technological
possibilities and of a lower level of substitutability than for websites.
Figure 8: General model based on channels
The traditional paid model and the free model emerged as the most relevant in
terms of revenues. Nonetheless, observed trends that are occurring in the
whole industry are on one hand the slow but steady decline of the traditional
model, and on the other the robust growth of the free strategy. This will
probably lead to a shift in their relative importance in the coming years, with
the free ad-supported model becoming the major source of revenues for many
media companies.
100% Sales 100% Ads
100% Paid
100% Free
Revenue / Services Matrix: General Model
Source of revenues
(sales/ads ratio)
Servicesoffered
(free/paidratio)
(A)
Very
Unlikely
(B)
Very
Unlikely
Traditional
Print
Newspapers
Mobile
Apps
Free Papers
and News
Websites

45

Free-mium models are still very fluid and small in terms of contribution.
However, according to the data collected, it is possible to forecast a much
more significant role for them in the future. This trend is closely linked to the
recent growth of two other sources of revenues: e-commerce and online
classified. This development, highlighted in the literature, has been fully
confirmed by the case study.
Key drivers of model selection
Drawing general conclusions about key drivers of revenue model selection is
more difficult, because it seems that in this regard characteristics of single
products play a larger role, especially in print. Nevertheless, some
observations can be highlighted. For apps, the whole industry is still on
"experimental mode" in order to understand and shape the future consumer
behaviour. It is not clear yet to what extent customers are willing to pay for
mobile content embedded in apps. For websites the key driver is certainly their
degree of substitutability, which has a huge impact on the elasticity of
demand. As shown in the case study and in the literature review, it is very
difficult to charge for generic news online, whereas the willingness to pay for
unique and high-value content, such as real-time financial data, is usually
higher. Finally, for print products there seems to be no dominant driver, as the
choice between free and paid depends on the interaction of a wide range of
elements. In the particular case of Blick am Abend, some of the crucial aspects
were: capital requirements, timing, the ability to reach a critical mass of
readers, the willingness to pay of different audiences, logistic issues and
internal and external competition. However, there are two important warnings.
First of all, this list does not pretend to be exhaustive, as in other situations
different variables might be more relevant. Secondly, it is very difficult to
separate the effect of each element and to estimate its relative weight.
In trying to find a general framework that puts together all these variables, it is
possible to identify three crucial determinants of the importance of drivers:

46

channel, target audience and type of content (generic vs. specific). These
"meta-drivers" have a huge impact on all revenue model drivers. However,
there are some relationships that are particularly intense. The channel heavily
influences capital requirements, logistics, reach, substitutability and the level
of competition. The target audience mainly affects the willingness to pay of
customers. Finally, the type of content plays a huge role in determining the
degree of substitutability with other products.
The impact of corporate strategy on revenue models
What emerged from the case is the fact that corporate strategy can have an
impact on revenue models in two ways. On one hand, if properly managed, it
can help in gathering advertisement by offering clients a broader and richer
range of products and audiences that can be combined to address the specific
needs of advertisers. Thus, it can have an impact on revenue models by
increasing total revenues and therefore by moving the balance between sales
and advertising (the horizontal axis of the matrix) toward the latter. On the
other hand, revenue models can be used as a powerful tool to attack new
market segments and reach different target audiences. In sum, a coherent
corporate strategy can have a significant positive influence on total revenues.
Other general findings
There are some other interesting observations, although they are not directly
related to revenue models. First of all, the case study demonstrates that in the
newspaper industry new products can still be successfully launched. This
finding is particularly important in a situation in which pessimism has
conquered the hearts of many publishers.
Secondly, customisation and data mining are clearly crucial trends for the
future of newspapers and advertising. On one hand, media companies have to
adapt to this change by moving from standardised products to highly
customised offerings to engage readers, while on the other hand they have to

47

improve their ability to gather information on users and to organise it in ways
that are valuable for advertisers.
Finally, it is useful to remember that revenue models influence only one half
of the income statement. To obtain superior performance, media companies
can also focus on cost efficiency. The case study shows that corporate strategy
is particularly important in this field. For example, the introduction of a shared
newsroom for all Blick products is a brilliant demonstration of how synergies
can be leveraged to improve efficiency.
Patterns for future research
In conclusion, it is important to highlight at least two areas of study that might
deserve further research. The first one is concerned with the drivers of model
selection. The study of a single case identified many drivers, but it is clear that
in other cases different variables would be relevant. Therefore, by observing
several cases, it might be possible to organise and synthesise all these
elements into a single and coherent theoretical framework.
Secondly, it seems still too early to study some forms of free-mium models.
The recent development of apps, which looks like the breeding ground for
innovative free-mium models, is only at an early stage. When this new
technology will reach a sufficient degree of maturity, it is likely that some
kind of dominant design in revenue models for apps will appear. Therefore,
future studies should monitor trends in mobile devices in order to identify
these crystallised models as soon as they emerge.

48

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