The document discusses business models for user-driven news initiatives. It covers the industry context of declining traditional media revenues. It describes how value networks are transforming, with content production being democratized and value increasingly coming from metadata rather than content ownership. Content aggregation is morphing into automated content recombination. Advertisement brokerage and multi-sided markets, where one side subsidizes the other, are also discussed.

1. Business model related insights from IBBT publishing related projects Olivier Braet IBBT-SMIT (Vrije Universiteit Brussel) Pleinlaan 9, 1050 Brussel

2. Overview Industry context Transforming value network Two-sided markets The social graph User-driven news initiatives

3. Industry context: internet related income erosion

4. NAA 2008

5. Transforming Value Network

6. Traditional Media Value Chain Role : Logical bundle of business activities Actor : Unifies roles in varying degrees of integration Contract : Delegation established through negotiation Attention : Most media markets are two-sided: they coordinate consumption by advertisers and audiences

7. HIER DE SLIDES VAN HANS MBT SCENARIOS

8. Emerging new roles

9. The business role of attention Continuum from: Passive consumption Leeching Active visit Scoring (least active / ‘thumbs up or down’) Tagging (more active) Creative visit Creating content

10. Content production is changing Traditionally: The creation of original content by internal or external professionals (salaried employees, freelancers, newswires) Content production has been democratized through making the tools of production available/affordable to the general audience Data(base) control has not been democratized Value extraction is increasingly controlled more by actors that control the meta-data than by actors that control content ownership

11. Content aggregation is morphing into content recombination Definition: The aggregation of content to be bundled in a branded package (TV network, magazine, newspaper) => New, emerging role: Content recombination The automated recombination of content chunks available throughout the business value network The concept of ‘citizen media’ is (mostly) a form of recombination They recombine input from users (“crowd-sourcing”) and (semi-)professionals via feeds that allow the embedding of multiple content types: text, video, audio, images, ...

12. The business role of advertisement brokerage Definition: middleman between advertising and content aggregation/recombination The race for the best contextual ads system Financial remuneration models evolving Number of page views (CPM) still exists Pay-per-click (PPC) model is under pressure Time spent on a site growing in importance The newcomers are moving into traditional media’s value chains, but Google’s acquisition of DoubleClick runs counter to the long tail tale

13. Nokia Media Center

14. Google

15. MySpace (NewsCorp)

16. Critical assessment of advertisement brokerage ‘ Extortion business model’: Pay and there will be less advertisements on your profile page Why not only show complementary product / shop categories alongside a business’ page? Google’s advertisement brokerage works bad in solving two questions: “ where can I find X professional near where I live?”, “ How can you avoid that my nearest competitor appears alongside the search results”? Opportunities: Geographical refinement and complementary advertisement brokerage

17. Multi-sided Markets

18. Newspapers as ideal two-sided markets Readers paid subscription and advertizers paid for readers’ eyeballs Normally, in two-sided markets, one side subsidizes the other.

19. Two-sided markets Market 1 Market 2 Eyeballs => <= Advertizers => Mr.Softee <= => ... <= Game Titles

20. Two-sided markets Market 1 Market 2 =>...<= =>...<= Rochet & Tirole (2003), ‘Platform Competition in Two-sided Markets’, Journal of the European Economic Association , June, 1(4): 990- 1 029. Parker & Van Alstyne (2005) ‘Two-Sided Network Effects’, Management Science, 51(10): 1494 -1 504.

21. Four determinants of two-sided markets Network effects Technological prerequisite: Standards! (Esp. If one cannot dictate the standard ... cfr. Microsoft) Organizational prerequisite: social relationships Product bundling over markets by platform owner ‘ Smart’ product design. But two-sided markets differ from traditional multiproduct cases (razor and blades are bought by the same person) Price discrimination Platform intermediary internalizes externalities (search- and transaction costs) Can stimulate both consumer welfare and profits Dominant platform owner can straddle two sides of the market

22. Ignoring two-sided markets Espresso: 12/01/05 => 20/07/05

23. Network effects prerequisite: Social Graph

24. How do social networks thrive? How & why do communities grow? Trust is the oil for network effects But the ‘trust’ concept is very elusive => S h ould be better formalized Mobile world knows: ‘connecting people’ is king In communities, content is not king , but conversations. Content is what people talk about Content becomes more focussed / specialized as social capital connections move from bonding, via bridging, to linking.

25. U nderstanding communities: Kinds of social connections and social groups Three forms of social connections: Bonding: Between intimate members Bridging: Between peer social groups Linking: Between professional social contacts

26. What do people strive for via their different forms of bonds/bridges/links? Intimate social group =>strives for=> Popularity/trust (i.e. social capital for its own sake) Peer group =>=> Popularity + Knowledge Professional network =>=> Popularity + Knowledge + Financial benefits Side Note: A high score on bonding runs counter to high conversion to financial capital(!) (bonding requires too much attention to too few people) => ‘The Strength of Weak Ties’ (Granovetter)

27. The looser the ties, the more formalized the control Intimate social group: Many informal rules, which are very fluid (e.g. teenage lingo); Value-based Peer group: Norm-based, institutions of practice Professional network: Rule-based, Institutionalized titles Users want pseudonymity to segment their social activities, not anonymity

28. User-driven news initiatives

29. Scope Narrow technological scope : Citizen-driven news web sites Excluding other media such as community TV, community radio, etc. Broad definition of ‘citizen’ media : all media that arise from communities that share a similar interest, and mobilize these communities to provide input in the news creation process In order to include both regional, national and international case examples Focus: Business modelling issues Excluding political (emancipatory) effects of these initiatives

30. Organization design Locus of editorial control High: in-house professional editors decide what appears and what doesn’t; readers can only comment Medium: readers can provide input ( scoring news items or being able to blog as a reader on the site ; but excl. comments) Low: readers provide the majority of the content and editorial interference is kept at a minimum

31. Service design Degree of shared benefits Few to no benefits shared Social benefits shared Reader can gain visibility / credibility with the other readers Social & financial benefits shared Credibility + financial benefits

32. Regional level

33. National level

34. International

35. Conclusions: a) value sharing Regional and international level: straight forward advertisement-based business model Advertisement brokering core point of value extraction National level: More experiments in innovation in terms of benefits sharing Reporter.co.za: Respectively ZAR 35, ZAR 20 and ZAR 15 for Gold, Silver and Bronze contributions Yo Periodista: 500 EURO rewards per feature article written by the readers Metrobloggen.se: 150 Swedish kronor (EURO 16) on a Mastercard credit card account for >5000 page views

36. Conclusions b) control International cases relinquish highest proportion of editorial control vs. regional / national cases National cases relinquish medium control Regional cases relinquish least control National level: Sharing of benefits causes centralization of control? Causality?