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Presentation from the 10th World Media Economics and Management Conference, 23-27 May 2012, Thessaloniki, Greece
Citation preview
4 June, 2012
TATION pRÆSEN
Business model innovation: The Danish newspaper
industry’s response to the decline in traditional
markets
10th World Media Economics and Management Conference, Thessaloniki, Greece
23-27 May 2012
Anna B. Holm, John P. Ulhøi, and Anastasia Uliyanova
*This research has been funded by the Danish Council for Strategic
Research, 09063245 (“Digital Urban Living”). The usual disclaimer
applies.
The business environment of the Danish newspaper industry is changing
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• Changes in consumer preferences, i.e. news reading is moving
online and becoming increasingly mobile;
• New types of competitors, e.g. news aggregators, internet providers,
content providers, specialised websites and portals;
• Technological innovations, particularly general purpose technologies
such as Web 2.0, mobile broadband Internet connection, new types of
personal communication devices;
• Novel sources of news, e.g. blogs, forums, and online social
networks;
• Public subsidies go solely to printed national dailies, while online
editions and e-papers are subject to value added tax and receive no
subsidies.
Newspaper circulation in Denmark (1989-2009)
3
By August 2011,
none of the
Danish daily or
morning
newspapers
had a
circulation of
over 100,000.
Source: Danish Newspaper Publishers´ Association
Research purpose
1. To analyse the existing business models of the
Danish newspaper industry.
2. To discuss how changes introduced during the on-
going development of digital platforms have
affected the dominant business models and their
core elements.
3. To investigate how leading Danish newspapers are
responding to the challenges.
4
The business model framework
5
Value proposition Value creation
Factors related to the
offering
• Key resources
• Key activities
• Key partners
Value delivery Value capture
• Customer segments
• Distribution channels
• Customer relationship
• Costs
• Revenue model
Source:…
Method and data
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› Qualitative research design based on interpretive methods.
› Two largest media groups in Denmark: JP/ Politiken and
Berlingske Media.
› Data sources include: • In-depth, face-to-face, semi-structured interviews with editors-in-chief,
CEOs, and other newspaper managers.
• Professional presentations from Danish and WAN-IFRA media
conferences.
• Newsletters and other archival data, e.g. annual reports.
› Inductive data analysis, with initial data reduction based on
the business model framework.
The initial response of the Danish newspaper industry - Industry consolidation through mergers and acquisitions to achieve
economies of scale;
- Cost-cutting initiatives and business restructuring, such as lay-offs of
journalists and the outsourcing of non-key activities to optimize
operations;
- Adjustments in paper formats, content and circulation to match market
demand and customer preferences;
- Free distribution of content – online newspaper editions and free-sheets
to attract readers and advertisers;
- Redefinition of competition and co-opetition with traditional rivals to cope
with increased competition from non-traditional rivals, e.g. Google,
Yahoo, etc. 7
NO INNOVATION IN BUSINESS MODELS!
- Review of value propositions for different customer groups, i.e. readers,
advertisers and marketers, and adding new value propositions as well
as customer segments;
- Dismantling the traditional business model based on a single delivery
channel, i.e. the printed newspaper, and managing multiple business
models with multiple distribution channels based on digital (Internet)
technologies;
- Creation and acquisition of online firms, portals, classified databases,
etc., to deliver value to traditional customers;
- Non-core profit-generating activities, e.g. e-commerce.
8
The delayed response of the Danish newspaper industry
Danish newspapers are still faced with a declining
readership and the prospect of further declining
revenues.
One of the many explanations lies in their current
business model configurations and a disruption of the
logic of the existing business model.
9
However…
Disruptive changes in the business model (1)
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Value proposition
• The offer of “free” content;
• New types of content, genres and media types and media convergence;
• Support of the overall brand, not the printed newspaper per se;
• New, specialized, niche online products and apps for the web, smart
phones and tablet computers.
Value delivery
• Fragmentation of the reader segment;
• New multiple business-to-business customers;
• Multiple delivery channels instead of one, i.e. the printed newspaper;
• Lost ownership of delivery channels and distribution of content through
third-party channels.
Disruptive changes in the business model (2)
11
Value creation
• New organisational structures for producing and publishing content on
printed and digital platforms;
• New IT resources required;
• Need for journalists and communication workers with new skills;
• New key partnerships with information and communication technology
(ICT) companies.
Value capture
• Increased unit costs of printed newspapers;
• Changes in the revenue structure;
• Continuous experimentation with pricing of digital products;
• Dependence on revenues from non-core activities.
Conclusions
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› The media groups in the study initially dismissed the need to innovate
because of long-term success with their traditional business model.
› The first real innovations in their newspapers’ business models only
occurred around 2006-2007, when the media groups changed their focus
to better serve customer needs.
› However, they still need to reconsider the extent to which their existing
businesses are efficient as well as effective, and to determine which
strategies to adopt to help them cope with today’s challenges.
› Adopting technological innovations and adjusting business models is a
never-ending process – although adopting new technology seems
‘uncomplicated’ compared with adopting a new business model.
.
Implications
› Business model innovation is imperative for the newspaper industry in
Denmark.
› At the same time, the industry needs new approaches to business model
innovation in general. These can include:
› Establishing a special business model innovation function or task force in order to design
and test new business model configurations before they are incorporated into the main
business model;
› Launching new value propositions as spin-offs before they are finally adopted by the
company;
› Involving customer groups in business model innovation, i.e. user-driven innovation.
› Further research should focus on the business model innovation process,
approaches and needs, rather than studying business models of the
industry in general.
13
THANK YOU!
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If you are interested in this research, don’t hesitate to contact me: • Email: [email protected]
• Twitter: @annabholm
• LinkedIn: http://dk.linkedin.com/in/annaholm