Business model evolution in the newspaper industry

A case study of Helsingborgs Dagblad

Supervisor: Joakim Winborg

Spring 2013

Authors: Max Forssén & Dorothea Castell

Abstract:

Title: Business model evolution in the newspaper industry: A case study of Helsingborgs Dagblad

Program: Master program in Entrepreneurship, Corporate Entrepreneurship and Innovation

Course: Internship and Degree Project (ENTN39)

Authors: Dorothea Castell & Max Forssén

Supervisor: Joakim Winborg

Keywords: Business model, Evolution, Change, Drivers, Triggers

Thesis purpose: The purpose of the thesis is to explore the business model evolution in the newspaper industry by identifying and analyzing the factors that caused business model changes

Methodology: A case study of a local newspaper based in Northwestern Scania. Semi structured interviews were conducted together with secondary data.

Theoretical framework: Three concepts were used and explained with help from theory; business models, business model evolution and causes for change.

Conclusions: Six significant changes in HD’s business model where technology played a major role. It can be concluded that proactive decision-making is the most successful approach. HD through a trial and error process changed their business model in order to adapt to the evolution of the newspaper industry.

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Table of Contents

1. INTRODUCTION......................................................................................................................................... 1

1.1. BACKGROUND.................................................................................................................................................11.2 PROBLEM DISCUSSION.......................................................................................................................................11.3 RESEARCH QUESTION.........................................................................................................................................21.4 PURPOSE.........................................................................................................................................................21.5 KEY CONCEPTS..................................................................................................................................................3

2. THE THEORETICAL FRAME OF REFERENCE...................................................................................................4

2.1 BUSINESS MODELS............................................................................................................................................42.2 BUSINESS MODEL EVOLUTION/CHANGE................................................................................................................62.3 CAUSES FOR CHANGE.........................................................................................................................................9

3. METHOD.................................................................................................................................................. 12

3.1 OVERALL RESEARCH DESIGN AND PROCESS...........................................................................................................123.2 DATA COLLECTION...........................................................................................................................................133.3 METHOD FOR DATA ANALYSIS............................................................................................................................153.4 REFLECTIONS OF METHOD CHOICES.....................................................................................................................17

4. PRESENTATION OF FINDINGS................................................................................................................... 18

4.1 INTRODUCTION OF THE COMPANY HELSINGBORGS DAGBLAD...................................................................................184.2 THE DEVELOPMENT OF HELSINGBORGS DAGBLAD..................................................................................................18

5. ANALYSIS AND DISCUSSION..................................................................................................................... 30

5.1 IDENTIFIED BUSINESS MODEL CHANGES................................................................................................................305.1.1 Extending the business: HD’s multi-channel strategy..........................................................................305.1.2 Reduction of channels: Leaving the multi-channel strategy behind....................................................33

5.2 ANALYSIS OF TRIGGERS TO BUSINESS MODEL CHANGES...........................................................................................345.3 IDENTIFIED PATTERNS......................................................................................................................................39

6. CONCLUSIONS AND IMPLICATIONS..........................................................................................................41

6.1 CONCLUSIONS................................................................................................................................................416.2 IMPLICATIONS FOR RESEARCH............................................................................................................................416.3 PRACTICAL IMPLICATIONS.................................................................................................................................42

LIST OF REFERENCES.................................................................................................................................... 43

APPENDIX.................................................................................................................................................... 47

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1. Introduction

To begin with, we will present an introduction of the business model of the newspaper industry and the challenges it is currently facing. In addition, we will present the research question and the purpose of the thesis.

1.1. Background

The changing media landscape has caught a lot of scholarly attention in the past decade (Swatman et al., 2006; Dal Zotto & Picard, 2006; Franklin, 2010; Rosenstiel et al., 2012). With the rise of the digital era, the traditional business model of newspapers is facing enormous challenges (PriceWaterhouseCoopers, 2009). Besides the internet as a major challenge, newspapers have had difficult times before: the radio and the TV were at their beginning also perceived as a possible threat as it was common expectation that those media would substitute the newspaper (Waldmann, 2011). However, history has taught us something else, as TV and radio have caused decline in reader and advertisement revenues – but despite the expectations – newspapers survived this threat.

With the possibilities that arose with new technologies, the information sector is nowadays increasingly making use of digital channels (von Reibnitz & Bird, 2012). As a result, the readers have gotten used to have access to free information. This trend of readers moving from reading a physical paper to making increasingly use of online offers, caused the next challenge: the advertisers started to move in the digital world as well (von Reibnitz & Bird, 2012). Physical traditional newspapers experienced a decrease of advertising revenues, because they could not offer the same audience for the advertisement as the internet. To put it short, the complete way of consuming news has changed. The existence of a website called www.newspaperdeathwatch.com mirrors the problem: newspapers are struggling to stay in business all over the world.

However, not all newspapers have vanished yet and it is not carved in stone that they will end to exist. Still, no general valid and promising business model for the newspaper has been found with which this challenge could be overcome. A recently published study of the Pew Research Center has investigated this problem and concluded that those newspapers that have not demised until now have tried out different things to face the challenges (Rosenstiel et al., 2012). Switching to e-business models or even extending the core by offering services that are not in line with the traditional focus of distributing news and selling advertisement, such as establishing event agencies or entering the e-commerce market are only some examples of how newspaper companies try to tackle the future (Rosenstiel et al., 2012).

1.2 Problem discussion

Nowadays the term business model is widely spread and its use has been increased exponentially since the information technology boom in the late 1990’s (Amit & Zott, 2011; Hedman & Kalling, 2003). Aspects of change, evolution, development, organization and innovation have been studied in relation to business models by various scholars (Morris,

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2005; Linder & Cantrell, 2000; Sosna et al., 2010). No matter how different the approaches to business models are within the literature, quite a few scholars share one conclusion: What Linder & Cantrell (2000) describe with their change model - depicting “the core logic for how a firm will change over time in order to remain profitable in a dynamic environment” – is what Demil & Lecocq (2010) call dynamic consistency. The bottom line is, that the most sustainable business models are flexible and constantly developing, as most are continually under pressure to change and adapt to modified circumstances.

This also applies for business models in the newspaper industry: they have been under constant pressure to change during more recent years (Swatman et al., 2006; Dal Zotto & Picard, 2006). This leads to our area of interest:  What kind of drivers and triggers are leading to a change within an existing business model? Scholars have given this question quite much attention (de Reuver, 2009; Sosna et al. 2010, Johnson et al., 2008; Osterwalder & Pigneur, 2010). On a general level, many different things have been mentioned, such as technological developments, legal regulations, competition, as well as the need for growth or higher profit (Linder and Cantrell, 2000; Chesbrough, 2010), while technological developments seem to play a major importance (Osterwalder & Pigneur, 2010; Sosna et al., 2010; de Reuver, 2009; Johnson et al., 2008). However, those aspects are commonly only mentioned aside and a proper discussion is lacking. Especially in literature about business model development in the newspaper industry, literature lacks to focus in detail on the relations between different types of driving forces and the actual changes taken place. This might be due to an understanding of the changing process of a business model close to Casadesus-Masanell and Ricart’s (2010): They state that the key driver of change is the firm’s strategy itself, as it specifies how to act upon contingencies in the environment, other industry players etc. However, the focus on the strategy does often not allow the original driving force to get enough attention itself.

1.3 Research question

Derived from the foregoing problem discussion of these issues, the following research question is posed:

How have technology and other factors influenced the business model evolution in the newspaper industry?

1.4 Purpose

The purpose of the thesis is to explore the business model evolution in the newspaper industry by identifying and analyzing the factors that caused business model changes. Change is not always fostered by the organization itself, with proactive decision making to take certain opportunities or anticipating potential threats by adapting the business model beforehand. In fact - as the literature review gave the impression – there are also external events forcing organizations to change their business models; circumstances that organizations have actively adapt to.

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The Swedish newspaper company Helsingborgs Dagblad (HD) is a practical example of a regional newspaper that has adapted to the above mentioned challenges and evolved – according to the company’s own perception – from a newspaper to a media company (Jönsson, 2013a), with the goal to become the leading media company in Northwestern Scania (HD, 2013b). It is therefore especially suitable to serve as a case to be studied in this context. By acquiring a deeper understanding of how triggering events affected their business, both from an internal and external view, the result will build on current research on how a business model can be affected within the newspaper industry.

1.5 Key concepts

Finally, the reader shall be introduced to the authors’ perception of the key concepts that are related to the research questions of this study. These are as follows:

Business model As the term business model plays a major role in the thesis, the term has to be defined. In the following chapter (see chapter 2.1), the difficulties of this definitions are presented. Based on this discussion, the authors decide to follow the understanding of Amit and Zott (2011), because they summarize the core elements that all business model definitions address, in one or another way: (a) a value proposition, (b) a revenue model, and (c) a value network.

Evolution of business modelThe thesis focusses on the evolution of the business model from HD. In order to do so, it must be defined what “business model evolution” means. As discussed in chapter 2.2, business models are not only static descriptions of the way a company does its business but can rather be perceived as a flexible and dynamic description of the business. The value proposition, revenue model, or value network (Amit & Zott, 2011) can change over time, such as a new value proposition can be added, if the consumer behavior changed and demands it. We argue that a business model evolves when a business model change takes place. The adapted definition of business model change is as follows: According to Demil & Lecocq (2010), it is a “substantial change in the structure of its costs and/or revenues from using a new kind of resource, developing a new source of revenues, reengineering an organizational process, externalizing a value chain activity - whether triggers deliberately or environmentally”.

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2. The theoretical frame of reference

The following chapter shall introduce, present, and discuss theoretical tools and theories that will be used for the analysis of this case study, following later on.

2.1 Business models

Since the mid 1990’s, the term business model has gotten increased scholarly attention (Amit & Zott, 2011; Casadesus-Masanell & Ricard, 2009; Osterwalder & Pigneur, 2010; Hedman & Kalling, 2003). However, the term can be used in different ways depending on the context, author and focus of the respective study (Amit & Zott, 2011).

Johnson et al. (2003) explain that the constituent parts of a business model, which together create and deliver value, are as follows: the customer value proposition (CVP), the profit formula, the key resources and finally key processes. Similar in content are the categories presented in the RCOV-framework by Demil and Lecocq (2010), even if they are slightly different named. Their description of a business model is “the logic of the firm, the way it operates and how it creates value for its stakeholders” and the business model framework consists of three main components: Resources and Competences (RC), Organization (O) (internal, external, volume, structure of costs) and Value proposition (V) (volume, structure of revenues). Most of the generic business model frameworks as the both presented above address the same core issues: value proposition, revenue model, value network (Amit & Zott, 2011).

Besides different components of business models, there are also different levels of how to understand the function of a business model. As the research of Morris (2005) has revealed, there are three different levels a business model definition can refer to: The economic, the operational and the strategic level. The economic level is the most basic one as it is concerned with the profit generation of a company; other scholars might call it revenue model (Linder & Cantrell, 2000). Business models in the operational level are capturing the processes and infrastructure that a company needs to successfully create value. It basically represents the architecture of a company (Morris, 2005). Finally, business models that belong to the strategic level describe “the overall direction in the firm’s market positioning, interactions across organizational boundaries, and growth opportunities” (Morris, 2005, p. 272).

E-business models

„Business models are perhaps the most discussed and least understood aspect of the web” according to Rappa (2005) and have caused many scholars to research within this field. Having in mind that the thesis focuses on the newspaper industry in context with technological developments, e-business models shall find some attention.

Even though many newspaper companies have protected and maintained their core business, most of them have adapted in some or another way to e-business – from distributing their news online on a news site to launching e-commerce platforms (PriceWaterhouseCoopers,

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2009, p. 4). Either of those ways shows that the newspaper industry has increasingly to deal with e-business models.

The famous business model canvas from Osterwalder was originally a result from research on e-business models, firstly presented in his work “An e-Business Model Ontology for Modeling e-Business” together with Y. Pigneur. Their presentation of an e-business model ontology shall describe the “logic of a business system for creating value in the Internet era” (Osterwalder & Pigneur, 2002). The final framework is composed of four main components, namely product innovation, infrastructure management, customer relationship and financial aspects (Osterwalder & Pigneur, 2002). The second category is especially important for e-business models, as the web has challenged the traditional customer relationship enormously (Osterwalder & Pigneur, 2002).

According to Mahadevan (2000), an e-business model with special orientation to e-commerce consists of the value stream (identifying the value proposition for customers and key partners), the revenue stream (assuring that the business creates revenues) and the logistic stream (dealing with several different logistic solutions). Timmers (1999) explains the business model in e-business context as (1) an architecture for product, service and information streams, (2) description of the involved actors and their respective roles, (3) description of potential value for involved actors, and (4) description of the revenue sources. Both, Mahadevan’s and Timmer’s suggestions have drawbacks: while Timmers does not systematically classifies revenue models, Mahadevan does not address the role of customer relationship enough.

Amit and Zott (2011) explain that the very basic construction of a business should be explained and captured when defining it. They elaborate that most explanations of a business model that are available today consist of a firm’s value proposition, revenue model and its value network.

However, the foregoing presented literature only classifies the components of e-business models, their description and definition and therefore do not substantially differ from the generic, not e-business but business related frameworks, we have discussed in the beginning of this chapter. Hedman and Kalling (2003) have mentioned that the e-business model literature is divided into two segments: the first group is the above presented, only focusing on components and frameworks, while the other group actually deals with the e-business models in practice by describing specific e-business model explaining how companies use the internet for value creation, examples are content provider, e-commerce, e-auction, online-portals, etc. (Hedman & Kalling, 2003). As newspaper are primary focusing on maintaining their core businesses, many start developing e-business models aside in order to use the available opportunities of the internet and to “speed up their capability to react to and anticipate changes” (dal Zotto, C., & Picard. 2006, p. 4).

Free newspaper business models

Besides e-business models of different kinds the free newspaper business model shall be introduced. According to Bakker (2002), who has done a study on the business models of free

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daily newspapers, there are five different models for free newspapers:

(1) Invasion model

Newspapers with this model have the main aim to create revenues. It is used by foreign companies entering a new market – special focus is set on low production costs.

(2) Defense model

The defense model has short-term focus and is mainly applied by newspaper companies that also publish traditional papers. It arises as a reaction on the launch of another free paper.

(3) Prevention model

Also a short-term focus has the prevention model, as newspapers with this model are published to prevent other free papers to enter the market. Both, the defense and the prevention model have to be reconsidered when they have been successful: “Either stop publication or move to a different stage” (Bakker, 2002).

(4) Promotion model

Free newspapers with promotional intent are most often published by regular papers that use the free editions as a marketing tool.

(5) Expansion model

The expansion model is applied if a newspaper company publishes a free newspaper in order to generate profit for themselves.

2.2 Business Model Evolution/Change

In the foregoing chapter we have presented that the business model concept as such is often used to depict and explain the way a company is doing business (Casadesus-Masanell & Ricard, 2009; Osterwalder & Pigneur, 2010; Hedman & Kalling, 2003). Even if the presented frameworks capture a certain point in time, most scholars agree that business models are not of static nature but rather are flexible and can evolve over time (Morris, 2005; Linder & Cantrell, 2000; Sosna et al., 2010).

General BM evolution

The evolution of a company’s business model is a key factor to success (Sosna et al. 2010; Griener 1972). Griener (1972) elaborates on the life cycle of a company: the company grows

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until it reaches a certain point where the business model has to change: either the company adapts their way of doing business or – if that is not successful – the revenue falls in decline and the company finally become either purchased by competitors or faces closing. The model presented by Linder and Cantrell (2000) captures the business model from the evolution perspective: The business model – in this case called “change model” – is describing the way how companies adapt to their changing environments, as they should always tweak their business models in order to improve current business and discover ways to face the challenges from the changing environment.

Ireland and Webb (2006) explained in their article “Exploration and Exploitation” that companies can find competitive advantages through innovation, while they elaborate on the need to explore new opportunities in order to gain ground in the future. But more important is that they also stress the need to exploit the company’s current business model, adapting or extending it in order to fully use the available potential.

The above mentioned authors all draw the same conclusion: it is important to be aware of the need to change, adapt, or evolve the business model (Ireland & Webb, 2006; Linder & Cantrell, 2000; Sosna et al. 2010; Griener 1972).

Dal Zotto and Picard (2006) discuss different business models for newspapers and their evolution. They conclude that it is most relevant for the development of any business model, in which environment it operates; shortly said the context is important. This is in line with what other scholars say: the traditional newspaper model is in need for change as the environment it operates in changes drastically (Swatman et al., 2006; Dal Zotto & Picard, 2006). As presented in the foregoing chapter, newspaper companies often broaden their operating area by entering new markets or adding new units with separate business models (like e-commerce). By doing so, the business model of the company is affected and finds itself in evolution. Dal Zotto and Picard (2006) conclude, that the “most competitive newspapers will probably be those that can successfully identify a business model to manage the genre repertoire of interdependent digital genres emerging with changes in technology and the audience’s everyday life”.

Change classification

In order to label the different events that a company faces during its life cycle, Cavalcante presents a categorization for four different kinds of changes. However, it is stressed that there is no perfect line that separates these four different groups and might not always perfectly fit the future. The change categories, presented below, serve as a classification for the analysis of the events detected at HD.

(1) Business model creation

A business model creation is the process which transforms a business idea into a new venture. In such case, the business model is not build on prior working practices or processes, thus the new business model is set up and implemented for the first time. Cavalcante et al. (2011) stress the several challenges a business model might be facing during this initial stage. It might become necessary to adjust the business model

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several times, in order to make it “fit the new venture into its relevant business environment”.

(2) Business model extension

This category refers to the extension of an existing business model in terms of adding activities and/or expanding existing core processes, e.g. enlarging the operating area of a company or adding new and/or better products. This change is most often driven by the wish to explore growth opportunities for the company and as a consequence exploit the subsequent commercial opportunities.

(3) Business model revision

The third type of change - the business model revision – describes changes that actually affect the former business model of a company not in terms of “adding something” but “replacing something”. Processes that have been part of the business model are replaced by new processes, leading to more substantial changes than the foregoing change types. This eventually leads to alternative ways of doing business. Motivational drivers for business model revisions are numerous; Cavalcante mentions (1) the need to adapt the way of doing business in order to fully use the commercial potential of a company, (2) the discrepancy between the customer needs and the company’s products/services, (3) power gaining competitors, and (4) the threat of new entrants launching substitutes.

(4) Business model termination

As the expression termination already suggests, this category describes changes in terms of terminating existing processes, which leads to either closing down a business unit with its own business model or closing down the entire company. The major challenge of this category is a possible resistance from the company’s owners.

Other theoretical concepts playing an important role in business model evolution

Finally, some factors shall be discussed that can be of importance during the evolution of a business model.

Several scholars agree that the management of a company, who takes the strategic decision, has a major influence on business model evolution (Magretta, 2002; Linder & Cantrell, 2000; Casadesus-Masanell & Ricard, 2010). In particular, these strategic decisions can be of two different kinds: either they are reacting on a trigger (see discussion in chapter 2.3) or the decision is made voluntarily without the need to react on any event/changing circumstance – meaning the change would be more of a proactive nature (Demil & Lecocq, 2010).

In line with the proactive approach to business model change, McGrath (2010) suggests that a company should make use of a strategy that puts emphasis on discovering and exploiting

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opportunities. She recommends that business models shall never cease to be developed further and shall evolve by experimenting. Experimenting is also what Sosna et al. (2010) recommend in their article about “business model innovation through trial-and-error learning”. Sosna et al. (2010) elaborate on how companies can change their business model even though there is a certainty that the value of the current structure will become less valuable in the future. The authors explain that a company needs to try and fail in order to gain new knowledge; hence through trial and error a company’s can innovate and change their current business model. They elaborate that just like most start-ups, a company most certainly needs to rearrange their business model several times and make decisions that will change how the company will address and promote change and new learning. Further on, they elaborate on how a company will at first form or structure a business model that will suit a current situation on a market for example. At a later stage this company will respond to how the market changes by testing different ways of how they do business and finally find a business model that suits their needs most efficiently.

Closely related to this is the concept of the dominant logic (Prahalad & Bettis, 1986). To explain this in an easy manner, they developed a theory around management of a company creating a sort of general logic towards prioritizing resource allocation, choosing and hiring staff, career management and even the overall structure of the company. Prahalad and Bettis further debated that this kind of dominant logic became some sort of organizational knowledge that would pass on as long as the company would continue their business. In the newspaper industry, the dominant logic for over 150 years was concentrated on the goal to distribute news with a certain quality. Extending or changing business models can also affect the dominant logic of a company. Suggestions towards dealing with the current dominant logic are that the organization has to focus on developing additional dominant logics In order to diversify the company, for example with separate organizations for every product they are offering. Another suggestion made by the authors is to unlearn the current dominant logic by eliminating any old ways of doing business in order to make room for the new mindset. The difficulty of using this kind of method is according to the authors that the more successful the company is, the harder the unlearning process will be.

2.3 Causes for change

After having presented the different perceptions on business model change in scholarly literature, it is important to look at the factors behind those changes. Therefore this chapter contains a presentation and discussion of literature related to drivers and triggers to business model change. To serve the aim of this study, special focus is set on technological developments as a cause for business model change.

Technological development has been discussed by several scholars with respect to its function as a trigger to business model change (Bower & Christensen, 1995; Wu & Hisa, 2008; Wirtz et al., 2010). Besides the fact that technological developments force companies in all different kinds of industries to change their business models, the newspaper industry is highly affected in particular (Franklin, 2010; PriceWaterhouseCoopers, 2009; Gentzkow, 2006).

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Newspaper companies need to be aware of the changing conditions and new opportunities for news production resulting from new information technologies (dal Zotto & Picard, 2006). The innovation of the internet has initially caused the newspaper industry to rethink their way of doing business (Meyer, 2004; PriceWaterhouseCoopers 2009, p. 5). As a result, many newspapers have extended their business model with offering their news online as a complement to the physical paper (Franklin, 2010).

However, the internet was only the starting point and gave rise to other technological developments: Especially through the invention of the web 2.0, many traditional businesses were facing the challenge to remain competitive and therefore adapted to the web 2.0 changes by also adapting their business model (Wirtz et al., 2010, p. 274). Another sign of technology triggering business model changes is the existence of the e-commerce business model, showing that the technological developments directly influence traditional business models and force the businesses to reconstruct their business models by entering the online market (Wu & Hisa 2008). This relates strongly to the purpose of this study, as HD has also entered the e-commerce business.

Related to the technological developments, the technological life cycle, respectively the s-curve concept shall be mentioned. The S summarizes four major stages of any technology: (1) emergence (the technology is not yet used to its full potential), (2) rapid improvement (phase of rapid and sustained growth), (3) declining improvement and (4) maturity (technology reaches its natural limits) (Narayanan, 2001). Seeing this in context with the discussion about technology as a trigger to business model change, the life cycle shall make clear that every technology has at a certain point reached maturity, which will give rise to new technologies. And each time, a technology has matured and given rise to a new one, it constitutes a possible trigger for the company to change the business model in order to keep up with the technological developments.

When presenting classifications for the different triggers, several scholars have classified technology related drivers as an independent category (Osterwalder & Pigneur, 2010; Sosna et al., 2010; de Reuver, 2009; Johnson et al., 2008). But many of them have also identified other triggers for business model change. Even if they build slightly different categories of triggers, the authors point out – without exception – that market related drivers are of high importance (Linder & Cantrell, 2000; Osterwalder & Pigneur, 2010; Sosna et al., 2010; de Reuver, 2009; Johnson et al., 2008). Even though the definition and delimitation of market related drivers can slightly differ among the suggested classifications, they all include the need to react on the threat of competition and changing consumer behavior (Osterwalder & Pigneur, 2010; Johnson et al. 2008; de Reuver, 2009). De Reuver (2009) and Sosna et al. (2010) also mention legal regulations and restrictions as a separate category. However, as the empirical data has not exposed any regulations that have had an impact on the detected changes, this category will not be relevant for the aim of this paper.

Osterwalder & Pigneur (2010) mention - besides the external triggers of market related drivers (market demand, trends, and industry) - also four internal epicenters for change. According to him, business model innovation can either be (a) resource-driven, (b) offer-driven, (c) customer-driven, or (d) finance-driven. While (b) offer-driven and (c) customer-

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driven can already be perceived captured by the above mentioned market-related driver category, (a) resource-driven and (d) finance-driven business model change has not been mentioned by the other authors. Resource-driven refers to changes that result from a company’s existing infrastructure to expand or transform the business model by exploiting existing resources, whereas Finance-driven captures changes triggered by new revenue streams, pricing mechanisms or reduced cost structures.

In view of this background, to capture all possible related driving forces relevant for the newspaper industry, the following categorization of drivers has been found to be adequate:

1. Technology-related drivers as suggested by de Reuver, 2009; Sosna et al. 2010, Johnson et al., 2008

2. Market-related drivers as suggested by Sosna et al. 2010; Linder & Cantrell, 2000; de Reuver, 2009

3. Resource-related driversas suggested by Osterwalder & Pigneur, 2010

4. Finance-related drivers as suggested by Osterwalder & Pigneur, 2010

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3. Method

After having introduced the topic and presented the theoretical framework, the method of research will be explained. This chapter provides a detailed description of the chosen methodology considered most suitable to reach the answers to the presented research questions.

3.1 Overall research design and process

Fig. 1: Illustration of way of proceeding with the case study

As the research focus presented in chapter 1.3 indicates, the thesis aims not simply to describe the evolution of a business model, as it is common understanding that the traditional business model of the newspaper industry which has been successful for over 150 years has been in the need to develop and adapt to environmental changes (PriceWaterhouseCoopers, 2009, p. 3). This study rather aims to contribute by identifying and analyzing the actual changes having taken place and the reasoning behind those. However, those findings will not be analyzed in order to prove assumptions and theoretical models or test hypotheses – that would be done if deductive approach would we used (Bryman & Bell, 2007, p. 64). The thesis follows the inductive approach, seeking to generate theory from findings in the empirical data (Bryman & Bell, 2007, p. 64).

As the thesis is embedded as part of an internship undertaken at HD during December 2012 and April 2013, the authors had the opportunity to get in-depth insights in a company that has been actively approaching the challenges within the newspaper industry and was constantly aiming to adapt to the changing environment. This opportunity was the decisive factor for

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determining the character of the overall research: The approach of this research shall be a case study of HD.

Case study research is a qualitative method that examines phenomena in their every-day context (Yin, 2003, p. 1). In most cases, objects of research are situations of practical decision making and their consequences (Gassmann, 1999, p. 11). The subjects themselves can be of different nature: A single location, a person, a single event or – as it applies in this case – a single organization (Bryman & Bell, 2007, p. 62). As the term business model evolution in the research question already indicates, this research examines a process that has been going on over a certain period of time. According to Yin (2003), three different types of case studies can be distinguished: the exploratory, the explanatory and the descriptive case study. As the thesis at hand seeks to investigate causality – focusing on the questions “how” and “why” the business model has changed – it can be classified as an explanatory case study design (Yin, 2003).

Having presented the overall research approach of the thesis, the way of proceeding with the case study shall be explained.

To begin with, annual reports of HD and secondary literature related to business model evolution within the newspaper industry in general allowed an initial information collection, by which the authors had the possibility to get familiar with changes taken place in the entire industry and at HD in particular. This is referred to as collection of information in the illustration (see figure 1). Based on this data, interviews with employees of HD were conducted to further collect specific information about the actual events and developments within the company. Parallel to this, academic literature has been consulted in order to find relevant theoretical models, aiming to facilitate the understanding and later the analysis of the subject of investigation: the business model of HD. This literature search resulted in the theoretical framework presented in chapter 2 of the thesis.

As the table in figure 1 depicts, the process of creating the theoretical framework, planning and conducting interviews and analyzing the resultant collected data with the presented theory, has been of iterative nature, in order to finally allow reaching conclusions to the presented research questions.

3.2 Data collection

On the basis of the initial collection of information two sets of interviews were undertaken: the first set was based on a narrative approach, aiming to create a descriptive picture about how and why the company has developed and changed, adapted or extended its business model. The second set was semi-structured and based on an interview guide, in order to follow-up on the first set, gathering more detailed information about the most important changes. Both interview sets shall be presented here.

First set of interviews

The concept of narrative interviewing has its roots in social research: It is mainly used when the biography of the interviewee is the subject of the research focus (Wengraf, 2001). Due to

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the longitudinal character of this research project – which is basically the “biography” of the company HD – the narrative interview approach was suitable to be applied. By starting the interview with a single initial question with a particular focus, the interviewee is encouraged to start telling his story. In the specific case of this research, the particular focus was set on the evolution of the company. Even though, this research has clearly set its focus on the business model evolution, the term “business model” was not used on the initial interview question. This was a conscious decision, as the term itself can easily cause confusion due to various and often subjective perceptions (Linder & Cantrell, 2000, p. 2). After explaining the research purpose of the thesis, the interviewee was asked to answer the following question:

“How has HD become the company that it is today? How and why has the company developed and changed, adapted or extended their way of doing business?”

To ease the narration, we suggested the interviewees also to visualize their perceptions in form of drawing a time line respectively sketching a process plan. A listing if the most important events was developed in advance based on annual reports and other company information (see appendix 1). However, this list was only serving as a safeguard in case the interviewee would miss out on major events, which did not occur.

As the first interview round was initiated in order to generate a descriptive and preferably complete picture of events related to HD’s business model, three interviewees were chosen with different backgrounds. They shall be presented here.

1. Eskil Jönsson

Eskil Jönsson, human resources manager at HD, has been working for the company for over 25 years. He became editor in chief in 2001 and was therefore always involved and engaged in any structural change. Due to his long time of employment, his membership at the management board, and his experience, he could provide useful information about the beginnings of the radical changes in the industry.

2. Tina Nybom

Tina Nybom is the business development manager at HD and is assigned responsible person for innovation within the company. She is currently working with new product developments with the management. She has participated in many changes of the company in the more recent time period.

3. Pontus Bodelsson

Pontus Bodelsson, CEO of HD, joined the company in 2011. Interviewing him shall lead to useful insights in the current strategy of the company and the struggle of balancing the traditional way of doing business with the new challenges HD is facing.

Second set of interviews

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In order to gather more detailed information about the important changes that have been pinpointed during the foregoing interviews, two semi-structured interviews were conducted.

Semi-structured interviews are characterized by a set of predetermined questions, while the interview itself can be flexible in its procedure (Bryman & Bell, 2007, 474-475). Due to the fact that events within a longer time period were center of attention, no employee was able to provide the knowledge to cover all of the events. Therefore, two employees were chosen whose combined knowledge would be sufficient to answer all questions; both had also been interviewed in the first round. Tina Nybom was mainly asked about events happened during the last five years, whereas Eskil Jönssons answers should elaborate more detailed about the time before that. For each of the identified changes, a the same set of questions was prepared t guide through the interview and to assure that all aspects relevant for the analysis are covered (for interview guide: see appendix 2).

All interviews were carried out face-to-face, had a duration of 1,5 to 2 hours and were audio-recorded.

3.3 Method for data analysis

After having collected qualitative data, the material needed to become coherent to allow analyzing. In order to do so, the interviews have been transcribed and coded. In this case, coding the available interview data means that the inner structure of the single interviews is broken up and the data is comprehensively arranged with regard to content (Meuser & Nagel, 1997, p. 466). This - combined with the information from annual results, internal company information, and secondary literature - resulted in a chronologically structured description of the events and changes having taken place at HD, constituting chapter 4 of the thesis.

Generally speaking, there are two strategies for the analysis of qualitative data, analytical induction and grounded theory (Bryman & Bell, 2007, p. 582). In the particular case of the thesis, the analysis seeks to develop theory out of the data while at the same time this process is iterative, going back and forward between data collection and analysis and theoretical framework (Bryman & Bell, 2007, p. 585). Therefore the approach can be classified as grounded theory.

In order to make clear choices what events we have considered as a business model change, the definition of Demil & Lecoqc (2010) is utilized, which states that a business model change is a “substantial change in the structure of its costs and/or revenues from using a new kind of resource, developing a new source of revenues, reengineering an organizational process, externalizing a value chain activity - whether triggers deliberately or environmentally”. For the sake of consistency, in the thesis virtually only substantial changes of the business model shall be focus of attention. Substantial in this case is defined by the authors as adding or taking away a business unit with its own functioning business model.

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Fig. 2: Depiction of the author’s understanding of business models in two levels

As figure 2 shows, the authors understand the business model in practice in the following way: the company HD has a business model which we call the company’s “overall BM”. As soon as the company has more than one core business, it also has more than one “sub-BM”. To give an example: the e-commerce platform “Shoppia” has its own business model – it is an “independent” business unit of HD, with a defined value proposition, an own revenue model and a value network (Amit & Zott, 2011) and therefore constitutes an independent business model – in this case “sub-BM”. The creation and participation in an innovation project (referring to Mindpark) on the other hand is not considered to be a business model change, as it neither has its own business model (the value creation component is missing; Amit & Zott, 2011) nor does it substantially change the structure or cost of HD’s overall business model (Demil & Lecocq, 2010).

Following this demarcation, six events have been identified that caused HD’s business model to change, by either business unit addition or removal. In order to classify those changes, the authors follow the classification introduced by Cavalcante (2011), according to which each change either constitutes a business model creation, revision, extension or termination. In a next step, triggers of each change will be determined and discussed. Finally, the results will be compared and discussed in order to detect patterns that lead to conclusions and hopefully an answer to the research question. (see fig. 3).

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Fig. 3: Depiction of the different steps of the analysis

3.4 Reflections of method choices

One has to bear in mind that any results relying on a single case study are not of general validity. The single case study – compared with a multiple case study – has the drawback of not being able to compare the results to other similar cases. Therefore the results from a single case study have to be seen in this context and cannot be perceived to be of general validity (Yin, 2008, p. 19; Eisenhardt, 1989, p. 541).

Besides that, the data acquired through interviews cannot be considered to be without bias. In particular the first set of interviews was conducted without a clear guideline but had a narrative character. The same accounts for the semi-structured interviews of the second round: Those interview methods leave the interviewee the freedom to stress what they found subjectively important, which does not necessarily mirror the actual significance of the particular event (Bryman & Bell, 2007, p. 507).

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4. Presentation of findings

The following chapter presents the findings made by the information collection through interviews, company information and secondary data. First, a short introduction of the company is given. In the second part, the development of HD over time is presented in a descriptive way. Focus is laid on the major events that have affected the company’s way of doing business, but also minor events might be mentioned, if necessary for a clear understanding of HD’s evolution.

4.1 Introduction of the company Helsingborgs Dagblad

HD is a regional newspaper company, located – as the name tells - in Helsingborg in Northwestern Scania. Today the company is Sweden’s fifth largest morning paper (HD, 2013a).

The company has slightly less than 300 employees and is family owned in equal shares by the Ander family and the Sommelius family. The annual turnover in 2012 was 720,7 mio. SEK. With its traditional three editions (HD, Nordvästra Skåne Tidningar (NST) and Landskrona Posten (LP)) the company reaches 169.000 inhabitants of the area Northwestern Scania with an average circulation of 72.600 in the year 2012 (TNS Sifo, 2012).

4.2 The development of Helsingborgs Dagblad

The beginning of HD

HD was founded in 1867. In general, individuals became more educated which increased reading and writing skills among the population of Sweden. A demand for a way to contribute to public discussion became an important topic, especially concerning the need to express political viewpoint on political ideas such as liberalism, conservatism and socialism. Thanks to the invention of the rotating printing press, the opportunity to print became more effortless in terms of speed and cost. The initial purpose that lied behind the foundation of HD was to fill a gap between local stores in Helsingborg and potential customers. HD’s streams of revenues came at first from selling advertisement (Jönsson, 2013a). Later on HD added the possibility to subscribe to the newspaper, the potential of this model was to gain cash flow for the company in advance:

“(…) the newspaper is a fantastic idea that worked for almost 150 years: you get people to pay in advance. One year often (…) We don’t know what we are going to give them because we don’t know what’s happening three month later. But the only thing they know when they pay is that they are going to get a lot of pages in paper in your mailbox (…).” (Jönsson, 2013a)

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The introduction of new media channels

www.hd.se

Attention to offer the readers an alternative to the traditional newspaper did not arise until 1995. The energy company Öresundskraft had acquired the possibility to access the internet which at that time was considered very early. Öresundskraft saw the potential to make use of this new technology and came with the suggestion to collaborate with HD (Jönsson, 2013a)

“There were some enthusiasts in the city of Helsingborg and on the company (…) Öresundskraft. They had discovered that there was something called “internet” out there. They built some connection to the net and wanted us to join, because they needed content (…). And we had the content and could quite easily get it out on the internet” (Jönsson, 2013a)

HD became the first newspaper in Sweden to publish all their text content on the internet with their launch in May 1995. (Jönsson, 2013a) The first edition of the website provided content that was almost identical to the traditional newspaper, but only text was included, no advertisement was considered yet. (Nybom, 2013a)

By getting access to the internet, HD could benefit from several perks with the new technology. The reporters who were employed by HD could now update themselves and conduct research from their home, when not being able to be at the office. The reporters could also get instant feedback on the material they uploaded on the internet, which resulted in improved quality in regards to the written content. Content could be delivered immediately to the readers; this was especially useful with news that would only be relevant for a specific timeframe such as accidents. (Jönsson, 2013a) The interaction with customers increased, readers could now comment directly to HD. Companies were later on offered the possibility to produce their own advertisements which HD would upload on their website, some of the earliest customers included local funeral businesses. (Jönsson, 2013b)

Radio Stella

While HD began venturing on to new grounds in terms of communication channels, it did not only include the collaboration with Öresundskraft and the creation of a pioneer news site. HD also invested in a local radio station called “Radio Stella”, which they owned to 50%. One can claim that the early 90’s was a new beginning for HD in terms of not only being considered as a traditional newspaper.

The merging of HD and NST

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The early 2000s was a critical period for HD and its existence as a stand-alone newspaper. Due to the rise of larger media houses such as Bonnier, Schibsted and Stampen who all owned and controlled significant companies that produced and published news, literature and TV. These media houses were known for acquiring competitors in their respective market and HD was seen as a suitable acquisition. (Jönsson, 2013a) The current CEO at HD, Lars Svensson saw this scenario more as an opportunity than a threat. He could see that a competing newspaper Nordvästra Skånes Tidningar (NST) was also facing the threat to be overtaken by one of the larger media houses, so he decided to confront the two families, of which each owned one of the newspapers. Lars Svensson started to mediate between them and explain that there would be several benefits if the two newspapers merged, rather than letting them confront an inevitable fate. (Jönsson, 2013a)

“HD’s CEO Lars Svensson (…) he had been before CEO in Ängelholm for NST, so he had good contacts with the Ander family in Karlstad, so he took the initiative to get the owners of the two companies together, and explained what would happen if one of them sold their newspaper. (…) already one maybe two years after the merger everybody agreed that this was a good thing to happen. And today I think one of the newspapers would not exist today, if we wouldn’t have had that merger.” (Jönsson, 2013a)

The potential merger would initially make the new company a large enough force that they would be able to act on its own. There would no longer be any local competition because the two newspapers were basically their only competitors; this would also lead to the cease of competition on selling advertisement space. (Jönsson, 2013a) Synergy effects would make the new company more effective and lead to reduced costs because the company could decrease their work force with around 130-140 employees. The two papers did not diversify that much in terms of content before the merger. NST were proud of being able to offer up-to-date news faster than HD, but HD in return offered their readers more in-depth content with richer background stories. HD had in terms of reach a rather small area but with dense population, mainly consisting of the area Helsingborg. NST had a larger reach geographically, distributing to smaller villages rather than the city. NST also suffered because of this high distribution costs and were also only controlling low profitable areas comparing to HD. (Jönsson, 2013a)

The two families who owned NST/LP (Ander family) and HD (Sommelius family) both agreed upon merging the two companies and from then the new company with a 50/50 ownership structure and would become a strong and known brand within the area of Nordvästra Skåne. The new newspaper would consist of three different editions but 80-85% the same content except specific news like local football teams and a specific section for entire Skåne which would have the intention to attract additional advertisers. (Jönsson, 2013a; HD Årsrapport, 2002)The decision to merge the two companies would also comprise of a major reconstruction in terms of relocation of the organization, introduction to new and improved routines and also the birth of a new joint company culture (HD Årsrapport, 2002).

The management of HD was worried that the clash of two different company cultures would create barriers towards becoming one strong and well-functioning organization. Thanks to an enormous contribution from the employees when initiating the first joint activities, CEO Lars

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Svensson believed that this was a positive beginning of a new and improved organization (HD Årsrapport, 2002).

“(…) we put a lot of work in to overcome the cultural differences and spend quite a lot of money as one company … with team buildings, and educations and so on with mixed groups from the two old companies. So that everybody should understand that the two old companies don’t exist anymore. We are now all together in one new company.” (Jönsson, 2013a)

In 2002 HD had according to plan become the dominant actor in terms of delivering news to the inhabitants of Nordvästra Skåne. The management of HD felt that this would be the time to create a service that would let the company keep its existing readers, and also attract new ones. HD made the decision to introduce a loyalty program that one year after its creation would be known has “HD Passet”. The intention of the loyalty program was to show appreciation to readers who had bought an annual subscription without any promotion discounts or similar. HD Passet would offer the members frills in terms of discounts from companies that was residing within the area of HD’s reach. (Nybom, 2013a)

Fig. 4: Circulation development of HD during 1970 until 2026 (Source: HD)

Potential threats on the market

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In general, the newspaper industry was not looking bright. A negative trend with decrease in circulation in terms of subscription was still on going and potential threats were becoming more visible (see fig. 4) (HD Årsrapport, 2002).

The year 2006 was characterized by the introduction of new and faster competition which has led to decision-making that could be seen as unconventional in a market that has been used to a tradition of slow development. (HD Årsrapport, 2006) Two of the major media houses Schibstedt and Bonnier entered the same market as HD, but due to the merger of HD and NST and good cooperation regarding sales of advertisement with the remaining newspapers based in Scania, HD was able to show an increase in revenues. (HD Årsrapport, 2006) Internet could also be seen as a growing trend with a national growth of over 50% during 2006. (HD Årsrapport, 2006)

Investing in Blocket.se

In 2006 HD acquired a stake in a local company called Blocket. The initial idea behind Blocket was that it would act as a meeting or marketplace between consumers in the regional area of Skåne. (Blocket.se, 2013) The founders of Blocket were in need of financial capital in order to pursue their goal with this project. The founders approached the current CEO of HD, Lars Svensson in hope to attract HD as future investor. Eventually HD bought a share in Blocket.

“We had plans (…) to develop blocket and to find ways to integrate it with the newspaper and so on (…) But in the back mirror it was only an investment – a very good investment.” (Jönsson, 2013b)

HD also saw the investment as a potential learning effect on how to create further revenues with smaller advertisements. In the past HD had made substantial revenues from small advertisements but were constantly in need to lower the prices for companies who wanted to buy these kinds of advertisements. The internet was perhaps the main cause why HD was losing revenues in this area and Blocket was seen as a gateway to offer smaller advertisement to a national market rather than the regional market HD was reaching at that time. (Jönsson, 2013b)

Adapting to market standards

HD was until 2006 a broadsheet format newspaper. The management of HD made the decision to adapt to a more convenient format called “tabloid format”. HD could reduce costs when printing the newspaper. The new format had already been a market standard since 2004 and most advertising agencies has adapted to the tabloid format, for HD this would ease the cooperation between them and the two parties. Another major consequence because of the change was that HD had to reduce their prices for advertisement with about 20% for a full-page. (Nybom, 2013a)

Initiation of new service offerings

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In 2006 HD made the decision to launch a new kind of newspaper, named Xtra. The concept was that the newspaper would always be free for the readers and be financially realized through revenues from advertisement. Xtra was initially also a reaction towards the entrance of a competitor in the form of Kinnevik’s free newspaper Metro (Nybom, 2013b) HD felt that if they did not counter the actions of Bonnier, there would be a possibility that HD would lose potential revenues from advertisers. Xtra was a statement from HD that this was their territory and competition would not be taken lightly.

“Well that’s also a newspaper that is under discussion in-house, if we are making money or not. And that depends on how you count. If you want you can say that we are making small profit and if you want you can say it is just costs – no profit at all. But we think that there is a value because otherwise the big Metro would have been interested in our region.” (Jönsson, 2013a)

Thanks to Xtra, HD had an easier time reaching younger readers and inhabitants in Helsingborg with foreign background. (Jönsson, 2013b) According to a scientific study it was proven that free newspapers like Xtra would increase reading among weaker demographic groups (Nybom, 2013b). In whole, HD was now able to gain a higher reach in terms of readers.

Internally HD created a new organization that would manage Xtra including journalists and a shared pool of administrators and sales force from the core company. (Nybom, 2013b) Consequently HD gained a diversified offering which would attract advertisers who now could advertise in two papers for the cost of one. HD also gained increased internal competence and increased synergy between competence from a new market and from already existing resources. Xtra would in total employ four to five new co-workers. (Nybom, 2013b)

Eventually HD initiated the collaboration with another newspaper based in Scania called Sydsvenskan. The collaboration included sharing resources, renaming Xtra to City; expand to three new areas including Malmö, Landskrona and Kristianstad (Nybom, 2013b).

2007 was according to the CEO of HD a fascinating year because the willingness to cooperate between the newspapers in Scania had increased. The reason was mainly because of new owner structures but also a conscious move to react to the increase in competition in the media industry. (HD Årsrapport, 2007) HD as a newspaper was also gaining a more dominant position in terms of reach because added services such as the website HD.se and the free newspaper Xtra. (HD Årsrapport, 2007)

In 2007, HD offered a new online service which was a PDF based version of the traditional newspaper. HD had used this technique before to archive previous editions of the paper; this made it convenient to initiate the project because they only had to make it accessible to the potential subscribers. (Jönsson, 2013a)

The PDF service made it possible for HD to offer their newspaper to individuals who wanted to read the news in its original format but online. It also met the demand of individuals who were traveling or living abroad and wanted to experience reading the real newspaper. The service reduced costs HD because at times it would be expensive to distribute the newspaper to specific areas that was located far away. The service would also guarantee that the

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newspaper would always be delivered on time; the delivery of the traditional newspaper would at times cause delays and deliver the newspaper to the reader later during the day. (Jönsson, 2013a)

HD makes an internal statement on online news

At the same time, a strong change in their media consumptions behavior was going on: Customers started increasingly to use the internet on a daily basis, while the newspaper consumption experienced a slow but visible decrease (See fig. 5)

Fig. 5: Change of daily media consumption (Source: HD; Nordicom)

Catching this trend, the management of HD made the decision in 2007 to separate HD.se from the core company and make it a separate entity. The new company would be called HD Nya Media.

The management of HD wanted to communicate internally that their presence online should be considered as a future core component. HD wanted the restructuring to lead to more attention from the employees and that more resources would be allocated to HD.se. (Jönsson, 2013a)

“Looking at the back mirror, this was a certain statement from the company: we are going to have the internet site and we are going to spend more resources and money on that. (…) At that point we started to sell ads in a more professional and ambitious way. We sold ads before but I would say that that was a new, more professional start.” (Jönsson, 2013b)

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A challenge that HD tried to resolve with separating its online counter-part from the core business was that there was a copyright agreement between HD, journalists and the photographers. The original agreement was that HD always had to get clearance from the owner of the picture or text before publishing it, the issue lied that the agreement did not include uploading such content online. By creating a new company that only focused on digital content, HD had the possibility to resolve this issue and come to a new agreement with the journalists and photographers that worked at HD.

The start and end of an idea generation venture

In 2007 HD together with NWT and Gote media founded a company called Mindpark that would focus on business development. The purpose was to produce and facilitate ideas for the future of newspaper. The companies would together generate ideas with Mindpark, but launch them separately. (Jönsson, 2013b) The main driving force behind this company was the current head of business development, Joakim Jardenberg. He had previous experience with internet start-ups and was especially known for helping the newspaper Aftonbladet to launch their website. (Jardenberg.se, 2013)

In 2009 HD made the decision to cease their involvement with Mindpark. They did not find the ideas that were generated to have enough potential to be realized. It was believed the creative process that could be found within Mindpark were too far away from the actual core business of HD, which eventually lead to ideas that could not be implemented or used in practice.

Adding additional services for customers

In 2008 HD added weekend subscription of the newspaper, which included a PDF edition of the paper Monday to Thursday, and the physical paper would only be delivered from Friday to Sunday. Initially the thought behind the Weekend edition was that the paper would only be delivered during the weekend, which was at the time a rising demand from existing subscribers. HD had to tweak the offering and include a PDF for the rest of the days because otherwise there was a possibility that advertisers would turn away because of lack of exposure. (Nybom, 2013b)

HD host in 2010 for the first time, what would be an annual event that would support, promote and award local sport teams from the area of Nordvästra Skåne. The main goal of the event was not to become an additional stream of revenues for HD but some financial support came from sponsors and ticket sales. (Jönsson, 2013a; Nybom, 2013a)

HD Passet was introduced 2002 and in 2010 the HD Passet mobile application and a webshop for members of HD Passet was introduced. The intention of HD passet was never to generate any direct revenues but to generate brand loyalty among subscribers. (Nybom, 2013a)

Venturing deeper into the new media landscape

For two consecutive years 2009-2010, HD together with the newspaper Sydsvenskan initiated a project with a consultancy firm called Kairo’s future specialized in helping companies gain a better perspective on their future. (Kairos future, 2013) The project revolved around

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exploring and understanding current and future trends within the newspaper industry. The outcome was two booklets that extensively present and discuss trends that are maturing or are on the rise. (Nu! Och sen?, 2009, 2010)

Trend analysis that for example was made in cooperation with Kairo’s future showed that a preference towards watching moving pictures was increasing among consumers. (Nybom, 2013a) The Swedish commercial TV-channel had also found a way to send local advertisement to specific locations which open a great opportunity for local actors to affordable timeslots to smaller companies. (Jönsson, 2013a)

” (...) they had this local commercial window, instead of just having these big national advertisers that could afford being on tv4, now tv4 could add this small windows for much lower cost, so almost anyone could afford a tv commercial. (...) So we wanted to compete against tv4.” (Nybom, 2013b).

HD made the decision in late 2011 to launch its own TV-channel called 24HD in order to meet this new demand and opportunity to gain a new stream of revenues that was different to their core business. (Nybom, 2013b)

HD had published moving media before. However, HD consulted the NTM mediagroup in Norrköping in order to gain an understanding of what kind of resources in terms of equipment and experienced staff was necessary. (Nybom, 2013b) NTM also helped HD to build their own TV-studio where HD would produce their own content. HD pictured the project to be very expensive, but would in return raise the quality that HD could offer in terms of moving media, news and images. Just as HD’s free newspaper, 24HD would only be financed through revenues from advertisement, where the perk for the advertising company would be valuable content; both broadcasted on TV and be available on their website HD.se. (Nybom, 2013b)

HD under new leadership

Lars Svensson, how had been the CEO of HD since 1985 had in 2011 decided to take a step back and retire. He was known to be a modern and brave person who often made unexpected decisions. Even though his leadership was often explained to be based on gut-feeling, he only presented a deficit in the annual report once which was because of an enormous investment in a new printing facility. (Jönsson, 2013a)

The new CEO who would take the place of Lars Svensson was Pontus Bodelsson, who had previous experience from the Swedish National encyclopedia, which similar to HD was seeing a decline in circulation and downfall in revenues. (Bodelsson, 2013) Pontus Bodelsson was known to work with a long-term oriented, strategic approach. (Jönsson, 2013a). This strategic approach should further lead the company to focus even more on the balance between maintaining the old business and exploring new opportunities of the internet, as HD’s advertising revenues showed a decline in the physical paper and a move towards the internet. Companies in general were switching from advertising in morning papers to the internet (see fig. 6; IRM-Media, 2012).

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Fig. 6: Advertising investments: % of total purchased media (Source: HD, IRM-Media)

Unconventional ideas become reality

Street

The head of HD’s commercial department, Thorbjörn Falk, started an AFP (Advertising Founded Program) web-TV project in 2012 called Street. The idea of Street was that they would produce advertisement segments for local businesses in Helsingborg, together with a young entrepreneur who would act as a narrator. (Nybom, 2013a) These segments were intended to be placed on HD.se and be streamed by consumers on demand. (Bodelsson, 2013). Street did not use any of HD’s internal resources. Street was shut down later on in 2013 and was seen as a trial-and error experience. (Bodelsson, 2013)

E-commerce

In 2013 HD launched an e-commerce venture that could be seen as very innovative for being from a newspaper. It could be considered as a unique project because in order for it to be realized, it was granted a scholarship from the owners of HD since it would not fit within the annual budget. (Nybom, 2013a)

The main project is an e-commerce platform, called “Shoppia”, launched in May 2013. HD has worked with e-commerce before but not to the same magnitude as this project. (Nybom, 2013b) The concept around Shoppia is that it will act as a meeting place between local businesses from the area of Northwestern Scania and the readers of HD. With Shoppia, HD could provide the readers of HD with an online shopping mall with plenty of local companies offering their services or products. The benefit for the companies who would use the e-commerce platform would be the access of a marketing channel that HD possesses. HD would also provide an easy solution where initial knowledge, distribution, payment solution and overall lower costs because HD has the buying power to bargain for better prices that a smaller business could not. (Nybom, 2013b)

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In order to realize Shoppia, HD invested in the platform externally, and then customizes it according to their needs. (Nybom, 2013b)

Another part of the new project was a tool that will allow HD to gather and store data from individuals that will use their e-commerce platform Shoppia. The data can later on be analyzed to customize their services based on the preferences of their consumers (Nybom, 2013b) The database was linked with the launch of HD-Passet in 2010. (Nybom, 2013a)

The initial idea – besides that trend research had shown that e-commerce has a promising future – was based on the need for a new income source.

“We have a strong brand, but are we going to sell news in the future? Yes we are, because that is our mission, but we have to also find other ways of financing the news. (…) like e-commerce. (…) we have to create a third type of income that is neither from circulation (subscribers) nor from advertisers, but from consumers in some way.” (Bodelsson, 2013)

According to HD, all of their readers are considered potential customers to Shoppia. Revenues will initially come from commission through sales, subscription from advertisers and premium features that will allow companies to buy a higher rank on specific search words. (Nybom, 2013b) The intention is also for Shoppia to become a springboard for future product development. (Nybom, 2013b)

HD launched a redesign of HD.se in the first quarter of 2013, which will improve the site and make it fit better with the added e-commerce. (Nybom, 2013a)

Lastly, HD Passet is planned to receive a facelift and be re-launched in 2014. (Nybom, 2013b)

Struggling times for HD

The continuing trend of decreasing revenues has now been ongoing for over 19 months and HD discharged 19 employees in order to cut costs. 2013 would prove to be a difficult year for HD.

The owners of HD made a decision to cease the broadcasting version of 24HD and City in the second quarter of 2013. (Jönsson, 2013b)

The end for 24HD and City

Because of the decision from the owners 24HD life span was 2 years. (Nybom, 2013b) The decision to shut down 24HD only included the regular broadcast which was offered locally, not the online-TV part (Nybom, 2013b). Drivers behind the cease of HD24 were change in consumer and advertising customer preference for viewing and purchasing content online. Another issue was the technique HD was using to broadcast their content with, also required individuals with digital box to own the most updated version; otherwise it would not be possible to view 24HD’s TV-channel (Nybom, 2013b). All content will still be produced for

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HD.se. The focus of the restructured 24HD would in the future focus more on live content and an overall stronger focus on news. These changes will hopefully lead to a service that will attract more viewers, advertisers and be closer to the core business of HD. (Jönsson, 2013b)

City as a free newspaper was hit hard by a change in consumer behavior. Previously individuals would read the newspaper when commuting, but due to the advancement of mobile technology and applications, consumers could find their dose of daily news through their smartphones. (Jönsson, 2013b; Nybom, 2013b; Nu! Och sen?, 2009, 2010; Intuit, 2010; Trendwatching, 2013)

City tried to react to this change by launching a free mobile application. The effort was too late and the owners decided to shut down City in Helsingborg and Landskrona. (Jönsson, 2013b) As a consequence, HD has to lay off five journalists and decrease their reach in terms of readers with 8%. Another challenge is since City is jointly owned by Sydsvenskan, they have to agree on when to actually cease the printing of City, a preliminary date has been set to the second quarter of 2013 (Jönsson, 2013b).

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5. Analysis and discussion

In chapter 4, the journey of HD has been presented, starting with a brief introduction of the company and ending with the most recent closings of two of their business units. By analyzing the empirical data with the help of Demil and Lecocq’s definition of business model change, six major changes could be detected. In this chapter, these changes shall be presented and classified according to the framework of Cavalcante (2011). Further on, for each of the changes, the triggers shall be identified. With the help of several scholarly works, but mainly based on de Reuver (2009) and Osterwalder and Pigneur (2010) we have created our own labeling for different trigger categories (see chapter 2), to which the identified changes shall be assigned. When having analyzed the different changes separately, a wider discussion will follow, aiming to find patterns and allow the drawing of conclusions.

5.1 Identified business model changes

5.1.1 Extending the business: HD’s multi-channel strategy

For more than 100 years the business model of HD has guaranteed a constant stream of revenues without any substantial change to their core logic of doing business, to deliver news to the inhabitants of Northwestern Scania (Prahalad, Bettis, 1986). How little would HD know in 1995 that the first version of their online news site would be the beginning of a movement towards digitalization? One can say that a new era has risen in the newspaper industry where a company like HD has to find alternative sources of revenue that are not entirely linked to their core business, or even in some cases not related at all (Nybom, 2013a; Bodelsson, 2013). HD has moved from only focusing on delivering news, to establishing several separate ventures which could be similar to conveying a multi-channel strategy (Nybom, 2013b).

Fig. 7: From a newspaper company to a media company: the business model extensions of HD

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Following the authors understanding of business models on two different levels – one overall business model of the entire company, and on the lower level the different business units with their separate sub-business model – the first four identified changes can all be classified as business model extensions: Over time, HD has maintained their core business - never replaced or terminated it (Cavalcante, 2010; see chapter 3, fig. 2). However, on the sub-level, when each venture is seen as a separate entity, it is possible to classify them differently (Cavalcante, 2010). In the following analysis, the business models of the units shall therefore be seen as independent entities and are classified on the sub-level.

Change 1: HD goes online: www.hd.se

Even if the initial intent of launching www.hd.se in 1995 was not more than using an alternative way to display HD’s content (Jönsson, 2013a), this measurement caused in 2007 HD’s business model to change. In this year, HD made the decision to capitalize on uploading advertisement on their website and founded Nya Media AB, which was a separate company responsible for the website. From then on, the website had the focus to generate revenues aside from the physical paper, which – according to Demil and Lecocq (2011) – constitutes a business model change. In order to do so, HD acquired additional resources in the form of physical and intellectual capital (Nybom, 2013b), which also approves that www.hd.se is a change to HD’s business model (Demil & Lecocq, 2011).

Classifying this change as an extension to the overall business model of HD is easy, but identifying if it is a business model creation in itself or a business model extension of the traditional newspaper is more difficult. The foundation of HD.se could be seen as a business model creation due to the fact that venturing on to create a news-oriented web site had never been done before, which also was true for the entire newspaper industry (Jönsson, 2013b). HD.se would eventually adjust at least once, by for example improving the web site with visual content and a more advanced structure than just plain text (Cavalcante, 2011). On the other hand, the website could be a business model extension, because it expanded HD’s existing core process or business which was to deliver news, only this time through the internet (Cavalcante, 2011). The website of HD.se could also be seen as a new or improved product because it could attract readers that did not wish to purchase a subscription of the traditional newspaper. It also contributed to additional revenues from advertisement since it could attract new customers and add an additional source to reach consumers for existing customers. (Cavalcante, 2011)

Change 2: Publishing a free newspaper: City

The addition to HD’s range of products in the form of the free newspaper, City became a substantial change to the company’s cost and revenue structure (Nybom, 2013a; Demil & Lecocq, 2010). City added additional costs in terms of producing the content which lead to hiring additional intellectual capital (Demil & Lecocq, 2010; Nybom, 2013a). Costs would also include the printing of the actual paper and the distribution to the service boxes where readers could pick their daily copy. In terms of revenues, City used an alternative method which was entirely based on income from advertisement (Demil, Lecocq, 2010; Nybom,

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2013a). Also confirming that City was a substantial change was that the structure of HD was extended with additional local bases in Malmö, Landskrona and Kristianstad where each office would work on its respective edition of City (Demil & Lecocq, 2010).

City can be perceived as a business model extension to HD’s core business (Cavalcante, 2010). The area of operating would be the same in terms of geographic location, but also be more specific as City Helsingborg would only be available within center of the city. The process of producing and delivering news would be the same as HD’s traditional newspaper. City would not be an improved product compared to HD but it would be able to reach a different, younger segment (Nybom, 2013b). They were also adding additional resources in terms of intellectual capital in the form of journalists, administrative and sales personnel would be shared within the existing resources. The opportunity was partially taken to exploit the possibility to add an additional product for advertisers to market on, but also as a strategic action in order to push out competition, similar to the definition of a defense model according to Bakker (2002) (Nybom, 2013b).

Change 3: Extending to the television market: 24HD

The establishment of the TV channel 24HD was a big change to the cost structure of HD since it was one of their biggest investments in recent times. The investment included consultation from an external company who had previous experience with building a studio, and acquiring the necessary resources in order to facilitate their own TV-production (Demil, Lecocq, 2010). Resources included acquiring equipment and personnel with previous knowledge on how to produce and broadcast TV. (Nybom, 2013a)

24HD can be seen a Business model creation from two different perspectives. Primarily 24HD is a new venture because it is something entirely new for HD in terms of working practice and process (Cavalcante, 2011). There was no previous experience with this kind of venture before in HD and that is why they outsourced the construction of the studio and using an external consultant to get everything in place (Nybom, 2013a). They also had to acquire knowledge externally in order to produce and broadcast. Even though they would produce news on their newly acquainted TV-channel, most of the production involved personalities with knowledge on specific subjects, rather than individuals with writing skills. 24HD also included a section on their website known as 24HD Play, where readers could stream produced content for the TV-channel on demand. While the online section of 24HD can be seen as a business model creation as well, it could also be considered as a business model extension to their regular broadcast (Cavalcante, 2011). It can be argued that HD extended their operating area in terms of selling advertisement, which now could be an additional offer for companies who would have a demand for it (Cavalcante, 2011).

Change 4: E-commerce: The launch of “Shoppia”

The creation of the e-commerce platform “Shoppia” can be considered as a substantial change in the business model of HD, as it will become a major change in their cost and revenue structure (Demil, Lecocq, 2010). The cost structure will initially change due to the fact that the management of HD had to acquire a major financial grant in order to invest in this project (Bodelsson, 2013a). Secondly the resources that were need in order in terms of acquiring the

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e-commerce platform, and the intellectual capital in order to facilitate and support the platform would lead to additional costs for HD (Nybom, 2013b). In terms of revenues it will be an alternative source for HD that will be affected by other factors than how the core business of HD is performing (Demil, Lecocq, 2013).

HD has stated that they have previous but limited experience with E-commerce. Due to the size in terms of investment both time wise and financially, Shoppia should be seen as a Business model creation for HD (Cavalcante, 2011). The fact that HD also stated that venturing into the market for E-commerce is considered innovative for newspapers (Nybom, 2013b). As stated in the definition of a Business model creation, Shoppia will introduce new working practices because the venture is not related to the core business of HD (Cavalcante, 2011). Shoppia will also introduce new processes in terms of logistics and financial solutions in order for consumers and companies to barter with one another. HD will make use of new processes like commission through sales and premium features in order to extract revenues from Shoppia (Nybom, 2013b). In terms of Business model extension, Shoppia will further add an additional offering for companies that want to further expose their products through another media channel (Cavalcante, 2011).

5.1.2 Reduction of channels: Leaving the multi-channel strategy behind

HD has at this stage ventured with four new projects during a relatively short time span. The management has through a trial-and-error process gained experience on markets they have already worked in before, and entirely new ones (Sosna et al., 2010). The next two identified changes are of different nature, as they do not extend HD’s overall business model but reduce it.

Fig. 8: HD closes down two business units: the free newspaper city and the broadcast version of the 24HD

Change 5: Closing down the free newspaper City

The closure of City should be seen as a substantial change in terms of revenues and cost for HD (Demil & Lecocq, 2010). By shutting down City, not only did the company abandon a

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venture that was in decline, but also lowered their overall cost from producing and printing the newspaper, logistics and administrative resources which were required to keep City running (Jönsson, 2013b). HD lost a competitive advantage in terms of offering an alternative channel for companies to advertise, which also were their only stream of revenue from City The company’s overall reach in terms of readers would also be lowered by a significant amount (8%), mostly because City reached commuters and inhabitants that did not purchase their traditional newspaper (Jönsson, 2013b).

Closing down City Helsingborg and Landskrona can be seen as examples of a Business model termination. The classification of a change as a termination does not only apply if the entire organization of HD ceases to exist (Cavalcante, 2011). A termination can also be at hand if a unit within HD is closed, provided that the venture had its own business model. This precondition in this case is fulfilled, as City can be seen as an entity could in practice become a company on its own.

Change 6: Ceasing the broadcast version of 24HD

Closing down the local broadcast of 24HD was mainly a substantial reduction in costs, at least when comparing to the revenues the TV-channel were generating (Demil, Lecocq, 2010). Management of HD decided to direct all their focus on producing digital content for the online counter-part of 24HD, 24HD Play (Jönsson, 2013b). By further utilizing their existing resources it can be said that HD reengineered one of their existing processes within the organization (Demil, Lecocq, 2010). A change in their current process in terms of production would also as stated lead to more “… stream able video, live content and more focus on news”. (Jönsson, 2013b)

The cease of 24HD should primarily be seen as a Business model termination (Cavalcante, 2011). Similar to City the decision was made ahead of the time scope the venture had initially, but was terminated by the owners of HD (Jönsson, 2013b). However, unlike City, 24HD only stopped their traditional broadcast. Management decided to keep all resources and put focus on their digital section. Additionally HD made a decision to revise their current use of 24HD and made a decision to create additional content for 24HD Play, including more news, live content and stream able videos (Jönsson, 2013b). The decision to keep 24HD Play and make better use of their existing resources can be associated with a Business model revision (Cavalcante, 2011).

5.2 Analysis of triggers to business model changes

After having identified the changes and classified them, the triggers to those changes shall be discussed. Even though, six changes have been identified, the following discussion will only be divided into four parts: the triggers for creating 24HD and closing it down again will be jointly analyzed. The same accounts for establishing and closing down the free newspaper city.

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Website: www.hd.se

Through cooperation with Öresundskraft, HD made a pro-active decision based upon a technological opportunity, to gain access to the internet and launch HD.se (de Reuver, 2009). At that time internet was still in its early stage of development and was not considered to be used by every newspaper (Jönsson, 2013a). Though the launch of their website was considered early and without acquiring any direct financial benefits from it initially, it should not be neglected that it was a new way for HD to reach their readers.

There is some difficulty to match HD.se with only one trigger. The development of technology including the internet has been a foundation towards triggering Market related change in the newspaper industry (Osterwalder & Pigneur, 2010). One of the most visible and trivial trends that is affecting HD is that technology is making it more compelling for consumers to digest their daily dose of news online (Nu! Och sen?, 2009, 2010; Intuit, 2010). As dictated by HD, many of their customers who are purchasing advertisement slots are beginning to prefer the website of HD.se rather than their traditional newspaper (Nybom, 2013b).

It is interesting to see that HD’s initiative to pioneer on digital news and introduce the possibility to advertise online for local companies in Nordvästra Skåne would later become one of their major concerns regarding their traditional newspaper (HD Årsrapport, 2006). This is especially revealing in 2007 when HD made a statement by focusing more financial resources on their website and started to sell advertisement in a more serious manner (Jönsson, 2013b). This can be seen as a reactive decision due to a financial trigger from companies investing more capital in digital advertisement (Osterwalder & Pigneur, 2010). While HD can make use of the positive growth of reading online news and the increase from advertisement revenues which subsequently comes from it, it is also cannibalizing on their core business of selling traditional newspaper (Nybom, 2013b;IRM-Media, 2010).

Fig. 9: Triggering factors to the launch of www.hd.se

Free Newspaper: City

The free newspaper can in several ways be the cause of a Market related driver (de Reuver, 2009). City was partially launched because of competition. The mediahouse Kinnevik launched their free newspaper Metro in Helsingborg, which was concluded by the management of HD to be a reactive and defensive act due to the direct threat to future

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advertisement revenues (Nybom, 2013a; Bakker, 2002). City can be seen as a counter towards the entrance of a competitor and a statement that HD had no intention to decline in reach which can be translated as market share, which they managed to keep for the entire existence of City (Nybom, 2013b).

It was becoming a known fact that weaker socio-economic segments such as youngsters were reading more thanks to the availability of free newspapers (Nybom, 2013b; Nu! Och sen?, 2009, 2010). This was a segment that HD was trying to reach with their traditional newspaper but to no avail, mainly because subscription method of paying for services in advance was not of preference. City would also reach a market related trend that included a segment of readers that commuted often and did not have time to read the news during breakfast (Nybom, 2013b; de Reuver, 2009).

Certain resources that HD already had in possession could have been a resource related driver that contributed to the decision to launch City (Osterwalder & Pigneur, 2010). HD had employees that could produce daily news, a printing facility that could make use of economy of scale through added production and logistics partner to deliver the newspaper (Nybom, 2013a).

City was closed because of change in consumer behavior, or in other words affected by a Market related driver (de Reuver, 2009). The decline of City was in general due to readers moving towards reading news online and through their smart phones (Nu! Och Sen?, 2009, 2010). City was planning to release a version in the form of a smart phone application but never became a reality due to the potential fallacy of not realizing the change in consumer behavior fast enough.

Underlying reasons for the change in consumer behavior also originated from technology constantly becoming less expensive and easier for everyday use (Nybom, 2013b; Nu! Och sen?, 2009, 2010; Intuit, 2010). Several newspapers have also launched smart phone applications where readers can view news for free. These factors have become online media a substitute rather than complementary good for traditional newspaper such as City, and can therefore be seen as a technological trigger affecting the shutdown of City (de Reuver, 2009).

Due to the decline in circulation, City became a costly venture to uphold (Jönsson, 2013b). Compared with other areas of HD, it did not contribute nearly as much in terms of revenues. By shutting down HD, the management effectively created a financial trigger that eased the cost structure of HD, which in the future can be distributed to other areas within the company (Jönsson, 2013b; Osterwalder & Pigneur, 2010).

The decision from the owners of HD to shut down City ahead of schedule can be seen as a pro-active decision before its inevitable fate (Jönsson, 2013b). Why the eventual launch of the City smart-phone application never became a reality could partly been because of a slow reaction to responsible employees of City.

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Fig. 10: Triggering factors to the launch of City and its closing down

TV channel: 24HD

When HD acquired the necessary resources to build and manage their own TV-channel, it can be reviewed as triggered by two driving forces. Employees working for the Swedish TV-channel TV4 had discovered a way for advertisement segments to be broadcasted separately depending on which area they were targeting, for example two different cities could view separate commercials simultaneously (Nybom, 2013a). This can be seen as a technological driver (de Reuver, 2009). The technological opportunity created a big advantage for companies who wanted to offer advertisement time slots for local companies but could not afford the more expensive, regional commercial slots (Nybom, 2013a). HD could see that there was a demand for this in their region and decided that starting a TV-channel would trigger a Market related driver in customer demand (de Reuver, 2009).

Secondly, HD had together with another Scania-based newspaper conveyed research on future trends and discovered that there was a positive trend towards consuming moving content such as watching TV or streaming content online (Nu! Och sen?, 2009, 2010). This trend can be associated with being a Market related driver that also triggered HD to invest in their own TV-channel (de Reuver, 2009). It should also be noted that HD believed that if they did not react to this opportunity, there would be a possibility that competition would instead take advantage of the situation (Nybom, 2013a). This would lead to a negative financial trigger affecting the future revenues of HD and their overall reach in their geographical area (Osterwalder & Pigneur, 2010).

Consumers eventually became more attracted to view content through digital channels, which has subsequently been triggered by technology becoming more comfortable to use and less expensive to purchase (de Reuver, 2009; Nu! Och sen?, 2009, 2010; Intuit, 2010). These factors lead to market related drivers in terms of decline in revenues from continuous advertisers, and a lack of viewers (de Reuver, 2009).

Similar to City, 24HD became financially triggered to shut down the venture in order to free up costs (Osterwalder & Pigneur, 2010). The pro-active decision to shut down 24HD has led to trigger a resource related driver (Ostewalder, 2010). HD has stated that they will make better use of their current studio, equipment and intellectual assets in order to produce higher quality content, but now focusing on their digital channel 24HD Play (Jönsson, 2013b).

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Fig. 11: Triggering factors to the creation (and closure) of the TV channel 24HD and its web-version 24HD play

E-commerce: Shoppia

Recent advancement in technology has made it possible for individual consumers to use their smart-phones as a tool for retrieving information, expressing their opinion online and purchasing goods, which all can be seen as underlying factors why activities online is slowly replacing traditional media and brick-and-mortar stores.(Nu! Och sen?, 2009, 2010; Intuit, 2010; Trendwatching, 2013)

Shoppia can further be seen as being triggered by market related drivers. The readers of HD have found the preference to rather read their daily dose of news through their smart phones, tablets or in the comfort of their home through HD.se (de Reuver, 2009; Nu! Och sen?, 2009, 2010). Substitutes of the traditional newspaper has risen which has directly made a negative impact on HD, which has forced them to look upon alternative ventures such as Shoppia. HD also looked upon acquiring an E-commerce platform since the trend towards shopping online is steadily growing, which they can create synergy effects together with their other project Profibridge (Nybom, 2013b; Nu! Och sen?, 2009, 2010).

Due to consumers adapting to affordable technology and easier to use applications, HD is experiencing decline in terms of circulation and reach of their traditional newspaper. The intention with Shoppia was to find additional streams of revenue that not necessarily required being associated with the core business of HD (Nybom, 2013b; Bodelsson, 2013). A pro-active decision was made by the management of HD can be seen as triggered by a financial driver to gain revenues from alternate sources (Osterwalder & Pigneur, 2011).

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Fig. 12: Triggering factors to the launch of the e-commerce platform shoppia

5.3 Identified patterns

By further discussing the case of how HD’s business model changed, any patterns that can be discovered will be further analyzed. It seems clear that HD’s business model is like many other companies, moving towards becoming more similar to an e-business (Mahadevan, 2000; Wu, Hisa, 2008; Dal Zotto, Picard, 2006). Similar to the theory about S-curves, newspapers are starting to adapt and divert more resources towards ventures that are not in decline (Narayanan, 2001; Wirtz, Schilke, Ullrich, 2010; Meyer, 2004). In HD’s case, it is clear that the traditional newspaper has reached a mature state and is not nearly as lucrative as it was in the past (Nu! Och sen?, 2009, 2010). It can be observed that ventures like online news sites are in rapid development and is slowly taking over the traditional newspaper (Narayanan, 2001; Nu! Och sen?, 2009, 2010). As Dal Zotto and Picard (2006) argue, the most competitive newspapers will try to find a business model that fits the current technological evolution. Through these changes towards digital media, three patterns can be identified while HD is adapting to become the leading media company in Northwestern Scania (HD, 2013b).

Chain of triggers

While using de Reuver (2009) and Osterwalder and Pigneur (2010) to identify what kind of drivers have triggered a change in the business model of HD, it can be observed that drivers can trigger change to HD but also trigger other driving forces to change. By acknowledging that the environment of HD is always in change, it can also be fascinating to further investigate how drivers can be triggered through a chain of reactions (Linder, Cantrell, 2000).

Primarily technological drivers have played an important role for the changes in HD’s business model. HD has moved towards focusing more on e-business and adapting to the web (Wirtz, Schilke, Ullrich, 2010; Meyer, 2004; Wu, Hisa, 2008). This can be seen through the improvement of HD.se, launch of Shoppia and focus on 24HD Play which all are based online. While City for example was initially launched because of a combination of market related and a resource related driver, it was due to technology and eventually a consumer preference towards reading through smart phones which made it shut down (de Reuver, 2009; Osterwalder & Pigneur, 2010).

Just as HD is constantly changing, it should also be observed that the external environment around the company is continuously changing as well (Linder, Cantrell, 2000; Demil, Lecocq, 2010). This is why it is important to highlight the fact that a single driver is rarely the only benefactor to a change. In the case of Shoppia, HD could see a trend that consumers were

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shopping more online (Nu! Och Sen?, 2009, 2010). Together with a great financial desire to find alternate streams of revenues, they decided to engage in e-commerce, which has been made easier due to advancement in technology (Bodelsson, 2013; Nybom, 2013b; de Reuver, 2009).

Proactive and Reactive decision making

As drivers are eventually making such an impact towards companies such as HD and their business model, they eventually have to respond or face consequences that can be critical for the company (Griener, 1972; de Reuver, 2009). As seen in the study, the management of HD has been an important strategic benefactor when it comes to launching or terminating the six observed changes (Magretta, 2002). The decisions have either been based on changes that are of emergent nature where HD has been forced to adapt or of voluntary nature where the management has deliberately made a pro-active decision (Demil, Lecocq, 2010). An example is the reactive decision to launch the newspaper City because of the entrance of the competitor Bonnier (Nybom, 2013a).

Trial and Error

It is interesting to see that the dominant logic of the management of HD has changed during the evolution of their business model (Prahalad, Bettis, 1986). Initially their logic to distribute news kept the business running for 150 years. Later, they ventured on opportunities that would seem promising or that was required in order to maintain their position on the market. Eventually HD realized that two ventures were not benefitting as intended and decided to shut them down (Nybom, 2013b). The result of these changes is that they went from a traditional newspaper to a company with multiple channels to distribute news and gain revenues from. Finally HD concluded from exploring several opportunities that their business model at this moment should focus on their core business but also produce online content (Mcgrath, 1997; Ireland, Webb, 2006; Jönsson, 2013b).

HD has made a journey to find a business model that suits their current needs and environment in order to stay alive and hopefully grow in the future (Sosna et al, 2010). It seems that HD is not afraid to fail when trying on new ventures and is using the thereby gained knowledge to improve their business model (Chesbrough, 2010). Additionally, HD has through experience gained the courage to seize an opportunity to launch an e-commerce platform even without knowing if it will succeed or not. These actions are important because a company like HD has to try out different fields like technology or even areas that are not related to their core activities in order to maintain their business (Christensen, Johnson, Kagermann, 2008). As Morris (2005) states that business models evolve, so has the business model of HD through emergent and voluntary change (Demil, Lecocq, 2010). Change is an important key component to succeeding and it seems that HD is trying to achieve this goal through experience from trying, failing and exploring (Sosna et al, 2010; Ireland, Webb 2006; Mcgrath, 1997).

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6. Conclusions and implications

6.1 Conclusions

In the study we have found six major changes that have affected HD in recent times. We can conclude that there are several kinds of triggers that can drive a business model to change and those different triggers can even influence each other and add up to a “chain of triggers”: to give an example, a technological development like the internet causes a change in the consumption behavior, which itself turns into a market related driver for HD. However, a certain patter could be detected. Technology as a driver plays an important role: In five out of six cases, technology has been Technology has been the fundamental trigger in five out of the six changes we have further investigated, with City being the only change that was not initially triggered by technological development.

Besides that, HD has made several decisions to change, both of reactive and proactive nature. When comparing these decisions to the success of their outcome, the following can be concluded: All proactively taken decisions - like the startup of www.hd.se, the launch of the e-commerce platform and the decision to stream the content from 24HD also on the web - have been successful, while the reactive taken decisions - like starting City and the broadcast version of 24HD - have failed to succeed and needed to be closed down.

A conclusion can be made that the proactive decisions HD has taken in the startup of HD.se, the startup of Shoppia and the decision to focus on 24HD Play has all been successful so far. All reactive decisions that have been made in the form of the startup of City and 24HD have all been considered as failures and have eventually shut down. In addition to that we found a connection between the successful, proactive changes and technology: All proactively decisions are focused towards digital media. It seems that starting ventures which are related to the internet have the biggest potential to succeed and HD should therefore consider investing in future ventures accordingly.

Furthermore, HD has experienced and explored several changes in their business model. HD has through a trial and error approach tried different media channels. HD has explored and embraced new opportunities that are not related to their core business. We can come to the conclusion that HD has adjusted their business model, moving towards a tighter fit, by leaving the multi-channel strategy behind and focusing more on their traditional newspaper and online ventures.

6.2 Implications for research

As the key findings presented in the conclusion showed, this study has led to interesting results. In terms of future research, it can be noted that the findings of this work derive only from this single case study. It would be interesting to see, if a further investigation with other newspaper companies would reveal similar patterns.

Besides that, due to the scope of this study, some interesting research aspects have not been considered. A detailed investigation of the business model evolution in regard to leadership aspects would be interesting, as it might reveal potential different perceptions on change

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between employees and the management of a company. In relation to this, obstacles to changes in the newspaper industry would deserve a thorough investigation – we would expect this to be of special interest, as the traditional nature of the industry (a business with a long, constant history) might enforce potential internal resistance to change.

6.3 Practical implications

The thesis has carved out, that HD’s proactive taken decisions have had a higher probability to be successful. One could therefore suggest to practitioners in the newspaper industry to actively explore business opportunities, preferably in the digital sector. Furthermore, as both eventually ceased units were initially launched as a reaction to competitors’ offers, it could be advisable to be cautious in this regard. As the example of HD24 had shown, competing in a non-core area with competitors who have their core business in that particular area could be a risky undertaking.

However, it must be stated explicitly that those statements above are speculative, as all theoretical conclusions are built on a single case study and therefore not suitable for generalization.

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Appendix

Appendix 1:

List of most important events as inspiration for the first set of interviews (based on annual reports and information from www.hd.se)

1995: hd.se starts with a complete online-offer

2001: Merger of HD and NST

2002: first time launch of one newspaper in three different editions (before it

was three different newspapers)

2006: HD goes tabloid format

2006: HD.se is re-launched

2006: Free newspaper in Helsingborg (Xtra)

2006: Focus on multi-channel publishing

2007: Establishment of innovation project MindPark (sold 2009)

2008: Three editions of City

2008: Establishment of City Skåne

2008 Xtra Helsingborg becomes City Helsingborg, City Landskrona starts.

2009: Cooperation with Sydsvenskan, analysis of business advantage

2010: New CEO

2010: Acquisition of COMRETT (internet services)

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Appendix 2:

Interview guide for the second set of interviews.

Identified changes from the first set of interviews:

Internet website www.hd.se 2006: Free newspaper “Xtra” (re-named to “City” in 2008) 2011: TV-channel 24HD 2013: Shoppia 2013: closing down City 2013: closing down the broadcast version of 24HD

For each of those events, the following set of questions was asked:

How did the change take place? What was actually happening? When did the change take place? Why did this change take place? What caused the change? Who was responsible for the change? Who made the decision to change? Who

implemented it? What was affected by the change? Did you encounter any obstacles, and if so, how did you solve them?

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