However, the paper version has some advantages in terms of content. Customers do most often seek information about places to live, work and vehicles in the paper version. The public also has a greater confidence in paper versions. This could have to do with the fact that it is hard to control web sites. The laws for the paper version and the Internet version are not the same e.g. it is not as clear who is responsible for the content of the web site.
The Internet version generally has a higher content of service than the paper version. Since the Internet is a virtual media the whole offer can be viewed as mostly service, especially since customers are not charged. Examples of services offered besides news are chats, sms-services and online games. In terms of logistics the versions differ greatly. The paper version is either delivered to a retailer or to the home of the customer. The Internet version is delivered to any computer by using an Internet supplier. In terms of individual adaptation of the offer to customers the Internet provides greater possibilities. The product can be made more heterogeneous to fit different customers needs. This development might have a downside to it for society in what is called “information segregation”.
The versions also differ in terms of the customers buying them. Many people do not have access to the Internet, e.g. many pensioners especially those with working class background. The size of this group is decreasing because of demographic changes. The price difference (most Internet versions are free) also affects what customers take part of the content. The versions are used in different situations. The Internet is often visited at work. This has implications for e.g. the advertisers.
Although the Internet and paper version of a newspaper differ in many ways there are as mentioned several similarities between them. These similarities might cause cannibalisation of the paper version. It is therefore important that the Internet version differentiate itself from the paper version.
How is the Paper Version Affected by the Internet Version?
Is the Paper Version Threatened?
If the content of the newspaper is viewed as the most important attribute it is likely that the Internet version of the newspaper will cannibalize on the paper version since the content is basically the same. Surprisingly several surveys have indicated that the threat to the paper version is rather small. One survey asked how many subscribers had considered canceling their subscription. Of the people asked 26% claimed to have considered this but only 15 % of these (that is 3,9% of the whole group) stated that Internet was the reason to cancel the subscription. Another survey that asked not subscribers shows that 75% has not changed their consumption of newspapers, 15% had lowered their consumption and 8% had increased their consumption because of newspapers on the Internet. A third survey done in the USA showed that the subscription of newspapers is not affected by Internet versions of newspapers and the single-copy purchases are positively affected. Some people bought the single-copy after having visited the web site. This third study could be one explanation of the two other surveys. A Swedish example is Aftonbladet who claims that their success as a paper version has a lot to do with the success of the Internet version. Another tendency studied is that people who buy newspapers often are the biggest consumer of Internet versions.
The surveys made indicate that the Internet newspapers cannibalisation on the paper version is at the present situation rather small. There are several explanations for this. One is that different products are discussed. This gives hope that the Internet newspaper can be viewed as a complement rather than a competitor to the paper version. Another explanation is that a large percentage does not have access to the Internet. As more people get access to the Internet the situation might change. The mentality of people regarding newspapers can also change the situation. Although many people have the possibility to read news on the Internet, they have still not gotten used to doing so. There are numerous of services that have become successes but that have had a slow start. The SMS is an example of this.
Other Aspects
Christian Palme believes that the Internet newspapers have forced several newspapers to sharpen their profiles because of the increased competition. Thus the content of the newspaper have improved in style and relevance.
General market trends
Convergence of Markets
Market convergence is the consequence of the integration of services, networks and devices. Companies who have traditionally been separated are now entering each other’s markets. Media-companies with a traditional range of products are investing in infrastructure and communication. Online newspapers don’t only offer news in text but also sound and broadcasts (web TV). Similarly, traditional TV stations offer interactive websites with news in text. This means that the technology also has lead to a convergence of media.
The driving force behind the convergence of markets is the technological development. Online newspapers have erased the border between traditional news coverage and interactive entertainment and services. On the site of Aftonbladet.se you can besides reading the news for example also chat with other people and refill your cellular phone card (Comviq Kontant). Online newspapers therefore do not only compete on the media market but also on other markets. The opportunities of the Internet can because of this market convergence offer online newspapers many ways, beside advertises on the site, to earn money. Online newspapers will probably firm many sorts of strategic alliances with companies outside the media industry for taking advantage of business opportunities.
Technological Development
The rapid development of information and communication technology (ICT) has had great effects on the media market. Newspapers have tried to take advantage of the possibilities that the technology offer in order to make profit and also for not falling behind competitors in this rapid development.
The amount of information that can be transferred between two distant points and the speed with which information is sent has increased and is still increasing. This is among other things due to new technologies for compressing information. At the same time, costs for transferring information and the capacities demanded by the nets are decreasing.
A very big part of the population in developed countries like Sweden has access to computers. Many of these are connected to the Internet through a broadband connection or very fast modems. The usage of the Internet is increasing because more and more people are catching up with the technological changes surrounding them but also because of demographical changes.
We can today because of the existing technology send not only texts but also sound and video clips to each other’s computers or cellular phones. The technological development has caused a convergence of media. Online newspapers offer besides the news in text also other things such as video clips of for example the artist written about in the text and a lot of other services.
WAP-technology and the ongoing development of the 3G-system will allow us to receive live television broadcasts, digital newspapers, etc directly in our cellular phones. There is also a convergence of technologies between different research fields such as Computer Science and Chemistry that in a close future could offer us for instance soft electronic papers which could be updated with new information constantly and stored folded in ones pocket.
The technologies mentioned above are only a few examples of what the rapidly developing technology has to offer us. However, there are very important questions that have to be considered when examining the business opportunities of the technological development. Who will use the technology? For what purposes will it be used? And at what price will they use it?
The opportunities of the Internet in particular could be used as an extremely powerful set of tools for a company but thinking of it or any other part of the developing technology as a “new economy” with new rules could be devastating.…
Internationalisation
Online newspapers are unlike printed newspapers, not restricted by geographical areas. They can have the whole Internet-using world as their customers. However, this great advantage has also got a downside to it. In countries like Sweden where most of the people speak good English although it’s not their native language, domestic newspapers will face an increased competition as well.
The internationalisation process has had the consequence of converging cultures. Although there are differences in cultural interpretation of news between for instance USA and Sweden, these differences have become small enough for a majority of readers not to notice them. This arises the question of how online newspapers should position themselves in order to be protected from this international competition. Naturally, online newspapers especially Morning Newspapers Internet versions who are the leading newspapers in Sweden in covering news from abroad will face a tougher competition from for instance CNN.com who also publish its news on the Internet. Also Business Press Internet versions are likely to face competition from international substitutes since globalisation is an important trend in business.
Swedish online papers of Evening Newspapers might be a little more protected in that sense because it’s focusing more on domestic news and articles about Swedish celebrities. Aftonbladet.se might however face an increased competition from other international sites offering a substitute product in the form of similar amusement (other gossip).
Factors that might partly protect Swedish online newspapers from international competitors could be brand loyalty felt by the readers towards “their newspaper” and perhaps their belief that the news coming from Swedish sources are more truthful.
The Swedish online newspapers can either choose to market them selves toward a restricted segment (Sweden) or to take the international battle and compete globally. This will of course mean that the company also has to choose an appropriate strategy and develop a product suitable for its purpose.
Strategies and Future Scenarios
The future of online newspapers and paper newspapers is uncertain. Nobody knows for sure how the technology and the attitudes of people regarding it will affect the future market. In this part of the paper we will first have a background-discussion about the survival of the Internet newspaper. Dividing the future development in to two distinct paths will follow this discussion.
We believe that Internet newspapers and traditional paper newspapers can develop in 3 directions. One will either eliminate the other from the market or they will coexist. We will in this paper make the assumption that the Internet newspaper will not be eliminated from the market. Based on this assumption we examine two different possible future scenarios.
- The coexisting of Internet papers and paper newspapers
- The elimination of the paper newspaper
The answer to the question posed in the beginning of this paper (how the two newspaper versions can exist without cannibalising each other, is naturally dealt with in the first of these future scenarios). The first scenario also probably describes a closer future, while the second scenario deals with a somewhat longer perspective.
The second scenario will not be as carefully discussed as the first scenario since it does not offer the answer to the main question posed in this paper. This scenario can however give us some insight in how the future of newspaper-industry can look perhaps twenty to thirty years from now. Many of the strategies suggested in the first scenario could also be applicable for the second scenario
Will the Internet Newspapers Survive?
Internet is still an immature and quit unexplored medium where most publishers are satisfied with producing a “printed newspaper” for the web.
In order to succeed as a new medium, the Internet newspapers need to think about their long-term profits. For the moment they are all fumbling for sustainable business models. But the fumbling is not a new phenomenon, both radio and TV was developed without the premier goal of profitability.
To achieve profitability and be able to survive it is important that the newspapers find ways to increase their income. Some believe that the papers need to concentrate on a smaller target group that have a special need for certain information and charging them for that service. When the public community get used to pay for Internet based information it will hopefully be just as accepted as it is today to pay for information in the physical world.
An interesting point of view in investigating the survival of the Internet newspapers is to draw an analogy to the telephone. When telephones were first introduced it was viewed as a mass medium that were to be used for sending news and music. Instead, the profitability became based on private communication. Some mean that Internet will be most important in point-to-point communication – that is by offering email and modern IP-telephony.
If the Internet newspapers would not survive the new distribution channels would be affected in several ways. Probably, the Internet suppliers would not be very affected by the mere disappearance of the Internet newspapers since the Internet newspapers are only a small part of the total Internet content. However, if the whole role of Internet would change e.g. by focus on point-to-point communication mentioned above, this will clearly affect the Internet suppliers to a greater extent. The customer would be affected since he/she would no longer gain the benefits of the new technology. We believe that it is very unlikely that the Internet newspapers would disappear, and state the survival of online papers as a basic assumption in this paper. Internet newspapers face some difficulties, but they also posses a great amount of possibilities.
According to the previous discussion, we will examine two future scenarios and suggest some strategies that we believe will fit them.
1. The Coexisting of Internet Papers and Printed Newspapers
If the online newspaper and the paper newspaper are to successfully coexist and by doing so maximise the profit of a company, the strategies of newspapers on the Internet for gaining profitability have to be carefully analysed to avoid that the paper version gets cannibalised. Even though several surveys mentioned above indicate that the Internet newspaper is not cannibalising the paper version, in a longer perspective as more people get access to the Internet and technology improves the Internet newspaper will have a better position and perhaps threaten the paper version. An important aspect of profitability is gaining income. We believe that to avoid cannibalisation of the paper version, the different newspaper versions must cooperate. The major strategies that we suggest are finding ways to gain income from the online paper and managing a constructive cooperation between the paper version and the Internet version of the newspaper.
Strategies
The strategies suggested can be divided into different levels. On the highest, structural level are strategies to position and differentiate the Internet newspapers as well as cooperation between the Internet version and the paper version. On a lower level we suggest strategies to earn income – an important aspect of profitability.
Differentiation and Positioning
As mentioned before, the newspapers on the Internet are facing economic problems. One solution to these problems would be to differentiate themselves from the printed newspaper and thereby provide a different product. This could also facilitate the customers’ willingness to pay for the service. The Internet newspaper has to utilize the Internet phenomenal characteristics and abilities. The site must develop and renew the services that already exist.
The head of the department of media-science Nils Enlund at the Royal Institute of Technology, KTH Stockholm, claims that the development has to go in a leisure-emphasized direction. This could be one way to get the customers to pay. However, before the sites have developed in this direction it would not be possible to charge the customer. Some examples of leisure activities could be shorter cuts from movies, easy computer-games, and different chat functions available on the site. A very important point however, is that you as a manager try to create your own site that differs in one-way or another from competitors. This strategy would be most appropriate and easier to implement for the group Evening Newspapers since they are already inclined towards leisure and entertainment. An activity that could be used for both entertainment and business is chatting. In Sweden, one of the most popular chatting channels belongs to Aftonbladet and has probably contributed to the popularity of the site. Also Dagens Industri has a chat-channel were you can discuss topics such as stocks. The Business Press has an advantage since it is already differentiated and can provide specialized topics to their readers. The updating of business issues, e.g. stock information is very important – this is another competitive advantage of the Internet version of business newspapers. Business Press should also have interactive services, e.g. a service that helps business people organise their stocks and new users to perhaps practice with fake-stocks before they get into the real game.
The Morning Newspaper should focus on their strengths to analyse and provide quality. They will, as mentioned face tough competition from actors like CNN and SVT. However, traditionally newspapers provide deeper analysis of subjects than television news and this is something that is valued by the customer and should be provided also on the Internet sites. DN should perhaps by using its’ image as a serious Swedish newspaper try to reach a more global arena. DN could also take advantage of the fact that Sweden is known globally for being a neutral country for its’ marketing campaign. This will also help to position the paper on the international market.
Cooperation
Through every strategy used, cooperation and coordination of activities between the paper version and the Internet newspaper is of vital importance to avoid cannibalisation of the paper version. Both should refer to each other to gain maximum synergies. This could be done by marketing of the paper version on the Internet, e.g. by giving information and opportunities to start subscribing through the web site. Many newspapers today have special offers to advertisers to advertise both in the paper version and in the Internet version. Another way of cooperation would be to let the same journalists write the article on the Internet and in the paper version (something that is already practiced). Background and archives on the Internet could complement news in the paper version. The greater extent of customer information that could be collected on the Internet should of course be shared with the paper version. Too much effort cannot be spend on the Internet version alone if the paper version is to survive. If the Internet and paper version do not cooperate it is likely that conflicts arise. One conflict that could arise is a conflict based on different perceptions of reality. The persons responsible for the Internet newspaper might think that they are reaching a new market with the Internet newspaper while persons responsible for the paper version might feel that market shares are stolen from them.
Earning Income
There are basically four ways for a company to earn income: advertising, using the same material in different web pages, using distribution channels and getting the reader to pay for reading the Internet newspaper.
I Advertising
Advertising has been a major source of income for many Internet newspapers but apparently this has not been enough to get profitability from the newspapers. There are several reasons for this.
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In recessions there will be a smaller possibility to gain income in this way since advertising in general decrease.
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During the 90's the newspaper industry has lost market shares to television. This will of course influence not only the paper version but also the Internet version; especially since advertisements for paper and Internet versions are often sold together (see below). If this was not the practice Internet advertisements might easier differentiate themselves from ordinary newspaper advertisements and perhaps compete with channels such as TV. Internet in combination with multimedia has several similarities to the channels stealing market-shares from newspaper advertising.
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The Internet is a customer-dominated media rather than a customer-oriented media. The customer will not as easily be distracted and is often quite goal focused when searching for information on the Internet. Only 0,5% of all Internet users click banners and advertisements on the Internet. This makes buyers of advertisements more reluctant to spend money on Internet promotion than traditional channels. The advertising form of the Internet will have to change in order to become more attractive and effective. Internet will probably develop to be a more attractive marketing channel at the same time as the usage of it becomes a more natural part of everyone’s daily life.
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Today many newspapers include the Internet advertisement in the price of the advertisement in the paper version. Thereby, the advertisement buyer automatically receives a place on the Internet. This practice might lead to that companies do not evaluate the promotion on the Internet since it is not seen as a cost, hence neither benefits nor disadvantages of the Internet as a medium is considered. Some newspapers charge extra for publishing advertisements on the Internet but this price is often very low (<10 % of the advertisement price). Only a few newspapers accept advertisements on the Internet if the advertisement is not in the paper version. We believe that this practice is likely to change as the significance of the Internet paper increases relative to the printed one.
The main reason for the newspapers to publish advertisements on the Internet is to increase the range of the promotion, to reach new target groups and to provide a service for the advertiser. Only 19% claimed to be publishing advertisements to increase income, hence advertisement on the Internet is not viewed as a major soucre of income. If the newspapers do not view the advertisement on Internet as profitable and do not bother to price them or price them very low it is likely that this will influence the advertiser not to bother about them. Indeed, this if anything can prevent the Internet newspaper to get profits from advertisements!
The Internet technologies provide great opportunities to customize advertising to the user of the service. The Internet is quite a unique medium in this manner. One example of this is the ability to see what country the user is situated in and publish advertisements based on this, for example Swedish readers of New York Times might get exposed to a commercial of "Kalles kaviar". Another method is to require some sort of membership for readers where the user gives information about demographic variables such as age, income but also what interests the user has. In this manner the user will only get exposed to commercials that fit his or her interests. This will make targeting of different groups more simple and the advertisements will be more efficient. Probably, the frequency of clicking will increase since the user is exposed to advertisements of interest.
In short, Internet newspapers should position and differentiate themselves from paper versions in terms of advertising to fully be able to use the technological possibilities of the Internet. It is important that not only rely on advertisements for income since recessions often decreases number of advertisements bought. However, the value of advertisements should not be underestimated as the Internet catches up in the competition with other media such as television.
II Using the Material on Several Web Sites
An Internet newspaper can gain from selling its information to other sites - that is by allowing those sites to publish the newspaper's material. By doing this the paper can get paid for doing the research and writing the articles without having to charge the customers. To do this the Internet newspapers must build relationships with different sites. Websites who might be interested in this offering are sites offering e-mail services, like for instance spray.se and hotbrev.com. Other interested actors could be sites focusing on Internet-communities who are interested in certain areas. An example could be sites following the achievement of a soccer team.
III Controlling Distribution Channels
This method to gain income suggests that Internet newspapers should convince suppliers of Internet to pay for getting access to the site of the newspaper. The Internet suppliers would raise the price of their service and in this way the cost of the newspaper would be hidden. The difficulty with this approach is getting the Internet suppliers to see own advantages with the system. However, if this approach would get acceptance several different kinds of web sites could get paid for their services in a quite simple way. There would also be no problem of inventing a payment system appropriate for Internet newspapers (see below) since the Internet suppliers already charge the customers. If many sites required Internet suppliers to pay for getting access to their sites the Internet suppliers could compete on the basis of what sites the customers could get access to by using their service. The Internet suppliers could perhaps gain from this since in the long run web sites getting paid could offer a better product and this might lead to a more extensive use of the Internet.
One way for the Internet newspaper to charge the customer through Internet suppliers would be to vertically integrate forward. However, there is a trade-off between increased control and potential return from vertical integration and increased risk and loss of flexibility. Since an Internet supplier supply very much more that news and charging customers indirectly is not so different from charging them directly this strategy would probably not pay off.
A better option would perhaps be to start close cooperation with some Internet supplier. The goal here would be to get the Internet supplier to understand the value of the Internet newspaper. Since Internet suppliers have many customers perhaps it would be easier to convince the supplier than convincing all the customers. The advantage of this strategy for the company would be that every customer of the Internet supplier would have to pay for the Internet newspaper, even the ones not consuming them. In the long run this strategy does not seem competitive.
IV Charge the Reader
This income is earned by charging the reader directly. There are several ways to do this, the major difference is whether the cost of the Internet paper is independent of purchasing the paper version or not. To combine the payment of the Internet newspaper with the paper version can be done in two ways. One way is to offer the Internet newspaper as an extra service to already paying customers and raise the price. Another way would be to offer the subscribers to pay extra for getting access to the Internet newspaper. The advantages of both is that the paper version do not get cannibalised by the Internet version since there are no ways of getting access to the Internet version without paying for the paper version. The disadvantage of the first method is that customers not interested in the Internet would have to pay anyhow, however the approach might generate higher incomes and increase the visitors of the newspaper site. Some customer would reason that since it’s included in the price why not use it. Both methods were the Internet version must be paid for via the subscription of the paper version would exclude the customers who are not interested in reading the paper version but only the Internet newspaper. According to surveys mentioned above there is a very small group of people (3%) who only read the newspaper on the Internet. However, as more and more people get access to the Internet and get comfortable in using the Internet this number will probably change.
A different approach is charging the customers of the Internet newspaper separately. This is advantageous for the customer since he/she can choose whether to purchase the paper or the Internet version or both. The payment could be done either through a subscription much like the subscription of the paper version or through micro payments. Micro payments could be based on e.g. days used or articles read. The problem in using micro payments is that it is difficult to find an appropriate technology to charge the customer. Many technologies exist today but there is no standard therefore it is important that different information suppliers on the Internet cooperate to find a common solution. A customer would probably be quite unwilling to pay a fee of 1 S.E.K using a credit card, for getting access to the Internet newspaper one day. Many organisations are doing research to find a functioning method for doing micro payments. This is not only a problem for Internet newspapers but for many companies selling products on the Internet. BITOS (organisation for content providers on web sites) has recently suggested that the payments should be done using a common technology, a type of payment exhange (betalningsväxel). This payment method is to be used by several Swedish companies and is simple and secure. This will make it easier for Internet newspapers to charge for their services.
A third approach is to charge the customer for special services offered in connection to the Internet newspaper e.g. getting access to the archive – earlier articles.
There are many alternative solutions in getting the customer to pay for the Internet newspaper but is this really a solution to the profitability problems? New York Times is free, the readers of Wall Street Journal have to pay but both are making a loss. A Swedish example is “Bohuslänningen” that charge the subscriber per article read (0,5 S.E.K per article). After using this strategy for six months around 2000 articles had been downloaded by 450 subscribers (of the newspaper’s 32200 subscribers). The total income from this practice was 1073 S.E.K. Most probably it was not to worth the effort to charge the customers especially considering the fact that the Internet site probably lost some non-subscribing visitors.
Some people think that there is no possibility to charge the customer for news on the Internet. Tobias Rydergren did some interviews with newspapers and experts and got the following statements (freely translated)
There are really two things that one can get paid for: stock exchange and porn. We are not dealing with either of those things
Bo Andersson, Expressen.se
I think the newspapers have limited possibilities to get paid on the Internet. The Internet newspapers will rather be integrated with the paper version.
Lowe Hedman, professor of media- and communication science at Uppsala University
One problem is to get the customer to understand that something that has been free for a long time now has a cost. At the same time, the possibilities to charge for Internet services should increase as more people get access to the Internet. Earlier, e.g. when Aftonbladet started their web site (1994) it was not possible to get the customer to pay since there was no market for the service. Another problem is that consumers often experience competing news on the radio and television as free since they do not directly associate the payment of the license fee with the consumption of news. Enlund believe that the attitude that news should be free can affect even the paper newspapers in the future. The fact that many newspapers today are struggling might be a first sign of this development. The press subsidy to paper newspapers has made newspaper survive that are not really commercially strong. It is important to realize that the problems with the Internet version are strongly interconnected with the problems of the entire newspaper industry.
One thing that has to be considered is that newspapers that cost probably will decrease the number of visitors to the site. This affects the advertisers’ willingness to purchase advertisements since they want as many visitors as possible. On the other hand the advertisers can get a clearer picture of the segments by some sort of membership – free or not. Before charging the customer it is therefore important to analyse the risks involved and whether the income from payments will exceed the probable loss from decreasing advertising.
Moreover, the marketing dynamics of newspapers is difficult. If a few actors continue to deliver free news the customers might choose these news instead of paying. To be able to charge the customer the Internet newspapers have to differentiate themselves and offer something of value.
2. The Elimination of the Paper Newspaper
Will the Printed Newspapers Survive?
It is generally hard to predict the future of the newspaper industry much due to the rapid development of technology. Some people think that the reason that newspapers still are printed is not that paper is an extremely excellent messenger but due to the lack of alternatives. Today, the technology is developing very rapidly and it offers us many possibilities. It takes however time for people to change habits and take advantage of these new possibilities. The progress of technology can in the future question the use of paper for many applications such as newspapers. The replacement of the paper can be desired from both an environmental perspective as well as from an economic one. Technology could, especially in a long term perspective threaten the paper newspapers. One example of this is the e-book. IBM is developing the future equivalence to paper – a type of organic displays that can folds to fit the pocket. This paper could be used as a notepad in A4 format, a kind of electronic newspaper. News from the Internet can be downloaded to the notepad through wireless connections. This kind of product will definitely change the use of media, but they are still too expensive to be considerate. Similar objects and e-books will in the future be very sophisticated and customized. The paper newspaper would no longer be alone with the competitive advantages of being mobile and easy to handle.
Some expert are seeing the end of the printed newspaper, for example the creative director at Jarowskij Media, Niclas Mattson said:
“30 years after that we quit printing textbooks for schools, there will no longer exist a target group for the printed newspaper. Textbooks are the platform to initiate first contact with the written word”.
Something that speaks against the extinction of the paper newspaper is the fact that no media ever have replaced another one (yet). Therefore, it is likely that the printed newspaper and the Internet version could be each other’s complements, at least in a short perspective.
Strategies
From the perspective of a company trying to maximise its´ profit this development can have both positive and negative effects. Highly established newspapers like Aftonbladet or Dagens Nyheter will probably face an increased competition because of the decreased barriers of entering the market as a consequence of new technology. As discussed earlier, the international competition will probably also increase. However, this technology will offer the papers great possibilities. At the same time as they face an increase in international competition, they will also have the opportunity to reach an international customer base.
We believe that the key to success will, just as it is today in any industry, be to have a unique offer to the customers. The paper will have to create some kind of value for its’ customers. The paper must be able to state that they are the best actor within their field of business. This means that the papers will have to differentiate and position themselves just as discussed in the previous scenario. We believe that a further development of technology will force this process even more than today.
The product “newspaper” as news in text, either in print or electronic, might cease to exist as a consequence of the convergence of media. The product offered through portal e-books in the future might consist of a news-coverage with picture sound and text integrated.
The question of how these media-companies should earn money still exists regardless of the evolution of their products. Many of the strategies suggested for the previous scenario is applicable for this question. The level of specialization will probably be very high because of the international and domestic competition situation. The opportunity to then sell information in form of articles covering a certain field should be great. A company can for instance focus on some cultural event and becoming an expert in this area. This development can have certain risks. The diversity of information covering a conflict could be threatened. We do not however think that this will be the case. The competition will be too big to allow this kind of power misuse.
The banking and payment-system will thirty years from now be very developed and hopefully in phase with the technological development. It will be possible to charge customers via micro-payments. We do not however believe in the usage of this method. The company should instead try to offer some kind of subscription where the customer pays a specified amount of money each month. This subscription can be offered in combination with the selling of an e-book, i.e. through the cooperation with e-book manufacturers. This will be a process very similar to the process of buying a cellular phone today and at the same time “locking” this phone to a certain operator.
Advertising and commercials will probably give the companies much greater incomes than they do today. If the online paper is the only part of the company that will remain thirty years from now, then the online paper also has to take over the advertising incomes of the paper version. Advertises on the Internet today are by a majority of people thought of as annoying while advertises in paper newspapers and TV-commercials (successful ones) might be considered as more entertaining. People can discuss funny TV-commercials while nobody ever discusses Internet advertisements. We believe that the most important thing that has to be done in order to increase the value of these is to make them more attractive. The pop-ups that exist today are not very efficient and should be replaced. In the future these commercials can be made at least as attractive as TV-commercials, for instance because of the use of e-books. The ability to reach customers in a wireless world where almost all devices are portal is great. This is why we believe that commercials will be the major source of income for online papers twenty to thirty years from now.
If printed newspapers would disappear many distribution channels would disappear with it. The graphic artists would only be attractive in terms of web applications. The printers would be out of job as well as the distributors, e.g. Pressens Morgontjänst. Internet suppliers would gain a much greater role and newspapers would be very dependent on their services. If newspapers would be faced with this future scenario, some strategies would be to build a close relationship with the Internet supplier or perhaps vertically integrate to gain more control of the distribution channels.
Media-companies can also gain profit through the cooperation with Internet suppliers. This was discussed in the previous scenario and many of the opportunities will still be there in a longer perspective. It is though somewhat difficult to suggest strategies for making profit through the cooperation with these since it is difficult to know exactly what their future role will be. The convergence of markets discussed earlier in this paper will also have to be carefully monitored in order to see business opportunities arising from it.
Conclusion
We believe that the Internet version and the paper version of the newspaper can find successful ways to coexist, at least in a somewhat closer perspective. The probably most important strategy that we believe has to be implemented to succeed with this is to differentiate the Internet paper with regard to the paper newspaper. The interactivity of the Internet and other possibilities that it provides can be used in this process. We have reached the conclusion that Morning Newspapers, Evening Newspapers and Business Press should pursue different strategies for differentiating themselves.
Morning newspapers should use their credibility and their reporters placed all around the world in order to differentiate themselves from competitors who do not have these possibilities. Evening Newspapers and Business Press should pursue a somewhat similar strategy for differentiating themselves from the paper version and positioning their brands. They should both create interactive services. We think that Evening Press should continue to focus on domestic news and stories about celebrities. Business Press should also continue to work locally in order to avoid threatening competition from international actors.
It is vital for the online paper and the paper newspaper to cooperate in order to be able to successfully coexist. To gain profitability it is also important to earn income and there are several ways to do this. We do not believe in the usage of micro payments. If the customer is to be charged directly, we prefer to use subscription fees. This is however a risky process, and the company could loose many customers. Customers could be charged indirectly through cooperation with Internet distributors. This method has however also some difficulties. Another way to gain income is to sell articles to sites that function as “information centres”.
We believe that the major source of income for the online papers will come through advertising. The clicking-system with pop-ups that exist today is annoying and has a relatively very small value for the online papers. Online newspapers should in the future be able to match the high incomes TV gets through commercials. One factor that we believe can make this happen is the increased usage of the Internet and the convergence of media. Advertisements and commercials on the Internet have to be made more entertaining.
We think that in a longer perspective the paper version of the newspapers might be eliminated from the market. E-books may then have taken over the role of the paper newspapers, offering the same advantages that these have offered in the past. We believe that many of the strategies suggested for the online papers in a shorter perspective will be applicable even after this development. A new business opportunity that could be explored is offering “subscription packages” where the customer buys an E-book together with the services of a company. Another business opportunity that companies should look out for is the convergence of markets. Companies might be able to offer customers much more than news alone as their product.
Internet newspapers might not be profitable today but they can all probably see the great future opportunities. We believe that a key success factor in this process will be to understand the behaviour of customers. A criticism to the question examined in this paper is that the coexistence of printed newspapers and Internet newspapers might not be desirable for a company. During a panel debate held at SSE, Mattias Fyrenius (SVD Näringsliv), implied that newspapers would gladly get rid of their distribution and printing costs and sacrifice the printed newspaper for a profitable digital alternative.
References
Printed Material
Aaker (1995), Developing Business Strategies, John Wiley & Sons Ltd.
Ford et al (2002), The Business Marketing Course - Managing in complex
networks, Chichester: John Wiley & Sons Ltd.
Porter, M. (2001), Strategy and the Internet, Harvard Business Review, 79(3)
Stern, L.W & El-Ansary (1996), Marketing Channels, Prentice-Hall
Internet Material and Newspaper Articles
Articles from Tidningsutgivarna are from the web site , collected 2002-09-23
Articles from Rockad are from the online newspaper, , 2002:1,
collected 2002-09-25
Newspaper articles are from the database Presstext (SSE Librabry), collected 2002-09-22
Enlund Nils, Nyheter ska vara gratis, Rockad
George Nicholas, Swedish media seek to unlock value of websites, Financial Times, 2001-10-09
Hallberg Karin, Internet perfekt partner, Tidningsutgivarna, 2002-02-11
Larsmo Ola, Det tryckta står sig på nätet, Dagens Nyheter, 2000-06-29
Lewan Mats, Leverantörer eniga om nätbetalningar, Ny Tekniks nättidning, , 2002-09-26
Locka läsare att betala ger intäkter på Internet, Tidningsutgivarna, 2002-09-12
Lundblad Nicklas, Ett fåtal kan förstöra marknaden, Rockad
Löwgren Jonas, 2003 års nyhetsmedier,
Melander, Det handlar om överlevnad, Rockad
Mårtensson Torbjörn (I), Brister i mediestrategier missgynnar dagspress, Tidningsutgivarna,
2001-08-09
Mårtensson Torbjörn (II), Tidningarna ökar sina publiceringar på Internet, Tidningsutgivarna,
2002-06-10
Pahlén Birgitta (I), Dagspressen står pall, Tidningsutgivarna, 2001-09-02
Pahlén Birgitta (II), IT är nu vardagsvara, Tidningsutgivarna, 2001-09-02
Pahlén Birgitta (III), Mediebarometern visar stabilt medieläge, Tidningsutgivarna, 2002-08-08
Palme Christian, Dagstidningen är inte död, Dagens Nyheter, 2001-04-03
Petterson Peter, På tiden att nättidningar får grundlagsskydd, Dagens IT, 2001-11-19
Pickard, Changing Business Models of Online Content Services, 2000,
http://www.informationobjects.ch/NetAcademy/naservice/publications.nsf/all_pk/1783/$file/JMM_Picard_2_2.pdf?OpenElement&id=1783
Rydergren Tobias, Inga pengar att hämta i nyheter på Internet, Resumé, 2002-06-06
Smitt Johan, Tidning på elektronisk väg, Dagens Nyheter, 2000-05-02
Sullivan Carl, Survey: Web Doesn’t Affect Print Readership, www.Newspaper-industry.org
Tidning på Internet allt populärare, TT Nyhetsbanken, 2001-02-13
Träff Gustav, Betalt på Internet men hur, Tidningsutgivarna, 2002-02-08
Tufft för papperstidningar på nätet, Rockad
Vikström Linda, Nättidningar vill ha betalt, Dagens Nyheter, 2001-08-17
Willebrand Peter, Marknadskrafterna styr, Rockad
Information about Tidningstryckarna
Web site of Pressens Morgontjänst
Tufft för papperstidningar på nätet, Rockad
Web site, Pressens Morgontjänst
Locka läsare att betala…, Tidningsutgivarna
Locka läsare att betala…, Tidningsutgivarna
Tufft för papperstidningar på nätet, Rockad
Tufft för papperstidningar på nätet, Rockad
Tufft för papperstidningar på nätet, Rockad
