Developing an Online Newspaper Business Model: Long Distance Meets the Long Tail
DEVELOPING AN ONLINE NEWSPAPER BUSINESS MODEL: LONG DISTANCE MEETS THE LONG TAIL
BY
GEORGE SYLVIE ASSOCIATE PROFESSOR SCHOOL OF JOURNALISM THE UNIVERSITY OF TEXAS AT AUSTIN
MARCH 24, 2008 AUSTIN, TEXAS
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ABSTRACT Developing an Online Newspaper Business Model: Long Distance Meets the Long Tail
This literature review cum strategic proposal connects two concepts – Chyi and Sylvie’s notion of long-distance online newspaper audiences and Anderson’s long-tail statistical Internet economic model – into an approach that holds strong potential for the local newspaper. The author analyzes the standard online newspaper input chain via the resource-based view (RBV) to suggest a new product that’s consumer-driven in terms of its value. The author argues that the resulting “global long tail” (aka GLT) product, however, must be combined with a two-pronged marketing strategy involving mobile media and local businesses to succeed. Finally, the author lists value chain, technological, and feedback risks that newspapers will have to overcome or rethink to adapt the strategy to current operations.
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Online newspaper strategy is an orphan in search of a home: Up until recently, consistent profits, market share, and sustainable growth have been scarce. Many companies are just now beginning to report an increase in online profitability. While most U.S. newspaper sites doubled their revenue, market share fell to 35.8 percent (from 44.1 percent in 2006) and the increase in revenue often came in lieu of print revenue: A Web ad cost 20 to 30 percent the cost of a counterpart print ad and a 1 percent drop in print revenue could not be made up by a 10 percent increase (Borrell 2007b; Stone, 2007a, 2007b). Average profit margins of online news sites approach roughly only half that of traditional media (Huang, 2007b). The mixed results in large part reflect the mixed approaches. Although American sites – with the exception of The Wall Street Journal – largely allow free
BY
GEORGE SYLVIE ASSOCIATE PROFESSOR SCHOOL OF JOURNALISM THE UNIVERSITY OF TEXAS AT AUSTIN
MARCH 24, 2008 AUSTIN, TEXAS
1
ABSTRACT Developing an Online Newspaper Business Model: Long Distance Meets the Long Tail
This literature review cum strategic proposal connects two concepts – Chyi and Sylvie’s notion of long-distance online newspaper audiences and Anderson’s long-tail statistical Internet economic model – into an approach that holds strong potential for the local newspaper. The author analyzes the standard online newspaper input chain via the resource-based view (RBV) to suggest a new product that’s consumer-driven in terms of its value. The author argues that the resulting “global long tail” (aka GLT) product, however, must be combined with a two-pronged marketing strategy involving mobile media and local businesses to succeed. Finally, the author lists value chain, technological, and feedback risks that newspapers will have to overcome or rethink to adapt the strategy to current operations.
2
Online newspaper strategy is an orphan in search of a home: Up until recently, consistent profits, market share, and sustainable growth have been scarce. Many companies are just now beginning to report an increase in online profitability. While most U.S. newspaper sites doubled their revenue, market share fell to 35.8 percent (from 44.1 percent in 2006) and the increase in revenue often came in lieu of print revenue: A Web ad cost 20 to 30 percent the cost of a counterpart print ad and a 1 percent drop in print revenue could not be made up by a 10 percent increase (Borrell 2007b; Stone, 2007a, 2007b). Average profit margins of online news sites approach roughly only half that of traditional media (Huang, 2007b). The mixed results in large part reflect the mixed approaches. Although American sites – with the exception of The Wall Street Journal – largely allow free
References: 31 Chyi, H.I.and Sylvie, G (2001) 35 Newspaper Association of America (2007)