Academic journal article Global Media Journal

Business Model Innovations in the Digital Publishing Industry

Academic journal article Global Media Journal

Business Model Innovations in the Digital Publishing Industry

Article excerpt

Introduction

The shrinking circulation Figures of printed publications changed the traditional business model of news publishers and caused revenue from circulation and advertising to crumble [1,2]. As a consequence, publishers have looked for several alternative sources of revenue through business model innovations recently [2-4] in order to reduce the dependence on revenue from the print segment [5-8]. Transferring the printed newspaper to an online version is no solution either, since consumers' willingness to pay for digital content is particularly low due to complementary journalistic brands on the Internet and new digital payment models [8]. Simultaneously, consumers expect a high added value from digital as well as from printed news [9,10]. This is why the customer value proposition of digital news content has changed compared to printed news. Furthermore, the use of digital content has steered away from the mass market and shifted towards niche topics [11], which lead to new opportunities regarding revenues from advertisers. Overall, the digitalization has led to a disruption of the publisher's' business model, as Christensen has described already in 1997. The surprising observation of today is that publishers still seem to be searching for an appropriate adaptation of their business model.

This forms the current challenge for news publishers: They have to reconsider every element of their business model - the customer value proposition, profit formula and revenue model, key processes and key resources [12]. This study addresses these business model innovations in the digital publishing industry, in particular the customer value proposition. Therefore, the study investigates consumers' demand for news content and raises the research question:

"Are there any specific determinants (i.e. brand affinity, interests, habits of usage) which appear in combination with specific needs or features that determine the CVP of publishers?"

There are certain bodies of literature about changes in the digital media industry [13] and disruptive innovations [14,15], about the future of the digital publishing industry [1,6-8,16,17] and about new business models and competition in the digital world [18].

There are surveys about the willingness to pay for digital content [1,2,5,6] and about specific consumer demands, trends and innovation [5,8,9]. However, despite the steady decrease in total circulation many publishers do not seem to have an appropriate answer and research concerning the potential for digital content production and distribution for newspaper publishers is still lacking [3,4,16].

Conceptual Framework and Research Model

Business Models

Existing literature about business model and business model innovation [12,18-20] define business model with various numbers of components. In 2005, Morris et al. conducted a research across 18 publications and identified 24 different components of a business model with 15 components mentioned more than once. On average each research named between four and eight components within its business model framework. In practice the most used business model is probably the CANVAS model of Osterwalder and Pigneur [19] with nine components. Amongst the various definitions three to four cornerstones are always mentioned as core elements: value proposition, revenue stream and key resources as well as key processes. This is why we base our research on the model of Johnson et al. [12]. It represents those four core elements and it is easy to use as a framework for the publishing industry. According to Johnson et al. [12], a business model consists of four characteristics: it creates a customer value proposition by applying key resources and key processes and allows revenues by a profit formula. "A successful company is one that has found a way to create value for customers. (...) The profit formula is the blueprint that defines how the company creates value for itself while providing value to the customer. …

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