Introduction: Traditional Media and the Internet: The Search for Viable Business Models Sylvia M. Chan-Olmsted
Sylvia M. Chan-Olmsted Introduction
The arrival of the Internet has changed the rules of competition in many industry sectors. In the realm of media markets, the Internet’s bona fide role as the newest mass medium and its unique characteristics of interactivity and personalization present tremendous challenges as well as potentials in the formulation of innovative business models, both from the existing media incumbents who wish to compete with and to leverage the Internet’s popularity and from the new online ventures that attempt to take a bigger share of the revenue pie from media advertisers and consumers. An important body of literature has emerged to address the changes and values that the Internet brought to a conventional marketplace. Many media scholars have begun to study the factors that might impact a firm’s Internet strategy and proposed a range of Internet business models. Most literature suggests that the Internet has improved the effectiveness and efficiency of coordination in the value chain, become a source of competitive advantage by providing companies with new ways to outperform their competitors, encouraged direct interaction between producers and consumers, allowed businesses to access global markets, developed better business intelligence, and enhanced customer communication and service. Additionally, the Internet provides a tremendous opportunity for the Web retailing of digital multimedia goods. It is evident that different media sectors and firms have approached the Internet with various emphases and intensities. Literatures suggest that these differences might be due to the nature of the product or service and its target market, the degree of organizational competency in integrating the existing business with the Internet, the degree of changes required from the organization to adopt the Internet, a firm’s dependency on the Internet for revenue, and the size and age of an organization.
Address correspondence to Sylvia M. Chan-Olmsted, Department of Telecommunication, College of Journalism and Communications, P.O. Box 118400, University of Florida, Gainesville, FL 32611–8400. E-mail:
[email protected]
2
As the Internet increases its presence in average households, all traditional media have, in their own ways, embraced the Internet. Nevertheless, even as many Internet ventures are being launched by media firms, many are being scaled down or eliminated because of the lack of evident benefits and resources. The development of an appropriate business model is especially critical, as well as intricate, as the Internet offers an alternative distribution channel for traditional media’s products and strengthens the existing media’s position with their readers and audiences and at the same time competes with the traditional media for consumer attention and resources. This issue of the International Journal on Media Management (IJMM) addresses the very topic of Internet business models from the perspective of the traditional media sectors. The 11 theme articles tackle the issues of online content delivery business models, the relation between online and offline media products, the Internet’s impact on a media value chain, online marketing of music products, Internet content strategies, and comparative studies of Web content and strategies in different countries. From theoretical discussions to empirical investigations, the authors successfully examine the traditional media incumbents’ efforts in developing business strategies that leverage their online competencies and suggest the factors that might play a role in this process. Specifically, to provide a structured method of comparing business models between firms within or between industries with a goal of identifying key profit drivers, Fetscherin and Knolmayer propose five components that any business model for content delivery should include. Using the print industry as an example, they find that the most important key profit driver is still the product, followed by revenue and price. Also using the print media sector in their exploratory case study, Schulze, Hess, and Eggers analyze how the Internet affects publishers’ content utilization practices. The authors find that although the Internet has various degrees of impact on the composition of publishers’ content utilization chains, it has not delivered extra revenues. In fact, the Internet-based content utilization windows have not been adequately explored and are relatively dependent on their relations
The International Journal on Media Management, 6(1&2), 2–3
with the print-based ones. In the next article, Kolo and Vogt propose a list of key issues that account for the success of online spin-offs in the media industry. Based on empirical data pertaining to the German market, the authors conclude that the management of online spin-offs has played a more significant role than the offline reach, such as the brand equity of the offline product, in the success of its online spin-offs. The findings in these three articles are quite interesting, as they point to the essential role of the online product and its revenues in driving profitability, at the same time confirming the traditional media’s inability to strategically capitalize on the unique characteristics of this new medium. The next two articles examine the online business strategies of music and video products. Chang, Lee, and Lee taxonomically link the economic properties of video products to their Internet distribution strategies, and Vaccaro and Cohn use a services marketing framework to show how music products might be distributed and marketed online with a true consumer orientation. The same strategic focus was evident in Stahl, Schäfer, and Maass’s work in selling paid content on print media Web sites. The authors here empirically test the strategy of selling bundled and unbundled content on newspaper and magazine Web sites and discover that cannibalization does occur when little strategic care is present in the bundling process (i.e., selling the same info goods offline and online simultaneously). Beyers’s article in online dayparting strategy further demonstrates the importance of strategic competency in this uncharted online world. Some of these articles also suggest that traditional media do have a certain degree of competitive edge in the online arena because of their existing relationship and experience with media consumers. Comparative media studies have always been fruitful in identifying the various exogenous conditions that influence the development of media products. Through the content analysis of top Web sites in the United States and
Introduction
South Korea, Ha and Ganahl’s article succinctly identifies two general Webcasting business models and the cultural determinants that might impact the success of these models. Moving to the region of the European Union, Arampatzis compares the business models of online news publishers in Greece and the United Kingdom by differentiating their content emphases and ownership types. From a different perspective in viewing the online news product, in the following article, Bucy suggests that online news sites should be evaluated based on their nonmonetary rather than profit–loss contributions. Finally, Edge’s work concluded our special theme section with an extensive case study of a failed ambitious Internet venture in Singapore, demonstrating the complexity of the Internet business environment. In the general articles section, this issue has two interesting contributions from Calder and Malthouse addressing the qualitative media measurement of newspapers and from Albarran and Loomis tackling the regulatory changes and media management practices in the United States. I hope you will find the work in this special issue interesting and inspiring. I would also like to thank all of the reviewers who took the time to help us advance the scholarship in our field. Special thanks should go to the editorial team at IJMM and the authors who contributed to this issue. I know the revision time frame was almost impossible, but you did it. Thank you all for the privilege of editing your work.
Sylvia M. Chan-Olmsted
[email protected] is an Associate Professor in the Department of Telecommunication at the University of Florida. Her research interests include new media and its impacts on market competition and telecommunication brand/strategic management.
3
