Regional Online Newspapers: paths to glory, or the road to ruin? Cornelia Krüger Paula M.C. Swatman Institute for Management University of Koblenz-Landau Germany

Introduction A state of crisis within the newspaper industry generally: Advertising levels are declining Cost cutting by individual newspapers: Will online editions of regional newspapers disappear, or... Can they become profit centres?

Business models for online content “…the method by which a firm plans to make money long term using the Internet.” (Afuah and Tucci, 2001) or, more generally … … a coordinated plan to design strategy along three vectors: (i) customer interaction; (ii) asset configuration; and (iii) knowledge leverage (Venkatraman and Henderson, 1998)

Comparison of Content Provider Business Models AuthorsCatchwordCritical Success FactorsSources of RevenueValue Chain BartussekNewsfilter- Identify and serve customers’ needs; - Traditional strengths; - New income resources Selling product Advertising Producer / Intermediary Farhoomand/ Lovelock Content ProviderSubscription feesIntermediary NiewiarraContent NetworkNetworksRevenue sharingNetwork RayportContent BusinessRevenue sharing between content provider and online service Revenue sharingNetwork Weill/VitaleContent ProviderBranding; Recognised as best in class; Network Fees from third parties or allies Producer WirtzE-InformationDifferentiationPay per transaction; Subscription Intermediary

Research approach Our research questions: Are the Internet business models described above used by regional newspapers, or are these companies implementing some other business model(s)? Are the Internet business models of regional newspapers successful?

German newspapers… RZ Online SWOL RON Online … compared to French… Sudouest La Dépèche Le Parisien … and Italian regional newspapers online. Il Giornale di Vicenza La Gazetta di Modena L‘Alto Adige Trentino Cases

Findings from the Cases 5 basic potential revenue streams Increased consumer income:-   subscriptions (traditional income source)  “pay per view”  merchandise sales of various sorts;  increased advertising revenue:-   advertisements in the offline version – then also available online banner ads in the online version of the service,

RZ Online 3 versions of the paper: Original print version ‘standard’ online version Unique ‘facsimile’ version of print edition – the vehicle for online sales Customer approach: Originally free to subscribers Now charged at € 2 / month (1800 subscribers now) Advertisers approach: ISP / ASP service (domains and web sites) Click-through advertisements

SWOL Goal is to be “the” online portal for the region and thus attract local and regional companies to put their online advertising on the Web sites related to SWOL.

Advertisement attractiveness depends on core competence Loca l Regional National International Core competence of newspapers: local, regional, national, international - Increasing attractiveness for online advertisement - Increasing attractiveness for direct marketing - Decreasing cost per online customer

RON Sales of advertising + archive material

German Internet business models – in theory and practice Still producers of news (mainly regional news – core competence). Intermediaries for international, national, business and financial news, bought from news agencies or other newspapers and magazines. Adding value to this content to adapt it to their own readers’ demands. Creating regional networks: RZ-Online is building a network with a subsidiary to sell Internet access and homepages. SWOL is also offering topic-centred Web sites. RON Online has even created a regional marketplace

Critical success factors for regional online newspapers Network Several income resources (subscription, pay per view, advertising, revenue sharing) Regional core competence

Comparison between the German, French and Italian experiences France and Italy: Not one regional newspaper online was selling content. Used their Web site to acquire print subscribers. Financed their online versions by online advertising. Most of them were focusing on regional core competence. Italian regional newspapers had alliances with Internet providers. Content was offered for free.

Reasons why The percentage of people using the Internet is smaller in France (22%) and Italy (34%) than in Germany (48%). It is less common to read a regional newspaper in France and Italy than in Germany. In Italy you find 97 regional online newspapers and in France 104 (fr.yahoo.com). One can find about 178 regional newspapers online in Germany.

Conclusions Promising Internet strategy: Building a network Creating a regional community Increasing several income sources