News, Technology and Business Models - an empirical study

Student thesis: Master Thesis and HD Thesis

  • Helene Træholt Jensen
  • Lena Overgaard Jensen
4. term, Interactive Digital Media, Master (Master Programme)
The aim of this master thesis is to present a mind-set for media companies in the news industry, one which can function as an inspiration on how to organize a profitable free-business model for digital news on tablet, and one that meets the form of the technology and meets the needs of a user.

Due to a decrease in the newspaper circulation and in advertising revenues, newspapers are attempting to create business models to ensure earnings elsewhere. Danish media companies are therefore currently in a situation where the question of success and survival lies in figuring out new business models that ensure profitable revenues from digital news. It is therefore interesting and extremely relevant to consider and evaluate the problem of how media companies can ensure revenues on digital news, and thereby secure a future business foundation. But how does one do that? Is the solution to set up pay walls in front of digital news, as we see them today and how will the users react to this? Possibly not well, since the digital news, from day one, has been a free accessible service, therefore the media must not expect any easy transition.

In addressing the issue of setting up pay walls several problems arose: (1) the users expected digital content to be free, (2) fundamental changes in the form and content of digital news had to be made, (3) loss of traffic and therefore distribution on the news sites (4) which meant an even more drastic loss in advertising revenues, (5) the users wish to maintain a tendency of scanning several digital news sites – for which reason the loyalty towards paying for one single newspaper or media company was minimal, (5) because of DRs requirement as public service, there will always be a minimum of one Danish source to access free news on the internet.

To achieve further knowledge of the complex field of digital news, we worked with the three domains which constitute the field of digital news on tablet: the news consumers (the human domain), tablet (the technology domain) and digital news (the business domain).

Through an in-depth analysis of three Danish media companies and their annual accounts and digital offers, we ascertained that the companies struggled with ensuring profit on their primary operation – news. Furthermore we found little or no strategy and connection between the free digital news offers and the paid solutions. In many cases there was an uncertainty about where the actual value of money occurs.

In achieving knowledge about news consumers, and in particular their use of digital news and willingness to pay, we carried out an empirical study. We paid ten families a visit on a weeknight to engage them in an interview about news consumption based on eight different media types: newspaper, magazine, tablet, smartphone, radio, laptop, TV and computer. The qualitative interviews were framed by a priority-exercise, where the users had to prioritise different media cards. The use of cards enhanced the quality of the study, because it made the users reflect upon their use of media and discuss media comparatively. The study about news consumers resulted in a large amount of transcribed data, which was processed though a triangulation of methods: the KJ-method, #hash tags and a semiotic view on patterns and relations. This resulted in a well-arranged and processed empiricism, something therefore usable to carry out an analysis of the human domain.

Our findings were, not surprisingly, that users are different, and have different kinds of need for news consumption. Two basic needs occurred: the need for a news summary and the need for insight. It was in the news insights that the real value lied, and where some readiness to pay for digital news was found. Absorption and insight is therefore a valuable asset in news consumption, where as news with a summary, was often used during the day or in the busy mornings as a displacement activity.

In general we found none or very little existing readiness to pay for digital news. More users said they would avoid news sites with pay walls until it was no longer possible to find free digital news. But if they were to pay, they had certain demands and expectations to form, content and service: low payment, easy transaction and a pleasurable design.

If media companies wish to use a tablet, as a platform to news distribution, it demands certain knowledge about the user preferences, design preferences, reading patterns and interaction principles. No matter what, the most important thing is to keep the specific target group in mind when developing a solution. Working with a tablet as a platform, the media companies have two possibilities: (1) native apps or (2) responsive web design. Depending on intention, ambitions and financial capacity, the media company must counterbalance strengths and weaknesses to find the best solution.

Through our findings and the problems with pay walls, we found it natural to occupy free business models. We used the Business Model Canvas as a framework in which we created three free-business models for news on tablets: Three-Party Market, Freemium and Direct Cross-Subsidies. By placing the models in a Business Model Canvas in direct context with media companies, users, technology and value propositions, three new templates for free business models occurred, that, when properly used, can contribute to the creation of profitable business models for digital news.
Publication date31 May 2013
Number of pages122
ID: 76956696