This study examines the transformations that trigger business models with paid content strategies on news organizations under the theoretical framework of market orientation. The results show three main factors: those related to competence, to the organization culture and to understanding of needs and wants of the audience. The findings also suggest that online newspapers business models with paid content strategies are more like experiments or forays rather than definitive methods that monetize the exponential growth of audience. In fact, none of the analyzed organizations could operate without outside aid.
The existing literature on market orientation has pointed to customer orientation as an essential behavioral component (Levitt, 1960; Narver and Slater, 1990) which develops and sustains a firm’s competitive advantage (Kohli and Jaworksi, 1990; Caruana, et al., 1998). Customer orientation is the heart of market orientation and is defined as the sufficient understanding of one’s target buyers to be able to create superior value for them continuously (Narver and Slater, 1990). This means that business basics focus on meeting the needs and wants of one’s customer in order to achieve a better firm performance (Kohli and Jaworksi, 1990; Slater and Narver, 1994).
Customer orientation, as well as the two other behavioral components  that conform market orientation construct, were traditionally reliably measured with a multi–item scale on service companies (Caruana, et al., 1998; Stevens, et al., 2008) public institutions (Cervera, et al., 2008), manufacturing industries (Lings and Greenley, 2009), or the non–profit sector (Mulyanegaraa, 2011). This quantitative approach employs different variables to measure customer orientation such as “customer commitment, understand customer needs, measure customer satisfaction or customer satisfaction objectives” that could complexly capture and assess the customer perspective (Deshpandé, et al., 1993; Webb, et al., 1998; Steinman, et al., 2000), which is required in order to understand this component from a holistic perspective. Measuring customer orientation is even more problematic when it comes to organizations immersed in a particular environment characterized by technological and market turbulences or competitive intensity (Kohli and Jaworksi, 1990) such as the online newspaper industry (Picard, 2009; Chyi, 2009).
This sector is particularly interesting because measuring the satisfaction — and fulfilling the needs and wants — of the audience is not essentially necessary in online newspapers that provide content at zero cost, because users are not actually paying for information (Picard, 2009). This means that the value creation in online newspapers with free business models (and advertising support) is destined to be attractive to investors through high profits and asset growth, and to also appeal to advertisers through opportunities to reach larger and specifically desirable audiences (Picard, 2009), but not specifically to attract audiences.
However, online newspapers with business models that emphasize payment by the customer (such as paywall, metered model, freemium or the various sorts of virtual kiosks) need to retain and attract new customers, and to provide and create value not only to advertisers and investors, but also to customers because they require economic transactions (subscription or pay per view). Despite the importance of the customer as an essential part of the online newspapers’ value chain, few prior studies empirically analyze the customer orientation of online newspapers with paid content strategies. The aim of this research is to shed some light on the following research questions: How do news organizations measure the satisfaction of their paid customers? How do news organizations identify the demands and necessities of their customers? How do they maintain (customer loyalty) and convince (customer capture) the customer to undertake an economic transaction (subscribe)? To that end, the paper employs a qualitative approach based on the case analysis of three online newspapers: Financial Times, The Times and El Mundo in Orbyt.
The paper is organized as follows: First, we examine previous research on market orientation and business models on news organizations. This is followed by the development of the methodology framework. The article then reports results of a multiple case analysis consisting of two British newspapers, Financial Times and The Times, and one virtual kiosk (new business model) in Spain, El Mundo in Orbyt. The results show three main influences or factors caused by business models with paid content strategies on news organizations: those related to competence, to the organization culture and to the understanding of needs and wants of the audience. The findings also suggest that business models with paid content strategies of news organizations are more like experiments or forays rather than definitive methods that monetize the exponential growth of audience. In fact, none of the analyzed organizations could operate without external aid.
2.1. Market orientation, business models and the online newspaper industry
Market orientation and its effect on performance have received a great deal of attention from marketing researchers and practitioners since the seminal works of Kohli and Jaworski (1990) and Narver and Slater (1990). However, the empirical evidence of the linkage between the two constructs is considered weak because of inconsistent findings in the literature (Jaworski and Kohli, 1993). Moreover, considerable debate still exists as to what, exactly, market orientation is, how it manifests itself, and how it can best be measured (Schlegelmilch and Sundaresan, 2008).
Across the multiple ways in which market orientation has been defined, there is some consensus in the literature that market orientation is a construct composed of three behavioral components: customer orientation, competitor orientation and inter–functional coordination (Kohli and Jaworski, 1990; Narver and Slater, 1990; Slater, 1997; Slater and Narver, 2000). Market orientation, according to Narver and Slater (1990), is (1) the business culture that produces outstanding performance through its commitment to creating superior value for customers while considering the interests of other key stakeholders (Slater, 1997); and, (2) provides norms for behavior regarding the organizational development of and responsiveness to market orientation.
The majority of the studies mentioned in this study assume that market orientation is a one–dimensional construct and/or each of its components contributes equally  (Tsiotsou, 2009; Lings and Greenley, 2009). However, numerous studies provide inconsistent findings about the role of these three behavioral components of market orientation, suggesting uncertainty about this statement and showing it as a multidimensional construct. In this sense, most scholars consider customer orientation as the most fundamental component of market orientation (Deshpandé, et al., 1993; Chao, et al., 2007) and some have found that customer orientation is the only dimension of market orientation that exhibits a significant positive effect on business performance (Sin, et al., 2005). Therefore, the present study treats the three market orientation components as separate constructs that consider customer orientation as the focal element.
According to Narver and Slater (1990), customer orientation is the sufficient understanding of a firm’s target buyers for which the firm is able to continuously create superior value. This ability means that business basics focus on meeting the needs and wants of one’s customer in order to achieve a better firm performance (Kohli and Jaworksi, 1990; Slater and Narver, 1994; Slater, 1997). Empirical evidence supports a linkage between customer orientation and firm performance and also suggests that increasing customer satisfaction and loyalty prevents customers switching behavior (Reichheld and Sasser, 1990). Consequently, the success of market–oriented firms can be measured in terms of customer satisfaction that those firms generate (Caruana and Calleya, 1998; Singh and Ranchhod, 2004).
For a news organization, then, a strong customer orientation implies that, for example, the newspaper will aggressively seek to determine the kinds of information that readers say they want or need and the newspaper will provide it (Beam, 1998, 2003; McManus, 1994). In fact, the measuring and fulfilling of customers’ needs and wants in online newspapers business models whose revenue systems depend mostly on the users’ economic transitions is essential in order to have a positive impact in customer satisfaction and loyalty. Hence, the value creation in online newspaper’s business models that relies on customer payments is captured not only by advertisers and investors, but also, and fundamentally, by customers, due to their monetary spending, which also implies customer perception of quality and customer satisfaction.
Despite the importance of understanding customer orientation on digital news organizations with paid content strategies, the current literature of media management and media economics lacks previous empirical research. Most studies focused on the analysis of paid content strategies of online newspapers (Herbert and Thurman, 2007; Graybeal and Hayes, 2011; Goyanes, 2013b) through different platforms (Chyi, 2012), or analyze the willingness to pay for information through different revenue systems (Chyi, 2009; Graybeal and Hayes, 2011; Chyi, 2012; Goyanes, 2014). However, the study of satisfaction and customer value capture (being customer–oriented) remains unclear for news organizations with paid content strategies. This study tries to address this gap by asking the two following research questions:
RQ1: How do news organizations with paid content strategies measure the satisfaction of their paid customers?
RQ2: How do news organizations with paid content strategies identify the demands and necessities of their customers?
The aim of online news organizations with paid content strategies on the Internet, unlike the online organizations with free business models, is to not only convince the customer (through advertising, promotions, personalization of the information, complementary services, quality, etc.) to pay for the product, but to also retain the customer on a long–term basis in order to create a sustainable base of economic income to maintain the business. So a dual approach results, involving both methods of subscriber recruitment and retention. Despite the overall surge in the literature on business models and paid content strategies on news organizations, scholars have certainly neglected the empirical study of both methods, with the different strategies to capture and maintain the customer remaining unclear. Accordingly, this research tries to shed some light on the issue of customer loyalty and customer capture on news organizations with paid content strategies, and asks the following research question:
RQ3: How do news organizations with paid content strategies maintain (customer loyalty) and convince (customer capture) the customer to undertake an economic transaction (subscribe)?
As the clever reader noted, the analysis of customer orientation is based on a sample of online news organizations that develop paid content strategies. But what do we exactly understand as organizations with paid content strategies? Simply those in which users are involved in an economic transaction, i.e., online news organization business models whose revenue systems depend on both customer’s payments and advertising support. Therefore, it is essential that we factually define what a business model is, as well as the different revenue systems currently developed by the online newspaper industry.
According to Teece (2010), a business model defines the way a company generates value (value creation) and how it captures some of this value as profit (value capture). In this sense, a business model represents the “business logic” (Casadesus–Masanell and Ricart, 2010) or according to Peter Drucker (1994) provides answers to the following research questions: ‘Who is the customer and what does the costumer value?’ and ‘What is the underlying economic logic that explains how we can deliver value to customers at an appropriate cost?’
For Timmers, a business model refers to an integrated system consisting of products, services and information flows, including all participants, their roles, their potential benefits and the corresponding profit sources and ways. Christoph Zott and Raphael Amit (2007) contend that the business model is the focus of innovation, and is the decisive source for enterprises to create value for themselves, suppliers, partners and customers. Alexander Osterwalder, Yves Pigneur and Christopher Tucci (2005) posit that the business model is a conceptual tool that contains a large number of commercial elements and inter–relationships, so as to clarify the business logic of a particular entity.
From a theoretical point of view, the first step in differentiating between online newspaper business models, is to consider the revenue model, i.e., whether the customer is involved in an economic transaction. Through the dichotomy of paid vs. free, the Internet enables the establishment of different business models: free , paywall , freemium , metered , donations, virtual kiosks , etc.
In this research, three cases from three different media — The Times, Financial Times and El Mundo in Orbyt — are analyzed. The sample is therefore a non–probability, purposive sample, since the most interesting cases have been chosen to shed some light on the research questions mentioned in the previous section. Nevertheless, a case study requires the use of different and converging sources of evidence. Thus, mixed methods shall be used. This consists of gathering and integrating evidence on each case based on a number of methods and complementary information sources, combining methodologies to analyze a given phenomenon.
This case study used the following empirical sources of evidence:
Internal documentary evidence — Included corporate annual reports, internal reports and studies, corporate Web sites, press releases on the object of study, public statements of the media representatives, and organizational conferences/public meetings.
External documentary evidence — Included specialized research, specialized scientific publications, databases (SABI and Amadeus), and official organization and media reports.
Interviews — Interviews are among the main empirical sources of evidence. Interviews are excellent to capture certain phenomena that cannot be observed. They also are a means to explore the perspective of another person. The main purpose of the interviews was to capture purely qualitative material in order to answer the research questions.
This study’s interviews have been designed based on a closed questionnaire for all interviewees in order to observe the main differences among the organizations. However, we often tried to be more probing, moving away from the pre–set structure of interviews with the aim of exploring in greater depth some commercially sensitive areas. Therefore, the interview design is a set script , as required for the research objectives, but occasionally some matters momentarily received more attention for the sake of fully understanding the different business models.
To achieve the objectives proposed, this research started from in–depth interviews with different managers, not only the digital editor. Data gathering was based on interviews with several managers of the various business areas in which organizations are divided, particularly in the advertising, marketing and product development departments.
As illustrated in Table 1, some interviews were conducted via electronic questionnaire. The questions were the same in the questionnaire and in the face–to–face interview. The personal interviews were conducted in the headquarters of the organization represented by each manager interviewed. The only exceptions were the interviews with John Ridding and Rob Grimshaw, which occurred at the sites of their lectures — Ridding’s “FT Digital Media Conference” at St. Paul’s Hotel in London (panel entitled “The Future of Digital Journalism and News”); and Grimshaw’s “Delivering New Media in a Multi–channel Mobile Experience” at the Internet Advertising Bureau (IAB) in London (presentation entitled “Beyond the Desktop”).
Every interview was preceded by a number of preparatory e–mail messages/calls, either via the manager’s PA (Personal Assistant) or directly with the person interviewed. The aim of this interchange was to clarify the hour, place and theme of the interview. Similarly, after the interviews some calls or e–mail messages were necessary in certain cases only for clarification purposes.
Table 1: Interviews conducted. Media Name Date Position Place Duration/Type The Times Tom Whitwell 10–05–2012 Digital editor News International 1 h. Hector Arthur 26–05–2012 Director of digital development News International 1 h. Martin Corke 13–04–2012 Director of digital integration News International 2 h. Ben Whitelaw 10–05–2012 Community manager News International 1 h. Dave Cockburn 12–04–2012 Planning director of the Newspaper Marketing Agency Newspaper Marketing Agency 2 h. Financial Times John Ridding 07–03–2012 CEO St. Paul’s Hotel 1 h. Rob Grimshaw 05–05–2012 Managing director IAB 1 h 30 min. Jon Slade 01–06–2012 Commercial director FT 2 h. Matthew Wellington 11–05–2012 Head of UK Agency Sales FT 2 h. Peter Spiegel 16–04–2012 Brussels bureau chief FT E–mail El Mundo in Orbyt Juan Carlos Laviana 04–06–2012 Director/Director Unidad Editorial 2 h. Marina de Santiago 07–06–2012 Marketing chief/Jefa de marketing Unidad Editorial 1 h. 30 min. Alberto Prieto 04–06–2012 Division chief/Jefe de sección Unidad Editorial 1 h. Alberto Arroyo 07–06–2012 Director of advertising/Director de publicidad Unidad Editorial 1 h.
4.1. Competition and paid content strategies
Before we answer the research questions, it’s important to convey the role of competition since problems occur in measuring customer orientation when it comes to organizations immersed in a particular environment characterized by technological and market turbulences or competitive intensity (Kohli and Jaworksi, 1990) such as the online newspaper industry (Picard, 2009; Chyi, 2009). All the interviewed managers acknowledged that competition consists of observing and analyzing the evolution of paid content strategies through their respective business models; in fact, they did not conceal their constant communication with competitors  (Laviana, Santiago, Arroyo, Prieto, Arthur, Corke, Ridding, Slade, Wellington, interview, 2012). What remains less clear is the activity of sector leadership within domestic markets and, above all, what is considered direct competition in the market of journalism with paid content strategies.
In that regard, Tom Whitwell’s vision on the competition varies from several years ago until today. The digital editor of British newspaper The Times believes that besides facing competition from the journalistic sector, The Times competes within the sphere of service and, more specifically, against all platforms that require an economic transaction for use of their services. This approach merits interest because it extends the concept of competition to a wider territory, which includes not only other journalistic services, but also entertainment.
Examining only the digital press, the competition becomes clear, however; moreover, the interviewed newspaper managers are aware of the leadership of the free press model in terms of volume (Arthur, Whitwell, interview, 2012). Nonetheless, the The Times’ implementation of paid content poses a cultural question for the medium itself (Whitelaw, Arthur, Corke, interview, 2012). The corporate culture descending from the upper echelons run by Rupert Murdoch is committed to quality journalism that entails per se the reader’s payment, although logically business performance is not largely derived from this payment in the short term (Corke, interview, 2012).
Also, the economic–financial nature of FT.com presents a substantial change with respect to what the managing bodies understand as competition. In the same way that The Times acknowledges the competition’s breadth to include even those companies that are not traditionally journalistic, the Financial Times further extends this range, simultaneously marking centralized businesses in the economic–financial field as direct competition (Slade, interview, 2012). Organizations such as Bloomberg or Reuters, much as The Economist or the Wall Street Journal (these last two above all in the commercial realm) pose the biggest competitive threats, given their network of resources that permit them to publish information of a global nature (Ridding, Slade, interview, 2012).
Multi–platform Orbyt slightly differs in the sense that it is a virtual kiosk which simultaneously mixes paid content with links to the free online newspaper ElMundo.es. In principle, facing the absence of a marketplace similar to the news solution rolled out by Unidad Editorial, Orbyt lacked a direct competitor providing a similar service. However, the emergence of Kiosko y Más, as a virtual kiosk offering titles not excluding those of the founding groups, launched a strong competitive threat. And that is how the managers see the platform (Laviana, Arroyo, Santiago, Prieto, interview, 2012).
To create a brand image as the biggest rival (Kiosko y Más), the organization resorted to traditional business practice: signing up the founding members of Orbyt (Arroyo, Prieto, interview, 2012). The transfer of one part of the directing team provoked a disturbance in relationships with both groups, since the managers of Orbyt had recognized practices and publicity campaigns carried out by Kiosko y Más as similar to those developed by Orbyt with the aim of increasing the number of subscribers and generating brand image (Arroyo, interview, 2012).
4.2. Transformation and change in culture within journalistic organizations
Many of the digitally present journalism companies are in a habitat that makes collaboration, innovation or entrepreneurship absolutely crucial within the culture. This situation is already understood by other theoretical disciplines, such as strategic management or entrepreneurship; however, the practical implementation in the journalistic sector is only now taking its first steps. Publishing companies are moving toward this new culture because beyond its surrounding technology, this situation implies the requirement of a new business culture that involves innovations and changes, above all in the processes of production, distribution and packaging (Whitwell, Grimshaw, interviews, 2012).
Also, delivering superior value to the user involves knowledge and analysis of the user’s demands. RQ2 asked: How do news organizations with paid content strategies identify the demands and necessities of their customers? In such companies, this knowledge of customer demands and needs should be more detailed than that accumulated by free news media, given the monetary cost paid by the reader. The Internet presents a challenge of such magnitude that the knowledge of the reader includes commercial and editorial aspects. The commercial side is designated for advertising companies, while the editorial is based within the offering of content, but with additional services designed to satisfy the demand of the reader (entertainment, information, knowledge, etc). These two factors potentially separate free services from paid services.
The journalism industry is starting to adapt itself. Nonetheless, print journalism has been traditionally based on a B2B model. The Financial Times, The Times and El Mundo are used to being B2B operators working with strategic allies who do not know the readers; even the newspapers themselves did not know the readers (Grimshaw, Whitwell, Laviana, interviews, 2012). However, understanding how to do business from a commercial perspective with the aim of comprehending different sales processes characterizes the paid content strategies of media groups whose incomes pivot on subscriptions. Such a tactic requires learning the trade, comprehending the marketplace and readers’ motivations, innovating and experimenting by the company.
One clear example responds to the evolution of the free articles idea of the Financial Times (Grimshaw, interview, 2012). At the beginning, the company allowed free access to 30 articles per month, and then reduced access to the eight monthly articles now offered. It is a gradual process to reach a balance, until the company discovers the best financial and commercial option (Grimshaw, interview, 2012). The same situation occurs with innovation using the mobile phone. The organization decided to integrate this device into general subscriptions, in such a way that a user could have access through any device using just one password (Grimshaw, interview, 2012).
With the strategy of offering a free sample of a limited number of articles as the business model, the FT aims to encourage its audience to try and use its contents (Grimshaw, interview, 2012). This brings to the digital realm a natural process from the physical world: trying a product before its purchase (Grimshaw, interview, 2012). The Financial Times operates like a retailer of mobile devices or even like a clothing shop, where the client has a direct relationship with the seller and tests whichever product is truly of interest. In the cases of The Times and El Mundo in Orbyt, the business model does not permit this kind of interaction.
For this to occur, a client must first register on the platform, something which logically permits an initial contact and relationship with the client. The Financial Times has more than four million registered users, i.e., a self–selected audience based on the very nature of the business model (Grimshaw, interview, 2012). From this initial registration, the organization heavily depends on the marketing department to transform registered users into paying subscribers. To do so, after a long process of study and adaptation of the business model, the department of marketing and data analysis has a list from which certain individuals can be selected and convinced to become paying customers, based on behaviors such as browsing habits, browsing time, page visits, etc. (Grimshaw, interview, 2012).
Dependency on the department of marketing and data analysis fundamentally drives the business model. This occurs, essentially, from the two perspectives previously indicated: the editorial, but also, the commercial. In addition, the company’s direct relationship with the client permits more effective advertising, given that the company carries out a detailed targeting of the audience, since a greater knowledge of the customer offers greater potential in the placement of advertisements (Grimshaw, Ridding, interview, 2012). For example, the online advertising rates at The Times have quadrupled since the implementation of the paywall, while the advertising premium rates of the Financial Times have the same economic value as in the traditional sector (Corke, Ridding, interview, 2012).
The managing bodies of The Times and El Mundo in Orbyt have started to realize that they are part of a business fundamentally dependent on marketing (Laviana, Corke, Arthur, interviews, 2012). Payment implementation involves an important transformation and learning process, raising a challenge of the first order for journalistic organizations, not only because of the challenge’s roots in technology, but also because of the organizations’ prior lack of experience in using data to convince the user (Corke, Laviana, interview, 2012). Companies such as eBay or Amazon specialize in this type of process. Nonetheless, paid media services are beginning a learning phase to determine the different processes open under payment and which previously were unknown. In this sense, media become businesses of marketing, of subscription sales (Laviana, Corke, Grimshaw, interviews, 2012).
In addition, the process of subscription via an economic transaction requires a simple payment platform for the client (Corke, interviews, 2012). It demands a user experience accessible to all kinds of audiences and supposes a great technological challenge for the organizations. Charging for content is a new scenario for journalistic organizations, implying the need for the facilitation of the creation of products and the facilitation of the purchase of these products through financial transactions which are truly simple for the readers (Corke, interview, 2012).
In the three media groups analyzed, the design and management of the payment platforms occurs within the company’s own installations (Corke, Santiago, Wellington, interviews, 2012). Instead of third–party companies, the company’s own marketing department, which has had to learn and adapt itself to this new scenario, has had to execute operations with which it had no prior familiarity. Such learning demands that the organization commits itself, to some extent, to the long term making of mistakes and even failures.
In summary, the main transformations involve news organizations that recognize the need for learning different sales processes. The Financial Times’ strategy of allowing users to freely sample content (in the hopes of developing a more direct relationship with the reader) serves as a prime example. Culturally and internally, this strategy calls for increased marketing staff engagement, with an emphasis on gradual, strategic experimentation.
4.3. User satisfaction and needs — How are they measured?
RQ1 asked: How do news organizations with paid content strategies measure the satisfaction of their paid customers? The first sources of evidence used to understand the demands of the readers are data and data analysis (Laviana, Wellington, Arthur, interviews, 2012). Such data are the fundamental resource for subscription–based organizations. This collection of data depends, however, on the business model implemented.
As to the data, there are several processes through which an organization gets to know a reader: from the registration process, the analysis of the user experience, the feedback received through comments, social networks, forums, e–mail, etc. Media companies are making a considerable effort to adapt themselves to these new scenarios (Whitwell, Laviana, interviews, 2012). For example, the business model of the Financial Times permits direct data collection from the reader. This translates into a greater understanding of the audience, which simultaneously generates income, in commercial terms (advertising), but also directly (subscriptions) (Wellington, interviews, 2012). The organization, using this information, can adjust its products to its readers’ requirements in a short time (Wellington, interviews, 2012).
The collection of data at The Times and El Mundo in Orbyt comes fundamentally from the experience of the reader, i.e., from the reader’s browsing throughout the daily but also from the reader’s online registration (Laviana, Arthur, interviews, 2012). In the case of El Mundo in Orbyt, for example, the marketing department is in charge of the analysis and extrapolation of trends. But, The Times and the Financial Times have their own specific teams to perform analysis using sophisticated information tools (Arthur, Slade, interviews, 2012). At the Financial Times the team consists of 25 people: five in London and 20 in Manila.
The analysis of data and the extrapolation of trends for example, has allowed the Financial Times, to understand how its clients consume information (Slade, Ridding, interview, 2012). Thus, the organization is beginning to differentiate content over different devices and time slots. So while creating the printed newspaper is based on detailed research articles of an analytical nature (Slade, interview, 2012), in the digital sector, content tends to be concise, constantly updated, and with a strong presence of data and data analysis (Wellington, interview, 2012), thus, coverage of capital markets has a larger following via smartphones; meanwhile, analytical articles hold more appeal on tablet devices and in the newspaper itself.
The Financial Times is learning how to analyze and determine what type of content is best suited for consumption depending on the channel (Reading, interviews, 2012). Publishing organizations, especially the Financial Times as a company focused on specialized journalism, confront an immense challenge in relation to the management of content delivered through different devices. The organization’s approach to this new reality is unique, mainly because it is a purely technological process based on computer engineering (Grimshaw, interviews, 2012).
Most journalistic organizations approach differentiation of information across different devices through daily adaptation and adjustment of their products through a team designed for that role (Grimshaw, interviews, 2012). This is unusual since it is a costly process in terms of manpower and time. However, the organization relies on technology as a tool for adapting content to platform. What the Financial Times is considering the development of a software program designed to carry out an automatic initial scan, so that a journalist using tailored IT tools can check later to see if the content is suitable for the platform type and for the particular time slot in which the audience uses this channel (Grimshaw, interviews, 2012).
Apart from these data sources — which exist thanks to the Internet — journalism organizations also get to know their readers’ demands through traditional methods: market studies, reader panels and externalization of studies (Laviana, Arthur, Slade, interviews, 2012). However, the use of these methods has diminished because of the ongoing economic crisis.
As noted before, data constitute the fundamental resource of subscription–based businesses. Data analysis will determine how and when to convince future clients of which commercial orientation to undertake (greater understanding of the reader implies better targeted advertising). This knowledge of usage frequency and preferences regarding content on a certain platform allows the organization to respond and to adjust products in real time, from the standpoint of development (software) as well as publishing production (Slade, interviews, 2012). The better an organization knows its audience, the better its business will perform (Grimshaw, Laviana, Arthur, interviews, 2012).
For example, at The Times, the creation of a new product on a certain platform occurs in three stages: discovery, design and delivery (Arthur, interviews, 2012). The first stage, above all, occurs when the organization needs data, research, experiments and understanding of the experiences of other companies within the industry in order to later strategically determine how to operate.
Nonetheless, the changing nature of the digital sphere demands strong and swift action in the implementation of a new product (Arthur, interviews, 2012). The organization should act quickly and without extending the processes of analysis (Arthur, interview, 2012). One clear example is in the launch of the iPad in the United Kingdom. The Times designed and created its iPad app in time for the iPad’s launch, while other organizations were still in the process of creating or experimenting. As a result, the British daily’s application became the leader in this market (Arthur, interviews, 2012).
While sources of evidence that permit recognition of user satisfaction are basically the same used to determine the user’s needs and demands, progressively, media Web sites have developed and incorporated new tools for feedback, such as social media presence, e–mail, comments on the news or customer service (Laviana, Slade, Arthur, interviews, 2012).
The implementation of paid content strategies demands a direct relationship with users with the aim of understanding audience data and adjusting the product accordingly. The departments of analysis or customer service play a fundamental role. For example, at The Times the personal relationship with the client requires the creation of direct feedback mechanisms between the media group and each reader. In this way, content generated by the general user is prohibited, allowing only registered users to comment on the platform, avoiding “information noise” (Arthur, Whitelaw, interviews, 2012).
The adaption of the products to reader demand is fundamental to maintaining each client’s loyalty and to increase their spending (Corke, Grimshaw, interviews, 2012). The organizations must maintain client satisfaction as it forms a fundamental element of the business (Wellington, Slade, Arroyo, interviews, 2012). Journalistic organizations are starting to realize that they must listen to their users through all the feedback tools available, but also through the different marketplaces in which they compete (Slade, Corke, Laviana, interviews, 2012). User demands in the Orbyt platform were translated into the launch of a Gourmet club that includes content on gastronomy, wine tasting, etc. (Arroyo, interviews, 2012).
So as to measuring paid customers’ satisfaction, the case study reveals an enhanced effort to develop and have online tools — e.g., registration, comment feedback, and social media — to supplement the traditional vehicles of market studies, reader panels, etc., and deliver additional, analyzable reader data. Coupled with quick response to market opportunities (such as The Times’ iPad app development), customers now get more personalized attention.
4.4. Loyalty and persuasion
RQ3 asked: How do news organizations with paid content strategies maintain (customer loyalty) and convince (customer capture) the customer to undertake an economic transaction (subscribe)? Paid content strategies’ objectives include not only the conversion of readers to subscribers, but also, to retaining readers in the long term. Journalistic organisations also attempt to obtain subscribers from the most valuable segment of the market, and to include the highest spenders. So a dual approach results, involving methods of subscriber recruitment and retention.
Recruitment and persuasion campaigns are common in the three media groups analyzed. Their implementation varies, depending on the business model. Fundamentally, they require maintaining a direct relationship with the user, not only with the marketing department, but also with the editorial department (journalists) via spaces provided for that function, such as comments, feedback tools, e–mail, etc. (Arthur, interviews, 2012).
One of the prime examples of driving subscriptions to Orbyt is the Twitter account of Pedro J. Ramírez, then director of the newspaper El Mundo , with more followers than the platform’s official account. From its creation, his account has turned into a fundamental sales channel for the development of the platform, featuring the launch of promotions for every 20,000 new followers, and enabling the capture of an average of 5,000 clients (Santiago, interviews, 2012). The promotional strength of his Twitter account as a sales channel has declined in such a way that the promotions are currently available through other media channels, above all through the free cyber media platform ElMundo.es. Nonetheless, the director’s Twitter account continues to maintain a significant audience, making it possible to publicize certain incentives aimed at encouraging non–subscribing users to try the platform through free access to one article, what the organization calls “bonus for twitterers” (Santiago, interviews, 2012).
The fundamental recruitment method involves financial incentives (Corke, Slade, Santiago, interviews, 2012); i.e., promotions and discounts for newspaper subscriptions. For example, El Mundo in Orbyt focused on promotions, with which users obtained a discount on the purchase of an iPad if they subscribed to the platform (Santiago, interviews, 2012). The recruitment strategy follows a basic pattern through which the organization offers a device directly related to the service offered (Santiago, interviews, 2012).
Once the promotion period has ended, the percentage of retention on the platform is very low (Santiago, interviews, 2012). This indicates that the reader is mainly oriented towards the promotion, and less toward the service. With this in mind, the subscriptions department and the call centre proposed an aggressive offer 15 days before the end of the subscriptions period, with the aim of retaining the user, given that discounted prices are the most effective campaigns after a promotion (Santiago, interviews, 2012). What the media groups are discovering is that the retention of users is as complicated or even more than the process of recruitment (Slade, interviews, 2012). This raises a challenge of great magnitude with regards to client loyalty.
In the case of The Times, besides promotions offering coupons for use at organizations such as Marks&Spencer or Amazon through company agreements between both organizations, the daily also offers multiple incentives to those who are already subscribers. For example, to its most active readers, the daily offers the possibility of a guided tour of News International’s headquarter facilities in London, or a breakfast with their favorite journalist, among many other initiatives. As a result, The Times generates an average of more than 2,000 daily comments, where around five percent of its audience routinely publishes opinions in a natural and open way. Therefore, what the organization is beginning to understand is that all of the feedback tools (comments on news articles, e–mail, and above all, social networks) are fundamental elements for gaining and retaining client loyalty, and less so for capturing new clients.
Media groups’ client retention strategy aims to fundamentally attract the reader via different tools. The main tool is the creation and adaptation of complementary services (Slade, Corke, Arroyo, interviews, 2012). However, depending on the media group, developing these services varies, from the creation of a community platform with benefits for its members (Times+ from The Times and DutyFree on Orbyt) or through services oriented toward the reader via the personalization of information, such as that of the Financial Times (Slade, interviews, 2012). Both strategies try to create a community that — based on its editorial offering and on extra services of value — remains loyal to the platform and is motivated to interact through a direct relationship with the organization (Slade, Laviana, Corke, interviews, 2012).
In this sense, one of the principal reasons why FT.com has a large number of subscribers (more than its competitors) is precisely because the organization doesn’t limit itself solely to the production of information content specialized in the economic and financial field. In addition, FT.com offers a wide portfolio of complementary services aimed at satisfying the tastes and needs of its target, with the objective of increasing its appeal and providing a kind of utility of its own, unique and beneficial for the interests of its clientele (Slade, interview, 2012). With its complementary services, FT.com creates a powerful platform for branding, marketing and brand advertisement. In the same way, the events, conferences and workshops provide a powerful medium of opinion and influence in the business and economic sectors. Additionally, many of these complementary services require an economic transaction apart from the subscription to the digital newspaper.
The quality of journalism also plays a fundamental role (Whitwell, interviews, 2012), just like the interaction and participation of the subscriber (Slade, Arthur, interviews, 2012). Reader retention strategies can basically be summarized in three options: provide a platform of additional services aimed at satisfying readers’ needs (for entertainment, leisure or culture), produce factually correct, quality journalism and maintain a high level of interaction and commitment, whether via the numerous feedback tools (social networks, comments, e–mail) or via the personalization of content (in other words, the creation and development of a direct relationship with the audience).
This research has tried to shed light on the following research questions: What are the main transformations or influences that trigger online newspapers’ business models with paid content strategies on news organisations? How do news organisations measure the satisfaction of their paid customers? How do news organisations identify the demands and necessities of their customers? How do they maintain (customer loyalty) and convince (customer capture) the customer to undertake an economic transaction (subscribe)?
Paid content strategies’ implementation rationales vary depending on the media group analysed. Nonetheless, the fundamental reason lies in a basic premise: the poor economic performance of free strategies through business models depending on advertising. We can confirm that the poor advertising revenue from digital media led to the adoption of paid content strategies in the media groups analysed. The competitors’ use of free content strategies reinforced this finding, in such a way that the managing bodies interpreted that the future of journalism as tied to another solution: reader payment.
Paid content, more than an option, constitutes a resource for making digital content profitable. The option arose because free content strategies through business models based on volume and advertising dependency are, under the prism of the managing bodies, profitable, and not because paid content strategies are themselves profitable. In fact, none of the media groups analyzed could operate independently or be profitable without a presence within the print sector.
Paid content strategies are developed as a solution for making digital media cost–effective, in accordance with a transformation of corporate culture based on technological change and innovation. On the other hand, despite the strategic planning of media groups employing paid content strategies, the economic uncertainties and discrepancies on their adoption indicate that charging for content remains an option of an experimental nature and, in the majority of cases, are used at the expense of the evolution of the results.
The fundamental transformations that paid content strategies cause in organizations, above all, relate to three aspects: competition (competitor orientation), culture of the organizations, and comprehension of the demands and needs of the readers (customer orientation). Firstly, regarding competition, paid content strategies extend the term in such a way that it applies to other sectors. Journalism companies now not only compete with organizations from the traditional sector, but also compete for time. Above all, they compete with other services, and not only cultural ones.
Secondly, regarding other organizations’ culture, paid content strategies trigger intense processes of innovation, experimentation and testing of new business and product campaigns and practices. The cultural change requires an overcoming of resistance to the changes within the journalism industry and great dependency on the marketing department.
Thirdly, paid content strategies require a direct relationship with the user, knowledge of the user, and understanding of the user’s demands and needs regarding information, leisure and entertainment (complementary services). The collection of audience data through registration or subscription, as well as analysis of browsing habits, is a fundamental asset for delivering better value to the costumer. In this way, the main value proposition of journalism companies not only becomes the production (of the newspaper) but also the delivery of services designed to satisfy the client, whether through additional services, interaction or content personalization. Future companies of the journalism industry will not be organizations depending on content, but (also) on the exclusive services they offer.
For the newsroom manager, this study of satisfaction and customer value capture (being customer–oriented) extends his or her ability to manage toward stronger customer orientation. Specifically, the study sets forth the first steps of practical implementation in the journalistic sector of what already is taken for granted in general business administration. As the case studies illustrate, publishing companies are moving toward a new culture because their surrounding technology requires the involvement of innovations and changes, above all in the processes of production, distribution and packaging (Whitwell, Grimshaw, interviews, 2012). If these news organizations can recognize the need for learning different sales processes — witness Financial Times’ strategy of allowing users to freely sample content (in the hopes of developing a more direct relationship with the reader) — then all newsroom managers can take note that culturally and internally, they will have to increase their engagement with marketing staff via gradual, strategic experimentation.
The other new, non–traditional practical managerial implementation steps (inside and outside the newsroom) will focus on developing refined data analysis skills. Internet–based data sources will allow news organizations to pick up where typical methods — market studies, reader panels and externalization of studies (Laviana, Arthur, Slade, interviews, 2012) fall short. Data analysis will allow managers to determine how and when to convince future clients of which commercial orientation to undertake (greater understanding of the reader implies better targeted advertising). The better an organization knows its audience, the better its business will perform (Grimshaw, Laviana, Arthur, interviews, 2012).
Still, we will also witness the need for swift decision–making processes in implementing new products. This will further the need for the enhanced online tools — e.g., registration, comment feedback, and social media — alluded to earlier. Anything that will supplement the traditional vehicles of market studies, reader panels, etc., and deliver additional, analyzable reader data will go a long way toward fostering what Sylvie (2012) called “managerial introspection” and “a demand–side style of analysis when it comes to dealing with competitive issues involving challenges from technology advancements” . In other words, managerial decision–making is evolving to a process–based phenomenon.
About the authors
Manuel Goyanes is a post– doc researcher in the Department of Journalism and Mass Communication at Carlos III University of Madrid.
Direct comments to mgoyanes [at] hum [dot] uc3m [dot] es
George Sylvie is Associate Professor in the School of Journalism at the University of Texas.
E–mail: g [dot] sylvie [at] utexas [dot] edu
1. Competitor focus and interfunctional coordination.
2. For example in Naver and Slater (1990) research, MO was postulated as a triangle with each component occupying a corner of the scheme where each behavioral component contributes equally to MO.
3. Based on free consumption of information and advertising support.
4. Based on charging for consumption and admitting different revenue models such as subscription or pay–per–view, which includes pay per day/week or read article, following the micropayments model implemented by iTunes. In the summer of 2010, The Times of London was the first online newspaper to implement this business model. Almost immediately, the plan reportedly lost 90 percent of their online traffic (Goyanes, 2013a), but the latest data published by News International (February 2012) suggested that the paper has more than 120,000 digital subscribers.
5. This model gives away certain content for free, and puts other content behind a paywall. In the case of financial newspapers, e.g., value is derived by top financial news that cannot be found elsewhere. The traditional example is the Wall Street Journal that put top financial news that is important to businesses, traders and similar others behind a paywall, because they will pay for it. Meanwhile, the model leaves general news outside the paywall.
6. Allows free access to a certain number of articles in a given period of time and once this amount is exceeded the newspaper invites the reader to subscribe to one of the multiples packages. One of the most successful examples is the Financial Times, which has set the limit to eight stories, if the reader had been previously registered. So far, FT.com has more than 4 million registered users, of which 313,000 have been converted to paid–for content (for Q3 2012). This translates into €30m to €35m extra revenue, only from subscribers (the service launched in October 2007). Advertising is now the minority of FT’s revenue, with content sales constituting 58 percent. And digital is now 47 percent of revenue of the group (for Q3 2012).
7. This is a strategic alliance between several news organizations with the aim of commercializing the traditional newspaper/magazine on the Internet (Goyanes, 2013b). Thereby, the digital kiosk (Such as El Mundo en Orbyt) could be seen as a replicate of the traditional kiosk, a catalog of publications where each organization competes under the same conditions (i.e., all publications are for a fee and not for free) although the price of each newspaper is a particular decision of each organization. It is a new marketplace that has web presence (different from the online newspaper) as well as in the respective app stores (Apple and Android) through different electronic devices (tablet and smartphone) where the user downloads the free application and has access under payment (either subscription or pay per daily/weekly use) to each participant newspaper. Through the digital kiosk the news organizations avoid platforms such as Apple’s NewsStand where 30 percent of each purchase and the user’s registration belongs to Apple and not to the news organizations.
8. The script is available on request.
9. David Cockburn (interview, 2012) exemplifies the mutual scrutiny through the following phrase: “If you want to know the strategy of the Financial Times, talk to the people at The Times.”
10. The current director of El Mundo is Casimiro García–Abadillo.
11. Sylvie, 2012, p. 274.
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Received 2 December 2013; revised 3 March 2014; accepted 4 March 2014.
“Customer orientation on online newspaper business models with paid content strategies: An empirical study” by Manuel Goyanes and George Sylvie is licensed under a Creative Commons Reconocimiento–NoComercial–SinObraDerivada 4.0 Internacional License.
Customer orientation on online newspaper business models with paid content strategies: An empirical study
by Manuel Goyanes and George Sylvie.
First Monday, Volume 19, Number 4 - 7 April 2014
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