TEAM 31
Information Goods are all goods deriving their value from the information they contain. An interesting topic in the context of information goods is the newspaper industry. The growth of Digital Media makes access to Information Goods, including News, easy and frequently free. Thus, newspaper companies explore new business models, built around their Internet websites.
The first Business Model is the Premium Subscription. One of the business leaders in the Premium Pricing Model is the Times. The Times is a leading News provider. However, only a very small part of every article is visible online without a paid for subscription. The main part of each article is protected by a Pay Wall, allowing only two articles per week for the free subscription. A Pay Wall is an internet technology restricting access to online content only to Premium Subscribers.
The Freemium strategy allows access to part of the content for free, yet restricting other parts behind a paywall. This strategy is currently used by Wall Street Journal. Usually, older news items are available for free online. However, breaking news require a paid for subscription. Moreover, the basic functionality of financial tables or charts is provided for free. However, important tools are restricted to premium subscribers.
Another popular business model is providing free access to the full continent with revenue made by hosting ads on the newspaper webpage. The Guardian is currently utilizing this model. The full content of the newspaper is available online, for free. Yet, carefully placed advertising is hosted on the newspaper website, allowing for the collection of crucial revenue.
All three newspapers practice versioning by offering the print, digital and combined version. Also, they all practice Pricing Discrimination by offering special lower prices exclusively for students. The Times conducts bundling through organizing different content and features into distinctive bundles like Classic or Ultimate Pack. The Wall street Journal differentiates versioning by making special regional versions available to customers, like European or American.
To compare these different business models, we visualize the Porter Five Forces model for each of these companies. The Times, the Wall Street Journal and the Guardian are all well established brands and experience considerably low bargaining power of suppliers and customers. However, due to the rapid growth of Internet, they face considerable threat of new entrants and substitutes. Also, there is is intense competition in the industry as all players are fiercely competing with each.
If we look at particular strengths, all three newspapers enjoy high internet visibility, customer loyalty and brand recognition. Yet, all are threatened by the increasingly high quality offered by emerging free access news websites. Also, the Guardian model is threatened by the popularity of ad blocking software, which makes clear a weakness of the model: the exclusivity of ads as revenue source.
Overall, these business models face the imminent need to rapidly adapt to the new Information Goods landscape dominated by Social Media and Networks. Otherwise, their potential to sustain the newspapers employing them will diminish and will become obsolete.
