In this blog we will focus on the changing dynamics of information goods within the newspaper industry. We will discuss the transformation by comparing the business models of the traditional newspaper NRC with the disruptive news platform Blendle.
Blendle is an online journalism platform offering articles from the most important Dutch newspapers and magazines. All these articles are available in one web application where users will only have to pay for the articles they read. On the contrary, NRC is a high-quality newspaper platform offering articles on a traditional printed newspaper as well as in digital form. NRC offers their subscribers full access to all the articles in the previous mentioned forms.
How do both platforms remain competitive in the newspaper industry? Being the first platform offering this type of service, Blendle has the first-mover advantage. The online kiosk also applies differentiation by offering a unique platform where users could purchase articles from all newspapers and magazines. The implementation of a pay-per-use system give users the freedom to choose how much articles and from which provider they want to read. Furthermore, Blendle creates awareness by offering free credit to new users.
On the other hand, NRC uses versioning to target different audiences. Although the content is mostly the same, with three different versions a larger amount of potential customers can be addressed. NRC also applies cognitive bias: by offering three different subscriptions, customers are more likely to choose the middle one than choosing the expensive or basic options. Along the same lines, NRC bundles its’ paper version with its’ online version. The upper option combines the online and daily newspaper, while the lower option combines the online newspaper and the Saturday edition. Bundling is a smart option when customers differ in their willingness to pay.
What are the strengths and weaknesses of both businesses? Blendle is the only company offering a differentiated product with multiple newspaper access. The pay-per-use concept is powerful as it makes news customizable and the cost for Blendle are quite low as they only provide the platform, not the news. Meanwhile, NRC uses different pricing strategies to increase revenue and is in charge of the content they provide. Moreover, NRC leverages cognitive bias in their subscription offerings.
The downside of Blendle is that they do not generate own content. Moreover, Blendle’s pricing strategy does not optimize revenue. Also, Blendle does not lock-in its customers: there are no subscription possibilities whatsoever. NRC’s weakness is the high fixed costs: they operate with an old business model in a competitive industry, focusing on advertising income. Their one size fits all principle makes it also hard for them to differentiate.
How could both companies turn their weaknesses into strengths? By offering bundles of articles, Blendle takes the differences in customers’ willingness to pay into account. Blendle could even use data analytics to determine personalized prices. NRC should further develop their online activities, focussing on videos and interactive components. Moreover, NRC should adjust its’ pricing strategy by introducing group pricing.
Team 32
