Technology of the Week – Online Newspaper Industry Competition by group 27

In our video, we perform a comparative analysis between the business models of two different online newspapers. Whereas the Wall Street Journal (WSJ) fully relies on subscription fees as the sole source of online income, NU.nl prefers an online advertisement strategy to generate revenue.
A distinctive feature of WSJ’s business model is its value proposition: offering high-quality articles. Because WSJ is able to accurately identify its potential reader base (students, professors and corporate customers), it is able to ask relatively high subscription fees. The lock-in strategy, through which WSJ attracts lifelong customers by offering students a subscription discount, is of vital importance here.
On the other side of the spectrum, NU.nl offers free-of-charge news content which is updated 24/7. The article quality is debatable, since usually only essential information is included. As such, NU.nl has developed a business strategy that is about quantity rather than quality: advertisement income. The higher the quantity of users, views and clicks, the more user data can be sold to advertising parties and the more income can be generated from selling advertisement space.
Next to the strengths of both business models, the weaknesses are compared too. Regarding WSJ, the indivisibility of the product is a malefactor. In other words, many customers pay the full package but are only interested in parts of it. Since the standard subscription fees are exceptionally high, this can deter many users who aren’t interested in the newspaper’s full content. For NU.nl, the perceived low quality of its contents impair on the number of frequent users. Moreover, the sole focus on advertising income might imply an overrepresentation of advertisements relative to news content. Some users might experience this advertisement proliferation as bothersome and may switch to other free competitors (e.g. NOS.nl).
All in all, there’s strong reason to believe that transitions in the IT-sector have enabled firms to guard against the problems mentioned above. As a solution we propose Blendl, that offers separate articles at prices that are more in line with the customers’ willingness to pay. The information broker purchases bundles of goods from the newspapers and sells them in parts to users. Thus, supply and demand friction diminishes and the market clearing is more efficient. Although this business model poses a threat to the initial creators of articles (customers may switch from a WSJ subscription to Blendl) on the long-term, it will boost reader quantities in the short- to medium-term. Moreover, Blendl can gather more information about its users due to the transactions they do through the platform. This implies higher quantities of more accurate information, which will subsequently yield more customized advertisements and higher advertisement income.