Research for this discussion topic builds on the findings of the analysis of Stratfor’s core competencies and the Publishing Landscape discussion.
Successful Revenue Models Websites generally rely on one of three models to generate revenue: subscription fees, advertising, or a combination in which some advertising-supported content is available to all readers while “premium” content -- available for a fee -- is advertising-free.
Emerging software that has either the direct or indirect potential to block online ads is a threat to the ad-supported revenue model. Adblock Plus is a Firefox add-on that blocks all advertising on a webpage. Similarly, Internet Explorer 8’s “InPrivate Blocking”, which was designed to allow users to anonymously browse websites and keep their surfing activities private, has the potential to block ads.
There are therefore potential technological barriers in the future for the ad-based revenue model. Overall however, the research is inconclusive on what the successful business strategy will be.
In general, American companies looking to expand their markets have the liberty of pursuing customers and strategies abroad that do not mirror their business strategies at home. Examples of this abound across sectors, from fashion (Wrangler has an up-scale image in Europe and proletarian one in the U.S.) to car manufacturers (models are built differently for Europe and the U.S.) and finally to the publishing world (Newsweek and Time have different editions depending on whether they’re published in Canada, the U.S. or Europe). Technology of the web allows online publishers to do the same by recognizing the location of the visitor/subscriber and adjusting the content of the site accordingly.
In order become successful abroad, online publishers of world analysis will want to consider using add campaigns in up-scale readership magazines (such as Foreign Affairs) as well as the strategy of “Celebrity Dressing” -- using testimonials of prominent readers to emphasize the kind of readership that is already captured. Many publishing houses also use guest columnist from the region as well as often amending the content (or display of the content) depending on where the product is purchased/viewed. Presence abroad (“boots on the ground”) generally seems to be a must across the spectrum for international success.
Future of the newspaper model
Newspapers are being hurt by a combination of major costs (debt servicing from sinking values, cost of printing up 25 percent in 2007-2008, delivery and staffing) and revenue decrease (reliance on print advertising vs. poor online ad revenue, end of classifieds due to online advertising, subscription decrease due to internet readership).
Newspapers that survive will be those that can minimize costs and maximize revenue. Small local papers can do this because costs are small and local advertisers have nowhere else to turn. Huge national papers can do it because economies of scale increase efficiency and they can command relatively high ad revenues from companies that want to advertise nationally. Midsize papers have the worst of both worlds and are the ones at risk of collapsing.
Successful Competitors: The Economist
An analysis of The Economist’s online publishing operation as Stratfor’s primary competitor reveals obvious ways in which the two companies differ regarding approach and content delivery. Essentially, www.economist, offers a significantly more expansive amount of content – although not as fresh (the site posts about two new pieces daily versus Stratfor’s 5-10 daily pieces). The Economist has also been much better in branding its product and has a distinct “personality” that is readily identifiable by readers across the world.
Future of the Wire Services
Newswire agencies have learned that it is no longer profitable to invest resources in reporting local news. The local newspapers can do a much better job for much less money. There is also a wider consumer base on the Internet where demand for international news is higher.
As a result, newswire agencies over the years increasingly internationalized their news focus. The more successful newswires right now are those that can adapt to more globalized news genres. Reuters, for instance, decided to become more financially-focused (over 90 percent of Reuters coverage is on global finance. With the decline of newspapers, the demand for international news coverage is increasing. Only the newswire agencies that have spread out far enough across the globe and have the financial capability will be able to capitalize on the international news market. While AP and Reuters by no means provide comprehensive and 100% reliable news, they do have the ability to cover a story globally, and that is still needed in a world where major dailies have closed their foreign desks due to budget considerations.