این فصل را با ذکر تمام تیترهایش (تاکید میکنم تمام تیترهایش) به انگلیسی ساده و روان خلاصه کن   Business Models and Value Creation
in the Newspaper and Magazine Market










The print media industry is one of the most important branches of the media industry. Print products are media products that are distributed in printed form, such as newspapers, magazines, and books. All enterprises that create and/or distrib- ute these products are regarded as print media enterprises. In this chapter the management of newspaper and magazine publishers is examined, using US-American media as examples.
Newspaper and magazine publishers are facing intensied competitive pressure due to digitization and market entry of new competitors. Against this background,
the following sections present the structure of the newspaper and magazine markets as well as the interactions of the market participants. Value creation structures, core competencies, and core assets are analyzed. The business models of newspaper and magazine publishers and the functions of newspaper and magazine management are illustrated.1


5.1	Range of Products and Services

The portfolio of a newspaper or magazine publishing house comprises all offered products and services. Based on the denitions of print media in Chap. 2.1, a further partitioning into various types of newspapers and magazines is possible. Figure 5.1 gives an overview of the entire range of products and services of newspaper and magazine publishing houses.

 Newspapers

Newspapers are usually distinguished on the basis of three criteria:

•	Publication frequency (daily, on Sundays, weekly)
•	Distribution channels (subscription, newsstands)
•	Circulation area (local, regional, national)

In contrast to free newspapers, the need for payment of the distribution is emphasized as another characteristic.
Daily newspapers are classied into subscription papers, which are predomi- nantly delivered by delivery boys or by mail and papers which are predominantly
sold at newsstands or by other retailers. There are subscription newspapers with local and supra-regional content. Local newspapers are produced for a regionally limited market and usually predominantly distributed by subscription. Among the daily newspapers distributed by subscription only, a positive development can be observed for quality-oriented titles that focus on information and clearly distinguish themselves from the tabloids.
Despite declining advertising revenues, the daily newspaper is still one of the most popular advertising media. However, its share in total volume of advertising expenditures has been decreasing since the mid-1980s.
Examples of classical subscription newspapers are press titles with regional circulation areas such as“Standard Times”or“Herald News,”and supra-regional daily newspapers such as“The New York Times”or“United States Today.”
Newsstand newspapers are also called tabloids, due to their special format. Just as
subscription newspapers, they are present in both ways, as regional newspapers (“The Denver Post”) or as supra-regional newspapers (“New York Post”).
According to their editorial concept, weekly newspapers may be classied into
economic newspapers (e.g.,“The Journal of Commerce”), confessional newspapers
 
	Range of Products and Services	107
(e.g.,“Catholic Sun”), and general weekly papers (e.g.,“The Phoenix”). Another category is local and regional advertising newspapers which are distributed free of charge in the circulation area and are exclusivelynanced by advertising revenues (e.g.,“Midweek”). Weekly and Sunday newspapers traditionally have a higher circulation than daily papers since many readers prefer to read a weekly rather
than a daily newspaper. Also, Sunday newspapers cater to daily readers who do not want to spend the weekend without the newspaper reading they are accustomed to (Picard and Brody 1997).


	Magazines

Magazines are generally categorized into popular, professional, and customer publications. Beyond that, confessional magazines, advertisement papers, ofcial journals, and local gazettes may be mentioned. In the following, we primarily discuss popular magazines and professional magazines.
Popular magazines usually address a broad spectrum of target groups. The editorial content predominantly consists of currents topics, easily comprehensible information, and entertaining elements. In the sector of popular magazines, general and special interest magazines may be distinguished. In contrast to special interest
magazines, general interest titles fulll the criterion of catholicity to a larger degree. They are conceived for broad audiences and offer the readers an extensive spectrum
of information in the areas of politics, economics, current affairs, culture, and entertainment as well as sports.“Newsweek”and“Time”are probably the best- known general interest titles in the United States.
Special interest magazines address a dened reader market segment that is interested in informative and entertaining content on a certain topic. They provide the reader with information on the main topic in a generally comprehensible and
entertaining way and are not mainly read out of professional interest as is the case with specialist journals. Special interest titles benet from the continuous displace- ment competition among popular magazines since they apparently satisfy the readers’need for information more appropriately than general interest pictorials.
Apart from age- and gender-specic offers, such as women’s, family, or youth
magazines, special interest titles cover a wide range of hobbies and interests, such as
motor sports, computer/IT, travel, sports, health, or economics. Confessional magazines may also be categorized as special interest magazines.
Professional magazines exhibit an extensively homogeneous target group struc- ture and a content-wise emphasis due to this specialization. All periodic prints (including scientic journals) that indent a temporally unlimited distribution that are published at least four times a year and primarily deal with vocationally relevant
contents are called professional magazines. Professional magazines essentially report on scientic, technical, and economic areas.
In the United States there are more than 5000 press titles within the range of
professional magazines. While some titles are also distributed via retail shops and paid subscriptions, the main channel of distribution is controlled circulation, with
 

which the magazine is sent free of charge to selected recipients in companies and the revenues are exclusively generated by advertisements.


	Interactions of Market Participants

Despite the increased competitive pressure due to online journalism and various advertising crises, the restructuring process within the US newspaper and magazine market is not yetnished. At the center of the business model in the newspaper and magazine market, there are still publishing houses which arrange customer relations
on two partial markets (Chyi and Sylvie 2000). On the one hand, they offer printed editorial content and advertisement space to private end customers.
Thereby, in distribution it is distinguished between subscription, retail sale, and magazine-reading clubs. The distribution function is thereby taken over respectively by specialized delivery services and/or by wholesale and retail sellers. On the classical trade route of the retail sale, the risk of returns of unsold copies, so-called remittees, however, stays with the newspaper or magazine publishing house.
On the other hand, the attention of the recipients to the advertising market is used as a resource for obtaining revenues. In this context, advertising companies can book available advertising space in the newspapers and magazines through agencies. The determination of the sold circulation as a basis for appropriate decision-making is accomplished by the ABC. Beyond that, companies try to gain access to the editorial part of newspapers and magazines through PR, such as special press events or press journeys.
To increase the attractiveness of their products on the recipient and advertising markets, publishing houses conduct brand management and cross-media activities. Thus, for example, news magazines are frequently also marketed as TV spin-offs,
which in addition allows the utilization of editorial synergies. In this context, the business magazine“Forbes”may be cited as an example. Figure 5.2 gives an overview of the substantial players and interactions in the newspaper and magazine market.



	Value Creation Structures

The value chain of newspaper and magazine publishing houses can be presented on the basis ofve stages, which need to be completed for press product production (see Fig. 5.3).
•	Therst two stages of the value-creation chain comprise the content creation. First, information has to be gathered externally (e.g., from press agencies) or internally (e.g., by reporters). In a second stage, these“raw data”are editorially processed. Parallel to the compilation of content, advertisement acquisition and
placement are executed.
•	In the third stage, the content has to be packaged, i.e., advertisements and editorial contributions are brought together. In this stage the layout is created, thus determining the graphical design of the products.
 

•	The fourth stage of the value creation chain refers to the physical production, i.e., the printing of the medium. Due to the progressive computerization, the pre-press
stage is more and more being omitted. The processes of packaging and printing are progressively coalescing. This development allows for printing within a narrow time frame and later submission deadlines.
•	The last stage covers the distribution of the completed print products via wholesalers and retailers, by subscription or by other distribution channels,
such as magazine-reading clubs.

If the content is also distributed in the form of online issues, the articles either remain unchanged or they are specially processed by an online editorial ofce. Thus, the“The New York Times”has its own team of online editors. When producing online issues, the value creation chain shown in Fig. 5.3 is left behind after the
second stage at the latest. Packaging and distribution occur in a separate online value.


	Core Assets and Core Competencies
Core competencies are of substantial importance for media companies’competitive success. The core assets of newspaper and magazine publishing houses include the specialist staff, the brand name, the contact network, and the rate of media penetra-
tion. The staff are know-how carriers that frequently have complementary abilities. They occupy a predominant role in service creation and marketing. The brand name provides the distinctiveness of the newspaper or magazine. The contact network consists of different sources of information through which the publishing house obtains input for content creation and market information for advertisement distribution.
Four central core competencies are necessary to use the core assets: content sourcing, content creation (editorial competence), product development (format competence), and cross-media marketing. For newspaper and magazine publishing houses, the targeted combination of core assets and core competencies can provide substantial competitive advantages in the reader and advertisement markets (Wirtz et al. 2011).
An example of the successful combination of core assets and core competencies is “Forbes magazine.”Brand and customer base are combined with the editorial competence of the“Forbes”editorial department and the format competence of the publishing house to publish several magazines which pursue a similar editorial concept but focus on specic topics (e.g.,“ForbesLife”and“ForbesWomen”).
Beyond that, the brand is also used for marketing in other media genres (e.g.,
“Forbes on Fox”).
 
	Business Models

During recent years, business models, being integrated management concepts, have become increasingly important. The business models of newspaper and magazine
publishing houses are shown in the following sections, based on simplied business models as presented in therst chapter. Following general outlines of the revenue and service creation models, the characteristics of the business models of newspaper
and magazine publishing houses are illustrated.


	Revenue Models

Regarding the reader market, primarily revenues from media use are relevant. In this context, sales revenues at retail can essentially be regarded as transaction-dependent revenues. In contrast, transaction-independent revenues predominantly arise from subscriptions. Revenues from media access are not relevant in the print industry. Likewise, other revenues are limited to minor merchandising revenues and services on the reader market, e.g., archiving services.
Revenue generation on the advertising markets is especially important for news- paper and magazine publishers. Advertising revenues, which amount to 65–85% of total revenues of newspaper and magazine publishers in the United States, form an important source of income. Considering free newspapers and advertisement
supplements, revenues are exclusively generated in the advertising markets. The product offer of print media in the advertising market predominantly consists of traditional advertising space, such as ads and supplements. Finally, revenue genera- tion on the rights markets also plays a role for newspaper and magazine publishers. Here, the focus frequently is on partial rights sale for geographically restricted issues, e.g., licensed editions in certain countries. The government being the fourth
source of income of the revenue model is not relevant for the print sector.


	Service Creation Model

Press products are published by newspaper or magazine publishing houses. Thereby, the emphasis of publishing activities is on production and distribution of the products. In the service creation model, the most important publisher’s activities are involved, which accrue in producing newspapers and magazines.
Thereby, for the publishing management, the service creation’s cost structure is of special importance. A decrease of production costs may result in a competitive
advantage in terms of cost advantage. However, due to the fact that publishing houses often operate in numerous businesselds, it is difcult to clearly allocate service creation costs in the newspaper and magazine sector. Figure 5.4 gives an overview of the cost and revenue structure of service provision in newspaper and magazine publishing houses. The values stated are average values.

One of the most important cost drivers in newspaper and magazine publishing houses is the expenditures for paper. These costs are only partially controllable by the management since the purchase prices can be inuenced by the individual publishing houses only to a small extent. With regard to the cost structure of the creation of editorial services, more freedom of design is available to the manage-
ment. Here, the publishing houses try to undertake cost reduction measures. This includes, above all, the outsourcing of editorial services to freelancers or specialized suppliers.


	Business Model for Newspaper Publishing

Newspapers and magazines each have different revenue models. To a large extent, both media arenanced by advertising revenues. However, the advertising format and the structure of customers are heterogeneous. Therefore, both media types are considered separately. Advertising revenues are generated through ads and third- party inserts.
 

Third-party inserts are usually inserted as a loose-leaf collection into newspapers. Beyond that, numerous newspaper publishers distribute advertisement supplements containing only a little editorial content in order to cover the local advertising market comprehensively.
For nationally distributed newspapers, such as“The New York Post,”supra- regional advertisements are another important source of revenues. Furthermore,
many companies extend their service range on the recipient markets through new technologies. Besides traditional print products, they therefore increasingly offer videos, CD-ROMs, or online services.
Figure 5.5 presents a simplied business model of newspaper publishing houses. Thegure shows the service creation processes of the individual services as well as points of contact to external partners. It illustrates theve processes already presented in the context of the value chain.
The service range of the presented business model is directed to the reader markets and advertising markets. On the advertising markets, the service range of the publishing group consists of a set of different services regarding advertising space: traditional print advertisements and supplements but also special advertising formats, such as sponsoring or promotions. In the context of online advertisement, the supply may differ regarding advertising formats, for example, advertisement in newsletters, banner ads, as well as advertisement via mobile Internet platforms.


	Business Model for Magazine Publishing

The revenues of magazine publishing houses can be divided into three categories: revenues from the sale of advertising space, revenues from the sale of the magazines, and other revenues. The latter particularly cover revenues from other business activities of the publishing houses, such as printing revenues. Compared to newspapers, the share of advertising revenues in total turnover is lower for magazines.
Therefore, magazines are generally less affected byuctuations of the advertise- ment revenues than newspapers are. Due to the supra-regional distribution,
magazines are more interesting for nationally advertising companies. Since most magazines are printed in color and on high-quality paper, manifold design possibilities are available to the advertising customers in comparison to newspapers. Considering the service creation model, the share of printing costs with regard to total costs for magazines has to be determined lower than for newspapers. Due to the nondaily publication frequency, there is no need to use a delivery service for maganzines, unlike for newspapers. In most cases magazines are delivered by
mail. The business model of magazine publishing houses is presented in Fig. 5.6.

Knowledge Review Questions
1.	Describe the product range in the press sector!
2.	Explain the interactions in the newspaper and magazine market!
3.	Which stages does the value chain of newspapers and magazines comprise? Give examples!