School of BusinessFACULTY OF HUMANITIES

Print and Online Newspaper Interaction Effects on Circulation Change

Dr Gary Graham LUBS

Dr John Hill LUBS

Dr Anita Greenhill MBS

Phase 1: In depth qualitative interviews Dresden (n=11) March 2011Leeds (n=15)April 2011

Phase 2: NS Regional Newspaper UK Database (n =100)SEM analysis (still in development).

British Academy funded project: SG100163

Methods

Leeds

London

MAP OF THE UK (LEEDS)

● Leeds’ population750,000 people make Leeds the second-largest metropolitan district in England.

● Business in Leeds112,000 people work in the city’s financial and business sectorsLeeds is the UK’s third-largest manufacturing centre, with 1,800 companies employing over 39,000 people. It has recognised strengths in advanced engineering, printing, chemicals and food industriesThe city is fast developing as a centre for the new, online economy.The city's media, communications & advertising sector is growing by about 10% a year.

● Leeds’ economyThe city has the most diverse economy in the UKLeeds has a GVA of £15.4bnAround a third of GVA is generated by the financial & business services sectors.

● Transport in LeedsLeeds Bradford International Airport serves 70 destinations in 30 countries, including North America and AsiaLeeds is linked by road to London and Edinburgh via the M1 and A1 and to the east and west coast ports via the M62London Kings Cross can be reached by rail in just over two hoursManchester International Airport can be reached in just over an hour by road or direct rail link.

YORKSHIRE POST (40,160)YORKSHIRE EVENING POST (68,635)

JOHNSTONE PRESS

The regional publisher of more than 250 newspapers across the UK saw pre-tax profits fall by 47.4 per cent from £26.1m to £13.8m in the 26 weeks to July 2011. During the period headcount was reduced by 179 to 5,049

DRESDEN

BERLIN

MAP OF GERMANY (DRESDEN)

Europe

Germany

Saxony

Dresden

 

51:03:00N 13:45:00E

113m / 372ft

 

Euro (EUR)

German

 

Central European Time (CET) (UTC+1)

Friday 13:17:39

http://www.aviewoncities.com/dresden/dresdenfacts.htm

The media in Dresden include two major newspapers: the Sächsische Zeitung (Saxonian Newspaper, circulation around 300,000) and the Dresdner Neueste Nachrichten (Dresden's Latest News, circulation around 50,000)

Sample classification details of newspapers participating in this study

Year established (average) 1896

Cover price (average) 48p

Issues per week (average) 6

Urban-based (n) 58

Rural-based 42(n)

Circulation (range)(average)

153,724 9(max) to 14,611 (min)40,419

Holding company ownership (n) 84

Independent ownership (n) 16

Readership (average)

Regional/local population (average)

51,433

378,584

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2005 2006 2007 2008 2009 2010

1,7781,719

1,6501,582

1,5091,435

Mill

ion

co

pie

s

UK regional newspaper sales (by volume), 2005-10Source: Newspaper Society, 2010.

Observations: The 21st Century News Media landscape UK

Leeds University Business School

• Using new types of media to reach local communities (e.g. Facebook)

• Recognizing the role of Facebook and Google as high traffic generating websites

• Online journalism as manual news aggregator competing with algorithmic websites (e.g. Google)

• Delivering local news to a mobile device (e.g. Apple iPhone, Tablet PC)

• Implementation of a useful subscription model for different mobile devices

• Need for location-based news and services by using Global Positioning System

Source: DD+V, Dresden workshop

Dresden

•The original financing model of newspaper (2/3 advertising and 1/3 sales revenues) does not take effect in the internet.•Most online portals from newspaper publishers operate in deficit. German newspapers are less profit centric than their UK counterparts.•Analogous to the pre-1980 newspaper environment in UK. •Reservation: many are conglomerates (Sachsische Zeitung partnered with a profitable printing business).•Online newspapers competing with public-service broadcasters (e.g. ARD, ZDF)•Restrictions of a limited regional market (economies of scale)•Role of local partners, alliances, acquisitions (economies of scope)•Over-supply in advertising leads to sinking advertising rates and therefore to sinking advertising revenues.•In addition, the web portals of the traditional content providers have a much lower reach compared to pure Internet services (e.g. SPIEGEL Online vs. GMX).

SZ Subscriptions

Leeds University Business School

Product:

Producer:

Benefit:

Latte Macchiato grande

McDonald‘s

5 minutes

Sächsische Zeitung

DD+V

1 day

1,99 €1,99 €

1,10 €1,10 €

Source: DD+V

Extant literatureTable I Extant literature on cross media synergy

Author Publication Result

Tarkiainen et al., (2009) Internet Research l Authors studied the effect of web site extension on the parent news-magazine brand. The results suggest that the web site can complement the print edition brand. However they conclude that more research is needed on factors that are related to extension success. Ulutas & Islier (2009) Internet Research This study focused attention on the differences between the front page layout of printed and internet newspapers. They highlight the

need to move away from static printed layout designs to optimize the potential of dynamic internet environments.

Keng & Ting (2009) Internet Research Authors explored cross media synergy from the concept of interactivity. They examined the emotional experiences readers gained from reading blogs. News blogs were shown to have much higher levels of participation and emotional commitment of users than conventional news media channels. Grewal et al., (2010) Jnl. of Interactive Marketing They compared pricing between offline/online channels. Because the marginal cost of another product is close to zero, a “fair price” for the consumer is much lower than that of traditional newspapers. Propose a “versioning” rather than a fixed copy price. Whereby you produce digital products with different quality ties to take advantage of the consumers’

willingness to pay for online news.

Leeds University Business School

Paywalls

Observations Theory (TCE?, Transactional efficiency)

Conceptual Model – Market development through print/online synergy

Synthesis

Empirically driven synergy model

We state the following hypotheses that predicts thereis cross-media synergy between print an online media presence:

H1: Printed supply chain product characteristics (business years, price, number of issues (per week), classified advertising rates (lineage) are positively intertwined with internet channel service presence (interactivity, daily unique users, mobile internet users, user generated content, convergence platforms, digital editions and paywalls). H2: Interrelations between printed supply chain characteristics (business years, price, number of issues (per week), classified advertising rates (lineage) and online service presence (daily) unique users, mobile internet users, user generated content, interactivity, convergence platforms, digital editions and paywalls) have a positive effect on the rate of circulation change.

Hypotheses

Clemons & Lang, 2003; Geyskenset.

al., 2002; Thurman, 2009.

Constructs and relevant literature for the theoretical model

Construct Item label and description Relevant literature

Print activity

Interactivity tools

Convergence tools

BusYears: number of years in circulation

Price: cover price of the newspaper

Issues: number of printed issues per week

Classadlin: cost of classified advertising lineage rates

Displaypt: cost of display advertising lineage rates

Classadon: cost of online classified advertising lineage rates

Dailyunique: number of unique daily online visitors

Mobile: number of mobile users

Interactool1: number of social media tools

UGC: different types of user generated content

Convergto: multi-media platform for distributing news content

Diged: specifically designed online news product

Paywalls: paid subscription to access online news content

Popmn: population of the newspaper community.

Franklin, 2008; Picard, 2006; Meyer,

2008; Mitchell, 2009; Mintel, 2007.

Co-creation

Paywalls

Howe, 2006, 2008; Li and Bernhoff,

2008; Deuze& Neuberger, 2007.

Greenslade, 2010.

Online presence

Normal P-P plot of standardized residuals

Results: Print/online presence inter-correlations

Inter correlation effects

Established daily unique users (ϒ = .218/ p= .029) mobile internet access users (ϒ = .217/ p= .030)

High price daily unique users (ϒ = .210/ p= .036) mobile internet access users (ϒ = .213/ p= .033)

High advertising daily unique users (ϒ = .200/ p= .045) mobile internet access users (ϒ = .199/ p= .047)Digital editions higher number of issues (ϒ = .191, p =.051

Total Variance Explained

Comp

onent

Initial Eigenvalues Rotation Sums of Squared Loadings

Total % of Variance

Cumula1tive

% Total % of Variance Cumulative %

1 4.091 40.914 40.914 3.655 36.500 36.500

2 2.396 33.965 74.879 1.466 14.660 51.560

3 .728 12.121 87.000

4 .600 5.999 92.999

5 .348 3.475 96.474

6 .208 1.282 97.756

7 .072 1.085 98.841

8 .060 .599 99.441

9 .034 .475 99.916

10 .008 .085 100

Extraction Method: Principal Component Analysis.

Factor analysis

PSCC

.33

BusYears

e1

.58

.16

Price

e2

.40

.20

Issues

e3

.45

OSP

.04

Convergto

e8

.98

MobileIntacc

e6

1.00

Dailyunique

e5

.42

.20

.06

1.00 .99

Hypothesis 1 Model TestingPath analysis parameter estimates

.00

PSCC

.45

BusYears

e1

.67

.17

Issues

e3

.41

.00

OSP

.04

Convergto

e8

.98

MobileIntacc

e6

1.00

Dailyunique

e5

.201.00 .99

r2

LC.14

Logcirce4.38

1.06

-.22

r1

.35

Hypothesis 2 model testing path analysis parameter estimates

Summary table: path analysis parameter estimates

Path model produced a sound good fit to the data X2 = 19/4, p> 0.01; GFI = 0.968; AGFI = 0,905; NFI = 0.926; RFI = 0.827; IFI = 0.970; TLI = 0.926;CFI = 0.968; PNFI = 0.937; RMSEA==0.066; RMR= 0.066.

Model 1Latent effect PSC C OSP 0.42 (7.71) P>0.001(Covariance )

Figures in parentheses represent unstandardized t-values

Model 2Latent effects PSCC LC1.06 (5.34) P>0.05

OSP LC - 0.22 (3.64) P>0.001

(Regression coefficients)

Discussion

● The SEM Model 1 shows a significant positive relationship between Printed Supply Chain Activity and Online Service Presence thus supporting H1.

● The SEM Model 2 does not show a significant positive path between Online Service Presence and Circulation Change and therefore does not support H2.

Dynamics of Multichannel Competition

● New organizational forms emerging. - Leveraging across channels - Optimal resource allocation

● OSP leading to negative change (cannibalization) in circulation change (homogenous experiences across channels, same experience with the brand).

● Better performing firms tailor each channel’s strength, harmonizing how channels work together, sum greater than the parts.

● Brand presence vital in the “pick and mix” of news media actors competing in the mass proliferated digital age.