The Value of Economic Information:

Business Models to Sell Online Contentsand the Image of Spain in WSJ and FT

Ricardo LeivaUniversity of Navarra

Pamplona, Spain

1. The economic nature of information2. Two alternative business models: WSJ and FT 3. The experience and the value of WSJ and FT for Spanish readers

•Information is a commodity desired and acquired.•Information can be an appropriable commodity with suitable legal actions (Arrow, 1962).

2. THE INFORMATION IS A VALUABLE RESOURCE

•Whatever the price, the demand for information is suboptimal (Arrow, 1962).•Property rights support inventive activity, but they lead to an underutilization of information.

1. THE ECONOMIC NATURE OF INFORMATION

•Samuelson (1967): TV broadcasting is a public good, but consumption may be restricted. •To exclude people from knowledge: costly and inefficient, but it depends on the case.

1. THE ECONOMIC NATURE OF INFORMATION

•Stiglitz (1999): Knowledge should be free.•It may be appropriable but it is a public good.

1. THE ECONOMIC NATURE OF INFORMATION

•Picard (1989): information is public or private depending on the media.• Information is the public good, the paper and ink are private (Compaine, 2000).•Online information = public good.

1. THE ECONOMIC NATURE OF INFORMATION

3. AN ATTENTION GOOD

• Information is an attention good.•The cost is incurred by the recipient (Simon, 1971).•Consumption of informational content ocurrs on the consumer level (Albarran, 2002)

3. AN ATTENTION GOOD

•Media market is a time market (Nieto, 2003)

•Media industry is driven by time (Albarran & Arrese, 2003)

4. A DUAL PRODUCT

•Media content and information compete in a dual market (Picard, 1989).

•News have instrumental, not intrinsic value. They are useful to do things (Picard, 2009).

5. A INFERIOR GOOD?

•Online news are ‘inferior goods’: less satisfying than offline media. •Varian (1998): Information is an experience good. • Information goods are digital goods (Varian, 1998).

1. The economic nature of information 2. Two great brands with alternative business models: WSJ and FT 3. The experience and the value of WSJ and FT to a Spanish reader

8. ALTERNATIVE BUSINESS MODELS

•WSJ y FT: the most trusted newspapers for American and British executives.•Freemium: free and premium content. •Price discrimination strategy: hardback and paperback books.

8. ALTERNATIVE BUSINESS MODELS

•Free version for 75% of news. Paid version for 100% of news: 103 dollars per year.•WSJ Web site continues visible and captures ads. It doesn’t canibalize print.

8. ALTERNATIVE BUSINESS MODELS

•Content behind pay-wall: exclusive and specific financial and economic information to earn and save money. •Valuable data for brokers, investors, executives and businessmen.

8. ALTERNATIVE BUSINESS MODELS

•Breaking news, general news and public information are free. •1.100.000 paid subscribers and 33 millions visitors of Web site. •Circulation print product: 13% in 4 years.

8. ALTERNATIVE BUSINESS MODELS

•Metered model of the FT is popular in the telecommunications industry. •The provider measures the consumption and charges a variable price. •Metered subscription:

• flat fee for fixed number of minutes• variable fee for additional time and international calls.

8. ALTERNATIVE BUSINESS MODELS

• Five types of metered subscription: • Free content no registration: 3/month.• Free content with registration: 10/month.• Standard subscription: all articles (less Lex) by €3.59 per week • Premium subscription: all the articles (more Lex), 5 years old archive and news in PDA by €6.99 per week. • Online-print subscription: Print and online editions by €14.09 per week.

8. ALTERNATIVE BUSINESS MODELS

•110,000 online subscribers and 435,000 print subscribers. •Online subscribers increased 9% in 2008.•The FT has doubled the price. • If you want to read the rest you have to pay.

1. The economic nature of information 2. Two great brands with alternative business models: WSJ and FT 3. The experience and the value of WSJ and FT to a Spanish reader

9. THE SPANISH EXPERIENCE

•WSJ and FT between October 1 and December 31, 2008.• Spain’s GDP fell 0.2% (Q3 2008) and the unemployment rate rose to 11%.• 182 articles of FT (78%), 51 of WSJ (22%). • Positive, negative, mixed or neutral orientation.• Second objective: to know the international image of Spain.

9. THE SPANISH EXPERIENCE

“Spain is an over performing economy with a sound fiscal position”

9. THE SPANISH EXPERIENCE

News about Spain (Q4 2008)

FT78%

WSJ22%

9. THE SPANISH EXPERIENCE

Most mentioned Spanish Companies Nº % Santander 39 16,7 Repsol 13 5,6 Metrovacesa 12 5,2 Iberia 11 4,7 El Corte Inglés 9 3,9 Sacyr 9 3,9 Telefónica 8 3,4 Ferrovial 7 3,0 BBVA 6 2,6 La Caixa 6 2,6 Marsans 4 1,7 Zara 3 1,3 Otra nacional 16 6,7 Otra extranjera 32 13,7 Ninguna 58 24,8 Total 233 100,0

9. THE SPANISH EXPERIENCE

Most mentioned Spanish People Nº % Rodríguez Zapatero 26 11,2 Botín (Santander) 8 3,4 Sanahuja (Metrovacesa) 6 2,6 Francisco Franco 5 2,1 Conte (Iberia) 4 1,7 Pedro Solbes 3 1,3 Ayuso (Ferrovial) 2 0,9 Rivero (Repsol) 2 0,9 Noticia sin persona 70 30 Otro 107 45,9 Total 233 100,0

9. THE SPANISH EXPERIENCE

Most Mentioned Topics about Spain Nº % Economic situation 57 24,5 Foreign operations of Santander 25 10,7 Repsol-Lukoil Operation 20 8,6 Iberia-British Airways 14 6,0 Metrovacesa-HSBC 13 5,6 Culture 12 5,2 Turism-gastronomy 12 5,2 Ferrovial-airports UK 6 2,6 Politics 6 2,6 Problems in Argentina 5 2,1 Others 63 26,9 Total 233 100,0

9. THE SPANISH EXPERIENCE

Orientation of News about Spain in WSJ and FT (Q4 2008)

Neutral29%

Positive23%

Negative40%

Mixed8%

9. THE SPANISH EXPERIENCE

• The Financial Crisis: After Years of Heavy Borrowing, Spain Is Poised for a Slump • HOUSE, J.: “The Financial Crisis: After Years of Heavy Borrowing, Spain Is Poised for a

Slump”, The Wall Street Journal, October 9, 2008, p. A4.

• Spaniards who previously shunned farm jobs are beginning to accept any work they can get and are sometimes given preference by Spanish employers.• MALLET, V.: “African workers reap bitter harvest on Spanish farms”, Financial Times,

December 24, 2008, p. 2.

9. THE SPANISH EXPERIENCE

Orientation of News about Economic Situation in WSJ and FT(Q4 2008)

Neutral 25%

Positive7%

Negative59%

Mixed9%

9. THE SPANISH EXPERIENCE

Orientation of News about Rodríguez Zapatero in WSJ and FT(Q4 2008)

Neutral 46%

Positive17%

Negative29%

Mixed8%

9. THE SPANISH EXPERIENCE

Orientation of News about Spain in WSJ (Q4 2008)

Neutral31%

Positive31%

Negative35%

Mixed3%

9. THE SPANISH EXPERIENCE

Orientation of News about Spain in FT (Q4 2008)

Neutral28%

Positive21%

Negative42%

Mixed9%

9. THE SPANISH EXPERIENCE

•FT published 3 times more news than the WSJ. •FT publishes 5 thousands news per month. 60 articles per month about Spain. 10 free articles per month are insignificant. •Four out of 10 pieces of news about Spain were negative.