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Communications of the ACM

Digital Newspapers Explore Marketing on the Internet


The newspaper industry has extended the traditional print medium through its use of the Internet. Marketing in this new medium takes on a number of challenges as the possibilities of the Internet are explored and the discussion whether the Internet newspaper is "friend or foe" of the printed newspaper continues. Marketing on the Internet presents an interesting challenge for those experimenting with the digital newspaper format since the interaction with the customer is computer-mediated. The opportunity to customize, search, and compare in a global marketplace extends the regional focus of most newspapers, demanding additional considerations of content, advertising, and delivery formats.

As a digital hybrid, the digital newspaper can replicate the printed newspaper in content and organization and be made to look like a traditional paper, but at the same time it can offer interactive multimedia content tailored to the individual consumer in a manner radically different from that of traditional newspapers. Despite the rapid spreading of digital newspapers on the Internet, there has been no solid framework for analyzing and comparing digital newspaper marketing efforts.

The goal of this article is to contribute to the definition of the digital newspaper by providing a framework for characterizing digital newspaper marketing efforts on the Internet. Through an explorative use of a framework involving 48 digital newspapers we illustrate the applicability of digital newspapers and try to give a picture of the current general approach in digital newspaper marketing.

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From Print to Digital Media

The newspaper has been a source of information and entertainment for centuries. The industry is driven by three key elements: content, delivery, and advertising. The content is the editorial package, including articles, commentary, and special information sections. The development of this content involves journalists, editors, freelancers, and, increasingly, wire services. Delivery has traditionally been through physical mechanismstrucks, carriers, and single copy sales outlets. Delivery mechanisms have traditionally limited most newspapers to a regional emphasis. Advertising is responsible for up to 60% of the revenue stream for most papers. Advertising is generally divided between retail advertising and classified advertising [6]. These three elements make up both the major costs and the major revenue potential.


The current picture is that digital newpapers are utilizing multiple marketing approaches.


The digital newspaper incorporates the same elements of content, advertising, and delivery, but in a new medium, the Internet. The availability of multimedia to support content results in a greater use of text, graphics, photos, audio, and video in the digital newspaper. The digital newspaper is typically available on a specific Web site and provides some or all of the paper version's content and in some cases expands the coverage with extended editorial content. Advertising includes both retail and classified, with the retail often a banner advertisement with a possible link to the advertiser's Web page. Delivery mechanisms vary, but can include access to the Web site and emailing of specific sections or articles. The ability to replicate existing newspaper content, including editorial and classified advertising, has been evident in the earliest incarnations of the digital newspaper.

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Digital Newspaper Marketing

In exploring digital newspaper marketing, the electronic, computer-mediated marketplace in which the newspaper operates must be considered [1]. This new marketplace provides new challenges for firms attempting to take advantage of digital marketing. The marketing theory of product, price, promotion and place provides an outline of related issues. Product includes both the display and description of the product as well as product quality. This element includes information about the product, its characteristics and how to use it. Price is made up of product cost, tax, shipping and handling, and the payment methods available. Pricing is often a key marketing decision, attempting to meet market demands while maintaining reasonable revenue and profit. Promotion includes the activities of advertising and merchandising the products. Promoting products or services can take place through customer incentives or by providing related product or service information. Place refers to the availability of the product, to the ability to deliver the product, and to the distribution channels. The channels for distribution include both distribution methods and the participants moving products or services to the end customer.

It is possible that newspaper organizations will use Internet technology to apply traditional marketing approaches to their promotional efforts. The Web, by far the most popular part of the Internet, is a document-centered environment that can easily be made to resemble the traditional medium of paper with text and photos.

It is also possible that newspaper organizations will use Internet technology to apply new marketing approaches in their efforts to promote themselves. The Web provides a rich medium supporting differing levels of information content and context for the media user [3, 7]. This approach can distinguish the digital newspaper in terms of its richness of product information available to the customer. The multimedia format of computer-mediated communication should have greater richness than the paper, with audio and video capabilities in addition to the text and photographs [4]. Thus the digital newspaper has the ability to provide enhanced content, based on its multimedia formats. This digital medium provides new ways for users to interact with the digital document. Digital documents can be contrasted with their physical counterparts on a variety of dimensions, including retrieval, access, storage, manipulation, transmission, and the role of users. Specifically, a digital newspaper should be easier to store, access, manipulate, consolidate, and transmit [2, 5].

Table 1 presents a framework based on the key of marketing activities with the traditional and digital newspaper formats. The framework drives the analysis of the marketing efforts of the 48 digital newspapers analyzed in this article. The primary questions to be addressed are:

  • How does marketing for digital newspapers differ from traditional forms of marketing?
  • How are the product, pricing, delivery, and advertising different between the two media?
  • How do Web sites develop or support the marketing initiatives of the digital newspaper?

The research was conducted in the spring and summer of 1997, analyzing the Web sites of 48 newspapers from all over the world. Each site was rated by at least three members of the research team. Characteristics examined included elements of content, marketing, advertising, pricing, and delivery systems. This content analysis approach provides a systematic and objective method for identifying these different characteristics.

Of the 48 digital newspapers, 29 were from the U.S.; the other 19 included papers from Europe, Asia, and the Middle East. The digital newspapers were typically quite comparable to the paper versions in terms of content. However, there were substantial differences in the areas of product development, pricing, advertising, and delivery (see Table 2).

Pricing: Subscription. All forms of payment mechanisms for accessing the digital newspaper were considered as part of the pricing and subscription scheme. This included both one-time viewing or viewing over a longer term. Only eight of the 48 papers had a payment scheme in place for subscribers. These eight papers were very specialized either in content or in strong coverage of a particular geographic region. The payment arrangements included pay per session and periodic subscriptions (one, three, six months) and in two cases a combined digital and paper subscription option. In addition to the eight papers, three others offered enhanced services for a fee, including research and special reports. It appears that those papers with a specialized content (topic or geographic area) tend to charge a subscription or usage fee.

The typical content of a subscription-based digital newspaper includes a free section with short headlines and limited content to advertise the product to potential subscribers. The subscription-based digital newspaper offers substantially enhanced capabilities to paid subscribers, including full-length articles and unique content.

An example of the subscription approach is the interactive version of The Wall Street Journal (www.wsj.com). The interactive version contains special features such as a personal portfolio that tracks and calculates your stock; a Dow Jones Business Directory, which is a guide to the most useful business information sites online; and many more valuable features. After becoming a subscriber, the user is able to receive most reviews dating back to April 1996. The Web version allows users to use search engines or the site map to navigate. The publishers of this digital version have generated substantial subscription revenue by providing additional functionality within the interactive edition.

Product: Customized content. A number of the digital newspapers provided services, activities, and products developed in response to a specific customer's (or set of customers') needs. These included customized article searches, advertisements, or delivery mechanisms such as narrowcasting. Four of the newspapers generated additional revenue through the development of customized products, ranging from research services and archiving to specialty items such as crossword puzzles.

In each case, the digital newspaper pushed the information to the consumer via email rather than allowing access to an additional site. Enhanced search and retrieval capabilities supported the customized products. The use of search agents and the ability to provide information filtering were the predominant uses supporting these customized products, generating products unique to individual users. These products were either based on the content of a single news service, or in some cases on multiple information sources brought together into a single product.

The Los Angeles Times (www.latimes.com) offers the "Hunter" News Retriever, which provides a customized electronic newspaper to users. The paper also offers a research service. For a fee, the user can search through the archives, or for a larger fee, can email a request to search many information areas.

The New York Times (www.nytimes.com) contains a wealth of information directly from the print edition, but it also incorporates information from outside sources, including a searchable 50,000-entry book-review database. The Times also is doing some "artistic tours" incorporating sound, pictures, and video in a form impossible in the print edition and also offers its crossword puzzle for a yearly subscription.

Product: Archives. Of the 48 newspapers, 37 provided an archive, with five newspapers charging readers for access to the archive. Those charging had significant research departments, and a longstanding commitment to maintaining paper-based archives. Payment schemes included a charge per article, a charge per time session, and periodic use or access charges.


An emerging marketing role for digital newspapers is that of marketing intermediary.


The size of the archive depended on two factors, the time period covered and the amount of material stored. Many digital newspapers continuously expanded their archives, while others only kept material for a limited period of time. Most often, when information is moved to the archive, the existing format is lost, with articles from a particular edition added to the database without regard to the presentation format.

The content of the archives was based on what had been published in the digital newspaper, what was published in the printed newspaper, and other sources. The newspapers offering access to more extensive material tended to charge a fee for access to their archives.

An example of an archive is the joint venture "media arkivet" (the media archive) of three Swedish newspapers (Goteborgsposten, Sydsvenska Dagbladet and Aftenbladet). The archive includes all editorials, articles, debates and other material published by the three newspapers since January 1995. Users can buy access to the archive on a pay-per-usage basis.

Product: Multimedia. Multimedia is utilized by 14 of the digital newspapers, including audio and video clips. The multimedia implementations typically involved the use of audio and video clips. Many of the digital newspapers utilizing multimedia are supported by sponsoring organizations involved in the broadcast media, providing a ready source of supply and expertise. It appears that little multimedia content is being generated solely for use in digital newspapers.

The convergence of audio and video forms has the potential to generate substantially different products from the text and photographs of the paper version and to stimulate increased consumer interest. This combination of various media into a coherent package increases the likelihood of higher impact of advertising.

An example is The Christian Science Monitor (www.csm.com) that incorporated multimedia with content from the paper version in its digital newspaper. The Christian Science Publishing Society is involved in print, audio and video production. On the digital version, individual users can listen to Monitor Radio audio, receive daily customizable email news delivery and browse information by combining related archived stories into areas of interest.

Advertising. Of the 48 newspapers studied, only five did not carry some sort of advertisements at that time (Die Welt, Peoples' Daily, Alanwar, New York Post, and Toronto Globe and Mail). Advertising in digital newspapers falls into two categories: advertisement for other online services or advertisements for tangible products. By clicking the advertisement, the reader was either taken to the Internet service or to additional advertising material. Another distinction in the advertising is between cross-advertising (advertising other products or services of the newspaper's publisher) and paid advertisements (banner and classified) from other companies.

A special type of advertisement was used by the Norwegian newspaper Dagbladet (www.dagbladet.no). The digital newspaper served as an advertisement for the printed version of the newspaper aimed at the average profile of the reader of the printed newspaper.

Several payment schemes for advertisements were used and the market was clearly experimenting with these forms. The most common mechanism (used by 20 papers) was having the advertiser pay a fixed amount for a fixed period, resembling the traditional payment scheme for placing adds in a printed newspaper. Ten papers had the advertising organization pay a fixed amount for each time a page containing their ad was exposed to a reader. Seven papers had the advertiser pay for a fixed number of exposures, once this number was reached the advertisement was taken out of the digital newspaper.

Distribution: Enhancing channels. Distribution in the digital version was immediate, breaking the traditional delivery barriers of time and space. There were typically two means of distribution for the digital newspaper. The most common was simply allowing users to access a Web site. In some instances, a customized version of the paper, or articles of interest based on a user's profile, were sent via email or via an information service such as PointCast.

In some cases the use of the Web outside the normal distribution channels of the physical newspaper counterpart had generated additional subscriptions. Russia Today/Central Europe Online (www.russiatoday.com) is a Web-only newsmagazine published by European Information Network, Inc. Nearly 60% of its readers live in North America; about 8% live in Russia or the CIS. The rest of the audience lives throughout the world, creating an international, English-speaking audience. This is an example of a specific publication reaching outside its normal distribution channel to include those interested in learning more about that specific region.

A new role: Market intermediary. An emerging marketing role for digital newspapers is that of market intermediary. Three papers took advantage of the electronic market mechanism for bringing buyers and sellers together. These market-makers provided support for transactions by serving as an intermediary of information for all parties.

An example of such a market intermediary is Den Blå Avis (www.dba.dk). The newspaper is printed in two different versions, one covering the western part of Denmark, published once a week, one covering the eastern part of Denmark, published twice a week. The digital newspaper is a marketplace for buyers and sellers, covering the sale and resale of items ranging from household articles to furniture and sports equipment to cars and real estate. The digital newspaper replicates the form and content of the printed newspaper.

The digital edition of Den Blå Avis allows new interaction forms not possible in the printed newspaper. It is not only a medium for establishing communication, but also for establishing buyer-seller connections. A potential buyer is automatically advised when a new edition of the newspaper contains classified advertisements matching that buyer's interests. Pricing of the digital and printed newspaper is based on a different concept than most other classified services. It costs nothing to place up to four classified ads a week in the newspaper. This innovation in presenting the classified ad is made possible through the capabilities of the digital medium. With readers subscribing to ads according to their own profiles or specifications the ability to target these ads as more than replicating the print versions may provide a distinctive new approach for digital publishers.

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Discussion

The findings suggest several different marketing approaches are used by different digital newspapers. These hybrid products attempt to generate value in a variety of different ways. Yet only about 30% of the digital newspapers studied are generating revenue from sources other than advertising. The 48 newspapers examined utilized a variety of different approaches in addressing pricing, product, advertising, and delivery (see Table 3).

The findings indicate that digital newspapers operate in an unclear market. The digital newspapers examined are, for the most part, quite cautious in their design and quite limited in the number of non-traditional marketing activities used. For the most part, digital newspapers have simply ported the existing print model to the Web. Variations on this theme have been few, and the full utilization of the Web's capabilities still seems to be far in the future. The marketing model applied appears to focus on the traditional approach of advertising revenues and the technology applied seems most heavily focused on archival and search mechanisms. These two marketing and technology activities do not appear to take full advantage of the potential for digital newspapers.

The advertising in digital newspaper sites is quite different than in the paper version, with no full-page ads available and limited size and exposure. The findings suggest that most digital papers are using advertising to help defray development costs. This traditional marketing approach seems suitable for the new digital version, although the advertising does take new forms, with smaller banner and sidebar ads with hyperlinks to the advertiser's Web sites and a product mix more reflective of technology products. The papers are also developing online classifieds, several with fully searchable auto/real estate/job/classified sections.

On the technical side, search capabilities allowing navigation of the digital newspaper seem to be a necessity for users. This does not, however, make the digital newspaper necessarily more interactive. The findings suggest that in most implementations, the search capabilities are quite rudimentary and do not significantly enhance the use of the digital version.

Traditional advertisers appear willing to utilize this new format, but the motivation of the readership is less clear. The availability of general news across multiple sources suggests that few users will pay for access to this information. The need appears to be for more specialized information content or specialized delivery of the information.

Taken together, the exemplar digital newspapers do identify potential marketing approaches to generate additional revenue beyond advertising. These activities include subscription fees, enhancing distribution channels, customized product development, charging for access to archives, and becoming a market-maker. The digital format has some significant technical advantages over paper, and four of the five activities identified take advantage of this (see Table 4).

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A Digital Newspaper Marketing Model

The emerging model for the marketing of digital newspapers and the role for digital newspapers in marketing on the Web must account for both the marketing and the technological dimensions (see Figure 1). The marketing elements of subscriptions, content, advertising and distribution define the opportunities of digital newspapers. The technological dimensions define the opportunities for creating new functionality that affords new experiences, including interactivity, versatility, multimedia, information retrieval, and information filtering. This model captures the dynamics suggested by our research results and can serve as a model for those designing digital newspapers by identifying the marketing possibilities provided by the Internet format, including product customization, advertising, and market-making opportunities.

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Conclusion

To answer the initial question of how digital newspapers will approach marketing, we have identified six different approaches. These approaches include traditional revenue forms for newspapers, combined with new revenue forms made possible by the digital document. The six forms are traditional advertising and subscription rates, digital document- enabled filtering and retrieval, enhancing of the distribution chain, and market-making.

Traditional marketing approaches were reflected in the use of advertising and, to a lesser extent, subscription fees. To a large extent digital newspapers base their revenue on the existing forms of advertising. Traditional use fees based on periodical subscription and pay per use are also being deployed, although to a lesser extent. The more innovative approach was the use of enhanced distribution as a means to generate revenue derived from new groups of customers not reachable by traditional means of distribution.

The digital newspaper as a digital document utilizing rich media was reflected in some of the papers. Several of the digital newspapers studied were marketing interactive services, based on information filtering and retrieval, with one newspaper even providing interactive games. Multimedia representation forms were in evidence in a number of the digital newspapers, but none were using this capability to generate revenue.

In the short run, the newspapers appear to be competing on the technological dimension. The direction of the market is driven by the ability to implement new technical advances such as personalized content and improved information retrieval. In the long run these technologies will be widely available, some will become core technologies of digital newspapers, others will be remembered as the bells and whistles of early designs. When the core technologies become widely available and the technical innovation phase is over, the competition will shift to the content and value of the intellectual property to both advertisers and readers.

The current picture is that digital newspapers are utilizing multiple marketing approaches. An implication for designers and developers of digital newspapers is that the technology must be in place to support information retrieval and the customized packaging of information content. Once the technological sophistication matures, there will likely be a shift, as digital newspapers look to the content as a means to generate additional opportunities. This argues for establishing a specialization in content and marketplace reputation that will maintain intellectual capital, increase reader motivation to subscribe, and support the potential for being a market-making intermediary.

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References

1. Hoffman, D. and Novak, T. Marketing in Hypermedia Computer-mediated Environment: Conceptual Foundations. Owen Graduate School of Management Working Paper, 1994.

2. Levy, D. and Marshall, C. Going digital: A look at assumptions underlying digital libraries. Commun. ACM (Apr. 1995), 7784.

3. Markus, M. Toward a "critical mass" theory of interactive media. In J. Fulk and C.W. Steinfield, Eds., Organizations and Communication Technology, Sage, 1990, 194218.

4. Molina, A. Newspapers: The slow walk to multimedia. Long Range Planning 30, 2 (1997), 218226.

5. Rao, S., Pedersen, J., Hearst, M., Mackinlay, J., Cord, S., Masinter, L., Halvorsen, P-K., Robertson, G. Rich interaction in the digital library. Commun. ACM (Apr. 1995), 2939.

6. Shaw, D. Different cultures, different missions. Los Angeles Times (June 16, 1997).

7. Trevino, L.K., Lengel, R.H., and Daft, R.L. Media symbolism, media richness, and media choice in organizations: A symbolic interactionist perspective. Commun. Research 14, 5 (1987), 553574.

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Authors

Jonathan W. Palmer (jpalmer@rhsmith.umd.edu) is an assistant professor of Decision and Information Technologies at the University of Maryland in College Park, MD.

Lars Bo Eriksen (lbe@intermedia.auc.dk) is a Ph.D. candidate in Computer Science at Aalborg University in Denmark.

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Footnotes

Part of this work has been sponsored by the Swedish Transport and Communication Research Board through its grant to the "Internet Project."

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Figures

F1Figure 1. Impacts on digital newspaper design.

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Tables

T1Table 1. Newspapers and marketing activities.

T2Table 2. Dimensions of comparison for digital newspapers.

T3Table 3. Activities/products in digital newspapers.

T4Table 4. Value generating activities for digital publishers: opportunities and requirements.

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©1999 ACM  0002-0782/99/0800  $5.00

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