ADVERTISING REVENUE IN PRINT MEDIA

Advertising Revenue in Print Media

Table of Contents

CHAPTER I: INTRODUCTION3

Justification for the pursuit of revenue streams4

Online advertising4

Subscription fee for online content5

Online ordering of print publication6

Syndication6

Per-unit fee for online content7

Sale of additional merchandise8

Affiliate programs9

CHAPTER II: LITERATURE REVIEW11

The shift to new media11

CHAPTER III: METHODOLOGY14

Procedure and sample14

The dependent variable: performance of online efforts16

Independent variables: revenue streams17

CHAPTER IV: RESULTS & DISCUSSION19

Analysis19

CHAPTER V: CONCLUSION24

References26

Advertising Revenue in Print Media

CHAPTER I: INTRODUCTION

Internet technology continues to advance at a remarkable pace, creating new opportunities and challenges for providers of information goods. Recent research has begun to examine the unique nature of information goods as well as competition in information goods markets. However, empirical assessments of the existing competitive environment remain limited and have largely focused on software markets. This paper examines a specific subset of firms that provide information goods: magazine publishers. This market is particularly interesting, since it represents a classic 'atoms-to-bits' shift, according to which firms that have traditionally provided product in physical form are now actively pursuing digital options. Furthermore, the environment is filled with uncertainty as firms plunge forward into an unknown where business models and revenue streams are unclear, profitability is questionable, and delay may mean peril as fast-movers obtain financing, attract talent, establish brand, and cement customer loyalty. A continuous shift by consumers away from time spent with traditional content sources and toward new information sources is underway. An understanding of various revenue stream options available is critical as firms faced with resource constraints consider whether and how to leverage options created by technology.

Justification for the pursuit of revenue streams

Online advertising

One of the most widely discussed revenue streams for providers of information goods is online advertising. Online advertising allows for a provider of information goods to pursue a low-price strategy, many times providing product for free. One rationale for the free-pricing tactic is supported by the economic perspective that free information goods are essentially priced at their marginal cost. Since digital products do not suffer from the marginal costs or advertising restrictions of print counterparts, adding advertising offers a revenue stream that also benefits from the economics of information goods.

And despite the removal of wildly fluctuating commodities from the marginal cost equation, critical expenses for online content providers are likely to be higher than their offline counterparts. These figures are most evident in salary discrepancies. More than half the cost (54.8%) for online newspapers is accounted for by salaries. And while entry-level reporter jobs avg. US$ 17,000-19,000, the figure for online reporters is US$ 27,000-35,000. The San Jose Mercury News and other publications with business and technology-focused staff have seen high turnover as employees leave for startup ventures they are covering. Also, some reports suggest that only a select few firms may be benefiting from online advertising dollars. According to the IAB's estimates, of the US$ 1 billion spent on online advertising in 1997, AOL and Yahoo took 55%, news and information sites captured 7% at best, and entertainment sites received only ...