Introduction: Traditional Media and the Internet: The Search for Viable Business Models

Abstract

The arrival of the Internet has changed the rules of competition in many industry sectors. In the realm of media markets, the Internet’s bona fide role as the newest mass medium and its unique characteristics of interactivity and personalization present tremendous challenges as well as potentials in the formulation of innovative business models, both from the existing media incumbents who wish to compete with and to leverage the Internet’s popularity and from the new online ventures that attempt to take a bigger share of the revenue pie from media advertisers and consumers. An important body of literature has emerged to address the changes and values that the Internet brought to a conventional marketplace. Many media scholars have begun to study the factors that might impact a firm’s Internet strategy and proposed a range of Internet business models. Most literature suggests that the Internet has improved the effectiveness and efficiency of coordination in the value chain, become a source of competitive advantage by providing companies with new ways to outperform their competitors, encouraged direct interaction between producers and consumers, allowed businesses to access global markets, developed better business intelligence, and enhanced customer communication and service. Additionally, the Internet provides a tremendous opportunity for the Web retailing of digital multimedia goods. It is evident that different media sectors and firms have approached the Internet with various emphases and intensities. Literatures suggest that these differences might be due to the nature of the product or service and its target market, the degree of organizational competency in integrating the existing business with the Internet, the degree of changes required from the organization to adopt the Internet, a firm’s dependency on the Internet for revenue, and the size and age of an organization. As the Internet increases its presence in average households, all traditional media have, in their own ways, embraced the Internet. Nevertheless, even as many Internet ventures are being launched by media firms, many are being scaled down or eliminated because of the lack of evident benefits and resources. The development of an appropriate business model is especially critical, as well as intricate, as the Internet offers an alternative distribution channel for traditional media’s products and strengthens the existing media’s position with their readers and audiences and at the same time competes with the traditional media for consumer attention and resources. This issue of the International Journal on Media Management (IJMM) addresses the very topic of Internet business models from the perspective of the traditional media sectors. The 11 theme articles tackle the issues of online content delivery business models, the relation between online and offline media products, the Internet’s impact on a media value chain, online marketing of music products, Internet content strategies, and comparative studies of Web content and strategies in different countries. From theoretical discussions to empirical investigations, the authors successfully examine the traditional media incumbents’ efforts in developing business strategies that leverage their online competencies and suggest the factors that might play a role in this process. Specifically, to provide a structured method of comparing business models between firms within or between industries with a goal of identifying key profit drivers, Fetscherin and Knolmayer propose five components that any business model for content delivery should include. Using the print industry as an example, they find that the most important key profit driver is still the product, followed by revenue and price. Also using the print media sector in their exploratory case study, Schulze, Hess, and Eggers analyze how the Internet affects publishers’ content utilization practices. The authors find that although the Internet has various degrees of impact on the composition of publishers’ content utilization chains, it has not delivered extra revenues. In fact, the Internet-based content utilization windows have not been adequately explored and are relatively dependent on their relations