Media business becomes increasingly service-oriented
The Internet has a major impact on the consumers' media habits. The market
situation for magazines is changing in line with the continuing increase of
online media content. Success will require a completely new business approach.
A recent study conducted by VTT Technical Research Centre of Finland
highlighted value and experientiality perceived by the consumer as the
starting point and prerequisite for service development of future magazines.
The digitalisation of the media has led to fragmented audiences and the rise
of social media to adopt the role of an information filter alongside
conventional information channels. Digital content and services continue to
gain in popularity as smartphones and tablets become more common.
Genuine interaction required to commit readers
The magazine of the future will be a visible brand in printed, electronic and
mobile media, and form a tight community created around a media brand. It will
be essential that magazine services are accessible to consumers through
several channels, both in printed and digital format. This includes reader
communities that allow service users to become co-creators of content. The
publisher will act as the coordinator of the community.
Emphasis will be on the readers' central role as customers of the magazine
service. The readers must feel that their opinion counts and that they have an
opportunity to influence. This will require genuine interaction that is honest
and open – the foundation of customer loyalty. It will be important to answer
questions quickly and to show that media/the company values its customers.
The new service model offers consumers improved opportunities for choosing the
most suitable content for themselves in whichever format they find most
convenient at the time. If the best possible account is taken of the needs and
experiential aspects of different consumer segments, then consumers will have
an important role to play, and the magazine service will feel tailored.
Existing business models and audience metrics no longer suffice
In the digital environment, business risks are high. Advertisers react both to
the changing economic climate and to burgeoning online media content. The
transformation of the media business into a service business will demand a new
approach – that of a service-oriented business model.
The media business revolution has rendered existing business models and
audience metrics obsolete. The Internet can be used to obtain information via
a multiplicity of channels. This poses great challenges for publishers, and
thus also for value chains.
Future magazines must take a more painstaking account of the various consumer
groups, their needs, how they perceive different forms of media and what
constitutes value for them in each media format, and how all this can be
turned into profitable business in the years ahead. It is vital to understand
consumer needs and build strong brands that meet these needs in various
channels. The crux will lie in generating benefit and making it pay.
Paper supplier becomes publisher's partner
Digitalisation and the declining use of printed products are also pressuring
change in the forest industry.
According to VTT, the new role of paper manufacturers will cover not only the
production of raw material for the printed product's value network, but
consultation to provide information and support for customers' processes.
Paper manufacturers would be wise, therefore, to expand their role from
enhancing the publication process towards enhancement of the magazine business.
Printed products will retain their place in the hearts of consumers, but the
kind of experiential significance they embody will be rather more difficult to
discern. Here the paper manufacturer can easily support the publisher.
Understanding of the business logic and needs of a publisher-customer will be
an advantage, and open dialogue with the customer of vital importance. The
goal is to establish a good relationship based on mutual trust, a relationship
with the potential of becoming a partnership.
The paper manufacturer would benefit from knowing the operators of the printed
product's value network and other networks of the magazine service, and above
all, the end-users of the service – the readers.
In the future magazine project Fumaga, VTT searched for new service models by
means of four case studies: hybrid media applications in magazines, new title
launch, brand experience and service concepts for customers' processes.
Aalto University also took part in the project. Fumaga was funded by Tekes,
the Finnish Funding Agency for Technology and Innovation; Viestinnän
Tutkimussäätiö (a communications research foundation); pulp and paper company
group Sappi; and biofore company UPM.
The publication can be found online here