News

Publishing as an example of how digitalization disrupts a business sector

Caj Södergård and Asta Bäck from VTT with Ilkka Koiranen from University of Turku analyzed how digitalization has changed the media business.

How does digitalization cause the disruption of business sectors? To cast light on this from a Finnish perspective, we picked publishing of newspapers, magazines and books as a case that makes up nearly 60 % of the media sector. Because media has already been through a significant disruption, it is an interesting sector for studying digital breaches.

In our three-phase analysis, we first identify from economical statistics a disruptive turning point, that in the publishing sector occurred around year 2012 (Figure 1). At this time, turnover of the publishing sector started to go down even if BNP remained the same. At the same time, the drop in employment in the sector accelerated as well as the decrease in circulation. Facing this disruption, the media houses were forced to reconsider their strategies.

Technology, consumer behavior and business models as game changers

On the basis of ICT use we specify the major changes in operational environment that have contributed to the turning point. In publishing, we identify technology, consumer behavior and business models as game changers. Within technology, three waves brought change; Internet, social media and mobile media. Internet and WWW brought on-line news and web shops, whereas social media created a new channel for content sharing and discussion. Media went mobile through the growing use of smart phones and tablets. Finland jumped early on these developments, which dramatically influenced the media consumer habits – the second game changer – during the years preceding the turning point. The great majority of Finns then read newspapers on the web, and an increasing group also on their phones and tablets. A majority logged in on social media.  In addition to changes in technology and consumption, the subscription based business model started to erode, which deepened the disruption. Printed newspapers and magazines, both based on subscription, lost in popularity to the often free web content, that has been difficult to produce in an economically viable way on an increasingly tough advertisement market.

How have media houses adjusted their strategies? 

As the third step in our analysis, we consider how media houses have adjusted their strategies to survive in the disruption. This has happened mostly through cost savings and through increasing mutual cooperation. However, there are examples where media houses have found new digital business replacing the disrupted ones. Helsingin Sanomat has succeeded to get more than half of their print subscribers to also pay for the digital newspaper. The Norwegian Schibstedt has developed its online classified advertisements into a highly profitable international business, which is central for the whole corporation.

Our three-phase analysis can be applied for studying disruptions in other business sectors.  It may also help decision makers in society to be proactive in their actions.

 

Figure 1. The Finnish publishing sector went into disruption around 2012; the turnover and employment  dropped despite that BNP remained the same. (Data source: Finnish Centre of Statistics). 

 

Article: Södergård, Caj, Bäck, Asta, Koiranen, Ilkka. 2016. Kustantaminen esimerkkinä digitalisaation aiheuttamasta toimialan disruptiosta: Palkansaajien tutkimuslaitos. Talous ja Yhteiskunta, No. 3, pp. 16-22.

  • Published:
  • Updated:
Share
URL copied!

Read more news

Aalto EIT Services - Javor
Research & Art Published:

EIT Jumpstarter 2023 (register before 16 April 2023)

Do you have an innovative idea and want to jumpstart your business?
Illustration: Juuli Miettilä.
Research & Art Published:

Avatars and genuine interaction

Aalto University’s researchers are contributing to the creation of redesigned maternity and child health clinics and positive childbirth experiences in their research projects. The visions seize the potential of technology, such as childbirth simulation in a 3D-video conference using an avatar, a virtual character. On the other hand, the researchers would also like to hold on to the best practices from the past, such as the traditional child health clinic card, genuine human interaction and the rotina tradition, visits by family and close-ones to meet the newborn and bring foods as a gift.
Sahar
Research & Art Published:

Sahar Babaeipour dreams of entrepreneurship – but before that, she wants to graduate as a doctor

The doctoral research conducted by Sahar Babaeipour, a doctoral researcher at Aalto University’s Bioinnovation Center, aims at a more sustainable packaging industry.
Matteo
Research & Art Published:

Matteo Iannacchero, a developer of bio-based yarns: ‘I value the freedom of science’

In his doctoral research conducted at Aalto University’s Bioinnovation Center, Iannacchero uses machine learning to develop ecologically sustainable electronic yarns. This is an opportunity to come up with something completely new.