HOW THE LARGEST GERMAN NEWSPAPER IS BATTLING ITS BUSINESS MODEL
by Dan Toma (co-author of The Corporate Startup)
In August this year Adobe and PageFair released a report saying that in 2015 alone the ad blocking browser plugins can cost the on-line publishers somewhere around $22 bil., with things worsening in the coming years. (the report is not considering ad blocking solution at mobile operating system level)
‘If change is happening on the outside faster than on the inside, the end is in sight.’ — Jack Welch, former General Electric CEO
Jack Welch’s words were the first thing that came into my mind when I learned that starting Tuesday this week (Oct. 13th) Germany’s biggest tabloid, Bild, started restricting access to their website, to the visitors using an ad blocker browser plug-in.
Publisher Axel Springer, owner of Bild, requires user to either deactivate the ad blocker or pay 2,99€ for a monthly subscription for almost the same content but mostly ad free. To sweeten the deal Axel Springer claims that BILDsamrt (name of the mostly ad free version) loads 50% faster than the normal one.
Can’t help myself asking: does it load faster because it has no ads? or, do users care about load time since you ask them to pay 2,99€ for this?
Leaving these questions aside, I try looking at this situation through the lens of business model innovation and corporate entrepreneurship. If a company Bild size resorted to this method, the fact that they have serious business model issues is obvious.
For starters one might think that the issue is around the revenue model that Bild is using, but from experience doing business model innovation advisory for various companies, I know that usually the revenue stream impact is just a cause of a bigger problem, not the its root.
Looking at Bild’s business model I’m puzzled by two aspects: value add and customer segment. And when I say puzzled I mean I can’t stop asking these questions:
- Who is the customer?
- What does this customer perceive as value add from Bild’s offering?
- Is this customer actually willing to pay X amount for this value?
Of course we all can have an opinion about the possible answers to the questions above, but even if we were to have the correct answers and start taking action today, this will still be just fire fighting. What needs to be highlighted from the Bild story is how the infamy of past success and the love for the existing business model is able to slowly bring down a consortium like Axel Springer.
From the perspective of corporate entrepreneurship, things are looking even worse for Axel Springer if we consider that they have one of Europe’s biggest corporate accelerator programs. In my book, The Corporate Startup,me and my co-author are emphasize that corporate accelerators are becoming a signpost for the enterprises failing at creating continuous innovation processes within the existing ranks (I’m usually not the most popular person at corporate dinners & conferences), but yet more and more corporations seam to invest in this low hanging fruit approach to innovation, instead of trying to solve this Rubik’s cube of ambidexterity (search and execution).
It will be interesting to see how this approach will play out for Bild and Axel Springer, considering that it is completely different from how English language publishers, such as The New York Time, The Financial Times, The Wall Street Journal are currently addressing the same issue.
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