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E-Business : War Between Paper and Screen

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ISM EXTERNAL PROGRAMS ISEG BUSINESS SCHOOL - 5th year

ISM - 431

E-BUSINESS
FINAL ASSIGNMENT
Student :

FLORENTIN THEVENET
Professor :

S

Subject :

The Impact of the Online Publication on the Print Media
Words : 3 733

strategic shift with the influx of new means of dematerialization of information. A study conducted in 2010 by Bain & Company1 reports that in 2015, 15 to 20% of the population should be equipped with a digital book, an electronic reader (called an Ereader) or multifunction tablet (not including Smartphones). These last may even represent the majority of the market, reaching a wider audience, if prices, still exceeding € 300, were to fall. Also according to this study, the digital book and digital media in general should know a better situation and favorable growth in the coming years, most users remaining faithful to the paper (including books), seeing the new devices with only additional functions. In addition, unlike the music industry or the audiovisual industry, there are very few parallel market, where users can illegally download works. If this phenomenon were to grow, then it may be as difficult for the publishing industry as the entertainment industry. Currently, there are three main schools of thought on the so-called traditional print media and its evolution towards digital media. Some see through this trend the death of newspapers and even the journalists (the professional ones). We cannot give them completely wrong, when you look at recent news. We can talk about the particular case of the French newspaper "France Soir"2 put into administrative closeout on July 23th, 2012, and the last paper edition was completed on December 13th, 2011. The newspaper did not

A

s we can see through recent events, it is not too much to say that the world of publishing and edition in its entirety, whether newspapers (daily, weekly, magazines, ...) or publishing literature, is undergoing a

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Report published by Bain&Company, INC., 2010, Publishing in the digital era, Page 1 http://www.bain.com/publications/articles/publishing-in-digital-era.aspx 2 X. TERNISIEN, 2012, France Soir mis en liquidation, Le Monde July 23th 2012 http://www.lemonde.fr/actualite-medias/article/2012/07/23/france-soir-mis-enliquidation_1737280_3236.html

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apprehend the digital shift, but we can also talk about a business model problem, the topics most likely not meet the expectations of readers. The debate on the future of traditional print media currently between optimism and apocalyptic vision. While some prophesy the death of newspapers and even the journalists, others people refuse to hear about the digital medium and of the consequences of its use. Before attempting to examine the constraints and strengths that represent the emergence of new interactive media, a remark is necessary. In history (and more specifically the history of communication), an innovation never did disappear technologies that existed before it. Only the methods and instruments of production have changed. Thus, the advent of radio and television influenced the future of media, but it has not disappeared. At first, so we will give a brief overview of the current market, by reviewing 20 years of digitizing industry. Then we will see in greater depth the impact of new devices on the Usage and consumption of information, before finishing with an analysis of the potential impact of these changes on the market in depth, from the point terms of jobs, which is a major problem in many countries at the time of the economic crisis and the loss of purchasing power.

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I.

HISTORY
Contrary to what we might think, the switch of the so-called traditional media to

digital does not date from yesterday. In fact, it dates from well before the use of the Internet by the general public. Established in May 1980 by French engineers, the "Minitel" is the first step in the process of digitization of information. At that time, several French newspapers, from generalists ones (as Liberation), to specialized magazines (as l'Equipe (sports)), through the economic ones (as Les Echos) decided to use this new communication medium3. Then, after the "Minitel" era comes the age of the Internet with the beginning of the 1990's. In 1995, the leaders on the market on the Minitel launch their website. The first one was the french Les Dernières Nouvelles d'Alsace, followed by Le Monde et Libération4. At the beginning, Liberation launched a weekly supplement devoted to multimedia, before putting it online, thanks to its success and reputation among the public5. However, although today it seems inconceivable for a company not to be on the web, digitization projects of newspaper companies were supported by a handful of individuals, all passionate about new technologies of information and communication, and all who understood the importance of this new mode of communication still in its infancy. Although often marginalized, these teams were advancing very slowly, in a still uncertain environment, especially with tiny funds6. As an example, we take the case of the French newspaper Liberation. The budget

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Unknown author, 2004, Du support papier au support http://membres.multimania.fr/nticpresse/menace.htm 4 Y. ETIENNE; 2007, Le journalisme après Internet, Paris : L'Harmattan, Page 75-78 5 S. JULY, 2005, Libération à l'heure du bi-media, Libération, October 18th 2005; http://www.liberation.fr/cahier-special/0101545300-liberation-a-l-heure-du-bi-media 66 Unknown author, 2002, Michel Colonna d'Istria est mort, Libération, August 14 2002, http://www.liberation.fr/economie/0101421969-michel-colonna-d-istria-est-mort V. LANDRIEU, 2012, Corinne Denis : le geste qu'il faut, Les Echos, #21216 Page 16 http://archives.lesechos.fr/archives/2012/LesEchos/21216-077-ECH.htm

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allocated for the creation and management of the website was more than 3.5 million francs (533,000 Euros approximately), while revenue of the website, mainly from advertising revenues, accounted for 2 million francs (300,000 Euros), and all this only for the year 1998. For now, the websites were used more as first fruits to convince managers of the usefulness of this new means of communication, rather than a real competitive advantage for the tiny community of users at that time7. Nevertheless, the explosion of the Internet bubble in early of the last decade 2000 will undermine the transition to digital communication industries. Budgets will be significantly reduced, while the major events on the International stage (attacks in NYC, 2nd Gulf War, ...) and the democratization of public internet access will create exponential growth of the hearing from 2001. According to a former assistant head of the department of electronic editions for Liberation, a great social plan was being prepared in early 2001. As an example of this transition, we can talk about the September 11 attacks were then treated very heavy and exhaustive. All elements have been recovered (telephone interviews with correspondents, videos (even very poor quality) photos, ...) were then used to power the website. The goal was to be present and visible. The flow of visitors increased exponentially, reaching the pinnacle of what could be a news site. Then the first wave of dismissal arrived. So the web is shown as extremely powerful news media, but also extremely dependent on financial structures. It then reaches the height of the Internet bubble, a paradox and a node in the history of the Internet. At that time, the comparative advantage possessed by the press on television or on the radio was the most complete and the possibility of archiving media face that had a higher rate of news reporting. However, the revival of the Internet, starting in 2005, the press lost
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Y. ETIENNE; 2007, Le journalisme après Internet, Paris : L'Harmattan, Page 82-87

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its only advantage. Indeed, electronic versions completely abolish space constraints associated with paper while making virtually unlimited number of pages8. Also, this new medium offered (and continues to provide) excellent interactivity through hyperlinks, bringing together several new them, although they may be separated by several months or several years. From 2008, technological developments were rapid and numerous, giving to the market of the press and the news, but also the publishing both new partners, new communication portals but also new competitors. All depends on what level the players are. First and foremost, we can mention the smart phones' revolution, leaded by the American Apple with its Iphone and the Canadian RIM through its Blackberry, which were among the first tools that allowed to connect to the Internet anywhere. As a result, these smart phones have been revisited, larger and bigger, with new functionalities. These new devices; called digital tablets, the most famous is the Apple's iPad. At roughly the same period, ie at the beginning of the 2010s, a version dedicated to books was created by the first reseller of books in the world. We were talking here of course e-readers, whose leader is the Amazon Kindle, which offers a catalog of nearly 1.4 million books at prices defying all competition.

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Unknown author, 2004, Du support papier au support électronique, http://membres.multimania.fr/nticpresse/menace.htm

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II.

New media & New tools
As we have seen so far, the confrontation between the digital versions and print

versions have almost 20 years. Understanding of the issues were from the beginning, some publishers or advertisers who struggled to make the turn in time. However, this comparison involved only the desktop (and Minitel to a lesser extent), which were then the only interfaces to digital versions. But in recent years, issues have changed with the advent of new tools, such as smart phones in the first place, closely followed by tablets. Until then, only news sites were involved. But the arrival of the tablets and e-readers have also forced the books publishers to reconsider their business model. E-readers and multipurpose tablets are going to become an integral part of everyday life. According to a 2012 study by Bain & Company9, the adoption rate (ie the percentage of homes with this type of device) is expected to reach 15-20% by 2015 in developed countries. However, this rate could reach higher levels if the evolution of tablet sales continue on the current trajectory. Conditions are still aligned to the sales continue to grow, most e-readers fall in the cost of $ 140 from below the psychological price. Digital tablets are, in turn, relatively expensive, the price is psychological moment for $ 300.Now we can talk in the new Apple tablet, the iPad mini, supposed to align on the shelves of competition, and the price of entry is $ 329. In general, the penetration rate has more than doubled in developed countries in just 2 years. For example, between 2010 and 2012, the rate increased from 1% to 4% in France, from 3% to 8% in the USA and 3% to 11% in South Korea, mainly due to changes in e-

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Report published by Bain&Company, INC., 2010, Publishing in the digital era, Page 1 http://www.bain.com/publications/articles/publishing-in-digital-era.aspx

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readers. On average, all countries surveyed, the percentage of households with a device of this kind is increased from 2% to 7%. All of these figures help explain the issues revolving around the digitization. Personally, having very little free time, I enjoy my daily trips by train to read the information on my phone. And I just look around me to see that I am not alone in this. We can say that these new tools enable more people to use digital versions of newspapers. as we saw earlier, users and consumers of digital newspapers are provided ready to pay for such services, with some exceptions. These exceptions include financial data, local news reports of investigations or sport. In other words, all information that is not generally treated on television or in the newspapers "general public". About books, e-books now account for 5% of books sold (in the U.S.), and experts believe that this figure will quadruple, or quintuple to 2015. Nevertheless, the book world is experiencing a greater distention in the use of digital media to the general information. In fact, people are not yet ready to move from paper and for several reasons: the feel of the paper comes first (41%)10, The price is still high devices (35%), fatigue resulting from playing on a screen (33%) and finally to 30%, there are those who simply were not thinking.

J. CHERIAN, 2011, Case Study Impact of Free Online Publication on Print Media, Advances in Management, Vol. 4

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III. Debate on the futures of the job
As we saw earlier, the parallel market related to the book industry is still weak or nonexistent. This is why the level of charges relatively little impact on the level of sales. Prices are generally lower than those of books sold format, this argument alone explains the fact that more and more people are turning to e-readers, even if they are still secured with the paper format, especially due to the "paper experience". But what about the pricing of online newspapers? As we saw earlier too, the online publication provides several advantages to the consumers, such as time-saving, userfriendly and simplicity. But are the people ready for pay for the use? According to a british survey, published in 2004 11 , around 50% of the revenues of the website come from advertising banners, and between 35% and 40% from the subscriptions or the pay-as-yougo from the users. But users are willing to pay for only a limited category of information, such as financial data, local news, or detailed analysis 12 . In other words, all data inaccessible and relatively marginal into the vast internet. But what about more traditional news? the question is whether you want to generate significant advertising revenue with free information, attracting a large number of users, but thus face increased competition, or if you want to put fees on your content, such as subscriptions, attracting a smaller but more loyal customers, competition is lower. For many people, free is equal to quantity, while price gives quality. Indeed, if the information was totally free on the internet, it would be much more difficult to verify the sources and foundations. Also, it would be much more difficult to differentiate pure information (supposed to be objective) and communication

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Editorial team, 2004, Les sites de contenu mixent e-pub et contenus payants, Le Journal du Net, http://www.journaldunet.com/0403/040317etudeaop.shtml 12 Report published by Bain&Company, INC., 2010, Publishing in the digital era, Page 5 http://www.bain.com/publications/articles/publishing-in-digital-era.aspx

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(more subjective), as the boundary between professional journalism and amateur journalism tends to get thinner until it disappears. More, it seems important to raise the issue, the problem of copyrights. This problem is at the center of the debate concerning the copyrights on audiovisuals supports, such as music, movies,... So now, we can ask about the copyrights for the journalists (especially the professional ones) and writers. The problem mainly revolves around the protection of their data and their works once published on the web, and especially the compensation based on the use of the latter. In France, the law "Creation and Internet", published in the Official Journal 12 June 2009 provides premise response to numerous questions and growing. It then defines the line publication service as "any communication service to the public online, professionally edited by a natural or legal person who has editorial mastery of its contents, consisting of the production and provision of public original content, general interest, regularly renewed, consisting of information with a link to the news, having undergone treatment journalistic nature or being of pure creation, which is not a promotional tool or accessory of a trade or business" 13 . Finally, still in France, the Code of Intellectual Property recalls that according to Article L132-37 "exploitation of a work of a journalist or a writer on different media, in the press title or defined from published research of this code, a single counterparty for the salary or compensation for use, for a period fixed by agreement or default by any collective agreement within the meaning of Articles L.2222-1 and following of the Labor Code". Thus, we can say that in general, the authors (journalists, writers and bones on) have the same rights to their works, that they be published in paper or electronic format. The

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translate from French Law 2009-669 - Article 27

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problem of protection, the parallel market is not large enough yet so that the competent authorities have already started to examine it. Thus, in general, journalists and writers should see a positive market trends information and writing, insofar as their work will be seen by many. By cons, many businesses will be negatively impacted by these changes. In the first place, and often overlooked in such studies, printers, who are the first link of the supply chain of paper, which will be directly affected by the disappearance or reduction of the consumption of paper. Then there are all the retailers, whether small kiosks to large book stores (Virgin Megastores, Fnac, and so on). Although these can still sell the devices, they realized turnover of book sales will fall sharply, unless they rework their business model, and develop their e-commerce sites so considerable, incorporating, in addition to their "regular departments" of mail-order selling, the ability for customers to purchase and download electronic contents. A recent article 14 takes the phenomenon of e-readers in our Japanese friends. As everyone knows, the inhabitants of the country of the rising sun are the first plebiscite new technologies when they are not creators. However, e-readers have struggled to start, until the arrival of the Americans (Amazon and Google in the lead), which came some problems at the local Sony. Order to give an idea of the magnitude of the potential of e-readers, the Japanese have spent over 22 billion dollars in books (paper and digital). Despite these figures, only

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X. THOMANN, 2012, Japon : le marché du livrez numérique en plein tsunami, ActuaLitté, http://www.actualitte.com/acteurs-numeriques/japon-le-marche-du-livre-numerique-en-plein-tsunami37769.htm

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100,000 shares were offered in digital format, which is relatively low against the tide Kindle in the U.S. and some 1.4 million books. The main problem for foreign manufacturers were not copyright, but the problems of layout, because as we know, the Japanese writing (hiragana and katakana) binds not from left to right, but well top to bottom. But the arrival on the market of software EPUB3.0 swept this problem and therefore allowed the arrival of the giant U.S. market. The market should therefore significantly in the coming years, Japan then serving as a test area for updated software versions and new appliances.

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IV.

Conclusion :
All the elements mentioned above leads us all to the same conclusion: the press is

forced to redefine, to turn if it wants to survive the digital tsunami, of which only the first waves have reached. This is especially true, at least for now, traditional newspapers, which, by creating online editions and web services have created a synergy between paper and electronic media. According to Bernard Boudic15, editor in French daily Ouest France, the complementarity of the two media offer many advantages. Firstly include modernity. The interactivity now possible between the news and the reader gives the sector a new image of modernity was then exclusive television. Then comes the valuation of holdings. Indeed, the scan data allows easy search of archives, whether in terms of the release date, the theme or author. Finally, through hyperlinks between related articles, the depth of information is growing exponentially. It now connects the article to additional documents, such as maps, records, official documents, information or other economic or cultural. In the case of research work, the author may also make available to the reader all or part of its sources to support his statements. Thus, although many professions, including those in the supply chain, will be messing with this mutation, the authors and publishers find themselves in strengthening find. According to the study driven by Bain&Company previously mentioned, "digital distribution will have an economic impact on tradtional publishers, whose business model are based on economies of scale and will therefore suffer from a decrease in physical volumes". Always according to the same study, "authors, in the meantime, are in an ideal position to benefit from the digital era. Best-selling authors in particular should gain more bargaining power with publishers and distributors".
15

Unknown author, 1999, Cyber-entretien avec Bernard Boudic, journaliste a Ouest-France, http://membres.multimania.fr/nticpresse/bernard.htm

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Publishers now have an unique opportunity to eliminate intermediaries, and thus become one company B-to-C instead of company B-to-B. In this way, they can see them grow their margins significantly, and thus invest heavily in communication systems. To take the case of Bernard BOUDIC previously mentioned, it is estimated that in his case, that of the regional press, online editions can reach readers who are not customers of the clipboard at the national or international. Also, like the "News" search engine Google Californian, readers can decide for themselves the themes and topics that concern to them, and have a range of information much broader. However, this "personalization of the offer could have an adverse effect in the long term." Not only the type of specialization based on public information, but also the selection is made by money and the cultural even if everyone can access freely. [...]. One of the effects of socio-cultural domination is not to ask anything other than what it was"16. Thus, the main advantage of the paper deal with blogs, webzines and portals is its legitimacy. In fact, readers are keen to find, whether on canvas and on paper, a certain look but also a serious, critical to the reliability of any data. Also, know-how and is an editorial team will be awarded the honor. Finally, for readers, there are three distinct types. It is and will remain the pure and hard paper, fervent supporters that change nothing. For them, nothing is comparable to touch, sound and smell of paper. Facing them, the digital junkies who never move without their smartphone, their tablet, and they are virtually unable to tell you what they did the day they have not informed their time in their device? These players have never, or very rarely read on paper, and finally, they represent a surplus of revenue because they were non-consumers of absolute paper. Finally, there is the "hybrid", that is to say, those who can both use paper that digital versions. This is especially me. I can not read
D. WOLTON, 1999, Internet et après? Une théorie critique des nouveaux médias, Paris: Flammarion, page 99
16

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a book on a screen, but I only use my pc to keep me informed of news. By cons, if I want information, from any given article, ... for research work, I need to print in order to rework, highlighting, barring ... data I am interested in. And this is undoubtedly the readers and consumers like me who can tip the balance one way or another in the years to come. Gutenberg, whose main desire was to provide as many maximum knowledge could only be proud of the development of his invention, and now the vast majority of people on this planet can have access to n 'any information, wherever they are and whatever their social level.

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