The Effect of Customization on the Business Success of Online Newspapers

On October 29th MSc. (Inf. Sys.) Teemu Santonen defended the doctoral thesis “Four Essays Studying the Effects of Customization and Market Environment on the Business Success of Online Newspapers in Finland” at the Helsinki School of Economics. The opponent was Professor, Dr. Arjen Wassenaar (University of Twente, Netherlands) and the custos Professor Markku Sääksjärvi (Helsinki School of Economics, Finland).

In his doctoral thesis, Santonen is especially interested in analyzing whether, as has been suggested, the better business success of online newspapers is achieved by applying customization strategy rather than by producing pure standardized services. In addition, Santonen also tests how the different factors besides customization, such as the market environment, revenue logic, the importance of business objectives, and experience in online publishing, were directly or indirectly related to the business success of online newspapers. The empirical data of Santonen’s thesis were based on 42 online newspapers operating in the Finnish online newspaper market. Furthermore, the survey data were enhanced with three case studies.

According to the findings of Santonen’s thesis, for the time being the business success of online newspaper in Finland could be explained by means of the geographical focus of the parent print newspaper, perceived demand and market turbulence, and the amount of experience in online publishing.

From the financial point of view, the business success of online newspapers in Finland was still modest, although few rather successful players were identified. Interestingly, only national level players seemed to improve their average success scores along with experience. This observation gave weak support to the suggestions of the positive feedback theory, which argues that in the end there will be only one real winner. The single most important business goal for online newspapers appeared to be the support of the parent print newspaper brand instead of trying to develop a genuine and profitable stand-alone online newspaper.

Based on statistical methods, two main dimensions of customization – the process- and product orientation – were defined. It appeared that the process customization approach was implemented with significantly more frequency, while the level of product customization was still substantially low. In general, the findings indicated that customization was not currently, or even in the short-term future plans, the main strategic option for online newspapers to achieve business success – even though especially process-oriented customization seemed to provide some help in generating revenue. Mainly experienced online newspapers with a national-level geographical focus were interested in applying customization.

In contrast to previous suggestions in the literature, the relationship between level of customization and level of perceived demand turbulence was not confirmed. Based on case results, the following reasons for the low level of customization are suggested: content not suitable for customization, would not be profitable, current (low) level of customization is enough for end-users, users are not interested, online newspaper is highly differentiated even without customization.