Demystifying the demand relationship between online and print products under one newspaper brand: the case of Taiwan and the emergence of a universal pattern

Abstract

This study uncovers a universal pattern regarding the oft-misunderstood demand relationship between online and print products under one newspaper brand. Growing from the portfolio management perspective and building on previous research conducted in the US and Hong Kong, this study examines the newspaper market in Taiwan. Secondary analysis of survey data collected from 7706 Web users confirmed that: (1) the print edition attains a much higher penetration relative to its online counterpart, suggesting that more people would rather consume the print edition over free Web offerings; and (2) compared with the general public, readers of the online edition were more, not less, likely to read the same newspaper's print edition. Such counter-intuitive findings carry important theoretical and managerial implications regarding the management of multiple product offerings under one newspaper brand.

Keywords:

• newspaper
• Internet
• Taiwan
• media management
• journalism

Acknowledgements

This study was funded by: (1) a research grant from the National Science Council (ROC, Taiwan) [NSC 98-2410-H-009-001-], and (2) the Taiwan Studies Grant from the Ministry of Education (ROC, Taiwan) through the Asian Studies Department at the University of Texas at Austin. The authors would like to thank Dr. Sung-Sheng Yvonne Chang, Alice Ju, Kelly Kaufhold, Seth C. Lewis, and Erin Brady for their support and assistance.

Notes

1. The cannibalization effect refers to the negative impact of launching a free online edition on the print edition's subscription base.

2. The ‘free vs. fee’ debate focuses on whether newspaper publishers should charge for access to their online content.

3. Economic theory defines the relationship between two related goods by cross-price elasticity of demand, i.e., the percentage change in quantity demanded for one good divided by the percentage change in the price of a related good. When cross-price elasticity is positive, the two products are substitutes; when cross-price elasticity is negative, the two products are complements (Hoskins, McFadyen, & Finn, 2004).

4. This is especially true among studies based on US national survey data. With more than 1400 daily newspapers circulated in the US, it is methodologically difficult to name specific local newspapers in a national survey.

5. They are: age, gender, education, income, employment-related variables, political orientation, Internet access at work, use of Internet for work-related or education-related tasks, high-speed Internet access at home, etc.

6. For example, the simultaneous use of the same newspapers’ online and print editions served as a rationale for the ‘online news is an inferior good’ hypothesis (Chyi & Yang, 2009).

7. Taiwan's freedom of the press ranked No. 1 in Asia during 2007–2008 and No. 2 (next to Japan) in 2009.

8. Da Cheng Daily and Min Sheng Daily exited the newspaper market in February and November 2006, respectively.

9. i.e., The Austin American-Statesman.

10. The Wall Street Journal (55%), USA Today (42%), The New York Times (41%), Dallas Morning News (64%), and Houston Chronicle (46%).

11. The Oriental Daily (70%), Apple Daily (63%), Ming Pao (56%), and The Sun (52%).

12. Gentzkow (2007) went further and developed a full model that included as many as 15 variables and concluded that online and print papers are substitutes, characterized by a demand relationship that is non-negligible but small. However, many of the variables are not available in our current data set.

13. Altogether, these sites reach 99% of Web users in Taiwan.

14. In 2000, Yahoo! acquired Kimo (www.kimo.com.tw), the most frequently visited Web portal in Taiwan at that time (Yahoo! Media Relations, 2000), and has since become the No. 1 portal.

15. But if the vast majority of online readers also read the print newspaper, that means the online edition duplicates the print readership without reaching non-print readers.

16. Plausible explanations include the less-than-satisfactory reading experience associated with reading text online, the cluttered design often seen on news sites, or simply the fact that online news is free (for details, see Chyi & Yang, 2009).

17. Currently, US newspapers’ online operations account for less than 10% of total newspaper ad revenue (Karp, 2007; Newspaper Association of America, 2007, p. 34; Seelye, 2007).