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An Online Success Story
content. This approach differed from that taken by BAP: the Internet was used as an independent medium, the product being tailored to suit it and not to overlap with the printed content.
2001 to Early 2003: The First Period of Rapid Growth
,QWKHFDVHRI%$3ZKHQWKH:HEVLWHWUDI¿F really took off its importance and value grew within the magazine publisher independently of the magazine. The Web site was found to be a good tool with which to enhance the magazine brand. Consequently, an editorial Web master was recruited and the development of the site, which had been outsourced, was taken in-house. More emphasis was placed on product development, and the Web master started to use customer feedback as a basis for improving the site.
The advertising and circulation functions of the publisher also started to realize the po-tential of the Internet during this period and they analyzed potential sources of revenue. The circulation department started distributing the URL address of the magazine in its marketing material, for example. They also introduced the online-subscription option, which was eventually taken up by a few subscribers. Furthermore, the ¿UVWDGYHUWLVLQJVDOHVWRWKHRQOLQHVHUYLFHVZHUH PDGH7KH¿UVWDGYHUWLVHPHQWVZHUHEXWWRQVDQG banners, but these proved to be troublesome to
PDVWHUZLWKWKHLQÀH[LEOHDUUDQJHPHQWVWKDWZHUH in force as sales were scattered both in-house and among the outsourced sales organization.
The changes and the above-mentioned de-velopments led to the readjustment of the online business model of the company. Table 3 shows the key elements of the BAP business model around the year 2001. It is clear that the role of the online service had strengthened within the strategy of the magazine, but the publisher still saw the Internet as a second-tier medium. The Web site did not generate much revenue and its basic function was seen to be to support the brand.
It is worth noting that an important milestone was reached around this time: the number of visi-tors to the Web site exceeded the number of print subscriptions (Figure 2). As this positive trend continued the different functions of the magazine became conscious of some new opportunities in the online presence. For example, the advertising IXQFWLRQUHDOL]HGWKHEHQH¿WVRIDQLQFUHDVLQJO\ segmented audience. Lively discussion forums could also provide information to the editorial staff on topics seen to be of importance, and thereby generate content for the print magazine; they would be good channels for marketing research. As far as the circulation function was concerned, the Web site visitors were considered a target: a large number of potential new subscribers to the print magazine were utilizing the service.
Table 3. The business model in 2001
Product development
1. Customer feedback used as a basis for Web site improvement
Revenue logic
1. First advertising sales
2. Few online subscriptions
Marketing and sales
1.Web sit seen as a means for supporting the brand
2. Online subscriptions started
Service and implementation
1. Customer service
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An Online Success Story
Crisis in 2003
In general, it was realized that this huge number of discussants in the forums could be a source of many advantages, and the magazine publisher did not know much about them. As a result, BAP de-cided to demand compulsory registration in 2003. Many users were taken aback by this decision and some of them established shadow sites instead of completing the registration. This development PD\KDYHEHHQUHODWHGWRWKHVSHFL¿FQDWXUHRIWKH BAP Web site: although babies and pregnancies could be counted among the happiest and most emotional topics in Western cultures, the tone was not always positive, and discussion was not limited to parent-baby issues. Correspondingly, many users wanted to participate in this type of discussion anonymously.
However, at the time of the crisis the publisher took a step backwards. The rebellion made BAP
change its registration system almost back to its former modus operandi, and it managed to win back its former visitors in a rather short period of time. Registration for some of the forums, including the most popular one, was made volun-tary. Currently, most of them require registration before participation in the discussion, that is, posting, but anyone can write anonymously on WKUHHRIWKHPVH[IUHHWRSLFDQG³RQOLQH´7KH last-mentioned is BAP’s closest equivalent to a real-time chat room; it is a discussion forum that is updated every minute.
Late 2003–2004: The Second Period of Rapid Growth
Since its short-lived crisis the site has been con-stantly updated and improved. Its popularity has brought positive publicity to the magazine, and the BAP discussion forums have also become a
Table 4. The business model in 2004 (at the time of the data collection)
Product development
1. Market research: Grasp of the audience, idea pool
2.Means for collecting material for the print magazine (e.g., surveys) 3. Continuous development of the print + Web concept
4. Improving the versatility of online advertising
5. Improving the pricing knowledge of online advertising
6. Adds a new "life like" dimension to the magazine concept
Revenue logic
1. Helps with defending the market positon in terms of circulation and advertising sales
2. Extending the subscription length
3. Preventing the escape of the audience to competitors
4. Increase of advertising sales (sales of multichannel packets) 5. Web site another attractive advertising forum beside the magazine
6. Online subscriptions: lower costs and higher subscription prices than direct or telephone marketing campaigns
Marketing and sales
1.Communicates a modern image
2. Communicates the magazine`s values
3. Suporting the brand 4. Positive publicity 5. Online registration a basis for customer database and targeted marketing
6. Online subscriptions as a complementary channel 7. Supporting customer loyalty and commitment
Service and implementation
1. Means for communicating with the target audience on a daily basis
2. Customer service
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An Online Success Story
popular news topic in other media. Advertisers were attracted to the strong image of the online service and this led to an increase of advertise-PHQWVERWKRQOLQHDQGLQSULQW$VLJQL¿FDQW internal development of the service was related WRWKHDYDLODELOLW\RI¿QDQFLDOUHVRXUFHVWKHRQ-line team was given more resources to develop the Web site and to communicate with the target audience on a daily basis. Correspondingly, there were changes and further developments in the business model (see Table 4).
Theproduct-development element was devel-oped further. The Web content came to include samples of the editorial content within the print magazine, and, vice versa, the Web community was used more as a source of ideas and stories that were to appear in print. The advertising function also came up with new ideas: it took the Web sales back in-house, and developed new systems to allow a more versatile selection of online advertising forms.
The registration of users provided the circula-tion function with a tool for contacting potential subscribers, and allowed for the lengthening of the subscription period as many pregnant women utilized the Web service. Furthermore, market-ing to potential customers online is cheaper than utilizing telephone sales. The Web site was also seen to support the circulation by enhancing reader commitment: virtual communities may build up customer loyalty and trust (e.g., Srinivasan, Anderson & Ponnavolu, 2002; Wang, Chia-Yi, Pallister & Foxall, 2006). These issues are linked with both the revenue logic and the marketing and sales elements within the business-model framework.
BAP and Competition in 2004
BAP is a clear market leader on the Internet in its own segment. The online service is well known, it generates lots of interest, and it has become big-ger than the print version. Although all the direct competitors (i.e., magazines focused on babies
and pregnancy) have created their own discussion forums (and have even tried to copy BAP), the BAP forums are well ahead of the competitors’ equivalents in terms of popularity.
Furthermore, the BAP online business model seems to be more complete than the others. For example, it has managed to use the Web site as a marketing tool. Its success has taken it to other media as news, its online advertising sales have helped the publisher to catch with up competitors in revenue terms, and its brand value has been enhanced.
In our opinion, the case magazine has also been able to make better use than its competitors of multi-channel tactics in its product develop-ment: readers are helping to generate material for the print version, and many of the articles include links to the content available on the Internet. To us it seems that the BAP Web site has far more to offer than direct online revenue streams. Most Finnish magazines targeted at women are still only using the Web as an advertisement for the print edition, and, interestingly enough, it seems that only its direct competitors have followed the BAP example.
In general, online services may support many functions and business-model elements that are important to a magazine’s success. We will now discuss several key issues that have been behind the online popularity of BAP, and consequently vital to its overall success.
Discussion: What Lies Behind the Success Story?
In our view, the key issue in the BAP Web site development since the early days has been the discussion forums. As mentioned above, they are the most utilized part of the online service and there are currently more than 40 of them. 7KHPDJD]LQHZDVWKH¿UVWLQLWVVHJPHQWWR SURYLGHVXFKIRUXPVDQGWKHWUDI¿FRQWKHVLWH grew mostly through word-of-mouth. They have EHQH¿WHGIURPWKHSRVLWLYHIHHGEDFNZKLFKKDV
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An Online Success Story
led to positive network effects (e.g., Shapiro & Varian, 1999). Discussion forums could be seen as one type of virtual community, and the key notion here is customer loyalty created by online community activities.
Furthermore, the fact that there was no edito-ULDOFRQWHQWRQWKH:HEVLWHDW¿UVWDQGWKDWWKH BAP online product development was driven by LWVFXVWRPHUVUHÀHFWHGDFOHDUDQGFRXUDJHRXV strategic decision. The publisher provided a plat-form, a discussion forum, and the users created the content and the value. This decision led to the evolution of the BAP online business model: the publisher did not want to copy the print version and instead created an online product with different characteristics. This could be seen as a critical incident leading BAP to its online path.
In general, the development of the BAP busi-ness model has been led by the product-develop-ment element of the company (and the editorial leg of the magazine). The print magazine has been extended with this interactive arm of the brand. Accordingly, while the network effects and e-word-of-mouth partially explain the consumer adoption of the BAP Web site, the crucial deter-minant of its success may have been its internal adoption as a part of the magazine concept. The role of online operations within the business model JUHZRYHUWLPH7KH¿UVWHQWKXVLDVWLFLQGLYLGXDOV within the company, such as the chief online editor, played a key role in the development of its online advertising sales by educating both sales people and customers. Innovations and their adoption are based on individuals (Tang, 1998); they only suc-ceed if the innovation-to-organization problems can be solved (Dougherty & Hardy, 1996). The decision to limit the BAP Web site to discussion forums during the early phase of its online opera-tions was innovative: it was a trendsetter, and its ¿UVWPRYHUDGYDQWDJH³EURXJKWLQ´WKHFULWLFDO mass in 1999.
There were no large risks during the early phases either. As the Web site content differed from the print version, there was no risk of can-
nibalization, and as the readers created the content, it was cost-effective as well. In this regard, another interesting development in the business model RIWKHPDJD]LQHZDVWKDWWKH¿QDQFLDOHOHPHQW (which is often considered a success criterion, e.g., Magretta, 2002) did not play a large role at the start of the online operations. It seems that RQHRIWKHELJLVVXHVLQWKHFUHDWLRQRIWKLV¿UVW online strategy was the low cost. No revenues ZHUHH[SHFWHGLQWKH¿UVWSODFHDOWKRXJK%$3 DGRSWHG D OHVVWKDQH[SOLFLW ³PDUNHW UHVHDUFK channel perspective” on virtual communities as early as in 1998 (e.g., Catteral & Maclaran, 2002; Pitta & Fowler, 2005). The aim of the Web site ZDVWR³WRJHWDJUDVSRIWKHDXGLHQFH´WRFUHDWH DQ³LGHDSRRO´DQG³WRJHWDWRXFKRIUHDOOLIH´ and to provide material for the print magazine and guide its development, possibilities that gradually materialized. In 2001 it started to col-lect customer feedback and in 2004 the use of the discussion forums in the further development of the magazine brand and content base became even more evident.
The Web site has always supported marketing and sales purposes, too. This is a business-model GLPHQVLRQWKDWFDUULHVYDULRXVEHQH¿WV/HWXV consider the image factors. First, the Web site gave BAP a technologically advanced image. Furthermore, the somewhat anarchistic and some-times even wild nature of the community using the discussion forums also extended the brand RIWKHPDJD]LQHDQGJDYHLW³VWUHHWFUHGLELOLW\´ The content of the Web site was not a column written by an expert telling mothers and fathers how wonderful it was to be a parent or how to raise one’s children, it was more of a real-life experience.
In terms of revenue logic, as mentioned above, BAP introduced the option to subscribe to the print magazine online during its second epoch (around 2001). There are two main factors that make online subscriptions especially valuable to BAP. First, the costs are rather low, which PDNHVWKHPSUR¿WDEOHDQGLQDGGLWLRQIDLUO
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An Online Success Story
high prices are charged as the publisher does not want to annoy current subscribers using the on-line service with aggressive offerings on the Web site. Second, customers belonging to the online community may be more loyal to BAP as virtual communities can create trust and commitment. It is evident that this was one of the key reasons why the circulation function was interested in the online operations.
It seems to us that the development of the BAP business model has been fairly incremental, featuring a few critical incidents or decisions that have shaped its growth path. Figure 3 summarizes our analysis of the importance and evolution of the four elements of the business model between 1998 and 2004. As mentioned above, the product development element has shaped the nature of the progress of the online operations. Marketing and sales in the form of both circulation and ad-vertising followed: the circulation function was mostly interested in defending its position, and in getting new print subscribers and long-term customers from the group of visitors on the site, while the advertising personnel considered the
YROXPHRIVLWHWUDI¿FLPSRUWDQWDVLWSURYLGHGD sales argument for online ads. However, the idea of large-scalerevenue generation from the actual Web site did not occur before 2001, and its role has increased only recently. The servicing and implementation dimension was given thought rather late as well.
To conclude, several key decisions made in the various stages of the BAP life-cycle could be considered a basis for its success. First, the innovative and courageous decision taken in the early phase was critical. This was atypical for media industry. According to Davis (2004), many media companies tend to work from inside-out ¿UVWWKHIRFXVEHLQJ¿UVWLQWKHLUH[LVWLQJSURGXFWV +RZHYHU%$3ZDVD¿UVWPRYHUDQGWKH:HE site was established as an independent medium WKDWZDVDEOHWREHQH¿WIURPWKHVWUHQJWKVRIWKH Internet, such as interactivity. Furthermore, the forums did not cannibalize the print medium. Second, the change in the business model in 2001 was decisive: the competitive situation had changed. Here, BAP did not copy what the others were doing, and instead strengthened the funda-
Figure 3. The development of the BAP business model. Code: the more colorful the arrow, the more important the element in the current business model during that period
Product development
Revenue logic
Marketing and sales
Service and implementation
1998 1999 2000 2001 2002 2003 2004
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