Failure of product differenciation in digital world

Digital components are embedded to any web edition of news media. The convergence led by the digital technology makes appearance of web editions of news media look similar. The text format is not only for newspapers anymore and video format is not any longer for broadcasting companies. At the time of digital convergence, any news content can be delivered in same ways on online sphere, so that the strategy of differentiation on news contents should be more significant than ever.

Traditionally, local newspapers were not considered as a substitute for the nationals or other local newspapers. It is because their publications have been limited to their local markets. And the role of local newspapers is to serve their local community, focusing on stories about the community. Therefore, as the Chapter seven indicated, many local newspapers have a market structure of monopoly. However, online editions of local newspapers are still considered as a non-substitute for the nationals or other local newspapers or vice versa? My answer will be ‘yes, they can be a substitute’, especially in a downturn of news media industry.

Heavy reliance on AP news for many local newspapers rips distinctive power of local newspapers. Even though local newspapers still produce community-oriented stories, they are just a small portion of whole news contents that the local newspapers produce. Readers are not only interested in community news, but also interested in a variety of news items, such as business, economics, art, culture, and food. However, downsized editorial departments in the downturn of the industry cannot afford to cover those topics on their own. Therefore, they use AP news to fill up the pages at an affordable price.

However, this strategy seems to rip the monopolistic power of local newspapers as well as national newspapers, which do share same contents produced by AP news. Since all information are circulated through the internet and filtered through portal news sites, such as Yahoo news, the readers in my local market do not necessarily access to the local newspapers in order to consume the topics which they are interested in. Moreover, the New York Times articles on the local newspapers can be accessed not only by the website of Times but also by the website of local newspapers which contracted with the Times for the use of the articles. Even though the big names, such as AP news, the New York Times, are enjoying their influence on the online sphere, the clear market boundary is becoming blur, leading to more severe competition among news media.

Among many reasons, the intense competition among news media may be partly due to 1) underestimation of internet’s distribution power 2) increasing homogenous news contents.