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Tracing the Evolution of Interactive Media and Funding Models through the Trade
Press
by Sally J. McMillan, Ph.D.Assistant ProfessorUniversity of Tennessee -
Knoxville
Prepared for the Communication Technology and Policy DivisionAssociation for
Education in Journalism and Mass Communication Annual Convention, August 1999New
Orleans, LA
Send correspondence to:
P.O. Box 10345
Knoxville, TN 37939-0345
Phone: (423) 539-4134
Tracing the Evolution of Interactive Media and Funding Models through the Trade
Press
Abstract
Analysis of a five-year sample of trade publications suggests interactive media
and funding models are stabilizing but still diverse. Sixteen types of
interactive media were identified, but the World Wide Web has become dominant.
Five funding models were analyzed. Advertiser Support dominates the advertising
trade press, User Fees are the primary model in the computer/ telecommunication
press, and more than half of all broadcasting/publishing articles mention
multiple funding models.
Note: The author thanks Cara Stratman and Emanuella Marcoglou for their
assistance in gathering data for this study. But were graduate students at
Boston University at the time this study was conducted.
Interactive Media and Funding Models in the Trade Press
Introduction
Media scholars and industry pundits have pontificated about interactive media
for years. Carey (1989) suggested that the modern era in interactive media can
be traced to the New York World's Fair in 1964, when AT&T demonstrated a picture
telephone. In the 1970s and 80s the topic was videotex, a television-based
technology that enabled two-way communication between content creators and
viewers. In the United States, the technology never achieved popular acceptance
and by 1986 the tests ended after disappointing losses (Ettema 1989).
But despite the demise of videotex, hype about interactive media never died in
the U.S. By the early- to mid-1990s, phone companies and cable companies were
scrambling to define interactive media. Policy makers pondered questions about
regulation. And everyone seemed to be asking what content these new interactive
media would deliver. In 1994, Rebello and Wing asked these questions: "Will
the hot ticket be dramas in which you guide the plot? Will it be game shows
where all the viewers can compete for prizes? Maybe it's extracting additional
information from a news program, sports show, or documentary with the click of a
button. Or will it be just shopping electronically in the virtual mall?"
Amidst these questions, Williamson (1995) observed: "So you want to make money
on the Internet. . . . You've got company. Lots of it."
Where are we now? Is the interactive media market stabilizing? Are models for
funding content emerging? This study addressed those questions by examining
discourse about interactive media and marketing in the trade press.
Literature Review
The trade press has been found to be a valuable source of insight about
evolving communication technology. For example, Brill (1996) found that
discourse in Advertising Age provided insights into the evolution of cable
television; Napoli (1997) found the media trade press was a good predictor of
the diffusion of VCR technology. McMillan (1998a) found that early discourse in
the trade publication Printer's Ink during the evolution of commercial radio
questioned the potential of radio as an advertising vehicle. However, as radio
began to evolve into a national medium carrying entertainment-based content and
attracting large audiences, the trade publication reversed course.
Studies of trade press discourse and media development listed above focused on
a single medium - cable TV, VCR, or radio. But interactive media present an
interesting challenge. There have been questions about the medium itself. Will
the primary vehicle for delivering interactive messages be a stand-alone system
like a kiosk or CD-ROM? Will it be a proprietary system like the early videotex
experiments or AT&T's ventures into interactive cable? Or, will it be an open
system like the World Wide Web or e-mail? (Lyle and McLeod 1993).
RQ1: How have the advertising, broadcasting/publishing, and
computer/telecommunication trade press defined interactive media and how
have
those definitions changed over time?
Today, the cable TV model of funding from both advertising and subscription
fees is rarely questioned. But, as Brill (1997) pointed out, some of the early
discourse about cable TV saw it as piracy rather than as a viable advertising
medium. Similarly, McMillan (1996) noted that early discussions of radio
favored tax support, listener donations, or corporate philanthropy as the
funding model for radio. Listeners and marketers alike initially opposed radio
advertising.
Alternative funding models have been proposed for interactive media as well.
The Advertiser Support funding model dominates much of the literature on
interactive media and marketing (see for example Strangelove 1994, Molenarr
1996, Schwartz 1997, and Ellsworth & Ellsworth, 1997). But alternative models
also exist. A second model, User Fees, would fund content of interactive media
with subscriptions or pay-per-use fees. Negroponte (1995) envisioned an
information-rich environment as the future of interactive media and predicted
that individuals will be willing to pay for delivery of personalized information
that is gathered from that information environment.
A third model focuses less on content development and more on the role of
communication in actually facilitating sales. This model, often referred to as
E-Commerce, needs to be differentiated from the User Fee model. The User Fee
model assumes that an individual pays directly for information in an interactive
environment (e.g., subscription to an online magazine). The E-Commerce model
assumes that information in the interactive environments is simply a tool that
enables the individual to make a purchase decision. The item being purchased is
outside of the interactive environment (e.g., flowers, airline tickets, etc.).
In some cases, E-Commerce may involve purchase of information (e.g., books) but
that information is delivered in a non-digital form. Negroponte (1995) would
characterize the User Fees model as the delivery of "bits," the building blocks
of the digital world; whereas, the E-Commerce model is characterized by the
delivery of "atoms," the building blocks of the physical world.
Hoffman, Novak, and Chatterjee (1995) depicted the E-Commerce model as central
to interactive media and marketing. Benjamin and Wigand (1995) also envisioned
electronic markets as central to business of the future. Peppers and Rogers
(1996) identified the ability to customize messages as key to future marketing
efforts. They suggested that as marketers build long-term relationships with
customers, the virtual marketplace will become a more welcoming place for the
consumer and a more profitable place for the marketer. But, as Lynch and
Lundquist (1996) pointed out, many challenges await marketers who wish to adopt
the E-Commerce model.
Upshaw (1995) championed a fourth model for funding content: Brand Building.
He suggested that marketers should build environments in which consumers can
interact with brands. These brand-building destinations are funded by
marketers. They do not necessarily lead directly to sales. Rather, they are
designed to lead to long-term relationships between consumers and brands which
lead to long-term profitability. However, critics have expressed concern about
the future of Brand Building in interactive media (Rust and Oliver 1994) and
about the challenges that researchers must face in evaluating brands in
interactive environments (Stewart 1992).
A fifth, and final, funding model has emerged in some of the literature. This
model may be best characterized by the concept of Community Forum. McMillan
(1998b) found that at many Web sites content is created by volunteers and
non-profit organizations. In essence, this content is provided as a public
service and is often intended to draw a community of people with similar
interests. Rheingold (1993) was one of the earliest proponents of this
low-budget, community-based model of interactive communication. However,
Beniger (1987) warned that electronic environments could lead to the growth of
pseudo-community that exploits rather than builds relationships. In summary,
the literature suggests five types of funding may exist for interactive media:
Advertiser Support, User Fees, E-Commerce, Brand Building, and Community Forum.
RQ2: What does the discourse in the advertising, broadcasting/publishing, and
computer/telecommunication trade press reveal about evolving models of
funding
for interactive media content?
After evaluating both the media used for interactive communication and the
models for funding content in those media, a logical question emerges. Are some
funding models more suitable to certain types of media than to others?
RQ3: What relationships exist in the advertising, broadcasting/publishing, and
computer/telecommunication trade press between interactive media types and
funding models?
Methodology
A recent study (McMillan in press) examined interactive media types and funding
models based on a sample of articles from Advertising Age. That study examined
the first five years of regular coverage of interactive media in that
publication (October 1993 through September 1998). The primary finding was that
the Web had become the dominant form of interactive media and Advertising
Support had become the dominant funding model. However, as Napoli (1997) noted,
the trade press that represents an industry that is threatened by a new media
development may not be accurate in its predictions about the future of that
medium. Furthermore, Klopfenstein (1989) cautioned against being overly
optimistic about forecasting the likelihood of adoption of new interactive
media. Thus, the recent McMillan study suggested that future studies should
compare the coverage of interactive media and funding models in the advertising
trade press with coverage in two other types of trade media:
broadcasting/publishing and computers/telecommunication.
Samples of articles from these two types of trade publications were drawn from
the Lexis/Nexis database. The researcher searched the Industry and Market News
library in two categories: 1) Broadcasting and Publication News, 2) Computer and
Telecommunication News. In both of these categories, the search was narrowed
using the same five year period as the recent Advertising Age study: October
1993 through September of 1998. The author searched for the term "Interactive
Media" in this sample frame.
A total of 511 articles that met the search parameters were found in the
Broadcasting and Publication News category. Publications indexed by Lexis/Nexis
in this category include: Communications Daily, Editor & Publisher, Electronic
Media, Folio: The Magazine for Magazine Management, Media Daily, Publishers
Weekly, and Screen Digest. The Advertising Age study sampled approximately
one-fourth of all articles published during the sample frame. Thus, the current
study also examined one-fourth of the 511 articles in the Broadcasting and
Publication News category. A table of random numbers was used to identify 128
of these articles for analysis.
A total of 1165 articles that matched the search criteria were found in the
Computer and Telecommunication News category. Publications indexed by
Lexis/Nexis in this category include: Byte, Communications Daily,
Communications of the ACM, Computer Reseller News, Computerworld, Digital Media,
Interactive Daily, InternetWeek, MacUser, Newsbytes, PR Newswire,
TelecomWorldwide, Telephony, and Washington Telecom Newswire. A table of random
numbers was used to identify 292 of these articles for analysis.
To enable comparison with the earlier study, data from Advertising Age was
included in the current study. A different sampling method was used in that
study. The researcher drew a stratified random sample from the first five years
of the Advertising Age Interactive Media and Marketing section, from October
1993 though September of 1998. The sample was drawn so that in each of the 60
months of the sample, one of the weekly sections was drawn at random. All
articles in that section were reviewed. A total of 629 articles were reviewed.
Data from all three samples were combined to result in a total sample size of
1049 articles. For all articles in the sample, coders noted identifying
information (e.g., title, author, date). In addition, coders noted the type of
interactive media identified within an article. All media types were coded. An
article might mention both the World Wide Web and CD-ROM in the context of
interactive media. If so, both media types would be recorded for that article.
Operational definitions of coded media are available from the author.
Finally, coders specified the funding model(s) that underlie the article.
Funding models grew out of the literature reviewed above. Operational
definitions for each are available from the author. In some cases, the funding
model was explicit. An article might focus on how a company invested in a Web
site for the specific purpose of Brand Building. At other times, the model
might be implicit. An article might address the fact that media rep companies
are beginning to represent Web sites. In this case, the funding model is not
specified but the article clearly is based on the notion of buying and selling
of media space which is indicative of the Advertiser Support model.
If more than one funding model were discussed in an article, all were coded.
The same article might discuss consumer concerns about online shopping
(E-Commerce) and also note an increase in brand-oriented marketer sites (Brand
Building). If multiple funding models were explicitly or implicitly inherent in
an article, all funding models were noted. In some articles, no particular
funding model could be identified. A news brief might mention a staffing change
in the interactive division of an advertising agency. Coders were trained to
indicate no funding model rather than to guess. This resulted in 250 sites
(23.8 percent) coded as no funding model. Still, a relatively large sample of
articles (799) were coded for funding model.
Three coders analyzed the articles. One, the author of this study, coded data
from all three samples of trade publications. The other two coders were both
graduate students who were trained in the concepts of the study. One
graduate-student coder assisted with coding the Advertising Age articles.
Approximately 10 percent of those articles were coded by both the graduate
student and the author. Using Holsti's intercoder reliability formula,
intercoder reliability of 89.4% percent was achieved. The other
graduate-student coder assisted with coding articles from the Broadcasting and
Publication News and Computer and Telecommunication News samples. Again, 10
percent of articles were checked for intercoder reliability using Holsti's
intercoder reliability formula. Intercoder reliability for these articles was
92.5%. Disagreements were discussed and the coders came to agreement in cases
where they had originally coded differently. In most cases, disagreements
represented simple oversights by one of the coders. In all samples, the
remaining 90 percent of the articles was independently analyzed by one of the
coders.
Findings
RQ1: How have the advertising, broadcasting/publishing, and
computer/telecommunication trade press defined interactive media and how
have
those definitions changed over time?
Sixteen interactive media were identified in this sample of trade publications.
Table 1 summarizes the frequency with which each of these media were mentioned.
Table 1. Total Media Mentions
Medium
Mentions
Medium
Mentions
World Wide Web
568
Virtual Reality
27
Internet
202
Web TV
26
Commercial Online Services
195
TV Home Shopping
21
CD-ROM/CDi
163
Digital Imaging
15
Interactive TV
149
Audiotext
14
Game Systems
67
Video Conferencing
10
E-mail
46
Video Disk/DVD
8
Kiosk
30
Hypermedia
8
Total media mentions in a single article range from one to eight; 41 percent of
all articles mentioned multiple media. The average number of media mentions per
article was 1.50.
Five media types clearly dominate this list. They are explored in further
detail in Tables 2 and 3. First, however, a few generalizations are in order
about the other 11 media types. E-mail and WebTV were covered in all three
types of trade publications. Kiosks and TV home shopping were most frequently
found in the advertising trade press while audiotext was most frequently found
in the broadcasting/publishing trade publications. The remaining types of
interactive media: game systems, virtual reality, digital imaging, video
conferencing, video disk/DVD, and hypermedia were most frequently found in the
computer/telecommunication trade publications.
Table 2 summarizes cross tabulations of the five most-frequently mentioned
media types with the three types of trade publications.
Table 2. Media Mentions by Type of Trade Publication
Advertising
BroadcastingPublishing
ComputerTelecom
Media Total
(2
World Wide Web
35756.8%
6853.1%
14349.0%
56854.1%
4.92p > .05
Internet
426.7%
3628.1%
12442.5%
20219.3%
171.65p <.001
Commercial Online Services
12219.4%
3225.0%
4114.0%
19518.6%
7.74p <.05
CD-ROM/CDi
7411.8%
2318.0%
6622.6%
16315.5%
18.50p <.001
Interactive TV
9515.1%
1511.7%
3913.4%
14914.2%
1.24p > .05
Note: percentages in table are the percent of articles that mentioned the
medium. Some articles mentioned multiple media. All media were recorded.
The World Wide Web, which is mentioned in more than half of all articles, is
clearly the dominant medium. No significant difference was found in the volume
of coverage of the Web among these three types of trade publications. However,
differences in coverage of other media did exist. Most notably, the
computer/telecommunication trade press was far more likely than the other types
of trade press to discuss the Internet (including FTP, Telnet and other non-Web
functions) and CD-ROM/CDi technologies.
The broadcasting/publishing trade press was the most likely type of trade
publication to discuss commercial online services - most often in conjunction
with creating a news or entertainment "brand" on those services. Many broadcast
and print organizations got their first experience in interactive media by
establishing a presence on a service such as CompuServe or America Online
(Cassino 1996).
Interactive TV was mentioned in about 15 percent of all articles. No
significant difference was found in coverage of Interactive TV among these three
types of trade publications.
Table 3 summarizes cross tabulations of the five most-frequently mentioned
media types with the five years of the sample period.
Table 3. Media Mentions by Year
1993-94
1994-95
1995-96
1996-97
1997-98
Media Total
(2
World Wide Web
42.1%
7236.0%
16772.3%
18373.2%
14278.9%
56854.1%
343.00p <.001
Internet
2010.6%
4221.0%
4318.6%
5823.2%
3921.7%
20219.3%
12.61p <.05
Commercial Online Services
4825.5%
7035.0%
3916.9%
3112.4%
73.9%
19518.6%
74.05p <.001
CD-ROM/CDi
5931.4%
5226.0%
2812.1%
145.6%
105.6%
16315.5%
87.18p <.001
Interactive TV
7640.4%
4321.5%
114.8%
156.0%
42.2%
14914.2%
166.72p <.001
Note: percentages in table are the percent of articles in a year that mentioned
the medium. Some articles mentioned multiple media. All media were recorded.
Significant differences were found in the way that each of these primary
interactive media were reported over time. In the first two years of the
sample, no single medium clearly dominated the sample. However by 1995-96, the
Web had emerged as the dominant media form, a position it held through the
remainder of the sample.
By contrast, Interactive TV began as a strong contender with 40 percent of all
articles in 1993-94 mentioning this medium. But by the end of the sample,
coverage had dwindled to 2 percent of stories and many of these indicated that
Interactive TV was a technology that had never fulfilled its promise. Several
of the later stories attempted to explain some of the reasons for the demise of
Interactive TV. For example, a 1996 article noted that "Interactive television
has been shunted into the background by uncertain economic models and consumer
demand and by the immediate revenue opportunities presented by the Internet"
("Interactive TV Group Refocuses to Keep up with Dynamic Industry," 1996).
Coverage of the Internet changed significantly, but without a clear pattern of
increase or decline. This may be due to mixed use of terms by journalists. At
times they seem to have inaccurately equated the Internet with its graphical
subset, the World Wide Web. Nevertheless, Internet and Web technologies
combined seem to have influenced the steady decline in coverage of other media
such as commercial online services and CD-ROM/CDi. For example, Electronic
Marketplace reported that many organizations have ceased to maintain a presence
on proprietary services such as America Online and have chosen instead to set up
shop on the Web with its lower cost and larger audience ("Web Advantages Keep
Advertisers Coming Back," 1995). Similarly, Riedman (1997) reported that even
the music industry (one of the primary users of CD-ROM technology) is
experimenting with digital distribution via the Internet and World Wide Web.
RQ2: What does the discourse in the advertising, broadcasting/publishing, and
computer/telecommunication trade press reveal about evolving models of
funding
for interactive media content?
A slim majority of the articles (51.3 percent) centered on a single funding
model; however, the total number of funding models in an article ranged from
none (in 23.8 percent of articles) through four. The average number of models
mentioned in an article was 1.1.
Table 4 summarizes cross tabulations of the five funding models identified in
the literature with the three types of trade publications. Articles that
included more than one funding model are also cross tabulated with types of
trade publications.
Table 4. Funding Model Mentions by Type of Trade Publication
Advertising
BroadcastingPublishing
ComputerTelecom
Model Total
(2
Advertiser Support
30448.3%
5442.2%
6120.9%
41939.9%
62.90p <.001
User Fees
10616.9%
3628.1%
9231.5%
23422.3%
27.56p <.001
E-Commerce
14623.2%
1713.3%
4916.8%
21220.2%
9.45p <.01
Brand Building
10717.0%
2418.8%
7425.3%
20519.5%
8.87p <.05
Community Forum
284.5%
86.3%
124.1%
484.6%
.99p >.05
Mixed Models
14829.2%
4451.2%
6933.5%
26132.7%
16.22p <.01
Note: percentages in table are the percent of articles that mentioned the
funding model. Some articles mentioned multiple funding models. All funding
models were recorded.
For both the advertising and broadcasting/publishing trade publications,
Advertiser Support was the dominant funding model. However there were
significant differences among the three types of trade publication and use of
the Advertising Support model. Most notably, less than half as many of articles
in the computer/telecommunication publications mentioned Advertising Support as
did articles in Advertising Age.
The most common funding model found in computer/telecommunication publications
was User Fees. A primary reason for this focus on User Fees is that many of the
articles in this sample referenced CD-ROM/CDi technology, which most frequently
is available to consumers for a fee, and online software that can be downloaded
only after users pay a fee. User Fees were least common in the advertising
trade press, but were a strong secondary funding model in the
broadcasting/publishing publications. Attempts to generate revenue from User
Fees in the broadcasting and publishing industries may be related to the Levins'
(1997) observation about the financial fate of many online ventures: "Most of
the world's 1,600 online newspapers are awash in red ink. A recent survey of
newspaper publishers throughout the U.S. indicated that only 10 percent of those
who have established digital news outlets are actually generating a profit from
the operations."
The significantly higher-than-average number of broadcasting/publishing
articles that mentioned multiple funding models is further support for the
notion that traditional media are looking for multiple funding sources as they
seek to become interactive. However, E-Commerce is mentioned significantly less
frequently in the broadcasting/publishing trade press than in the other sampled
publications. Thus, online purchases of non-digital items (e.g. promotional
items such as media-branded caps and mugs) does not seem to be part of the mix
for traditional media organizations.
By contrast, E-Commerce is the second-most-frequently mentioned model in the
advertising trade press. Advertisers often viewed E-Commerce as the logical
"next-step" to advertising. For example, Cleland and Carmichael (1997) warned
advertisers that banner advertisements are not enough. They suggested that
online advertising should incorporate direct marketing techniques that allow
consumers to make an immediate online purchase decision.
Brand Building seems to be a relatively strong secondary funding model in all
three of the types of trade publications. But it was the strongest in the
computer/telecommunication industry articles where many articles addressed the
business-to-business Brand Building that can be facilitated with interactive
media (Emigh 1997). Julie Schwerin, president of the industry market research
firm InfoTech reported that "Like print, CD-ROM serves as both a publishing
medium and a promotional tool" (New Media Developers Tapping Innovative
Marketing Strategies Using CD-ROMs 1996). But computer/telecommunications
industry publications also noted the potential brand-building function of
interactive media at the consumer level as well. For example, when introducing
its new Web site, Kellogg's announced that it was committed to creating an
informative and fun environment that promotes one-on-one relationships between
Kellogg and its consumers ("It's Fun to Put Snap! Crackle! Pop! into Your Web
Page," 1995).
In all three types of trade publications, Brand Building was seldom the only
funding model mentioned. For example, many of the articles in Advertising Age
that mentioned the Brand Building model stressed the importance of moving beyond
Brand Building to User Fees (Johnson 1994) and/or E-Commerce (Cleland and
Carmichael 1997).
Of the five funding models identified in the literature, Community Forum was
the least-frequently mentioned model found in an average of only 4.6 percent of
articles. This low presence of the Community Forum model is consistent across
all types of trade publications. Some early research suggested that interactive
media may build consumption-based communities (Cerulo 1992). The articles in
this sample that did mention the Community Forum model most often envisioned
those Community Forums as a way to attract advertisers. For example, Williamson
(1996) presented a case study of ways in which iVillage has created a "space" in
which groups such as parents, women, and people who work at home can share
information and build "communities of interest" that can then be matched with
advertisers who seek to communicate with the members of those communities. In
announcing a new community-based site, one company asserted that "The Internet
didn't invent community; it provided tools to extend it." The product
announcement then goes on to explain that the new community-based Web site
"provides tools for real communities to extend their richness and reach." The
announcement concludes by noting that "the service is advertiser and
sponsor-supported and is free to the end user" ("CMG Information Services
Launches The Password," 1998).
Table 5 summarizes cross tabulations of the five funding models identified in
the literature with the five years of the sample period. Articles that included
more than one funding model are also cross tabulated with publication years.
Table 5. Funding Model Mentions by Year
1993-94
1994-95
1995-96
1996-97
1997-98
Model Total
(2
Advertiser Support
4322.9%
6834.0%
10846.8%
11646.4%
8446.7%
41939.9%
37.99p < .001
User Fees
5730.3%
5326.5%
4419.0%
5020.0%
3016.7%
23422.3%
14.48p < .01
E-Commerce
4322.9%
4020.0%
3716.0%
4216.8%
5027.8%
21220.2%
11.55p <.05
Brand Building
2111.2%
2311.5%
5423.4%
5923.6%
4826.7%
20519.5%
27.20p <.001
Community Forum
84.3%
115.5%
146.1%
93.6%
63.3%
484.6%
2.78p > .05
Mixed Models
4233.1%
4229.5%
5528.1%
6634.9%
5638.9%
26132.7%
5.58p > .05
Note: percentages in table are the percent of articles that mentioned the
funding model. Some articles mentioned multiple funding models. All funding
models were recorded.
Significant differences were found in the way that most of the funding models
were reported over time. The two exceptions were Community Forum which
maintained a steady minority coverage over time and Mixed Models which were
found in about one-third of all articles in each year.
In the first year of the sample, User Fees were the most-frequently mentioned
funding model. But mentions of the User Fee model have been on the steady
decline in the past five years. Even as early as 1994, research had begun to
show that "the fact is, most consumers don't want to open their wallets for
interactive media," (Fawcett 1994). And by 1997, trade publications were
reporting that "pay-per-view business models have hardly been a raging success
for publishers operating in cyberspace," ("Interactive Media Briefs," 1997)
while surveys reported that the number of users who were willing to pay for
content was declining ("Consumers Expect Free Content," 1997).
Advertising Support has come to be the most-frequently mentioned funding model
appearing in about 46 percent of all articles in each of the last three years of
the sample. Advertising seems to be the solution that many interactive media
developers have turned to for providing "free" content to users while enabling
the media developers to make money from those interactive media. Advertising
Age projected 1997 Web advertising expenditures at $538 million ("Web Ad
Spending in Spotlight Again," 1997) and analyst David Moore predicted that
online advertising revenue would double or triple in 1998 ("New Media News,"
1998). In the latter part of the sample, many of the articles that included the
Advertising Support model focused on setting standards for Web-based advertising
(Williamson and Hodges 1996).
The Brand Building model experienced a slow but steady increase in coverage
during the sample period. This increase may reflect the growing realization
that not all interactive media ventures lead directly to profit. For example,
some of the later articles in the sample discussed specific techniques that
organizations can use for building their brands through the use of interactive
media and public relations. Nora Paul, library director and Computer-Assisted
Reporting expert at the Poynter Institute for Media Studies, said that Web sites
are helping both reporters and public relations professionals manage the volume
of press releases that go to the newsroom. Searchable databases enable
journalists to locate experts who can provide comments on stories in progress
and this in turn provides an opportunity for those "experts" to promote the
brands that they represent (Noack 1997).
Finally, E-Commerce seems to have experienced roller-coaster coverage in this
sample period. In the first two years, E-Commerce was represented as a strong
potential source of revenue and was covered in 20 percent or more of all
articles. In the middle two years coverage, of E-Commerce dropped
significantly. In 1995 through much of 1997, the trade press seemed to be
reflecting the "common knowledge" that consumers were reluctant to shop through
interactive media. But in the last year of the sample, E-Commerce seemed to
re-emerge as a possible funding model for interactive media. Judy Neuman, vice
president of interactive media at Eddie Bauer, Inc., seemed to summarize the
opinion of many interactive media insiders when she postulated that Internet
shopping, though still a long way from being a mass activity, had begun to
explode. She said that in the Fall of 1996, buyers tended to place an order for
one item "to see if it worked." But by the Fall of 1997, those "dabblers" seemed
willing to do much more buying online and commonly order as many as for 12 items
at a time (Machlis 1997).
RQ3: What relationships exist in the advertising, broadcasting/publishing, and
computer/telecommunication trade press between interactive media types and
funding models?
To explore this question, the researcher correlated the five primary media
types with the five funding models. These correlations are reported in Table 6
below. Kendall's Tau was used to look for significant relationships between
media and funding models.
Table 6. Correlations between Primary Media Types and Funding Types
Advertiser Support
E-Commerce
Brand Building
User Fees
Community Forum
World Wide Web
.35***
.10**
.22***
-.17***
.08**
Internet
-.06*
.01
.07*
.07*
.04
Commercial Online Services
.02
.10**
-.04
.14***
.08**
CD-ROM/CDi
-.15***
-.04
-.03
.22***
.02
Interactive TV
-.07*
.01
-.06*
.10**
-.01
* p < .05, ** p < .01, *** p < .001
Some funding models are clearly linked to specific media. For example,
Advertising Support is strongly and positively associated with the World Wide
Web while it has negative or non-significant relationships to all of the other
four primary media types. Brand Building is also positively associated with the
Web and its technological relative the Internet. But Brand Building was
negatively associated with the now all-but-extinct interactive television.
E-Commerce was positively associated with commercial online services that were
able to develop proprietary security systems early in their history. These
systems helped to solve transaction-security issues. But, as the Web has
developed and consumers have gained additional confidence in Web-based security
systems, the Web has also come to be positively associated with E-Commerce. By
contrast, the Web is negatively associated with User Fees (as noted earlier, Web
users are not willing to pay for information) while commercial online services
are positively associated with the User Fee model. While many commercial
services have moved from a pay-per-minute model to a "flat rate" these
proprietary systems still seem to be better able than the open Web to extract
extra fees for additional information services.
CD-ROM/CDi seems to be associated almost exclusively with the User Fees model.
This is a logical connection as these technologies contains digital information
that is usually purchased by individuals who wish to play the game, acquire the
educational material, or search the data-rich environment found on a digital
disk. Interactive TV, a medium that dominated early coverage but has all but
died out in recent years, also seems to have been based almost exclusively on
the User Fees model. The advent of "free" interactive media such as the World
Wide Web may have signaled the death knell of interactive TV.
Analysis of the Internet may be somewhat skewed by trends in reporting.
Articles in 1994 and 1995 often used the term Internet to refer to an evolving
medium that reporters still didn't understand. During this transitional period
when the term Internet was used generically, reporters and their sources may
have still been operating from the perspective developed for interactive TV that
envisioned interactive media as being funded primarily by User Fees.
Finally, the Community Forum model is positively associated with both the Web
and commercial online services. Both environments have the potential to offer
individuals a "place" in which to express themselves. Home pages on the Web and
personal pages created by subscribers to online services are examples of the
type of "free" content which is designed to create online communities. However,
as noted earlier, there seems to be a trend for many of these Community Forums
to attract Advertising Support. Thus, one must wonder how open these forums
will be to unpopular opinions - particularly if those opinions reflect
negatively on potential advertisers.
Summary and Discussion
Near the start of this paper, we asked the questions: "Is the interactive
media market stabilizing?" and "Are models for funding content emerging?" Based
on the findings reported above, the answer would seem to be a qualified yes.
With past media developments, the trade press has provided a good indicator of
when a new medium begins to stabilize. Findings related to research question 1
suggest that the World Wide Web has come to be viewed as the primary type of
interactive media. It would probably be incorrect to assume that there will be
no further developments in interactive media. It seems that, at least for the
present, the Web has developed into a relatively stable medium for the delivery
of interactive messages.
Findings related to research question 2 suggest that experimentation with
funding models continues. Advertising Support seems to be emerging as a
dominant funding model appearing in an average of 40 percent of all articles in
the sample. While Advertising Support clearly dominants the advertising trade
press, User Fees are the dominant funding model in the computer/
telecommunication trade press. Within the broadcasting/publishing trade press
more than half of the articles mention multiple funding models.
A primary reason for conducting the current study was to determine whether the
advertising trade press differed significantly from other trade press samples
with regard to coverage of interactive media and funding sources. Significant
differences were found. This underscores the importance of examining multiple
types of trade press when forecasting media futures (Napoli 1997).
Advertisers have a vested interest in believing that advertising dominates any
medium. If advertising is the dominant funding source, then media developers
will be obligated to meet the demands of advertisers. Such demands include
careful tracking and reporting of audience size and characteristics as well as
standardized systems for buying and selling those audiences. By contrast the
computer/telecommunication trade press serves primarily developers of
information products and services that are designed for direct sale to the
consumer. Thus, it is not surprising that articles in these publications
focused on the User Fees model. Readers of broadcasting/publishing trade
publications are the creators of media content. Many of these content creators
(i.e. broadcasters and publishers) have come to rely on multiple revenue streams
for their traditional media operations (e.g. advertising combined with
subscription and news stand revenues for newspapers and advertising combined
with monthly fees for cable television) and thus are likely to look for multiple
revenue streams in interactive media as well. This search for multiple revenue
streams might be even more important as newspapers are faced with losing
classified advertising revenue to other players (e.g. Monsterboard.com) in the
interactive marketplace (Dellago 1996).
Despite some differences in perspective in the different types of trade
publications, the environment for interactive media seems to remain robust.
Sixteen different types of interactive media were found in the sample used for
the current study and five of those media were mentioned in 14 percent or more
of all articles. All five of the funding models identified in the literature
were represented in each of the five years of the sample, and all but one of
those models (Community Forum) was found in an average of 20 percent or more of
all articles.
Without question, the Internet and its graphical subset the World Wide Web
became a major interactive media force in the five year period examined in this
study. All indicators in this sample of trade press articles suggest the Web
will continue to remain a major force in the foreseeable future. However, the
continued discussion of multiple funding models suggests that innovation and
experimentation continues. Interactive media developers seem to be taking the
advice of Steve Florio, president of Conde Nast: "In this age of escalating
costs, we better take advantage of every revenue stream we can," (Ellwanger and
Kerwin 1995). Perhaps ongoing experimentation with multiple funding models is
the dominant trend for the future. It may be unrealistic to expect interactive
media to come to rely on any single funding source.
Nevertheless, explorations of research question 3 suggest that some types of
interactive media might be more likely than others to obtain funding from
specific sources. For example, CD-ROM/CDi technology seems to be based almost
exclusively on the User Fees model in which the viewer pays directly for
content. By contrast, the Web, Internet, and commercial online services all
seem to support multiple funding models. Just as cable TV is based on a mixed
model of Advertiser Support and User Fees, so the these technologies which are
all based on interconnected computers may also be developing multiple funding
sources.
Suggestions for Further Research
Future projects should go beyond identification of ways in which interactive
media and marketing are stabilizing to an analysis of implications of those
trends. For example, what are the implications of what seems to be the growing
trend to add Advertiser Support to Community Forum sites? Will the demands of
advertisers place limitations on the types of content that can be developed in a
Community Forum? Or, more broadly, will the demands of advertisers lead to the
same trend of programming to the least common denominator that critics suggest
has occurred in other media (Seiter 1986)?
Finally, future research might also explore implications of evolving media and
funding models on marketers. Potential questions include: How does investment
in the Advertiser Support model impact on other marketing investments? Is money
being diverted from other media, from sales and promotion budgets, or from some
other source? How much value do advertisers get from sponsoring Web-based
content? Are they gaining something unique by utilizing interactive media, or
is the Web just an extension of traditional media?
This article provides a benchmark in recognizing the sea change that has
occurred in the media environment during the final decade of the twentieth
century. Interactive media have arrived. And, at least for the moment, the
dominant medium seems to be the World Wide Web.
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