Extra, Extra: Newspapers on Life Support

This article got published in an economics journal.

This upholds my theory that the world is shifting from information on paper to a whole new digital sphere. Just like Newsweek recently switched and soon many more publication companies will. This article that I wrote goes into more depth as to the economics and history behind the issue… (Enjoy!)

Whats going to happen next?  ... Ask these guys!

Whats going to happen next? … Ask these guys!

Newspapers are on a precipitous decline.  Ever since the television was first introduced to the public, newspapers have simply failed to bring up the bar. They have been unable to deliver. Today, we are enthralled and absorbed by TV’s and the Internet. The advent of the internet and the ability of consumers to now access the web through a host of devices such as mobile phones has hastened newspapers decline. Needless to say, we have also become dependent on them for the news. Why are newspapers not getting any demand from consumers? An economic analysis will provide us a cause and effect account for the continuing decline of print media.

 A short history on Television and Internet:

In the early 1900’s, newspapers were prominent, going through stages of cyclical unemployment, but nothing of cumbersome worry. Fast-forwarding to the 1950s was really when everything turned around. Television came out in the 1950s and it brought in a crucial element that has propelled itself into the public’s eyes. That element is visual images aided by sound. Advertisement could now bring itself to life with moving images in the form of a video with sound. That is a much stronger message then one conveyed on a newspaper, with just a plain, simple image in the midst of a flow of text.  Then came the internet.

The Internet, which slowly made its mark in the 1990’s in major parts of the world, has become the most powerful information-sharing tool to date. News dissemination has never become simpler since then. When compared to television, it offers an even better advertising format for advertisers. Online news providers are able to tailor their pitch to what readers are looking for. This is done because of things like cookies that track users searches and save them in the form of a ‘history’. For example, suppose one individual were to search for a lot of football-related accessories, then because of cookies, ads would display products on the lines of sports, or more specifically just football. Advertisers love this since they get the feeling that they are getting their money’s worth.

So now you can glean the entire scope of the industry and see how newspapers are getting out competed.


 Circulation of newspapers all over is declining in the midst of falling demand from consumers. This is in turn is causing many companies to make employee cuts. As costs escalate many companies are facing what is similar to ‘diminishing marginal returns’. Where each employee is just adding minimal input, and just weighting up the cost.

Journalists are heading out the door, as the publications landscape faces structural unemployment.

FACT: Since 2001, the United States has shed a fifth of their journalists – according to State of News Media Report.

Journalists are still able to provide breathtaking articles and the scope of news is not in any sense being jeopardized. However, it is the consumers who are not paying their dues. They are turning towards the internet which provides information that is plentiful and free.

With the exception of a few top publication sites, such as The Wall Street Journal, many companies have been forced to abandon paid internet subscription services. Unbelievably, even The New York Times has dropped online charges. Bottom line – no one at all wants to pay when there is stuff for free.

Technological changes trumps newspapers

Readers’ habits are quickly changing. The majority doesn’t want to read general interest publications, but rather they want to go online and read articles by particular writers and check out blogs which match their interests. When you go online you can comment on articles, share them, and even edit them such as on Wikipedia.

“When we go online, each of us is our own editor, our own gatekeeper,” says columnist Nicholas Kristof.


People who surf the Internet don’t have to pay a single penny for viewing the news. It’s all free and there is no charge involved. This is what attracts the hoard. You post something on the internet for absolutely no burden of cost to the consumer, the consumer is bound to amble up and procure it. When you look at newspapers, on the other hand, you have to pay a price. The price over here, in India, generally ranges from Rs. 1 to Rs. 10, while international publications range from Rs. 10 upwards. Newspapers are pretty inelastic and a fluctuation in prices would not trigger a drastic reduce/increase in demand, so you may think that the price doesn’t matter in this case and that demand should remain static. But the thing is one could get the same news, the same exact story and info, for free online! Its either pay the price or snag something for free. I’m sure most of us, given our innate nature, would be more than happy with the latter.

And the cost for newspapers may seem meager, or little of nothing for most, but it still tends to add up in the long term. Moreover, in the long term there’s always that scary concept that causes price escalation and eats up the value of our money – inflation. All in all, the price matters.

What can publication companies do?

Publication companies should be more focused. Instead of providing coverage of wide range of events, companies should prioritize in one area and expand greatly in it. They shouldn’t cover ever single news item that they could get their hands on, but rather they should focus on one aspect. For example, The Wall Street Journal is thriving because they are concentrating all their expertise in one area: business. Same goes with The Economist which zeroes in on economic issues and delivers insightful information on those lines.

Newspapers used to one-inch thick back in the old days in the US which greatly increased the cost of manufacturing. Companies should slim down and offer what is most relevant to the public.

One more strategy that publishing companies could turn to is outsourcing. To cope with falling revenues and rising costs, publishers could outsource their internal processes as part of their management strategy.

BOTTOM LINE: Publication companies need to strategize, be more focused, and efficient. Only then will newspapers be able to sky rocket back into the eyes of the public, and prove its stance of dominance once again.









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