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Introduction

Economic pressures are the primary forces that shape the behaviour of newspaper companies. In order to survive in the digital age, some responses of newspaper managers are affecting journalistic quality, producing practices that diminish the social value of newspaper content and divert the attention of newspaper personnel from journalism to activities that are to the business interests of the press. The newspapers operate in a mature industry with little growth potential. The current situation as the newspaper industry faces is an uncertain future because of stagnant markets; that is the increasing competition from other media that caught the audience attention, used by progressively smaller portions of the population and changed the advertiser media choices. These trends have been developing for two decades. Publishers are convinced that the industry has to be managed differently in order to survive and thus, have adopted a range of strategies that have further commercialized the industry, making commercial considerations that exceed the importance of editorial quality or social concerns.

Traditionally, newspaper enterprises were own privately by individuals who operated his/her publication with public interest and community service orientation. In order to survive for sufficient fund to normally operate the publication, many newspaper enterprises are affected by pressures to maximize profit and company values, change in business cycles, rise and fall interest rates, share price changes for public companies, create structured relations with owners of capital, workers and suppliers, pay for facilities and equipment, and engage in the creation production, marketing and distribution of papers. These changes have resulted new objectives to the media managers and emerged emphases placed on profits and share prices with companies in recent years. It allowed stronger elements of capitalism and commercialism to become the major factors determining operations and content in major media companies.

The primary content of newspaper today is commercialized news and features designed to appeal to broad audiences, to entertain to be cost effective and to maintain readers whose attention can be sold to advertisers. In the modern newspaper business model began to focus on urbanization, wage earning and expand literacy to create social conditions. To obtain that, newspaper began to seek larger audiences by reducing the price for papers, altering content to appeal to a mass audience and shifting costs to retail advertisers that developed with the changes in economic and social life. As a result, the survival of newspaper is very much dependent on commercialism, where newspaper companies have made specific efforts to acquire or launch news and feature services to gain additional commercial advantage from the content that they do not produce, as well as to achieve additional income through this channel.

Industry History

The newspaper industry has gone through prior periods of boom and bust. The popular press took off I the 1830s with the creation of the “penny “press”: inexpensive papers that were sold by street vendors. The industry grew importance, profitability, and influence. During the Great Depression, plunging revenues and competition from the emerging technology of radio hurt newspaper. Newspaper advertising revenue fell 45% from 1929 to 1933, and was still down 20% in 1941. Hundreds of newspaper went out of business or suspended operations, while created unemployment to the newspaper workers. Radio increased in importance and was the only media segment that realized gains in advertising during the Depression.

With the rise of television, the newspaper business faced another major transformation. In the 1960s, television surpassed newspapers as a source of information, and TV networks became more adept at capturing national advertising. The newspaper sector was consolidated as family-owned businesses were bought by growing chains. As chain ownership prospered, an increasing number of cities became one-paper towns, leading to concerns about lack of competition. Newspaper companies such as the Washington Post Co. and New York Times Co. were the significant companies at the time.

Declining Advertising Revenues

Retail, classified, and national ads have traditionally accounted for 80% of newspaper revenues, with subscriptions and newsstand sales making up most of the rest. Sunday newspaper, with their bulky ad inserts and extra sections, along with papers published later in the week, have brought in more than half of newspaper print dollars at some publication.

The traditional advertising model for years generated healthy profits, subsidized expensive foreign, investigative, and other reporting and helped keep subscription and newsstand prices low. However, during the recession, newspapers have seen a dramatic drop in advertising. While other media have also been affected, newspaper have hand some of the sharpest declines. Total advertising revenue at daily newspapers plunged from 49.4 billion in 2005 to 27.6 billion in 2009, resulted a 44% decrease.

In 2009, The Pew Center’s Project for Excellence in Journalism estimated that about half of the recent drop in advertising was due to the poor economy, as auto dealers went out of business and other retailers cut back. Newspapers are also in the process of long-term, structural changes as readership and advertisement moving online. Online ad revenues made up about 10% of newspaper advertising in 2009, and rose up about 12% during the mid-2010.

Classified advertising, which accounted for about 50% of ad revenues for newspapers reached its peak in 2008. However, these ads have gravitated from print to specialized websites like Craigslist. Media companies have tried various strategies to save the classified market, with big chains such as McClatchy, the Tribune Co., the Washington Post Co ran sites like cars.com and homegain.com. However, these efforts were undercut by the online ads. The classified advertising in daily papers declined 38% in 2009, with some categories falling even faster such as the Help-wanted ads: fell 64% in 2009 compared to the previous year.

The traditional formula – 80% of newspaper revenues from advertising – is no longer holding steady as newspapers try new strategies to raise revenue, such as sharply increasing the price of the print newspaper, starting affiliated websites, and other strategies.

Statistic

Newspaper Industry in United States:

In the 2008 United States Census Bureau, newspaper publishers experienced a single-year decline in total revenus of 8.3% - from $47.9 billion in 2007 to $ 43.9 billion.

A major reason to the overall loss in revenues for the industy was the decline in advertising space revenue for general newspapers, which dropped 10.2% - from $30.9 billion in 2006 to $27.8 billion 2008. Revenue from newspaper subscriptions remained largely unchanged over the period, from $8.3 billion in 2007 to $8.2 billion in 2008. Facing dwindling advertising revenues, the publishing industry has latched onto the wine club movement such as New York Times and Wall Street Journal.

Newspaper Industry in Canada:

This source is originated from Winnipeg Free Press, a division of Free Press Canadian Newspapers Limited Partnership

The revenue at the company that owns the Winnipeg Free Press, the Brandon Sun and Winnipeg community newspapers declined by 10.5% in 2008. Total sales for FP Canadian Newspaper Limited Partnership (FPLP) were $26.8 million for the quarter, with advertising revenue of $18 million, off by 13.1%.The reduced advertising spending is because of the global economic slump, along with increased use of the internet and other free media.

Commercialism and Newspaper Quality

Commercialism has diminished the importance of public service. Market concerns and economic pressures now determine operation and content in the newspaper industry. This situtation has promoted self-interest behaviour aimed at market potential and a growing conflict between the role of newspapers as “servants of readers” and the exploitation of readers to seek additional commercial gain.The public increasingly sees the newspaper industry becoming a business that is more concerned with its own economic interests than with its original purpose.

The content of today’s newspaper is shifted by commercialism, and the market conditions in the media firms. This results a diminution of newspaper quality and diversity as commercial media emphasize content that serve broad audiences and will not lead to reduction in advertisers as well.

Making news pay: Reinventing the newspaper

An example of an American newspaper named The Sun. With mixture of crime reports and human-interest stories, the Sun was intended to appeal to a mass audience with cheap price at one penny, one-sixth the price of most other papers. This daily newspaper was selling 15,000 copies a day. The Sun introduced a new business model to the industry: it has a large circulation that attracts advertisers, where the result revenue enables the company to keep the price down and circulation up. It appears to be a great deal for all concerns: readers got their news cheap; advertisers could reach a large audience easily; and newspaper could afford to employ professional reporters.

This model has worked very well before the audiences have shifted to another media, the Internet. “The audience is bigger than ever, if you include all platforms”. News providers throughout are outreaching for new models to survive. Some are starting to charge for content on the web and mobile devices such as pursuing non-traditional sources of revenue such as wine clubs or dating services. It is uncertain that if these models will work; however, it is clear that revenue from online advertising alone will not be enough to cover the costs of running a traditional news organization.

Online advertising usually brings in less than 20% of a newspaper’s advertising revenue. Advertisers can measure the effectiveness of advertisements and make negotiation on the payment. Some argued that Internet advertising would become as valuable as it becomes more targeted. Even though the revenue on online advertisement is growing, it is still not fast enough to fill the gap of decline in revenue from print advertising and circulation. The strategies of “metered paywalls” and charges for mobile devices have been very doubtful in terms of attraction. As a matter of fact, some newspapers prefer to generate revenue by incorporating more “lifestyle” element to attract the attention of the audiences. For example, newspapers can use their trusted brands to earn new forms of revenue, such as the New York Times and Britain’s Daily Telegraph, have launched wine clubs; Canada’s Globe and Mail offers branded cruises and so on. Non-traditional sources of revenue are seemed to be more convincing in today’s newspaper industry in order to survive the business.

Times Company Creating a Wine Club

Newspapers don’t have the same revenue sources that they used to. Revenue at The New York Times Company has been falling. In 2009, the company reported that second-quarter revenue declined 21.2%, to 584.5 million, but advertising in newspapers and on the Web declined much faster, at 31.9%. As revenue has declined, the company has looked to shed units. In 2009, the Times announced the sale of its classical-music radio station, WQXR, and it was seeking a buy for properties including The Boston Globe. Meanwhile, it was considering how to increase revenue, such as looking into whether to charge readers for access to its Web site, along with side ventures like the wine club.

The alternate ways to make money as its advertising revenue plunges, The New York Times was getting into the wine business. “ The Times is looking at a lot of different ideas for engaging our audience,” said Thomas K. Carley, the senior vice president of strategic planning for the Times Company. Not only the times have started wine clubs, the Bay Area public broadcasting organization KQED, Sunset Magazine, Forbes and The Wall Street Journal have done the same.

UK The Guardian Online dating service

In this era of sharply reduced advertising, with newspapers trying to generate new revenue streams, this distinction is more important than ever. The Guardian, a bristsh press has established one of the biggest online dating service sites named “Soulmate” in the UK. The Guardian's site, Soulmates, has grown 60% year-on-year since its launch, and saw a 45% increase in new members. Soulmates has also celebrated its best ever month, week and day. "Growth has continued despite the downturn and January 2009 was our best ever month in terms of new members and revenue," says Tina El-hage, ventures business manager, Guardian News & Media.

Other non traditional source of revenue

It is fundamental that readers must know what is and is not for sale in newspapers. We have explored the newspapers are generating new revenue streams through wine clubs or online dating service. To begin with the least damaging example, the modern newspapers have began to sell advertising space on section fronts. We sometimes even see advertisement on section fronts but on front pages as well. This damages a newspaper’s appearance and robs news of its most compelling space.

In the American Journal Review, John Morton has criticized that the newspapers participating in activities to bring in paying customers that are only peripherally related to journalism--event planning. He exemplified the example by the Washington Post selling dinners featuring Obama administration notables, lawmakers and other luminaries plus a selection of its journalists at the home of Post Publisher Katharine Weymouth for off-the-record discussions. The cost to sponsor was $250,000 for a series of 11 dinners. Morton believed that this venture was so rich in potential conflicts of interest -- having Post journalists involved in off-the-record discussions and that the newspaper was selling its “soul”.

It is true that the newspaper is declining in revenue, Morton stated that to the newspapers, it is still important to be careful in straying from their fundamental mission – gathering and presenting the news to increase revenue. Newspapers face a great problem as they deal with an economic model broken by the Internet. The news “thieves” are taking great economic advantage of the decision by most newspapers to make the information they gather for free in the web.

Internet wants to be free, so most newspapers followed along, to their regret. Newspaper companies wanted to project a premise that information wants to be gathered and people want to receive it and pay for it. However, the problem is how to charge for information on the Internet. Various efforts are under way to rectify this problem; the progress emerged some antitrust concerns in order to earn their revenue to maintain the operation. Morton believed there will eventually a solution that best fit the situation.He believed that newspapers still have an advantage of producing mass amounts of desirable content.

Newspapers must evolve or die

Some papers have reduced printing and other costs and moved to online-only editions or shrinking their delivery area. Such as Detroit News and Detroit Free Press, which are combined in a joint operating agreement: cut daily delivery of the print newspapers to three days a week. As print circulation declines, online readership has emerged. Consumers no longer think of “daily” news; news is served to us by the nano-second on the web and our smartphones and handheld devices. It is not news that newspaper revenues are plunging.

The decline of newspaper can be traced to four relatively modern events:

Free Web browsers: The release of microsift’s free web browser, Internet explorer in 1995. To the chagrin of Netscape, IE became the dominant browser in today’s society. People rush to get their content online via computer or any wireless devices. Many media brands are now willing to give away information for free to gain a foothold in the nascent internet.

Craigslist: The second event that greatly contributed to the decline of the newspaper industry through an attack on its traditional revenue model. Starting in San Franciso since 1995, Craigslist has given people a free platform to post classified ads for free, with some recent exceptions. The newspapers could not be able to compete with this ad paradigm shift.

RSS: Really Simple Syndication (RSS) feeds provided a free and easy way for the aggregation of news, stories, blog posts and all types of information that internet uswers felt was pertinent to their lives. RSS is not only information-free, but also quick and easy to grad the latest news from the internet without having to visit newspaper’s website.

Google Ads: Google’s ability to place ads everywhere enables it to monetize the internet by a seemingly transparent method; using AdWords meant that even small blogs could provide a source of Income to Google. While the Google search engine became popular because of the accuracy and relevance of its search results, AdWords created a dependable source income for Google, marking the decline of advertisement of mainstream newspaper.

Rise of the Web

The challenge that newspapers are facing is to hold on to lucrative print readers, while finding ways to make more money from a growing online audience that generally reads the free information. Print circulation of daily papers fell by 13.5% from 2001 to 2008. Average daily newspaper print circulation fell 8.7% in early 2010 compared to 2008. The Declining circulation and shrinking delivery area are the reflections of the reduced printing and other costs for the moving-online strategy. For example, The Detriot News and Detriot Free Press combined in a joint operating agreement to cut daily delivery of the print newspaper to three days a week.

As print circulation declines, online readership has surged. Newspapers are attracting online readers not only from their local communities, but also other cities and countries. Public interest in news has not diminished, but increased. However, readership trends have became more complex, as habits and preferences evolved in response to the wide range of information available on the Internet, television and wireless devices. Readers do not necessarily want news from a traditional paper. Some big news websites emerged such as Yahoo News, CNN.com, and NYTimes.com.

Conclusion

The newspaper industry has gone through prior periods of boom and bust. The revenue of today’s newspaper companies has been decreasing due to emerge of Internet. The traditional formula – 80% of newspaper revenues from advertising– is no longer holding steady as newspapers try new strategies to raise revenue, such as sharply increasing the price of the print newspaper, starting affiliated websites, and other strategies. Newspapers face a great problem as they deal with an economic model broken by the Internet. The news “thieves” are taking great economic advantage of the decision by most newspapers to make the information they gather for free in the web. Print circulation reduced to compensate the cost of going online; Newspaper companies established new revenue stream such as creating wine club and online dating services; Opening advertisement spaces to violate the traditional format; and participating in activities to bring in paying customers that are only peripherally related to journalism. All of these “strategies” are the current non-traditional source of revenue for the newspapers to survive the information age.

In order to survive, some newspapers prefer to generate revenue by incorporating more “lifestyle” element to attract the attention of the audiences. For example, newspapers can use their trusted brands to earn new forms of revenue, such as the New York Times and Britain’s Daily Telegraph, have launched wine clubs; Canada’s Globe and Mail offers branded cruises; the UK newspaper The Guardian have established online dating service and so on. However, the public increasingly sees the newspaper industry becoming a business that is more concerned with its own economic interests than with its original purpose. The content of today’s newspaper is shifted by commercialism.

Nowadays, people do not look for “daily” news, but “micro”news that update instantly. People do not necessarily have to receive information from traditional newspapers. Here comes the challenge of newspaper – to evolve or die? As ad revenue declined in a serious manner, the print circulation declined and led to the surge of online readership. The challenge that newspapers are facing is to hold on to lucrative print readers, while finding ways to make more money from a growing online audience that generally reads free information. Under this situation, despite the critism to the commercialism of advertisements on newspapers, the non-traditional sources of revenue are seemed to the most convincing strategy in today’s newspaper industry in order to survive the business.

Reference

The Economist (2011, July 11). Making news pay:Reinventing the newspaper. The Economist, 400(8741), 7. Retrieved from [21]

Picard, R. (2004). Commercialism and newspaper quality. Newspaper Research Journal, 25(1), 54-65. Kirchhoff, S. (9 September, 2010). The U.S. Newspaper Industry in Transition. CRS Report for Congress. pp 1-25 State News Service. (16 December 2009). NEWSPAPER PUBLISHERS REVENUES DECLINE IN 2008. Winnipeg Free Press.(7th May, 2009). FP Canadian Newspapers sees revenue decline 10.5%. Retrieved from [22] <reference/>The New York Times. (13 August 2009). Times Company Creating a Wine Club. Retrieved from [23] <reference/>Henly, J. (8 April 2009). G2: The online dating agency. <reference/>Morto, J. (2009). Too steep a price: newspapers must protect their integrity as they struggle to find new revenue streams. American Journalism Review, 31(4), 48. <reference/>Mizuno, G. (May 2 ,2009). Newspapers Must Evolve or Die. Retrieved from [24]

Samanthayukb (talk) 03:45, 29 November 2011 (UTC)