An Endangered Species Special Edition: The Newspaper Industry


Newspapers are dying. In May 2009, The Atlantic presented a scenario in which The New York Times
could cease to exist as the paper was in danger of defaulting on $400 million in debt with only $46
million in hand. In fact, in 2008 The New York Times newspaper advertising revenue fell a whooping
18%.
These numbers threatened the future of the newspaper industry and those within it. The industry faced
many conflicting opinions especially when considering future possibilities. Many argued for an online
revenue model, however, according to estimates an online model would only support around 20% of
The New York Times’ current staff. Others, proposed the idea of micropayments or small fees for
individual articles, however, the newspaper industry bought into the idea that the “culture of the internet
is free.” Thus prompting Sulzberger, publisher and chairman of The New York Times, to weigh the
fixed costs of the paper, and ponder answering the question of when it would make sense to stop the
presses. On the other hand, some believed newspapers could be saved by becoming a nonprofit, endowed
institutions such as universities.


Despite the controversy, in 2018, The New York Times reported $28 million in profit! Its digital growth
added 109,000 digital only subscribers, raising the revenue from digital subscriptions to $99 million.
Even crazier, the overall revenue increase 2% to $415 million and a profit of over $24 million. Digital
subscriptions have granted companies such as The New York Times to, as we have  learned in class,
create a digital footprint of each consumer and use that information to their advantage. The New York
Times specifically curates what the digital consumer reads and optimizes the recommendation based on
it, allowing them to present the most relevant and the most viewed articles to the reader. In addition,
firms like Visual Revenue Inc. use data to arrive at a value for a particular article. Regardless, even with
the increase in total revenue, there was a 10% decrease in advertising revenue, causing digital
advertising to fall $51 million. Even worse, print advertising revenue fell $68 million.


The circumstances of the newspaper industry were similar to the aftermath of Napsters. The internet
has allowed the sharing of information at the expense of the past newspaper revenue model and industry,
primarily the printing sector, causing the revenue model to completely revolutionize. Would you pay a
subscription to The New York Times? But why would you when you could just consult the internet at the
expense of zero marginal cost?


https://www.nytimes.com/2018/08/08/business/media/new-york-times-earnings-subscriptions.html

Comments

  1. AnonymousMarch 10, 2019 at 11:35 AM

    I really enjoyed this post and learned a lot about the ongoing issues within the newspaper industry! Looking into this issue further, I found out that many newspapers are also taking another approach. This approach involves becoming a nonprofit organization, which allows them to reduce profit margin expectations and from being sold and taken apart for profit. However, this solution is also not a cure all to the problem in the industry and the main focus for the newspapers is raising donations to continue working. It really goes to show how the revenue models you mentioned and other alternatives need to be combined to create the most efficient model that will ensure the continued existence of the industry.

    Source : https://www.usatoday.com/story/money/2016/06/15/report-nonprofit-newspaper-business-model-not-cure-all/85935970/

    ReplyDelete

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