Future of Newspapers - The Newspaper Market in History

The Newspaper Market in History

The newspaper industry has always been cyclical, and the industry has weathered previous troughs. But while television's arrival in the 1950s presaged the decline of newspapers' importance as most people's source of daily news, the explosion of the internet in the 1990s and the first decade of the 21st century increased the panoply of media choices available to the average reader while further cutting into newspapers' hegemony as the source of news.

Both television and the Internet bring news to the consumer faster and in a more visual style than newspapers, which are constrained by their physical form and the need to be physically manufactured and distributed. The competing mediums also offer advertisers the opportunity to use moving images and sound. And the internet's search function allows advertisers to tailor their pitch to readers who have revealed what information they're seeking – an enormous advantage.

The Internet has also gone a step further than television in eroding the advertising income of newspapers, as – unlike broadcast media – it proves a convenient vehicle for classified advertising, particularly in categories such as jobs, vehicles, and real estate. Free services like Craigslist have decimated the classified advertising departments of many newspapers, some of which depended on classifieds for 70% of their ad revenue. At the same time, newspapers have been pinched by consolidation of large department stores, which once accounted for substantial advertising sums.

Press baron Rupert Murdoch once described the profits flowing from his stable of newspapers as "rivers of gold." But, said Murdoch several years later, "sometimes rivers dry up." "Simply put," wrote Buffalo News owner Warren Buffett, "if cable and satellite broadcasting, as well as the internet, had come along first, newspapers as we know them probably would never have existed."

As their revenues have been squeezed, newspapers have also been increasingly assailed by other media taking away not only their readers, but their principal sources of profit. Many of these 'new media' are not saddled with expensive union contracts, printing presses, delivery fleets and overhead built over decades. Many of these competitors are simply 'aggregators' of news, often derived from print sources, but without print media's capital-intensive overhead. Some estimates put the percentage of online news derived from newspapers at 80%.

"Newspapers are doing the reporting in this country," observed John S. Carroll, editor of The Los Angeles Times for five years. "Google and Yahoo aren't those people putting reporters on the street in any number. Blogs cannot afford it." (Editor Carroll resigned from The Times in 2005 in the face of parent Tribune Company's demands that he slash newsroom staff.)

Many newspapers also suffer from the broad trend toward “fragmentation” of all media – in which small numbers of large media outlets attempting to serve substantial portions of the population are replaced by an abundance of smaller and more specialized organizations, often aiming only to serve specific interest groups. So-called narrowcasting has splintered audiences into smaller and smaller slivers. But newspapers have not been alone in this: the rise of cable television and satellite television at the expense of network television in countries such as the United States and United Kingdom is another example of this fragmentation.