Statistical, Ecosystems and Competitiveness Analysis of the Media and Content Industries: The Newspaper Publishing Industry

Statistical, Ecosystems and Competitiveness Analysis of the Media and Content Industries 
88
 
European newspapers rely to a far lesser extent on advertising, which makes them less 
vulnerable to economic recessions. Other explanations are that most newspapers in the EU are 
run by private owners (sometimes still family businesses), instead of depending on private 
equity investors or traded at the stock market as is the case for most newspapers in the US. 
Therefore they are less subject to the pressure of striving for short term profits. 
But, fundamentally European newspaper publishers face similar problems as US newspaper 
publishers. The developments sketched in this study indicate that the newspaper publishing 
sector in Europe is in a transition phase. Its legacy business is declining, it is facing increased 
competition and its new online and mobile services have in most cases not yet been profitable. 
Newspaper publishers are trying out various new models, none of which has so far 
compensated the revenue losses of the print newspapers. Meanwhile the legacy publishers 
bear the double costs of sustaining their offline print newspapers, while at the same time 
investing in new online news services. 
There is a risk that the market enters a spiral of decline created by a lack of profitability 
Picard (2002). If newspaper publishers suffer from lack of profitability, they will reduce their 
expenditure on content, personnel, equipment and marketing. This will lead to less desirable 
products, declining audiences and subsequently less advertising revenue. Newspaper 
publishers will respond by further reductions in financial resources - which will contribute to 
even more lost profits and so on and so forth.
All this means that the management of newspaper publishing companies needs to reconsider 
its strategies. They need to rethink their identity and their business models; their 
organizational structure, their products, their target audience and their role in society. 
Innovation, supported by research and development might help them to adjust to the declining 
income, and increased competition. Numerous news organizations are working on innovative 
projects, including new (online) products, services and partnerships. But usually these 
projects are incremental in nature; they focus on a process of gradual change. So far these 
efforts have not led to significant new business models or higher print circulation, while 
online, revenue models remain uncertain and do not compensate for loss in profits.
Traditional media companies respond differently to disruptive developments in their 
environment than newcomers. They often find it difficult to, on the one hand, protect their 
vested interests and investments and on the other hand to respond to the new opportunities 
that arise. The new possibilities are often financially unattractive because profit margins are 
initially lower and it still is largely unclear how the market will develop. Companies find it 
difficult to allocate sufficient resources to invest in new developments. And when they do, 
they try to integrate new developments into their existing product, focusing on their existing 
audience. Often they are also afraid that investing in new technologies will cannibalize their 
legacy products. 
Incumbents face a number of problems with respect to innovation if the conditions of the 
market change drastically (Kung, 2009). Strong players in the market focus on existing skills 
and incremental innovation. The more successful these companies are (were), the more they 
will linger on their current unique selling points. As markets shift and technology changes, 
existing parties will focus on old markets. They often seem unable to reinvent themselves in 
time. Many newspaper publishers turn to merger and acquisition strategies instead of 
innovating themselves. 
The strengths and weaknesses of the EU newspaper publishing sector, in the context of a 
digital media market, are summarized in Table 17. 

---