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 
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changing cost base are likely to vary with the size and location of the newspaper publishing 
company, but concrete data on costs and changes in costs are not publicly available. 
Digital publishing and distribution costs are substantially lower. A lot of initial costs, for 
example for investing in printing plants, are eliminated or decline to zero (Grueskin, Seave, & 
Graves, 2011). This has lowered the barriers for market entry, enabling many new 
competitors to enter the market. Due to the economic decline, a number of newspapers have 
also decided (or were forced) to stop printing their newspaper and transferred their news 
publishing to online-only. Examples are the Christian Science Monitor in the United States 
(the first national daily to take this step) and a number of regional/local newspapers in the US 
like the Seattle Post-Intelligencer.
The step from printed news to online-only news saves publishers significant investments in 
paper and printing plants. But recent research shows that this switch is not necessarily a 
solution for newspaper publishers. Thurman and Myllylahti (2009) for example have shown 
that the Finnish financial newspaper Tallousanomat managed to cut costs by 50% by going 
online. At the same time, revenues dropped by 75%. Especially advertising and subscription 
income showed considerable decline. 
Revenues 
Newspaper publishers are active on a two sided market (Doyle, 2002; Hesmondhalgh, 2007; 
Albarran, 2002). Newspaper publishers generate revenues by selling newspapers (in print or 
digital form, as single copies or via subscriptions) directly to newspaper readers. They also 
generate income by selling the audience’s attention to advertisers, both in print and in online 
editions.
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Up until today, global newspaper revenue depends for more than half (57%) on 
advertising and for 43% on direct income from readers who have a subscription or buy single 
copies (PwC, 2009; OECD, 2010). Online advertising revenue is only slowly increasing and 
worldwide accounted in 2009 for approximately 4 of newspaper publishers’ revenues and 6% 
of total advertising revenue (OECD, 2010). 
The dependency on advertising revenue differs greatly in various European countries. In 
Luxembourg, for example, advertising contributes 77% to paid-for daily newspaper revenues, 
while in the UK this percentage is 50% and in Denmark only 38%. In the United States, 
newspapers are most dependent on advertising – 87% of newspaper income is derived from 
advertisements. In Japan, on the contrary, newspapers are the least dependent on advertising, 
35% of their income is derived from selling advertisements (OECD, 2010).
Newspaper prices are relatively inelastic. When the prices of newspapers are lowered, the 
demand for circulation will not increase and the same holds for higher prices.
Increasingly, newspapers are generating additional income through the sales of other products 
like movies, wine or travel arrangements, a development which is spurred by declining 
revenues from sales and advertising and attempts to build more loyal communities of readers. 
Revenues from digital news publications mainly come from advertising, but some newspaper 
publishers also have paid online products. Compared to revenues from the print newspapers, 
revenues from digital products are still low. The developments in online revenues will be 
further elaborated in Chapter 3.