Is the internet really to blame for the declining newspaper industry?
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While the internet has opened up loads of new opportunities for brands conducting content marketing, it has stolen consumer attention away from the newspaper industry, which is now a shadow of what it was a decade ago.
An indicator of this transition took place earlier this year with the once powerful Washington Post being sold to the founder of Amazon, Jeff Bezos, for a mere $250 million, which pales in comparison to Facebook’s acquisition of the instant messaging app WhatsApp for $19 billion.
The irony is that The Washington Post met with Google founders Sergey Brin and Larry Page in 1998 and refused to back the company.
“Such missteps are not surprising. People living through a time of revolutionary change usually fail to grasp what is going on around them.” said the newly-retired Washington Post reporter of 50 years, Mr Robert Kaiser.
Before the internet took over the world, newspapers relied on advertisers for the bulk of their revenue, Mr Kaiser pointed out in his article ‘The bad news about the news’, published on the Brookings Institution.
At that point, newspapers could reach a large but broad audience that advertisers were happy to pay for, but the advent of the internet made it possible for advertisers to target specific audiences.
For instance, Google and Facebook have the ability to target people with a proven interest in a product, such as people who have searched for similar items in the past.
Mr Kaiser noted that Google’s advertising revenue has steadily increased over the past decade, rising from $70 million in 2001 to over $50 billion last year – twice as strong as the combined advertising revenue of all American newspapers last year.
The newspaper industry also lost out big to sites like Craigslist that replaced their classified section. Kaiser says these classifieds used to bring in a third of their revenue 20 years ago.
To push their business into the 21st century, many newspapers tried to adjust their existing business model to the internet, but advertisers are no longer interested in the general readership newspapers attract.
However, almost 20 percent of all advertising dollars are still invested in print media, even though Americans only use around 5 percent of their time spent on media reading magazines and newspapers, said Kaiser. So, newspapers are receiving more advertising dollars than they are worth.
The online advertising market is now much more competitive than newspaper advertising, according to the University of Chicago Booth School of Business Professor Matthew Gentzkow, and as a result, online advertising rates and revenues have declined.
The problem with this competitive online market is that the revenue that comes from online advertising is always going to be lower than the figures the news industry was accustomed to, he argued.
In his study titled “Trading Dollars for Dollars: The Price of Attention Online and Offline,” which was published in May’s issue of the American Economic Review, Gentzkow said advertising rates and results on the two platforms are often compared with the same metrics, but are entirely different.
While online advertising is often measured by the number of unique monthly visitors the advertiser receives, newspaper rates differ depending on the circulation of the newspaper.
The internet isn’t responsible for the decline in popularity of newspapers, asserts Gentzkow, who also pointed out that the industry started declining before the internet takeover in the 1980s.
While the internet might not be directly responsible for the declining news industry, it has taken advertising dollars, and the attention consumers from this print media.
One thing that is clear is that modern consumers are opting for easily accessible online content, as opposed to any kind of newspaper.
Posted by Dylan Brown