Newspaper circulation has continued to decline over the years. Perez-Pena (2008) reports that newspaper sales in summer and spring have been falling by about 5% every year. This has caused serious financial strain in some newspaper companies (Pew Project for Excellence in Journalism 2010). Kirchoff (2010) states that eight major newspaper companies were declared bankrupt in 2008-2010.
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The decline of newspapers in the US is attributed to decrease in readership of newspaper across the country (Fair Syndication Consortium, 2009). The drop is experienced in all different types of newspaper circulation. Kirchoff (2010, p. 1) believes that the decline has been prompted by the change in readership habits as most people turn to the internet to access free news as well as information.
Web publications and news updates from individuals and organizations or institutions which do not aim to make profit by providing news, have competed the print media as they offer free, more updated news (Langeveld 2009).
Such organizations include foundation-funded projects which focus on investigative reporting, local reporting as well as policy news (Reynolds 2008). The internet provides a wide range of information and broad content from different source that can not be found in any newspaper.
Previously, classified, retail as well as national advertisements had accounted for about 80% of most newspaper companies’ revenues as people still relied on traditional advertising models (Newspaper Association of America 2011). However, the rising online advertisement through the internet has significantly affected revenues of most newspaper companies.
Many companies are adopting online advertisements since they are cheaper considering their wide (global) coverage and their interactivity. Besides, readers are continuously moving to the internet making it the most appropriate media for advertisement (Harvard University, Kennedy School of Government 2007, p.11).
Kirchoff (2010, p. 6) reports that the industry experienced a 44% decrease in advertising revenue between 2005 and 2009.
Another factor which has contributed to the decline of newspapers in the US is the debt trouble. Some newspaper companies borrowed significant amounts of money from financial institutions just before the recently experienced economic downturn.
Greg and Louis (2009); and Brubaker and Hepp (2010) points out Tribune Co. and Philadelphia Newspapers LLC as some of the major newspaper companies which have experienced serious financial strains forcing them to file for bankruptcy.
The increasing economic challenges experienced by newspaper companies have made the prices of their stocks to decline, further leading to decline in their revenues. These financial problems have impaired their relationship with their lenders, making it difficult to raise new capital.
Some newspaper companies have not been able to meet their financial agreements which they made with their lenders meaning that their credit lines risk being terminated since they are not able to consistently repay debts from their cash flow.
With the increasing volatility in the industry, survival has become the most important for newspaper companies. Some of them have adopted staff layoffs as their strategy for decreasing their workforce costs, and raising the price of their newspapers as a way of increasing their revenues (Morton 2009).
These strategies have made consumers turn to alternative media which are cheaper and provide a wide range of information. Alternative sources of information as well as news are becoming increasingly available to consumers with the rise of wireless devices such as phones, iPhones, iPad as well as wireless e-readers (Pew Research Center for the People & the Press 2009).
Available business models for the declining newspaper industry
The decline in newspapers has significant impacts on the owners as well as consumers. It leads to decrease in revenue or worse still, losses which may lead to bankruptcy. On the other hand, important news may not be covered as most newspaper companies reduce the number of their staff.
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This decline will also have several indirect impacts on other media and information availability. Therefore it is important to adopt business models which can be implemented to revive the industry.
Hybrid print/online model would be an appropriate business model for newspaper companies (Malone 2009). This would enable newspaper companies collect sufficient advertising as well as subscription revenues from both the print media and the internet.
They will also be able to operate with their present staffing levels allowing them to provide a broad range of information as well as news from the local to the international scene (Federal Trade Commission 2010). For the program to be successful, they have to consider strategies for revenue-sharing with the available search engines like Google.
They have to charge subscription fees for particular contents in their online editions in order to earn revenues from their online news. However, they have to crackdown Web Portals as well as spin-off websites which reproduce their content (Dougherty 2009).
Newspaper companies can also adopt partnerships or joint operating agreements (Hanson, Hitt, Hoskisson & Ireland 2011, p. 46). This strategy will enable them share the cost of production, news coverage, newspaper circulation and delivery, and therefore reduce their costs of operation, and in turn achieve economies of scale.
Under joint operating agreements, they can share their advertising channels by integrating their marketing models. This will also allow them to link each other’s websites and newspaper contents.
Brubaker, H., & Hepp, C. K., 2010, Philadelphia Newspapers sold to lenders. The Philadelphia Inquirer. Web.
Dougherty, H., 2009, Online news aggregators—friend or foe? Hitwise. Web.
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Hanson,D., Hitt, M., Hoskisson,R., & Ireland,D., 2011, Strategic management: Competitiveness and globalisation. Melbourne: Cengage.
Harvard University, Kennedy School of Government, 2007, Young people and news. Politics and Public Policy. Boston: Joan Shorenstein Center on the Press. p. 11.
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