Question

How do you evaluate the business models of newspapers in developed countries? 400 words

Answer 1

It might be surprising but most of the people still get their news updates from the newspaper only. To be precise this no. is about 2.7 Billion as compared to 800 million people getting their newsfeed online or through digital mediums. And to the surprise of most of us, developed countries are the frontrunners in consuming newspapers, with US , Japan, Germany and UK among the Top 5 newspaper consuming countries. So, what has changed?

The thing that has changed is the way these newspapers now work. Earlier, a large portion of their revenues used to come through advertising, with some coming from distribution as well. But with the companies shifting their funds towards the digital modes of advertising, the revenues from print advertising are decreasing gradually. Companies don't consider it as a viable and logical option mainly because of cost facts, inability to measure its effectiveness, and quantifying ability of digital advertising. The focus, therefore, now is shifting towards getting more and more revenues from distribution. In fact 2015 was the first year in this millennium when revenues from distribution were higher than revenues from advertising ($92 Billion vs. $ 87 Billion). This is not a seismic shift, but yes the scenario is changing, and it shows that the charm of newspapers is still intact among the customers, but is diminishing among the advertisers, who are moving towards other mediums.

One of these above mentioned advertising mediums is digital advertising. This mode of advertising is quantifiable, can be measured and can be innovated upon, making it much more appealing to the companies. But to say the least, all this hasn't stopped advertisers from advertising in newspapers. Yes, the raw revenues from distribution have grown more than those from advertising but the still advertising remains the core of newspapers' business model.

Under such a model companies advertise their products in newspapers to take advantage of its humongous reach. This is specially beneficial for new products that might gain a lot of popularity by taking advantage of newspaper's reach. This popularity can drive their products to greater heights and hence advertisers are ready to shed thousands of bucks on newspapers.

With everything said above, I believe it is pretty apparent that the business model of newspapers is changing slowly as they focus more and more on revenues from distribution instead of advertising, but the climax of the entire process is far away. Even in the developed countries like US and Japan people still read newspapers a lot and when their is such an accumulation of audience at a single platform, the advertisers would certaimly try to take its advantage.

Therefore, the business model of newspapers in developed countries is still intact, that is through distribution and advertising, and won't change that quickly.