Question

1. CASE: Newspaper Industry
Do you know how many newspaper companies are suffering from the big Revenue Drops and enormous Profit Losses [CO C]?
Let's think about All the resources that combine to produce Daily Newspapers:
Management, Editors, Reporters, Photographers, Delivery people, Printing Presses, Pulp Mills, pulp mill Workers, Ink Makers, Loggers, Logging truck Drivers and so on.

Then how come we can get a high-Quality newspaper less than one dollar?

Answer 1

The chief revenue propeller for any newspaper are its advertisers. Moreover, advertisers usually select the newspaper which enjoys an extensive circulation. To raise the circulation, prices of newspapers has to be set considerably low.

Additionally, many newspapers obtain certain amount of newsprint on   subsidization from the government. This aids them to keep expenses low to a some extent. But, it is the advertising revenue which has the chief effect on recouping the expenses of news collection, newsprint, making & distribution.

With input expenses increasing & the economic depression, there is also strain on advertising. The business framework of many publishing houses & newspapers is tilted towards advertising. In market circumstances that are volatile, discretionary expenses are reduced and advertising expenditures fall in this grouping. Over-reliance on this type of business framework is building pressure. Thus, it is time to re-assess the cover price approach.

Most media firms think that even a slight rise in cover prices results in a decline of readership numbers. But, there is also a potent faith that readers will agree to take a hike in cover pricing if they recognize the intrinsic worth of the item.