Legal Research

The Economics of Newspapers

By admin

Yesterday Hal Varian, Google’s chief economist, gave a presentation on the changing economics of the newspaper industry. He made a lovely show using graphics of the changing dynamics of their revenue model and changing user behaviours. Some blame Google but I think that this graphic says a lot about the impact of Google:

Google?s Chief Economist: ?Newspapers Have Never Made Much Money From News?

“Here are some telling stats from Varian?s presentation, which is also embedded below:

? About 40% of internet users say read news on the Web every day.
? Time spent on online news sites is only about 70 seconds per day, compared to 25 minutes spent reading a print edition.
? Online news readers tend to read at work, not for leisure, so they don?t have much time to stick around and are thus worth less to advertisers.
? Overall, less than 5 percent of newspaper ad revenues come from the online editions.
? Search engines account for 35 to 40 percent of ?traffic to major U.S. news sites,? according to comScore.
? The cost of printing and distributing print editions, makes up about half the cost, while editorial operations only make up 15 percent.

Varian concludes: ?Newspapers could save a lot of money if the primary access to news was via the internet.? … ?The fact of the matter is that newspapers have never made much money from news,? says Varian. They make money from ?special interest sections on topics such as Automotive, Travel, Home & Garden, Food & Drink,, and so on.? The problem is that on the Web, other niche sites which cater to those categories are a click away, leaving the newspapers with sections which are harder to sell ads against, such as sports, news, and local.”

030910 Hal Varian FTC Preso

It’s a sector worth watching, since the changing dynamics of news also represents the changing nature of quality evaluation, editorial, gatekeeping, etc. It is a double-edged sword since nothing is free at every step of its product life cycle.

Stephen

Full post as published by Stephen's Lighthouse on March 10, 2010 (boomark / email).