Atom’s Eve of Destruction: Newspapers

After establishing the early successes of Netflix, our class discussion switched over to Act II: Netflix trying to transition from its mail distribution of actual DVDs to streaming movies online (atoms to bits).  This got me thinking, what other industries are firms making the very same transition from physical hard copies to digital versions of their product?  My first thoughts: the newspaper industry.  To start this post, I offer the following video, the most relevant part starting at 1:52:

As the video alludes to, revenues in the newspaper industry are dropping and the industry is cutting jobs.  A lot of this is due to the fact that the newspaper industry has tried to adapt to the increasingly mobile environment, which is in a lot of ways similar to what Netflix is attempting to do.  As people become increasingly mobile with smartphones and tablets, and spend more and more time using social media, newspaper companies have put more and more of their content online.  One would think this would be successful: changing a product to better suit the customer.  However the following graph suggests otherwise:

The drop in print advertising is not all that concerning because newspapers are trying to become more digital anyway.  The real problem is that digital newspaper advertising is (no pun intended) at a virtual stand still.  As Netflix found out, an “atom” based business model does not always perfectly translate to the bits world. Since there is so much advertising space online, the amount companies are willing to pay for ad space online is far lower than they were formerly willing to pay in the Sunday newspaper.

Over the last few years, we have seen the rise of competitors: purely online newspapers, the pure play newspapers.  As we saw in the movie streaming industry, the costs for an exclusively online format is a lot cheaper, as there is a lot less cost of distribution and renting space.  Additionally, having a product in atoms (whether physical DVDs or newspapers) is a lot more expensive than an online digital version, especially with the increasingly low cost of memory due to constantly improving memory chips.

However, as the video states, pure play online newspapers, like the Huffington Post, do not generate enough revenue (each online reader produces 16-20 times less revenue than a print reader) to provide the worldwide coverage that print and online papers, like the New York Times, provide.  Thus, if the pure play format wins, our news will be not as comprehensive, in depth, and informative.  So what is the solution? Many newspapers are starting to charge for online newspaper subscriptions.  However, as stated in the video, the New York Times “thinks that approach will cut newspapers off from the global conversation.”  How many people are going to be willing to pay for online subscriptions when more and more news is available on Facebook, Twitter feeds, and smart phone aps?  This remains to be seen.  But I ask all readers to answer the poll question, what the medium from which you get the majority of your news?

Is the newspaper industry in trouble?  Much the same as Netflix, their ability to fine-tune their transformation from atoms to bits will tell the story.

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6 thoughts on “Atom’s Eve of Destruction: Newspapers

  1. As I read this post, I reflected on how my news-reading experience has changed. I never bought the newspaper, but I remember that every Sunday I skimmed through my dad’s copy. I stopped skimming through the newspaper when the principal Venezuelan newspapers opened a Twitter account. I followed them all on Twitter and this was more than enough to know about what was happening in my country and around the world.

    When I arrived to Boston, I greatly benefitted from having my country’;s main news sources available on Twitter. Twitter made it possible for me to have the news of country and country where I live in the same space. While this change has negatively affected the newspaper industry, it has been definitely a plus for me!

  2. Just has Alonsoev (sorry I don’t know what your first name is) reflected, I too reflected on the way that my reading experience has change. Because of the student version of the WSJ subscription, I get a paper copy in addition to the digital subscription. Everything I received my paper version, I don’t read it. it goes almost untouched to the recycle bin. Now I read most of my news online or through my iphone. I am also able to get alot of the news of Hong Kong through apple daily and South China Morning Posts’ online site.

    It seems like that eventually newspaper will be render obsolete.

  3. It is interesting how, through the onset of heavy social media use and the like, that we seem to feel more connected and up-to-speed than ever with what is going on in the world. Yet the accuracy of this information is compromised, leading us, contradictorily, toward less understanding of what is really going on. For example, someone’s tweet about a current event may be blown far out of proportion, or be biased by a personal opinion, whereas sources like the newspaper are unbiased factual information. This aspect of newspapers is invaluable. On the other hand, these newspapers themselves may have a twitter or form of social media that allow us to keep up with their factual info. Are the newspaper companies harming themselves by providing us with this free access? On a side note, the turn to online distribution of newspapers is a much more environmentally-friendly, “green” approach, which is another major concern of consumers in the modern world. This also may cause people to stop subscribing to a print newspaper.

  4. Very good connection between Netflix and the movie industry, to the Newspaper industry. The graph also provides a visual representation of how the online newspaper industry is struggling. It’s sad to think that some of the most famous Newspapers in America may start to slowly go out of business at some point in the near future. There is something bucolic about waking up and reading the hardcopy of a newspaper on a Sunday morning, while your fingers slowly turn black as the ink rubs off. The poll question is a very nice touch to the blog and I’m interested to see what the final results are going to be. Personally, I receive most of my news from Online Newspapers or TV news. In your blog you discuss the fact that newspapers like the New York Times are charging for online subscriptions, however you didn’t really mention websites such as CNN.com. CNN provides national and international news for no cost simply by going onto their website. I can’t really imagine that The Huffington Post will become the new primary source of news however, CNN is often thought of as a reliable news source and I find that when I am looking for news online, I often go to CNN.com or similar websites. Overall, a very good blog post and a good connection between our class discussion on Netflix and the online newspaper industry.

  5. Very interesting post. I never really thought about how much the newspaper industry is in danger, although I can definitely see it now. As George said, with the Wall Street Journal subscription that we need for some classes, we get the online and the paper version. I definitely found myself picking up the paper version but then never getting around to reading it; but instead just reading articles online. I also agree that with much more news coming for free on social media sites like Facebook and twitter, not many people will pay for an online version of a paper.

  6. Really nice post. This is a very relevant topic in today’s increasingly paperless world, a world going from atoms to bits. The comparison with Netflix is also an interesting one. Obviously, Netflix has run into some walls when attempting to stream it’s content, as do the major newspapers like the Washington Post and the New York times. However, even though there have been problems with it, I do still think it is the way of the future. There are obvious environmental benefits from an increasingly paperless world, but Netflix streaming and NYT online also speaks to the instant gratification world we live in. People need information and content immediately, and thus the businesses that are best able to provide that will strive. You also did a nice job of pointing out some of the limits for these newspaper companies-charging a fee takes away from the global aspect of a newspaper. So is that fair? How are newspapers going to get revenue? These are interesting questions that we will see answered in our futures.

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