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The New York Times had an interesting story today that helps diagnose the underlying reasons for the newspaper industry’s financial struggles. Pointing to the recent downsizing of The San Diego Union-Tribune as the type of news now common in the industry, the story explains why:

The long-term shift of advertising to the Internet — especially classified ads for things like jobs, cars and houses — accelerated last year. The real estate downturn hit the newspaper business hard, especially in California and Florida, where real estate ads fell more than 20 percent at some newspapers. …

The paradox is that more people than ever read newspapers, now that some major papers have several times as many readers online as in print. And papers sell more ads than ever, when online ads are included.

But for every dollar advertisers pay to reach a print reader, they pay about 5 cents, on average, to reach an Internet reader. Newspapers need to narrow that gap, but the rise in Internet revenue slowed sharply last year.

ROB DAVIS

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