please take a look at the pics I took SS and respond the questions

CLOSING CASE How to Make Money in Newspaper Advertising The U.S. newspaper business is a declining in- advertising revenue to subsidize subscriptions, dustry. Since 1990, newspaper circulation been many newspapers decided to increase their sub- steadily falling, with the drop accelerating in scription prices, by 5 to 10%. This led, however, recent years. According to the Newspaper Asso- to falling numbers of subscribers. In addition, ciation of America, in 1990, 62.3 million news- some newspapers have rapidly expanded Web- papers were sold every day. By 2011, this figure based news properties at the risk of cannibalizing had dropped to 44.4 million. The fall in advertis- their offline print customers. As of 2014, almost ing revenue has been even steeper, with revenues 30% of total newspaper circulation in the United peaking in 2000 at $48.7 billion, and falling to States was online, and for the fifteen largest news- just $20.7 billion in 2013. Reasons for the decline papers, over 45% of their total circulation was in circulation and advertising revenue are not online. Of the country's 1,380 daily newspapers, hard to find; digitalization has disrupted the in- 450 had adopted digital pay plans that offered dustry; news consumption has moved to the Web, a combination of online and print subscription. and advertising has followed suit. The online The New York Times, for example, had a range classified advertising website Craigslist has been of subscription options that included everything particularly damaging to newspapers. Advertis- from online only, to select days of print in addi- ers can post ads on Craigslist for free (in most tion to online, to print only. Many newspapers cases) that are easy to search and update in real increased the price of single copies, and this, time, unlike a newspaper. According to research combined with the digital paywall movement of by professors Robert Seamans and Feng Zhu, charging for online content, appeared to stabilize for bilin circulation and advertising revenue are not online. the country's 1,580 daily newspapers, hard to find; digitalization has disrupted the in- 450 had adopted digital pay plans that offered dustry; news consumption has moved to the Web, a combination of online and print subscription. and advertising has followed suit. The online The New York Times, for example, had a range classified advertising website Craigslist has been of subscription options that included everything particularly damaging to newspapers. Advertis- from online only, to select days of print in addi- ers can post ads on Craigslist for free (in most tion to online, to print only. Many newspapers cases) that are easy to search and update in real increased the price of single copies, and this, time, unlike a newspaper. According to research combined with the digital paywall movement of by professors Robert Seamans and Feng Zhu, charging for online content, appeared to stabilize Craigslist alone was responsible for over $5 bil- circulation revenues and helped reduce the indus- lion in lost revenues in the newspaper industry try's historic dependence on advertising revenues. between 2000-2007. Against this background, one local newspa- Declining demand for printed newspapers per company is swimming against the tide, and has left established players in the industry reeling making money at it. Community Impact News- and searching for responses. Gannett Co., which paper produces 13 hyperlocal editions that are publishes USA Today and a host of local news- delivered free each month to 855,000 homes in papers, has seen its revenues slip to $4.3 billion in the Austin, Houston, and Dallas areas. The pa- 2014, down from $6.77 billion in 2008. The vener- per is the brainchild of John Garrett, who used able New York Times has seen revenues fall from to work as an advertising director for the Austin $2.9 billion to $1.6 billion over the same period. Business Journal. In 2005, Garrett noticed that The industry has responded in multiple ways, the large-circulation local newspapers in Texas but implementing a response has proven to be did not cover news that was relevant to smaller anything but easy, as a change to one side of a neighborhoods-such as the construction of a newspaper's business model requires changes to local toll road, or the impact of a new corporate its other side. Newspapers traditionally relied so campus for Exxon Mobil. Nor could news about heavily on advertising that they subsidized the these projects be gleaned from the Web. Yet Gar- consumer news side. According to research by rett believed that local people were still hungryday all caci papers, has seen its revenues slip to $4.3 billion in the Austin, Houston, and Dallas areas. The pa- 2014, down from $6.77 billion in 2008. The vener- per is the brainchild of John Garrett, who used able New York Times has seen revenues fall from to work as an advertising director for the Austin $2.9 billion to $1.6 billion over the same period. Business Journal. In 2005, Garrett noticed that The industry has responded in multiple ways, the large-circulation local newspapers in Texas but implementing a response has proven to be did not cover news that was relevant to smaller anything but easy, as a change to one side of a neighborhoods-such as the construction of a newspaper's business model requires changes to local toll road, or the impact of a new corporate its other side. Newspapers traditionally relied so campus for Exxon Mobil. Nor could news about heavily on advertising that they subsidized the these projects be gleaned from the Web. Yet Gar- consumer news side. According to research by rett believed that local people were still hungry Professor Seamans and Zhu, without classified for news about local projects and events that (continued)might impact them. So he launched the inaugural in ad revenue per printed copy. About 50 cents issue of his paper in September 2005, and finance of that goes to mailing and distribution costs, ing it with $40,000 borrowed from low-interest 80 cents to payroll, and another 80 cents to credit cards. printing and overhead, leaving roughly 40 cents Today, the paper has a staff of 30 journalists, per copy for Garrett and his wife, who own the about 35% of the total workforce. The reporting entire company. If this analysis is right, Impact is pretty straight stuff. There is no investigative is making very good money for its owners in an reporting, although Impact will run in-depth sto- industry where most players are struggling just ries on controversial local issues, being careful to survive. not to take sides. "That would just lose us busi- ness," says Garrett. About half of each edition is Sources: C. Helman, "Breaking: A Local Newspaper Chain That's Actually Making Good Money," Forbes, January 21, 2013, devoted to local advertisements, and this is where www.forbes.com; News Paper Association of America, "Trends Impact makes money. For their part, the adver- and Numbers," www.naa.org/Trends-and-Numbers/Research tisers seem happy with the paper. "We've tried .aspx; J. Agnese, "Publishing and Advertising," S&P netAdvan- everything, from Google Ads to Groupon, but tage, April 12, 2012, http://eresources.library.nd.edu/ databases this is the most effective," says Richard Hunter, etadvantage; R. Edmonds, E. Guskin, A. Mitchell, and who spends a few hundred dollars each month M. Jurkowitz, 2013; Newspapers by the Numbers. The State of the News Media 2014, annual report on American journalism, to advertise his Houston restaurant, Catfish Sta- Pew Research Center, New York; Yahoo Finance, finance.yahoo. tion. Another advertiser, Rob Sides, who owns a com; R. Seamans and F. Zhu, "Responses to Entry in Multi- toy store, Toy Time, places 80% of his advertis- Sided Markets: The Impact of Craigslist on Local Newspapers," ing dollars with Impact's local edition in order to Management Science, 60 (2), 2014, pp. 476-493; R. Seamans reach 90,000 homes in the area. and F. Zhu, "Repositioning and Cost Cutting: The Impact of Competition on Newspaper Strategies," NYU Stern Working An analysis by Forbes estimated that each Paper, 2014. 40-page issue of Impact brings in about $2.50 15'4\"\" 7UsUUU 11.011155 \"1 \"\"5 \"It\": Competition on Newspaper Strategies,\" NYU Stern Working An ana1y31s by Forbes estunated that each Paper, 2014. 40-page issue of Impact brings in about $2.50 CASE DISCUSSION QUESTIONS I. What advantages do traditional print news- are they likely to select both? If both, are papers have for entering the online news busi- ness? What disadvantages do they have? 2. What do you think determines whether people will use print, online, or both sourc- es for their news? . When a print newspaper initiates an online version of its newspaper, what are the pos- sible outcomes for its current display adver- tisers? Are they likely to prefer one channel over the other to reach their customers, or they likely to expect a discount for a bundle of print and online advertising? How do these outcomes affect the newspaper's bar- gaining power? . How do you think the cost structure of on- line advertising compares to the cost struc- ture of print advertising? . Which print newspapers do you think will fare the best as online news continues to expand? Why