1. What advantages do traditional newspapers have for entering the online news business?

2. How has the U.S. newspaper industry responded to news consumption moving to the web?

The U.S. newspaper business is a declining industry, with the drop accelerating in recent years. The fall in advertising revenue has been very steep. The reasons for the declines in circulation and advertising revenue are not hard to find; digitalization has disrupted the industry, news consumption has moved to the Web, and advertising has followed suite. The industry has responded by downsizing newsrooms, shutting down unprofitable newspaper properties, including numerous local newspapers, and expanding Web-based news properties as rapidly as possible. Whereas consumers were once happy to subscribe to their daily print newspaper, they seem to loathe paying for anything on the Web, particularly given the large amount of “free” content that they can access. Against this background, one local newspaper company is swimming against the tide, and making money at it. The company, Community Impact Newspaper, produces 13 hyper- local editions that are delivered free each month to 855,000 homes in the Austin, Houston, and Dallas areas. The paper was the brainchild of John Garrett who noticed that local newspapers in Texas did not cover news that was relevant to smaller neighborhoods. Today the paper has a staff of 30 journalists, about 35% of the total workforce. The reporting is pretty straight stuff, although Impact will do in-depth stories on controversial local issues, but it is careful not to take sides as it will cause them to lose business. About half of each edition is devoted to local advertisements, and this is where Impact makes its money. For their part, the advertisers seem happy with the paper. It seems that Impact is making very good money for its owners in an industry where most players are struggling just to survive.

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1 The advantages that print newspapers have for entering online news are that it is relatively cheaper that the access to a larger pool of consumers enables to more interaction with the consumers and ... View the full answer