Google’s Hal Varian on newspaper economics

Google Chief Economist Hal Varian gave a presentation on Newspaper Economics back in March.  It makes grim reading if you are in the dead-tree-news business and bears out many of the things we have been saying on this blog over the last couple of years.

Here are a couple of the best charts.

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From this chart I would note the collapse of newspaper ad spending, the rise of internet (of course), the rise of cable TV at the expense of broadcast, the relatively mild decline in Yellow Pages and the way direct mail has held up.  For the future I think the same drivers of choice and convenience that have favoured cable over broadcast will push people towards internet TV, and that direct mail and Yellow Pages will lose share.

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Problems in the newspaper industry started way before the internet came along.

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But the internet exacerbated their problems.  Based on this trend news on the TV will be under threat soon.  Interestingly other charts show that internet news is largely consumed in the workplace and hence consumed quickly, and that the wealthy are the biggest users of internet news.

Also interesting, is that the newspaper industry has never made money from news, but rather business pages, automotive, home and garden, travel, real estate and technology – all the areas that have been picked off by specialist web sites.

Thanks go to Andrew Fawcett-Wolf for pointing me towards the presentation.

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