Economics

The problems that the print media are facing are all too common; loss of customer base, loss of advertising revenue, etc.  Some major newspapers have shut down the doors, some are struggling dearly (i.e., New York Times).  At the same time, the online media outlets are flourishing.  Explain in terms of economic concepts presented in Chapters 5-10 (see your syllabus) this phenomenon.  For instance, what does this have to do with “spreading the overhead?”  What does this phenomenon have to do with various market structures discussed?  Do the print media have a future?

I think a lot of it has to do with advancement in technology as a whole. It’s my understanding that newspapers have been in decline way before the internet. People have other options to get their news and advertisements from. Gone are the days of having the majority of the world sit down and read a newspaper every day. If a newspaper company is not selling as many units to make a significant profit then their advantage to spread their overhead over a large volume decreases. Spread the overhead means the more units of output you produce, the more your overhead/fixed costs are spread out and you pay lower average fixed costs per unit of output.(Enotes, 2013)

Most newspaper companies no longer have the revenue to pay for their total costs. 73% of newspaper revenue comes from advertising. However, online media has given businesses and consumers options thus bringing high advertising costs from print media down. Websites such as Craigslist offer free classified services and businesses can advertise on their own websites thus allowing them to promote to a worldwide audience at a cheaper price.

Online media overhead is cheaper as well. Over half the cost of a newspaper is in printing and distribution; however certain fixed costs like huge printing presses and variable costs such as paper, color ink, amount of pages printed etc. is eliminated by moving to online distribution.

Newspaper or other print...