Going, Going, Gone?

Posted by Milos Sugovic

The following empirical question was posted as a comment on Free Exchange, an Economist.com blog, regarding the economics of newspapers and their evolving business model:

“I think there is a correlation between falling broadband prices and falling newspaper demand. How much? I would like to know.”

I too wanted to know, especially since we’ve discussed it here and here on Reason Enough, so I went ahead and mined data, graphed it, and did some back-of-the-envelope forecasting calculations. 

Based on a few Datamonitor reports on changes in internet access volumes (instead of broadband prices) and newspaper quantities from 2003 to 2007, I generated the below scatterplot:

The trend is pretty clear: internet access figures are a pretty good predictor of newspaper volume displacement. In fact, for every additional million internet connections we can expect to see a 20 million drop in newspaper volume. 

So if newspapers want to survive, they better start surfing the web for some creative ideas.

Comments

[Clare Abdalla]

Interesting post Milos. I think joining the web may not be enough to save some newspapers, as personalized news is becoming the norm. I am curious to see how websites such as The Daily Beast, Democracy Now and Common Sense, which filter top news stories for readers, will affect newspaper demand.