12 Financial Models

Alexis Turner, Jessica Shaw, Jonathan Young, Etienne Vongerichten

Digital media has transformed the way we see things. In this section we will discuss the financial models of the 3 major types of print media. This includes books, newspapers and magazines. We will also discuss how their individual financial models have adapted to the increase in digital media.

Learning Objectives:

  • Understand how the book industry has adapted and changed with new technology.
  • Understand how Newspapers have adapted their financial model to continue to grow their profit margins.
  • Understand magazines impact on print media

Books

Books will always be important and needed in the world. The book industry has changed dramatically in the last few years due to new digital media.  New technologies allow people to access books online making it much easier to find what we need when we need. Since new digital technology has advanced the rise in eBooks and audio books has increased but paper books still remain highly needed in today’s society.

More people are now  using mobile devices, computers, iPads etc. to read certain literature. A rise in eBooks and audiobooks  have become a big thing because of this development. “About 73 percent of publishers and authors had published their books digitally in the U.S. in 2015, and nearly 80 percent stated planning to publish e-books in 2016″ (Fuller, 2006). This allows people to have easier access to books because they don’t need to travel anywhere to find what they need. Since the demand for books is higher and the book revenue grows immensely. The more we buy physical books as well as online books the producer still makes money. This generation is very attached to digital media so the need for audiobooks  and eBooks will continue to grow because we have more of options for how we view things. This need for books is very important especially when it comes to college students. Every semester a student has to buy one or multiple books in order to understand the material talked about in class on a day to day basis.  If not a book then an access code to an online version which is just as similar to a physical book. This need for books in a college will help keep the demand high. Research states “the industry sold 2.57 billion books in all formats in 2010, a 4.1 percent increase over 2008, and publishers’ net sales revenue grew to $27.94 billion in 2010, a 5.6 percent increase over 2008.”(Michael, 2011) Books will continue to be a huge part of society but the way we access books will continue to dramatically change because of these convergences.  In order for the book industry to survive it needs to be able to adapt to these changes and learn to evolve with it.

For more information on the effects digital media has on books use this link below :

Effects of digital media on books

Newspapers

Newspapers may seem like something only your dad is interested in on a lazy Sunday morning, but they are a multi-million-dollar business.  Even with an aging demographic, the industry has increased its profits by 6% since 1997 due to paid advertisements.  (Case, 1991) Due  to their customer bases increasing age the industry has been looking for a way to attract a younger demographic, as well as more advertising. The financial model for newspapers has transitioned from basing itself on income from buyers to basing its income on advertisers. (Case, 1991)  This transition has allowed the industry to flourish, even with a dwindling reader base. Unfortunately, as newspapers have become more commercial, they have begun to lose their credibility with their readers. There have even been reports stating up to 10% of readers did not rely on papers for their news because they have been commercialized. (Dvorak, 2012) Even with a consistent drop of customers the newspaper industry has adapted and continued to grow even reaching into online options to appeal to a younger customer base. Their solid financial model, and willingness to adapt to their customers the Newspaper is a form of media that will be around for many years to come.

On the Financial  aspect of newspapers, they use revenue generators  which are different ways to make money. This has been huge especially in the last year or so.   Unfortunately, it is a fact that newspapers are really behind their competitors which is TV and online media.  In order for newspapers to be more successful, the prices of newspapers have to work with the readers and the advertisers.  Newspapers have to attract the right kind of readers through various subscription plans in order to try and be as successful as TV and online media, especially in the modern day.  There are ways that researchers found to maximize newspaper revenue through the subscription plans, and if these ways are successful, it could make a huge impact on the newspaper industry. (Stroh, 2016) The newspaper industry is the second oldest mass media industry in the United States. (Picard, 2004) The book industry is the first oldest mass media industry.  Over the history of the newspaper industry, it has evolved so much.  It plays a huge factor in the social and economic roles because it now accounts for around $50 billion in sales annually, if not more. (Picard, 2004) The main goal of newspapers affects the structure of this industry as well as economic decisions made by managers.  This industry is also the most profitable of all mass media industries in the country.  In order to get a successful result, the newspaper industry combines a number of different sections.  For example, they combine technology, information gathering, packaging services and solutions, and financial support from advertisers and readers to produce the best possible product that is going to last for a long time to come.  A variety of economic characteristics separate newspapers from other types of media. (Picard, 2004)

To learn more about Newspaper revenues click the link below:

Newspaper revenues

Magazines

Magazines have been around since 1741, although they are still getting printed and published, the sales are declining. They’ve declined a total of 12.4% in 2016 and will continue to drop in the coming years . Magazine retail sales have dropped from about 103 million in the end of 2014 to about 75 million by the end of 2016. “According to Mag Net, in dollar terms, total magazine newsstand sales for the thousand biggest titles in the U.S. and Canada fell 6.1% from $571.2 million in the second quarter of 2015 to $536.3 million in the second quarter of 2016, while the number of units sold at newsstand tumbled 10.9% from 108.5 million to 96.6 million” (Sass, The Daily Blog). Magazines have been on the decline ever since digital media came along, such as cell phones, computers, tablets, etc. Magazine companies chose to go to digital media for an easier access to buyers subscriptions. Another reason was to use an app to be downloaded on digital platforms like mobile phones and tablets for people to read their favorite magazines. On magazine apps there would also be special features like high-definition videos and pictures that wouldn’t be on a printed magazine. “Some big titles have done just this. Top Gear (down 16.7% in the ABCs) is a brand, its editor a brand manager, its journalists, passionate providers of content across platforms. The print product is to linger over, but the iPad edition and the app, with its galleries and high-definition videos, its exclusive offers and interactivity, is where the magazine’s strength now lies” (Rowlands).

To read more information about magazines and its sales, click on the link below:

Magazine sales

Citations

“Book Publishing Revenue in the U.S. 2016 | Statistic.” Statista, Statista , 2017, www.statista.com/statistics/560733/book-publishing-revenue-usa/.

Barthel, Michael. “Despite Subscription Surges for Largest U.S. Newspapers, Circulation and Revenue Fall for Industry Overall.” Pew Research Center, Pew Research Center, 1 June 2017, www.pewresearch.org/fact-tank/2017/06/01/circulation-and-revenue-fall-for-newspaper-industry/.

Case, Tony. “Good News on Paper Only.” Mediaweek, vol. 9, no. 18, 03 May 1999, p. 8.

Dvorak, John C. “Newspaper Ad Revenues Are Slow to React.” PC Magazine, Mar. 2012, p. 1.

Fuller, Steve. “Topic: Book Industry.” Www.statista.com, Statista, www.statista.com/topics/1177/book-market/.

Hviid, Morten, et al. “The Disruptive Effects of Digitalization on the Book Industry.” CREATe, University of East Anglia Norwich, 7 Mar. 2017, www.create.ac.uk/publications/from-publishers-to-self-publishing-the-disruptive-effects-of-digitalisation-on-the-book-industry/.

Kelley, Michael. “New Book Industry Survey Shows Robust Ebook Sales.” Library Journal, vol. 136, no. 14, 9/1/2011, pp. 12-14.

Picard, Robert G. “The Economics of the Daily Newspaper Industry.” Media Economics, Lawrence Erlbaum Associates, 2004. Google Scholar, http://bit.ly/2j9M9u9.

Rowlands, B. (2013, March 07). The fall and rise of magazines from print to digital. Retrieved November 05, 2017, from https://www.theguardian.com/media-network/media-network-blog/2013/mar/07/fall-rise-magazines-print-digital

Sass, E. (2016, September 06). Magazine Newsstand Sales Fall Again. Retrieved November 02, 2017, from https://www.mediapost.com/publications/article/283900/magazine-newsstand-sales-fall-again.html

Stroh, Sean. “Revenue 2017.” Editor & Publisher, vol. 149, no. 10, Oct. 2016, pp. 40-45.

Wang, A. X. (2016, January 02). Books and newspapers will do just fine in 2016. Magazines? Not so much. Retrieved November 02, 2017, from https://qz.com/584744/books-and-newspapers-will-do-just-fine-in-2016-magazines-not-so-much/

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Introduction to Media Studies by Alexis Turner, Jessica Shaw, Jonathan Young, Etienne Vongerichten is licensed under a Creative Commons Attribution 4.0 International License, except where otherwise noted.

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