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The Impact of Digitalization on Newspapers 1

The Impact of Digitalization on Newspapers

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The Impact of Digitalization on Newspapers 2

The Impact of Digitalization on Newspapers

Introduction

In the past two decades, the society has undergone enormous advancements in

technology. Digitalization represents the process of altering content creation, storage,

distribution and consumption from analog to digital techniques. Traditionally, news media

functioned as a three-sided market which encompassed creating trusted information in the

context of news that readers paid for. Additionally, the news media involved selling of the

readers’ views to brands, organizations and even individuals through the concept of

advertisements. Complicated distribution and customer loyalty typically protected the existing

firms from new entrants in the newspaper section.

However, the digitalization has interrupted the conventional three-market operations in

news media. Indeed, internet and internet-connected devices have disintermediated the content

creation, readers’ view perception and consumption patterns. Currently, an individual in any

location of the globe can access information through internet-linked devices such as computers

and smartphones and social media entities such as Twitter, Facebook and Snapchat and other

websites. Advancement in technology allows internet actors to access enormous data on the

characteristics and preferences of the consumers which enables customization of advertisements

and news an attribute that traditional print newspapers cannot match. This paper critically

analyzes the impact of digitalization on the newspaper industry through discussing its effects on

production and consumption of news.

History of Digitalization of Newspapers

The Impact of Digitalization on Newspapers 3

In the mid-1400s, the German Johannes Gutenbury established the movable printing

press (Suijkerbuijk, 2014, p. 14). The invention allowed newspapers producers to venture into

mass production and distribution. Since the 17th century, the newspaper industry utilized paper

to print news the way it is done in the current society. Other developments such as the telegraph

further increased the popularity of newspapers as a source of information for individuals and

businesses alike. However, in the 20th century, radios and televisions were invented and become

alternatives to printed newspapers. The increase in generic competition forced newspapers

producers to increase the quality of the products and make them more attractive to the

consumers. In the technology bubble of the 2nd half of the 20 century, many newspapers

producers invested in analyzing the business idea of online newspapers (Ellonen, 2006, p. 2).

Indeed in the late 1980s, several newspapers firms began publishing on the internet.

The transformation of digitalization in regard to production, distribution, and

consumptions relates to the development of the computer. Computers as electronic devices

analyze and present data in digital form. Digitalization involves the progression of input data into

numbers. As such, information typically takes the structure of qualities such as light or sound or

the traditionally written texts, graphs, diagrams, and photographs. Upon input, data is analyzed

and stored in the form of online sources or memory devices upon which they are decoded and

received as displays on the screen (Krahmer and Phillips, 2011, p. 3). The most significant

attribute associated with the change from analog to digital techniques involves the transformation

from the traditional physical form such as print newspapers to electronic form including media

houses websites.

In the creative industries, digitalization has been in progress for decades. Advancements

in technology alter almost everything on how news is produced and consumed. In the 20th

The Impact of Digitalization on Newspapers 4

century, consumers were expected to capture news while it was unfolding or risk losing that

content forever and relying heavily on second-hand information. However, digitalization has

eradicated issues related to the freshness or perishability of news. In this regard, newspapers

readers had better opportunities of accessing information more than once. Currently, news in

digital databases is accessible through the internet. The consideration given to news content has

reduced dramatically and content preferences have changed (Leandros and Doudaki, 2009, p. 4).

Individuals across the globe watch more links and read less broadcast news, interest in weekly

and monthly magazines issues override the interest in daily publications. The discovery of

breaking news online.

In the analysis of the developments in the newspaper industry, it is necessary to

acknowledge the evolution of content published in newspapers. In the late 19th century,

newspapers were meant for the elite and the educated with a focus on the business class.

However, the influence of these newspapers declined with the necessity of commercial that

contributed to the mass production of newspapers after the First World War (Grone, et al., 2013,

p. 24). Newspapers focused on entertaining, impacting human interest and provided a keen

interest in social evils including crimes, violence among other societal scandals. Mass circulation

was a major attribute of this generation of newspapers since they attracted a large readership. In

the last four decades, newspapers expanded their content to radical and other diverse content.

Differences between Traditional Newspapers and E-newspapers

E-newspapers differ from the print newspapers in regard to the way it is delivered. Online

newspapers exist in digital form while the traditional newspapers are presented in physical form.

The digitalization aspect associated with online newspapers allows the delivery of content in a

“live” manner while traditional newspapers remain in print (Flavian and Gurrea, 2009). E-

The Impact of Digitalization on Newspapers 5

newspapers can be accessed anywhere at any time of the day so long the reader has access to the

internet while the traditional papers require being bought and carried around. Online papers

allow alteration and customization to the needs of a specific reader while the traditional paper is

standardized. Whereas traditional papers are typically bundled, online news article allow the

delivery of a single article to the customer.

Adverse Effects of Digitalization on Print-newspapers

Currently, most of the newspapers have an online version. However, the change from the

traditional analog systems to digitalization seems to be rather difficult to plan and implement.

The newspaper industry was once a profitable entity compared to other industries over time, until

recently (Mitchelstein and Boczkowisk, 2010, p. 571). Despite the innovation of telegraph, radio,

and television which represented intense competition in news delivery, the newspaper industry

has always adapted and superseded the challenges to make profits. However, the concept of

digitalization seems to be a far more complicated avenue for the newspaper industry.

Faced with several adversaries it seems newspapers will be forced to abandon the

traditional forms of production and distribution for a much more innovative approach. The main

source of revenues in the newspaper industry is advertising and circulation. Research indicates

almost two decades ago, in 2000, more than eighty percent of the total income comes from

advertising (Nawrocki, 2014, p. 6). In this regard, circulation accounts for a mere 20% of the

total revenue. However, digitalization has affected the amount of revenue that newspapers earn

from advertisements. The reduction in print-newspapers penetration in recent years has led to a

decreased incentive for advertisers to utilize newspapers and magazines to reach their

consumers. Currently, corporate marketers prefer and rely heavily on relatively cheaper and

dynamic online advertising.

The Impact of Digitalization on Newspapers 6

Indeed, many businesses prefer to post their adverts in key social media applications such

as Twitter, Instagram, Facebook, and Snapchat. Moreover, in cases of print classified ad

sections, marketers tend to prefer websites that are specialized in classified advertising and social

networking. Additionally, the decrease in revenues despite many newspapers having an online

version is related to lower income from advertisement online compared to the income from

printed newspapers. Research indicates between the years 2005 and 2009 revenues associated

with advertisements in print newspapers dropped by more than 40 percent (Nawrocki, 2014, p.

32). The decrease in revenue indicates a decrease in profit margin in the former industry giant.

Moreover, the transition to digital forms of distribution indicates reduced revenues from

circulation. Most of the news avenues on online platforms tend to provide content free with the

intention of maximizing revenues from advertisements and foregoing income associated with

circulation in print-media or subscription fee in online avenues (Olarare, et al., 2013). The losses

in circulation and subscription further reduce income in the newspaper industry.

The decrease in revenues has prompted both large and small newspapers to devise

strategies that reduce production costs. The most vital costs for print newspapers include

printing, administration and editorial personnel, mechanical, and distribution. Labor costs

transitioned to almost half of the total expenses in the newspaper industry (Kaye and Quinn,

2010, p. 92). As such, many newspapers companies made a decision to cut costs through

reducing labor expenses. Indeed, between 2001 and 2009, most newspapers that published

content on a daily basis reduce their personnel by almost 25% (Byrne, 2013). While the

reduction in staff was an informed decision to prevent several companies from plunging into

losses and debts, reduction in the staff has affected the coverage of print media. A reduction in

coverage has the potential of leading to under-reporting which affects consumer trust and loyalty

The Impact of Digitalization on Newspapers 7

hence decreased market presence. The losses associated with the decrease in advertising,

circulation and subscription revenue may be much higher hence affecting the decision to switch

to online papers.

Positive Effects of Digitalization

Digitalization presents systems that provide the necessary resources for companies to

upgrade their production and distribution channels hence the ability to expand. Many

organizations are leveraging the advantages accorded by internet and digitalization to gain

competitive advantage and subsequently increase their profit margins. Embracing digitalization

enables newspapers to save both time and costs in the production stage. The traditional system

associated with typing informing before printing not only consumed a lot of time but also was

relatively expensive. Additionally, the cost associated with physical distribution makes it

difficult to meet company financial objectives without a significant increase in prices of

products. Digitalization simplifies production process while eliminating the expenses associated

with distributions to different locations (Leandros and Doudaki, 2009, p. 6). Digitalization has

revolutionized the way news creators work and collaborate. Indeed research indicates if a

company such as the New York Times totally discards print newspaper and invest entirely on e-

newspapers which involves digital distribution, the company will cut their current costs by more

than half.

The advancements in information systems accelerate the process of news reaching the

reader while reducing the associated distribution costs. Traditionally, newspapers spent a lot of

time on distribution, especially in daily publications. With digitalization, a journalist can post

content within minutes of the approval of the editors which reaches consumers immediately.

Newsmakers are able to reach the consumer directly through complementing intermediaries.

The Impact of Digitalization on Newspapers 8

Digital technologies allow consumers to seek more information since individuals can

read as many headlines as they desire with no extra costs. Web 2.0, the current system of the

internet and digitalized devices thrive on user-added value where it involves user-generated

content and creativity that are designed to meet the needs of each individual (Nawrocki, 2014, p.

35). The characteristic of digitalization that allows customization of consumer interest motivates

individuals to continue to consume information.

Additionally, digitalization provides an opportunity for the media houses to connect with

their readers in a more direct way. Interaction with users enable the media houses to gain

perspective on the established processes and as such play a role in creating innovative and

profitable ideas. The current aspects of digitalization and internet thrive on applications that

improve with an increase in users, services that advance with increased interaction between

individuals and content providers on basis of word of mouth and experience (Karim, et al.,

2012). Since users are no longer mere receivers of information, the limitations associated with

print-newspapers are reduced. Companies are able to learn about the preferences of the consumer

and design products that meet customer needs.

Furthermore, the interaction with consumers enables news readers to play a role in news

creating. Due to digitalization, a broader amount of individuals can become news creators. In this

sense, the previous evident distinction between newsmakers and consumers has recently become

blurred. While this may be perceived as a threat to newspapers companies that are already facing

stiff competition it indicates a promise in the level of interest on part of the consumer. As

individuals become more engaged in the production of news the general interest in news content

escalates hence the possibility of increased demand. In this regard, there is a possibility of the

newspaper industry to reverse the current trend of decreasing revenues (Leckner, 2007, p. 13).

The Impact of Digitalization on Newspapers 9

Digital innovation has made news production and distribution more efficient which represents

the possibility of the newspaper industry to return to its former glory associated with high-

income levels and large profit margins.

Consumer Perspective

There is no doubt that the consumers enjoy extensive benefits due to digitalization related

to easier access to extensive and diverse content at relatively cheap cost. Research indicates

consumers’ gain more relevant information than ever before which facilitates in expanding their

creativity (Grone, et al., 2013, p. 42). Online access to news published by key media houses and

other bloggers increases customer news reception in comparison to the traditional requirement of

buying print- newspapers, and journals. The main driver of benefits associated with digitalization

is related to the proliferation of new devices that enable individuals to access internet in devices

such as tablets and smartphones rather than relying heavily on the personal computer. Indeed, the

possession of internet-enabled devices has increased the number of internet users in the past few

years.

Digitalization is influencing the nature of consumer demand. Although there is evidence

of decreased revenues for many newspaper companies across the globe, research indicates that

the past decade has witnessed a tremendous growth of online news consumption (Grone, et al.,

2013, p. 43). The availability of free content coupled with the ease of access increases the

amount of news content an individual reads in a day. Traditionally, a news reader was required to

spend cash buying a newspaper whose content was limited to current events. Indeed the

characteristic personalization concept associated with digitalization enable consumers to access

relevant information. Additionally, new technologies enable extensive and reliable storage of

content hence facilitating access to content years after their initial publication (Grone, et al.,

The Impact of Digitalization on Newspapers 10

2013, p. 28). Indeed, the growth of online consumption of news is directly associated with the

recent upsurge in the time spent on the internet.

Moreover, digitalization has facilitated consumer-producer interaction in the newspaper

industry which benefits both the producer and the consumer. When customers communicate their

needs to media houses directly, there is a high probability the companies will change systems to

attune with consumer demand. The ability to voice concerns, suggestions enables the growth of

creativity on part of the consumer (Erikkson, et al., 2008, p. 32). Digitalization has enabled the

consumer to be more involved in the production process an advantage for both firms and the

customers.

Despite its extensive benefits to news readers, most consumers are aware and concern of

the perceived risks associated with digitalization. The risks vary from data security to fear of

fraud and awareness of viruses and malware. The keenness on digital privacy has increased with

recent developments that indicate several apps are involved in the transmission of sensitive user

information. The ability to provide user content based on the readers’ reading habits indicates the

monitoring of content that an individual reads. It is important for newspaper companies and other

participants in the creative industry to ensure the security of user information.

As mentioned, many new paper companies currently have an online subsidy to tap into

the advantages associated with digitalization. Much of the content provided online is free. A

study conducted to analyze if consumers will be willing to subscribe to the content they currently

get for free online indicated that more than 80 percent preferred the services to remain free.

Indeed, 75 percent insisted that if they paid for online news sources they will seize from using

those services (Suijkerbuijk, 2014, p. 45). However, research indicates that generally consumers

are spending more in the creative industries and are willing to pay for quality services. Indeed,

The Impact of Digitalization on Newspapers 11

the study indicated more than 60 percent of the news readers were willing to pay on the

condition that the content provided was ad-free.

Adaptation by Newspaper Companies

Many news websites are available without a paywall or subscription requirements hence

supported solely by advertising revenues. Advertising revenues alone are not enough for most

companies since the rates of online adverts differ considerably with the previous print ads

compensation. Since the consumer is only willing to pay for the eradication of adverts it is

necessary for newspapers companies to strategize on the increase of income associated with

advertising. The techniques involve reshaping their products and content to appeal to the current

generation of consumers while innovating other news ideas consistent with technology. It is

necessary to acknowledge the traditional print-media was created in an environment that has

undergone tremendous changes.

As individuals spend more time on the internet, it is expected their news consumption

will fragment across a wide range of products and services from professional content to user-

generated content to classified ads to social networks such as Facebook. Moreover, the ease of

production indicates consumption of news will fragment even further across a variety of

producers. The key issue in progressing is not merely related to whether newspapers companies

can effectively make profits on a digital domain but if they can create attractive and relative

consumer experiences. This because the quality of information can only be determined by

reading content hence the importance of user-experience (Karim, et al., 2012). It is important for

newspaper companies to build an online presence through capitalizing on their established

brands. For instance, a known brand like New York Times can create an extensive following in

the digital economy based solely on its name.

The Impact of Digitalization on Newspapers 12

News delivery is usually based on trust since consumers want to receive accurate

information. As such, known newspapers brands can effectively override the issue of a variety of

producers. Undeniably, the failure of several newspapers companies to exploit the advantages of

digitalization is partly explained by the dominance of hierarchical structure where information is

mainly controlled by top editors and established publishing brands. Currently, many newspaper

organizations opt to mass produce media content through the social network hence the possibility

of benefiting from advertisements in social media platforms such as Facebook.

However, the assets associated with an established brand should be complemented by a

large variety of content type including; sports, entertainment, fashion, political with the use of

common digital features such as videos, site blogs and interactive tools such as chat sections. It is

necessary for newspapers companies to graduate from publisher’s core of fixed content that was

typically intended for general readership, to digital-combined analytics provides an avenue for

newspapers to manage and reorganize content hence providing a personal experience for each

reader (Grone, et al., 2013, p. 46). Efforts of customization include; auto-curated data and

entertainment options facilitated by algorithms that suggest related content attuned to particular

customer interests, reading history among other contextual information.

Indeed, exploring the digital-combined analytics allows newspapers to extend their reach

beyond their proprietary content to third parties. The third parties may entail other content

providers and commerce partners. Collaborating with other parties allow the partners to tie

complementary goods and services into the user experience hence opening new channels for

income through monetizing on both original content but also the audiences access and insight on

the partner’s goods and services. Additionally, such an avenue will also increase the value of ad

inventory for the individual newspapers will increase especially in situations where they are

The Impact of Digitalization on Newspapers 13

supported by a detailed understanding of the audience. In addition to diversification of content,

many newspaper companies are investing in international expansion. Changes in news gathering

techniques coupled with ease in production and the associated digital distribution provide an

avenue for newspapers companies to reach a global audience at very low costs.

However, despite the extensive opportunities for expansion it is necessary to

acknowledge digitalization will continue to have a disruptive influence on many newspapers

firms especially those who were heavily involved in printing formats. Newspapers companies

will continue to struggle with the transition from the former analog to digital systems (Byrne,

2013). However, news platform that was born digital such as the Huffington Post is inventing

new formats that are beneficiary to e-newspapers. The Huffington Post and BuzzFeed implement

formats that are tailored for specific audience hence providing cases in point of the concept of

“creative destruction” in the print sector (Grone, et al., 2013, p. 46).

Research indicates that to a great extent the online avenue of the newspaper industry has

forced many publishing houses to restructure the previous print news from the former editorial

reasons to strategic purposes (Nawrocki, 2014, p. 7). There are evident differences in which

editorial content is presented online and in print edition insinuating an underlying difference in

functionality. For instance, the front pages in online newspapers often include a multitude of

news items and pointers to other types of information. Print editions, on the other hand, illustrate

a major story on the front page.

People read newspapers for four different reasons including the search for specific

information, to get updates on current issues, for leisure purposes and merely as a habit.

Digitalization has not altered the reasons for reading newspapers. Indeed, the reasons for

preferring traditional newspapers instead of e-paper and vice versa is based on the concept of

The Impact of Digitalization on Newspapers 14

diffusion of innovations. The choice of online papers over traditional newspapers is based on the

relative advantage which indicates to what extent individuals consider online access to news

better than print news whether in regard to money or convenience of access. Another factor

influencing choice is associated with compatibility which illustrates e-newspapers are considered

to be more compatible with the current needs of the society since it values user preference as

compared to the traditional newspaper. Additional another motive of preference of one form over

the other relates to the observability of the visible consequences of choosing one form over the

other (Flavian and Gurrea, 2009). In this regard, research indicates print and online coexist as

long as the editors pay attention to peculiarities. Indeed, some individuals ascertain despite the

extensive advantages associated with online news articles, they still prefer to read printed papers.

The perceptions and preferences of individuals tend to change. However, it is vital to realize the

continual development of technology illustrates the further expansion of digitalization and its

effects in the creative industry.

Conclusion

Digitalization has brought certain changes in all areas of business and life. Like many

other sectors of the economy, the newspaper industry is going through a digital revolution. The

changes in the newspaper industry extend beyond the introduction of new technologies but

encompass changes in business relations in the industry. Print-newspapers across the globe are

facing a decline in revenues associated with the decrease in consumers that influence advertisers’

shift from using newspapers to reach the public. Although newspapers services on the internet

have been a common concept since the 1990s, many newspapers are yet to establish a strong

business presence in the digital economy. Competition and increased marketers and consumer

expectations indicate online advertising as a source of income will remain a demanding pursuit.

The Impact of Digitalization on Newspapers 15

Strategies for monetizing content better are not enough to solve the decreasing revenue problems

in the newspapers industry especially for established companies that profited heavily from

printing prior to digitalization. It is necessary for newspaper companies to invest in new types of

content and diverse ad inventory. Additionally, there is a necessity of new ad formats the will be

able to compete in the dynamic digital economy. It is important to recognize digitalization has

been essential in facilitating consumer-producer interaction that benefits both the consumer and

the newspaper industry.

The Impact of Digitalization on Newspapers 16

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