I recently have been spending a significant amount of time analyzing the relationship between regional newspapers and local merchants. In particular, I have focused on college newspapers that serve the university population.
Regional newspapers build readership by providing their customers with reliable and timely information concerning the local community. Newspapers have enjoyed strong demand due to people’s natural interest in their surroundings. While the content newspapers offer is very relevant and high sought after, their business has been declining.
Times are tough for regional newspapers not because of their product, but because of their business model. Newspapers use to sell directly to their readers. To reduce the price of their product, advertising revenue increasingly subsidized the cost to readers. Today, many regional newspapers are free of charge to readers, but are entirely paid for by local merchants who advertise in the paper.
Facebook poses a huge threat to newspapers’ current business model. According to a recent survey conducted by We Media/Zogby, nearly half of all people in the United States rely on the Internet as their primary source of news and information, compared to 29% for television, 11% for radio, and a mere 10% for newspapers. What’s worst for newspapers is that the Internet is gaining more momentum as the source for information amongst the younger generation. It is these young people that make up Facebook’s user demographic.
Local merchants only care about expanding their customer base. They have traditionally used regional newspapers as their advertising medium, but only because newspapers have high readership and visibility. Local merchants need customers to grow their business, and need to advertise efficiently. The vendors that want to reach a younger audience no longer can do so effectively through regional newspaper advertising due to the declined visibility amongst the younger generation. As a result, local merchants will have to modify their advertising strategy, which will impact regional newspaper revenue.
Facebook offers a simple solution. Local merchants can use Facebook Pages to create a free dynamic Web presence within Facebook to reach the younger generation. Any business can easily leverage Facebook’s social capital for free with a Facebook Page. Instead of paying to have a presence in a regional newspaper that has declining visibility, Facebook Pages offers the ability to network with millions of potential customers at no charge.
Regional newspapers are in choppy water. The carpet is about to be pulled from under their feet. Local merchants have a declining incentive to continue advertising in their paper due to diminishing readership and high prices. On the other hand, Facebook is offering a large community of potential customers and the ability to create a free presence in a rapidly growing social network.
I have no doubt that regional newspapers will be fighting against Facebook in the coming years.