Competition, Circulation And Advertising

Competition, Circulation And Advertising

Lacy, Stephen

This article reviews academic literature about the impact of competition on newspaper circulation and advertising. It suggests some principles about competition and the long-run performance of daily circulation newspapers.

This report examines the impact of competition on newspaper circulation and advertising. It identifies a few general principles regarding competition and the long-run performance of daily, general circulation newspapers. Accomplishing this goal first requires a discussion of the nature of circulation and advertising competition. Economic theory states that competition exists when buyers can substitute one product for another. This willingness to substitute depends on several factors, such as price, price of substitutes, quality of products, income and degree to which various products provide the consumer with equivalent services. With news media, few products are perfect substitutes because readers add to the meaning by interpreting content and develop preferences for specific bundles of information, such as particular newspapers. Because of these preferences and the utility they provide, newspapers and all media do not fit well the assumptions of classic economic theories of perfect competition. Understanding newspaper competition requires different economic models than those emphasized in Economics 101.

Classic models of competition suggest there are many firms in a market, each selling an identical product. Each firm also pays identical costs to produce its product. Consumers want to buy the product at the lowest possible price, and it doesn’t matter which firm produces the product. Any firm that increases its price loses customers who switch to another firm selling the same product at a lower price. Each firm’s product is a perfect substitute for any other firm’s product. Firms cannot influence competitors and are forced to sell at a price that just covers their costs.

Market conditions must change before firms can increase prices without losing all of their customers. If only a few firms compete, each individual firm’s actions will influence the response from other firms. In oligopolistic markets firms might agree to raise prices above production costs, earning excess profits. Explicit pricing agreements are illegal, so oligopolists must depend on tacit understandings to maintain pricing discipline. However, such agreements are unstable, and individual firms will violate these understandings if they believe they can gain an advantage.

When there is only one firm, the market is a monopoly. Monopolists can raise prices so long as consumers are still willing to pay for the product. However, even monopolists cannot raise prices without limit. If a newspaper is a monopoly, consumers and advertisers will substitute other forms of mass media when prices are too high. Monopolists with very high prices also risk attracting new competitors into their markets over the long run.

Most newspaper markets have other forms of mass media that compete for advertising and for the attention of consumers. However, newspaper competition is often described as ranging from oligopoly to monopoly, depending on the market.

Competition for Readers

Newspapers don’t compete for readers solely on price. Newspapers offer news and other information that may not be available elsewhere, and newspapers’ format and publication cycle differ from those of other mass media. Although the newspaper industry does not fit all the assumptions of classic economic theory, readers’ behavior can be explained at least partially by the theory of monopolistic competition. ‘ It states that firms can limit to some degree the effects of competition on their firms by catering to differences in consumer taste. Differentiation makes products from other firms less than perfect substitutes. Differentiation costs money, and firms that use differentiation must raise prices to cover their higher production costs. However, even with the higher cost of differentiation, firms in an oligopolistic market may be able to raise prices high enough to earn excess profits. News media are naturally differentiated by their nature and distribution systems. Newspapers provide some types of information better than radio and television, but radio and TV news have their advantages as well. Print media (magazines, daily newspapers and weekly newspapers) differentiate themselves by publication cycle and product nature. Differentiation also can exist through political leaning of editorial pages, featured columnists, d istribution of newshole among topics, use of graphics and any number of other content elements.

Therefore, when newspaper managers vary content to increase circulation, differentiation becomes a product strategy. Managers pursue these strategies to influence readers’ selections among newspaper and other news outlets. The differentiation makes people’s demand less responsive to price changes (more inelastic) by convincing readers that one newspaper is better than another. If one is perceived to be better, then the reader is less likely to substitute between them. In other words, differentiating a newspaper reduces substitution and competition. Newspaper editors might have more of an influence over readers than they do if perceptions of the content were the only factor affecting demand, but it is not. Price, convenience of distribution, income, readers’ education levels and other factors also affect demand. Differentiation is just one way, albeit the most important way, of affecting demand and the willingness to substitute products.

Standard areas of content differentiation have developed2 such as variations in the type of information (business, sports, news, entertainment, opinion), type of writing and reporting (spot news, feature, columns, in-depth), topics within types of information (city hall, schools, amateur sports, etc.), and geographic focus (city, county, state, regional, national, international). In the United Slates, geographic focua domina les produel differentiation, and most daily newspapers exist in cities with only one daily. As a result, most dailies face only imperfect substitutes. These imperfect substitutes come in the form of dailies outside the city but within the county, dailies in adjoining counties, metropolitan and regional dailies, weekly newspapers, radio, television and the Internet.

Even though it sheds some light on newspaper competition, the theory of monopolistic competition has limits as well. It does not explain how readers alter their media habits to select among imperfect substitutes. However, a recent model based on the theory of monopolistic competition gives limited insight as to how imperfect media substitutes compete.3 The model states that people seek information for five general uses – surveillance of their environment, diversion/entertainment, making decisions, social/cultural interaction and selfunderstanding. To find information that will allow them to fulfill the needs behind these uses, they employ a mix of media products. The vast majority of people include multiple media in their media mixes to serve their information needs. No one medium or media product can serve all their needs.

People manifest these five general uses in many ways. For example, people seek surveillance information about sports and the stock market from newspapers and television. Some people prefer books for diversion, some movies and some both. Newspapers are bundles of information that fit into readers’ media mixes and meet their information needs. The media mix can be visualized as a grid. The top of the grid lists uses of information, and the side lists media products. Within the cells of the grid are ranges of percentages. These percentages show how much an individual depends on a media product for a particular use. For instance, on average, a person might get 40 to 50 percent of surveillance information about war preparation from The New York Times, 15 to 20 percent from CNN, 15 to 20 percent from NPR and the rest from a local daily.

To be successful, a newspaper must fit into several of the cells in the media mix grids of large numbers of people. From an individual’s perspective, a person includes a newspaper, or any media product, in his or her media mix when the usefulness of the product justifies the money and time spent on it. A person reads a newspaper when the price in time and money is less than or equal to the value of the utility it provides in meeting information needs. This process of comparison of price and utility is subjective but occurs nonetheless. Therefore, newspapers with a broader mix of editorial and advertising content increase the probability of attracting readers. Newspapers that adopt a niche strategy, narrowing the range of information to focus on certain segments of their communities, risk losing readers whose interests are no longer served. The niche strategy may be attractive in the short run, but may result in long-run problems if competing media take the opposite approach. For example, cable television companies offer subscribers bundles of channels.4 Bundles package channels with mass appeal with channels that interest smaller segments of the audience. Packaging both kinds of channels together allows the cable company to maximize the size of its potential audience.

A newspaper increases and retains circulation in three ways: 1. increase the number of people who have the newspaper as part of their media mix (serve more people), 2. increase the average number of readers’ media mix cells in which newspapers fall (serve more information needs), and 3. increase the percentages of information from newspapers within the cells (serve a higher percent within individuals’ information uses). To accomplish these three things, the content in a newspaper must be useful to the readers in ways they want and need, which is the aim of product differentiation strategies.

Competition for Advertising

Competition for advertising dollars is similar to competition for readers. Companies that buy advertising have a mix of media aimed at reaching groups of potential buyers with a message that will influence them to buy. Newspapers are successful at selling advertisements when they reach those groups with the type of ads that might influence members of the group. Two points are important in understanding advertising competition: different types of advertisements have different functions, and not all media perform these functions equally well.

Lacy and Simon listed four advertising functions: I. advertising makes people aware of a product’s existence (awareness ads), 2. advertising informs people of product prices (price ads), 3. advertising provides information about a product’s quality (quality ads), and 4. advertising influences people to identify a product or service with an enjoyable experience or attractive personality (identity ads).5 At the same time, advertising can be classified by type of ad local retail, classified, inserts – and by geography – local, regional, national. Just as with reader competition, all media and media products are not perfect substitutes. However, some are close enough substitutes that cross-media advertising competition occurs. In addition to the level of substitutability and the number of potential buyers advertising attracts, businesses purchase advertising on the basis of price. For cross-media comparisons, the price is the cost-per-thousand. By comparing the cost per thousand for various media, a company’s managers try to decide how to allocate their advertising dollars. However, the cost per thousand does not take into consideration the level of substitutability. This is something that a manger does informally as the allocation decisions are being made.6 In effect, an advertiser adjusts the cost-per-thousand rate to compensate for the substitutability of various media and media firms.

The subjective compensation represents a perception the advertising buyer has of the effectiveness of ads run in different media operated by different firms. It varies from advertising buyer to advertising buyer and explains why research has found a great variability in the substitutability of media for advertising.7 It is influenced by a wide range of factors from advertising sales people to the mangers’ previous experience with advertising. Even if a media product is a limited substitute for newspaper advertising, a newspaper’s high advertising rates could result in poor substitutes becoming alternatives for advertisers.

Research Results

Theory states the degree of competition depends on the willingness of consumers and advertisers to substitute other media products for the newspapers. This willingness depends on prices, on whether consumers and advertisers perceive newspapers as a substitute for other media products, and on whether consumers choose to fit newspapers into their mix of media products. With theory as a backdrop, this section will address academic research results and what they suggest about the impact of competition on newspapers. The suggestions will be presented in the form of probabilistic general principles. They have research support but they cannot be certain because of variations from market to market and variations across time. The probabilistic nature of the statements makes them more applicable in the long run than in the short run.

In addition, the statements apply to the long run because people form habits in their media use. Most readers do not change their media mixes quickly unless some event, such as a newspaper strike, forces them to change. Media habits usually change slowly. The habitual use of media makes sense for readers because it saves them time. If they had to decide where they would find information each day, it would drastically raise the time and cost of accessing information and news and probably cut back on their media use. As an extension of this idea, the perceptions of media products change slowly with repeated use. For example, the statement that circulation is positively related to quality represents a long-term relationship. It may take months or years for readers to reshape their reading habits to reflect changes in quality. This works both for improvements and declines in content quality.

The following statements aim to give guidance in understanding long-run trends in newspaper markets. As such, they are not prescriptions for changes, but rather explanations of what happens. Of course, a useful prescription should be derived from accurate explanations. The hope is that these results will help managers think about long-run strategies for dealing with their markets.

In the Long Run, Competition Is Good for the Newspaper Industry

This statement is based on research that supports three propositions:

* Competition forces the newspaper to spend money on improving the newspaper content to attract readers.

* Competition helps to keep people in the reading habit because it improves quality and it lowers subscription prices.

* Competition among reporters pushes them to perform better as journalists.

Competition Forces Newspapers to Spend Money on Newspaper Content

The intensity of competition varies. Managers are less likely to react to competitors that threaten small or insignificant portions of their markets. As larger or more important parts of the market are threatened, managers are more likely to respond by increasing the amount spent to cover news. The increase in spending as a result of intense competition is called the financial commitment theory.8 Two independently conducted, simultaneous studies that each used national samples of more than 100 daily newspapers first supported this relationship in the mid-1980s.9 They found that competition between dailies in the same city increased the number of wire services, the size of newshole and the number of reporters used to fill a given amount of space. It was not just the presence of another newspaper in a city but the intensity of competition that forced newspapers to respond by increasing newsroom budgets.10 A third national sample confirmed the relationship between intensity of competition and number of wire services.” Cho found a similar relationship between intensity of competition and content in a national sample of Japanese dailies.12

Although not all studies have supported financial commitment entirely, most have. Lacy looked at competition between newspapers located in different cities and found that intense competition was related to larger newsholes and more local news.13 A study of newspaper corporations found that as the percentage of a company’s dailies that faced competition increased, the profit margins for the newspapers declined and the percentage of revenues spent on expenses increased.14 Blanchard & Lacy surveyed managing editors at daily newspapers between 25,000 and 100,000. After analyzing 77 responses they reported that the newsroom staff increased by one for each eight-percentage point increase in penetration by other dailies in the county.15 Four case studies revealed that intense competition was positively correlated with local coverage.16 Two Canadian studies found that newshole declined after competitive dailies closed.17

Other studies have found partial support for financial commitment. A study published in 1989 concluded that in cities with two or more dailies readers received more pages for the cover price.18 The relationship was small, but the researchers failed to use intensity of competition. White and Andsager concluded that competition was associated with the total number of Pulitzer Prizes won by newspapers between 1985 and 1989, but it was not associated with the total number of local Pulitzer Prizes won by a newspaper.19 This study also did not use intensity of competition as the independent variable. Lacy, Fico and Simon found that as intensity of competition among 21 large dailies increased, the percentage of controversial stories reporting more than one side increased.20 However, the limited sample size made it difficult to generalize from this study.

A case study of the joint operating agreement in Shreveport, La., concluded that the two papers differed in their coverage of racial conflict, which is consistent with the need of competitive dailies to differentiate themselves.21 A study of 21 dailies that faced competition from a daily in the same city, 21 JOAs and 72 dailies that did not have another daily in lheir cily concluded: “In summary, JOA newspapers resemble competitive newspapers more than monopoly newspapers in the way they allocate funds to wire services and reporters and the way they allocate news space.”22

Martin studied differences in the news staff size and workload at clustered newspapers and non-clustered newspapers.23 Clusters exist when the same company owns two or more newspapers in geographically adjacent markets. The clustered papers competed less aggressively than non-clustered papers. Clustered papers also had smaller news staffs and higher workloads.

Studies that failed to support financial commitment did not use competition intensity as the competition measure and/or used limited samples,24 or they didn’t test financial commitment variables.25

Competition Improves Quality and Possibly Lowers Subscription Prices

The bulk of research supports the financial commitment theory, which states that intense competition increases the amount of money spent on newsrooms. This is consistent with economic theories and models that competitive firms attempt to differentiate themselves. However, one might argue whether increased expenditures result in increased quality. Bogart examined the nature of quality by surveying editors.26 he found that the top three measures of quality were a high ratio of staff-written to wire service and feature copy, the total amount of non-advertising or editorial content in a newspaper and a high ratio of news interpretation and backgrounders to spot news reports. all of these measures require an investment in staff and newshole and are consistent with the financial commitment research. Using an index based on Bogart’s survey, Lacy and Fico found a positive correlation between competition and quality.27 Becker, Beam and Russial found a correlation between staff size and quality of newspapers as determined by a panel of journalists.28

Gladney examined quality by surveying senior editors at 257 large dailies, medium-size dailies, small dailies and weeklies.29 His survey showed that editors across newspapers shared common perceptions of quality, but there also were variations. all editors agreed that local coverage and accuracy were the two most important measures of content quality. Good writing was third for all but weekly editors, who ranked it fourth. More variation was found among the other quality measures (news interpretation, lack of sensationalism, visual appeal, etc.). Similar patterns were found for organization standards. All types of editors placed integrity, impartiality and editorial independence among the top four measures of quality. all dailies put staff enterprise fourth, and weeklies placed it sixth. The number-one measure of quality, local coverage, requires a financial commitment to staff size.

Although definitions of quality vary, most editors will tell you that having adequate resources in the form of newshole, numbers of reporters and wire services are at least preconditions to achieving quality. An understaffed newsroom with a limited newshole will not produce as high quality journalism as a newsroom with sufficient staff and newshole. At the same time, this doesn’t mean an editor should have all of the staff and newshole that she or he wants. This was the point of the model developed by Lacy.30 The model states there is a optimal point in the relationship between quality and circulation where the quality is high enough to serve most readers but not so high as to be inefficient in serving readers. This model has only been tested indirectly once.31

The increase in newsroom expenditures that flows from competition may not translate into higher quality, but the usual expenditures on larger staffs, a larger newshole and more news services certainly increase the probability of improving quality. A classic study by Danielson and Adams examined completeness of coverage of the 1960 election using a national sample.32 They measured completeness in the 96 dailies by seeing whether the papers covered a set of 42 election issues randomly selected from The New York Times’ coverage. They reported a positive correlation between completeness of coverage and the size of the news staff and number of wire services. To argue that quality and circulation are not related would be inconsistent with the studies that have connected higher quality and content variations with increased circulation and penetration33 and with a study that found poor quality was related to a decline in circulation and penetration.34

Two articles reported research concerning the impact of newspaper competition on society. Vermeer found that counties with daily newspaper competition had closer U.S. senatorial elections.35 Lasorsa (1991) reported that people in counties with daily competition responded with a larger number of important issues facing the United States when surveyed than did people in counties without competition.36 These suggest that newspaper competition provides increased public information for readers.

Fewer studies have examined the relationship between competition and circulation prices, and they are somewhat inconclusive. Grotta examined cities that lost a daily and concluded that the prices were higher after a daily closed.37 A case study in Canada supported this conclusion.38 Picard did not find that competition lowered subscription rates.39 In all these cases, the measure of competition was the presence or absence of other dailies, and not the intensity of competition. Research indicates that results are affected by the measure used for competition.40

A national study of clustering in 1988 and 1998 found that clustering, which reduces competition, was associated with higher subscription prices during 1988 but not in 1998.41 The study reported large variations among markets with respect to the relationship between competition and subscription prices. This may reflect variations in strategies. Newspaper managers with only a few competitors might not compete by lowering subscription prices. Those managers instead could match competitors’ prices and compete through product differentiation. This is consistent with oligopoly theory with product differentiation.42

Merrilees studied two newspapers in an Australian market that refrained from cover price competition for 34 years. The papers competed instead with innovations in editorial content. The price collusion ended for four years, then its adverse effects on one paper’s profits resulted in a new round of cooperation.43

Picard reported in a case study that a single daily in a town enjoys inelastic demand, meaning readers were not sensitive to price increases. Increases in subscription prices by 30 percent led to only a 3 percent decline in circulation.44 Lewis studied 12 dailies across 21 years and estimated that for each 5 percent increase in price, a daily would lose 1 percent of its circulation, although variation was found across markets.45 Studies have not examined what happens to advertising demand as cost per thousand increases as circulation declines.

It appears that when faced with intense competition, many newspapers, but not necessarily all, respond by increasing their newsroom budget to better differentiate their newspaper. This typically includes larger newsholes, more reporters to fill the newshole, more news services and more local news. Some readers, but not necessarily all, see this as higher quality. The newspapers may or may not respond to competition by keeping subscription prices down. Economic models would suggest that this is more likely to happen in markets where two or more newspapers have roughly equal shares of the circulation market, but empirical evidence is mixed.

Competition Among Reporters Makes Them Perform Better as Journalists

Competition can affect the financial decisions of managers. Beam, for example, found that competition was associated with managers’ perception of uncertainty about the market, which was positively related to managers’ use of readership research.46 In other words, competition causes managers to react by seeking information about what readers want and need. The uncertainty can affect the behaviors of journalists as well, but little research has been conducted about the impact of competition on journalistic behavior. However, the results of the research that does exist are consistent.

Coulson and Lacy reported a survey of 258 reporters and 165 editors who had worked for newspapers in cities with one daily and in cities with two or more dailies.47 The majority of both types of journalists said competing dailies provided higher quality local coverage, greater diversity of news and greater diversity of editorial opinion than dailies without competition. They also said competing dailies were more likely to sensationalize and less likely to become complacent in news coverage.

A survey of 232 city hall reporters aimed to get more details on how competition might affect news coverage on a beat.48 The results were consistent with the study of reporters and editors. The majority of the journalists said newspaper competition increased the number of city hall stories they wrote, made them report stories they might have missed, made it harder for them to find time for in-depth stories, and made them report stories they didn’t think were important. The most important variables in explaining these responses were the number of other dailies covering city hall and discussions with their editors about their city hall coverage. The overall impact of competition was to increase the number of stories but reduce the time for in-depth reporting. There was no way to evaluate the tradeoff between these two.

Alterations in Content and Declines in Newspaper Quality Can Lead to Declines in Circulation and Penetration

This relationship is an extension of research reviewed in the previous section. Not all content changes will result in circulation and penetration decreases, but research indicates that content variations, especially regarding quality journalism, do affect circulation in the long run. Newspapers bundle content. They include news, entertainment, business information and much more. Readers buy and read newspapers for a variety of reasons.49 Readers, and in turn advertisers, are likely to become increasingly sensitive to characteristics such as price or the timing of delivery as the quality, or value, of content decreases. Although a decline in quality in one area may not lead a household to drop the newspaper, if readers decide that the overall content no longer meets their information needs, they will look to reconfigure their media mix and replace a newspaper that has habitually been in that mix. Of course, the new mix has to provide more utility than the previous media mix of information products or at least the same utility at lower cost.

Some observers may assume that people will stop reading dailies on a regular basis only if similar dailies are available. However, research into possible competition from dailies in other cities and from non-dailies indicates that this may not be the case. Called the umbrella model50 and later the ring model,51 this competition across city and county lines and among newspapers with different publication cycles represents a form of monopolistic competition. These are imperfect substitutes, but they are often close enough that some people will reconfigure their media mix when they are no longer pleased with the mix they currently have.

Hawley studied 30 former long-term readers over two years to see why they dropped and then re-subscribed to the daily newspaper. She concluded that “dissatisfaction with content was the primary reason these loyalists stopped subscribing to their local daily.”52 This finding is consistent with research about the Denver and Detroit metro areas that discovered a correlation between the content in metro dailies that addresses a particular suburb and the penetration and circulation in that suburb.53 As some types of local content increased, circulation increased. The type of content associated with the increases (advertising, law enforcement, sports, city government, etc.) varied from suburb to suburb.

Two studies have addressed whether readers will substitute weekly and daily newspapers by examining the correlations between the county penetration of metropolitan dailies, non-metropolitan dailies and weeklies. The studies used counties outside the central counties of metropolitan areas. The first examined Michigan counties and found a negative correlation between the penetration of non-metropolitan dailies and weeklies.54 The Michigan study was limited by its statistical method, but a research project based on 381 randomly selected U.S. counties corrected for the statistical limitations of the Michigan study.55 The strongest negative relationship was between weeklies and non-metropolitan dailies. As the penetration of one type increases, penetration of the other decreased. The strength of the relationship depended on the type of weekly included in the statistical analysis. The relationship was stronger between paid weeklies and non-metro dailies than with free weeklies. The authors also found patterns of substitutions that suggested metro dailies and free weeklies might act as complements and together be acceptable substitutes for county dailies. The data showed great variation, so these conclusions hold generally but would vary with how well the weekly and metro daily content together could substitute for a non-metro daily. The data also indicated that metro and non-metro dailies can be substitutes, which is consistent with Hawley’s study,56 but readers are more likely to substitute non-metro dailies for metro dailies than vice versa.

In their reconceptualization of Rosse’s umbrella model, Bridges, Litman and Bridges examined the Tampa-St. Petersburg metropolitan area.57 Their conclusions are consistent with the results of the two studies mentioned in the previous paragraphs. The penetration of metropolitan and non-metropolitan dailies are negatively related.

Cho and Lacy discovered a similar pattern between national and local dailies in Japan.58 The total penetration of local and national dailies in prefectures was negatively related, but the relations between particular national dailies and local dailies varied and were even positive in some cases. Martin found that as the penetration of other dailies in a county increased, a particular daily’s penetration declined.59 He did not find a correlation between weekly and daily penetration, but this inconsistency with previous research might reflect the fact that this study did not differentiate between metro daily and non-metro daily penetration.

An earlier study of the Los Angeles area reported competition between metro and non-metro dailies, but it diminished outside the metro area.60 Devey reported there was no competition among metro and non-metro dailies in the Boston area,61 but the study failed to control for trends in penetration.

One study sought to see how a newspaper group with universally recognized low quality performed over a decade.62 The authors selected Thomson newspapers as low-quality newspapers because the CEO said in a 1993 speech that this was the case.63 The data were from 1980 and 1990 and included 64 Thomson dailies and 128 control papers from the same states as the Thomson papers. Control papers were also selected to be similar in circulation and market size. In addition to controls through selection, the authors used regression analysis to control for competition, market size, subscription price and consumer income. At the end of the 1980s, the Thomson newspapers averaged 2,292 fewer subscriptions than non-Thomson papers just because they were Thomson papers. In 1980, Thomson newspapers experienced an reduced average circulation by 1,671 compared to the non-Thomson newspapers. The average circulation for Thomson papers was 14,124 in 1980 and 13,294 in 1990. The average circulation of the non-Thomson papers was 14,362 in 1980 and 14,539 in 1990. The Thomson newspapers’ average home county penetration dropped from 65 percent in 1980 to 53 in 1990. The control group average penetration dropped from 58 percent to 57 percent.

Stone, Stone and Trotter used a panel to evaluate quality and found that newspapers with higher quality had higher circulation.64 Lacy and Fico developed a quality index65 based on Bogart’s survey of editors.66 Their eight measures of quality were: a high ratio of staff-written copy to wire and syndicated copy, total amount of non-advertising space, high ratio of in-depth copy to hard news, number of wire services carried, high ratio of illustration to text, length of average news story, high ratio of non-advertising to advertising content in the news sections, and the number of byline writers divided by the square inches of total staff copy. The study used 114 randomly selected dailies and reported that about 22 percent of the variation in circulation in 1985 was related to the quality in 1984.

When taken with the financial commitment material, the preponderance of large-scale U.S. studies support the connection between newspaper content and circulation and penetration – whether it is called quality or not. These studies are bolstered by evidence that people will accept imperfect substitutes for newspapers. Newspapers face imperfect competition, and if their content fails to serve readers, many of these readers will reconfigure their media mix to include other publications, or in some cases drop newspapers entirely.

Clustering Cuts Short-Run Expenses, but Penetration and Quality Decline and Ad Rates Increase

The economic boom of the 1990s coincided with a period of high newspaper sales. During this period, daily newspapers changed hands 856 times, including 153 dailies that were sold more than once. Sales of daily newspapers in the 1990s were higher than sales for the previous two decades.67 Many acquisitions were driven by an increasingly popular strategy of clustering of dailies. Such clusters can reduce production costs, provide regional coverage for advertisers and concentrate a group’s newspapers in thriving markets.68 In addition, clusters reduce competition for some newspapers, which allows newspapers to cut newsroom expenses.69

The number of studies about the impact of clusters is small, but the results are fairly consistent. When the same company owns dailies in adjoining counties, fewer dailies circulate within these counties and the average penetration of all newspapers in the counties declines. When a newspaper company owns a cluster, it will likely gerrymander circulation areas and eliminate overlapping areas of circulation. Research about the impact of strikes on circulation shows that readers denied one daily will not necessarily subscribe to another.70

The cost savings of shared activities among newspapers in a cluster are obvious. Clustered papers can share printing plants, which boosts economies of scale. In some cases, multiple newspapers can share staff functions. A survey of 188 clustered dailies in 2000 reported that about 74 percent of the dailies shared newsgathering resources, about 64 percent shared administrative expenses and about 65 percent shared production resources.71 These percentages were all much higher, more than twice in all but administrative expenses, than those reported by a group of about 198 non-clustered papers.

In addition to reduced penetration, Fu examined the impact of clustering on the elasticity of demand associated with a newspaper’s price.72 He concluded that newspaper clustering is associated with a 22 percent reduction in coverprice elasticity of demand. In other words, newspapers can increase subscription prices without losing as many readers as they would if the paper were not clustered.

Martin’s study of clusters in 1988 and 1998 found that subscription prices increased as their market shares increased in 1988, but this relationship could not be identified in 1998 because of the greater variance in pricing behavior among clusters.73

Martin also examined the relationship between newsroom resources and clustering.74 He found that 188 clustered newspapers in 2000 had newsroom staffs that were 23 percent smaller than staffs at 249 non-clustered dailies. Workload, defined as the ratio of each paper’s average weekday newshole to its staff size, was available for 96 clustered dailies and 154 non-clustered dailies. Workload was about 20 percent lower at the non-clustered papers. When regression analysis was used to control for differences in competition and advertising price, Martin found clustered papers averaged about four fewer newsroom employees than non-clustered dailies. There were about 17 more column inches per employee at clustered newspapers.75 A second study found clustering is associated with smaller news staffs and higher workloads.76

The result of clustering has been a decline in competition among imperfect substitutes. Readers have fewer options in altering their media mix. The impact on news quality is not clear. However, one study found that a decline in this type of competition reduced newshole and the percentage of newshole given to local news.77

Lack of Competition from Other Dailies Will Increase Cost Per Thousand and Might Push Some Advertisers to Other Media in the Long Run

Clustering also tends to increase advertising rates. Fu and Martin were consistent in their conclusions that clustered newspapers charge higher advertising prices.78 This conclusion is consistent with research about advertising competition. Studies about the impact of competition on advertising prices have consistently found that competition among dailies and weeklies will reduce the cost per thousand ad rate.79 Research that uses absolute ad prices often finds no relationship because using circulation as a predictor variable overwhelms every other variable in the statistical analysis.80 Large- and medium-market studies of why advertisers buy advertising indicate that cost effectiveness, which can be measured by cost per thousand, plays an important role.81 However, studies of smaller markets indicate that cost per thousand may not affect advertising linage as much as other factors.82

If the competition that reduces cost per thousand declines or disappears, the potential increases for advertisers to substitute other media, and in some markets this will likely happen. However, the ability to substitute varies with the type of advertising. Ferguson found that markets with more radio and TV stations had lower national and ROP cost per thousand.83 Shaver and Lacy found similar results with a limited non-random sample of 40 dailies.84 As the number of radio and TV stations per 1,000 population increased, the newspapers experienced a significant decline in ROP ad linage. However, markets varied greatly, as would be expected with small samples, and the same relationship was not found for total ad lines.

A survey of six small dailies’ markets found that the majority of advertisers believe small dailies compete with other media, but they knew little about comparing across media.85 Sentman examined three metro markets and found that advertisers were more likely to shift advertising to other print media (suburban or surviving competitor).86 Only 20 percent said they would move the money to radio, television or direct mail. Of course, the market structure of metropolitan areas has changed since the 1980s.

A survey of 125 national advertising managers discovered that many managers consider other media to be substitutes for national advertising.87 Almost 53 percent said magazines and newspapers were acceptable alternatives for national advertising, and about 43 percent said radio and newspapers were acceptable alternatives for national advertising. Maxwell and Wanta surveyed 211 advertising agency executives and reported that the executives who had reduced spending on newspapers gave four main reasons: other media reached the audience better, declining circulation, concern about newspaper demographics and the high cost of newspaper advertising.88

Economic theory and newspaper research indicate that newspapers facing declining competition from clustering or for other reasons will increase their cost-per-thousand ad rates. This increases the probability that advertisers will consider other, imperfect substitutes for at least some of their advertising. Little research exists on the long-run impact of this trend on corporate survival and profit margins. However, the percentage of all advertising dollars spent at daily newspapers declined from 22.7 percent in 1986 to 19.2 percent in 2001. Advertisers seem to be increasing their willingness to use imperfect substitutes to reach their customers.

Summary

Economic theory and research provide evidence that intense competition among newspapers will result in increases in newsroom budgets, changes in content and decreases in advertising cost per thousand. Evidence is less strong that competition decreases subscription prices, although this can happen under some conditions. Considerable variation across newspapers can be found with all these relationships, which represent a variety of managerial decisions. However, the following general statements are supported by research:

* Intense newspaper competition increases expenditures in the newsroom and improves journalism performance.

* The increased expenditure and performance translates into changes in content and improvements in quality aimed at attracting readers.

* The relationship between these content changes and circulation growth is not perfect. However, evidence suggests quality content can attract readers and that failure to provide acceptable levels of quality and content will lead to declines in circulation and penetration.

* Competition for advertising decreases the cost per thousand that advertisers pay newspapers for at least some forms of advertising. At least some advertisers see other media as substitutes for some forms of newspaper advertising, especially retail advertising. The number of advertisers who accept this seems to be growing. At some point, rising cost per thousand probably leads to businesses moving their advertising to other media, although this is just one factor in the substitution.

* Clustering reduces competition and affects content and advertising prices.

What does this suggest for the future of newspapers? If readers become dissatisfied with a newspaper, many will select imperfect substitutes for their media mix. The more the imperfect substitute resembles a newspaper, the more likely readers will switch. This is, of course, why text-dominated Web sites could increasingly become substitutes for newspapers as people become more comfortable reading on screens and screens become more portable. Just how much of a threat these sites are will depend on the relative utility of the content to readers.

As readership declines and the cost per thousand increases, advertisers will be more likely to switch to imperfect substitutes. If ad linage declines, newspapers that want to maintain profit margins will either have to increase ad prices to maintain revenue or cut newsroom and other expenses to control costs. In the former case, the probability of advertisers’ seeking substitutes increases. In the latter, quality declines will cause readers to leave, increasing the cost per thousand. As cost per thousand increases, businesses are more likely to substitute other forms of advertising.

It appears then that competition helps newspapers in the long run. The response to competitors helps to maintain content quality and keep prices down. Newspaper competition, however, continues to decline. Only about 30 cities have either two or more separately owned dailies or joint operating agreements. The nature of newspaper economics has caused this decline,89 but competition among dailies in other cities has been affected by clustering strategies. In 1993, 46.5 percent of a random sample of 747 counties with daily newspapers had at least one other daily reaching 5 percent or more penetration in the county.90 By inference, the authors estimated that 1,031 to 1,099 such counties could be found in the United States. Sixty-six of the sample counties had two or more dailies that each reached 20 percent or more penetration. There is no more recent figure, but the percentage of dailies in clusters increased from 27 percent in 1988 to 33 percent in 1998.91 During that time, another 153 dailies ceased publication.

Newspapers often take advantage of declining competition to enhance short-term profits. However, this is a strategic choice. According to economic theory, businesses that cut quality and pursue aggressive pricing policies can invite competition.92 A recent study of the relationship between type of daily ownership and existence of weekly competition in a county found that counties with publicly owned dailies or no dailies averaged about one more weekly newspaper than did counties with privately owned dailies.93 Because publicly owned dailies tend to cut newsroom budgets and price aggressively,94 this exploratory study suggests that dailies might be inviting weekly competition through short-run pricing and content strategies.

Newspaper owners are at a crossroads. They must decide whether to pursue short-run content and price strategies that will maintain the high profit margins expected of newspapers,95 which also will make them more vulnerable in the long run to increased competition from weeklies, other dailies in adjoining counties, television, radio, magazines and the Internet. Other public companies may someday face the decision that Thomson faced after undermining its circulation with poor quality:96 Do we stay in the newspaper business after it becomes impossible to maintain profit margins above 20 percent? The likelihood that every newspaper company will have to answer that question will grow as intermedia competition causes long-run profit margins to decline. How soon a company faces that question will depend on its short-run content and pricing strategies.

Notes

1. Edward H. Chamberlin, The Theory of Monopolistic Competition, 6th ed. (Cambridge: Harvard University Press, 1950).

2. Stephen Lacy and Todd F. Simon, The Economics and Regulation of United States Newspapers (Norwood NJ: Ablex Publishing, 1993), 32-37.

3. Stephen Lacy, “Commitment of Financial Resources as a Measure of Quality,” in Measuring Media Content, Quality, and Diversity: Approaches and Issues in Content Research, ed. Robert G. Picard (Turku, Finland: Turku School of Economics and Business Administration, 2000), 25-50.

4. Bruce M. Owen and Steven S. Wildman, Video Economics, (Cambridge, MA: Harvard University Press, 1992).

5. Lacy and Simon, The Economics and Regulations, 41-42.

6. Mary Alice Shaver, “Application of Pricing Theory in Studies of Pricing Behavior and Rate Strategy in the Newspaper Industry,” The Journal of Media Economics 8, no. 2 (1995): 49-59.

7. Mary Alice Shaver and Stephen Lacy, “The Impact of Intermedia and Newspaper Competition on Advertising Linage in Daily Newspapers,” Journalism & Mass Communication Quarterly 76, no. 4 (autumn 1999): 729-744; Dan Shaver, “A Study of Rate Structures in Display Advertising,” (unpublished MBA project, Wake Forest University, 1993); and Ken Smith, “Advertisers’ Media Selection in Small Newspapers Markets,” Newspaper Research Journal 14, no. 4 (fall 1998): 30-44.

8. Barry R. Litman and Janet Bridges, “An Economic Analysis of American Newspapers,” Newspaper Research Journal 7, no. 3 (summer 1986): 9-26; and Stephen Lacy, “The Financial Commitment Approach to News Media Competition,” Journal of Media Economics 5, no. 2 (1992): 5-21.

9. Stephen Lacy, “The Effects of Intracity Competition on Daily Newspaper Content,” Journalism Quarterly 64, no. 2 (spring 1987): 281-90; and Litman and Bridges, “An Economic Analysis.”

10. Galen Rarick and Barrie Hartman, “The Effects of Competition on One Newspaper’s Content,” Journalism Quarterly 43, no. 3 (summer 1966): 459-62; and Lacy, “The Effects of Intracity.”

11. Stephen Lacy, “Newspaper Competition and Number of Press Services Carried: A Replication,” Journalism Quarterly 67 no. 1 (winter 1990): 79-82.

12. Hiromi Cho, “The Impact of Newspaper Competition and Ownership on Resource Allocation: A Study in Japan” (Ph.D. diss., Michigan State University, 2000).

13. Stephen Lacy, “The Impact of Intercity Competition on Daily Newspaper Content,” Journalism Quarterly 65, no. 2 (spring 1988): 399-406.

14. Stephen Lacy, Mary Alice Shaver, and Charles St. Cyr, “The Effects of Public Ownership and Newspaper Competition on the Financial Performance of Newspaper Corporations: A Replication and Extension,” Journalism & Mass Communication Quarterly 73, no. 2 (spring 1996): 332-341.

15. Stephen Lacy and Alan Blanchard, “The Impact of Public Ownership, Profits and Competition on the Number of Newsroom Employees and Starting Salaries in Mid-sized Daily Newspapers,” Journalism & Mass Communication Quarterly, in press.

16. Rarick and Hartman, “The Effects of Competition”; D. J. Stakun, “Content Analysis of the Bloomington Herald-Telephone During and After Publication of the Competing Courier-Tribune,” (master’s thesis, Indiana University, 1980); N. A. Woerman, “The Effects of Competition on the Beloit Daily Call and a Comparison with Its Competitor, The Solomon Valley Post,” (master’s thesis, Kansas State University, 1982); and Tom J. Johnson, and Wayne Wanta, “Newspaper Competition and Diversity in an Urban Market,” Mass Comm Review 20, no. 3/4 (1993): 136-147.

17. Katherine Trim, Gary Pizante, and James Yaraskavitch, “The Effects of Monopoly on the News: A Before and After Study of Two Canadian One-newspaper Towns,” Canadian Journal of Communication 9, no. 3 (1983): 33-56; and Dores A. Candussi and James P. Winter, “Monopoly and Content in Winnipeg,” in Press Concentration and Monopoly, eds. Robert G. Picard, et. al. (Norwood, NJ: Ablex, 1988), 139-145.

18. Shu-ling Chen Everett and Stephen E. Everett, “How Readers and Advertisers Benefit from Local Newspaper Competition,” Journalism Quarterly 66, no. 1 (winter 1989): 76-79, 147.

19. H. A. White and Julie L. Andsager, “Winning Newspaper Pulitzer Prizes: The (Possible) Advantage of Being a Competitive Newspaper,” Journalism Quarterly 67, no. 4 (autumn 1990): 912-19.

20. Stephen Lacy, Frederick Fico, and Todd F. Simon, “Relationships among Economic, Newsroom, and Content Variables: A Path Model,” Journal of Media Economics 2, no. 2 (1989): 51-66.

21. George Sylvie, “A Study of Civil Disorder: The Effects of News Values and Competition on Coverage by Two Competing Daily Newspapers,” Newspaper Research Journal 12, no. 2 (spring 1991): 98-113.

22. Stephen Lacy, “Content of Joint Operating Newspapers,” in Press Concentration and Monopoly, eds. Robert G. Picard, et. al. (Norwood, NJ: Ablex, 1988), 155.

23. Hugh J. Martin, “Do Newspaper Clusters Attempt to Reduce Costs by Sharing Resources? Evidence from a Survey of Executives, ” Newspaper Research Journal 24, no. 4 (fall 2003): 6-21.

24. John C. Busterna, Kathleen A. Hansen, and Jean Ward, “Competition, Ownership, Newsroom and Library Resources in Large Newspapers,” Journalism Quarterly 68, no. 4 (autumn 1991): 729-39; John Schweitzer and Elaine Goldman, “Does Newspaper Competition Make a Difference to Readers?” Journalism Quarterly 52, no. 4 (1975): 706-10; Robert M. Entman, “Newspaper Competition and First Amendment Ideals: Does Monopoly Matter?” Journal of Communication 35, no. 3 (1985): 147-65; Maxwell E. McCombs, “Effects of Monopoly in Cleveland on Diversity of Newspaper Content,” journalism Quarterly 64, no. 4 (autumn 1987): 740-44,792; Maxwell E. McCombs, “Concentration, Monopoly, and Content,” in Press Concentration and Monopoly, eds. Robert G. Picard, et. al. (Norwood, NJ: Ablex, 1988), 129-137; and Lacy, Fico and Simon, “Relationship among Economic.”

25. Raymond B. Nixon and Robert L. Jones, “The Content of Competitive and Non-competitive Newspapers,” Journalism Quarterly 33, no. 2 (spring 1956): 299-314; Ralph O. Nafziger and T. P. Barnhart, “Red Wing and Its Daily Newspaper,” No. 9 in the Community Basis for Postwar Planning series, (Minneapolis, MN: University of Minnesota Press, 1946); Gerald H. Borstel, “Ownership, Competition, and Comment in 20 Small Dailies,” journalism Quarterly 33, no. 1 (winter 1956): 22022; and Wesley F. Willoughby, “Are Two Competing Dailies Necessarily Better Than One? journalism Quarterly 32, no. 1 (winter 1955): 197-204.

26. Leo Bogart, Press and Public, 2nd ed. (Hillsdale, NJ: Lawrence Erlbaum Associates, 1989).

27. Stephen Lacy and Frederick Fico, “Financial Commitment, Newspaper Quality and Circulation: Testing an Economic Model of Direct Newspaper Competition” (paper presented at AEJMC, Washington, DC, August 1989).

28. Lee B. Becker, Randy Beam and John Russial, “Correlates of Daily Newspaper Performance in New England,” Journalism Quarterly 55, no.l (winter 1978): 100-08.

29. George A. Gladney, “Newspaper Excellence: How Editors of Small & Large Papers judge Quality,” Newspaper Research Journal 11 no. 2 (spring 1990): 60-72.

30. Stephen Lacy, “A Model of Demand for News: Impact of Competition on Newspaper Content,” journalism Quarterly 66, no.l (1989): 40-48,128.

31. Stephen Lacy and Hugh J. Martin, H. J., “Profits Up, Circulation Down for Thompson Papers in ‘8Os,” ‘Newspaper Research Journal 19, no. 3 (summer 1998): 63-76.

32. Wayne A. Danielson and John B. Adams, “Completeness of Press Coverage of the 1960 Campaign,” Journalism Quarterly 38, no. 3 (summer 1961): 441-52.

33. Stephen Lacy and Frederick Fico, “Newspaper Content Quality and Circulation,” Newspaper Research Journal 12, no. 2 (spring 1991): 46-57; Stephen Lacy and Ardyth B. Sohn, “Correlations of Newspaper Content with Circulation in the Suburbs: A Comparative case Study,” Journalism Quarterly 67, no. 4 (autumn 1990): 785-943; and Gerald C. Stone, Donna B. Stone, and Edgar P. Trotter, “Newspaper Quality’s Relation to Circulation,” Newspaper Research journal 2, no. 3 (summer 1981): 16-24.

34. Lacy and Martin, “Profits Up, Circulation Down.”

35. Jon P. Vermeer, “Multiple Newspapers and Electoral Competition: A County-level Analysis,” Journalism b Mass Communication Quarterly 72, no. 1 (1995): 98-105.

36. Dominic L. Lasorsa, “Effects of Newspaper Competition on Public Opinion Diversity,” Journalism Quarterly 68, no. 1/2 (winter/spring 1991): 38-47.

37. Gerald L. Grotta, “Consolidation of Newspapers: What Happens to the Consumer?” journalism Quarterly 48, no. 2 (spring 1971): 245-250.

38. Candussi and Winter, “Monopoly and Content.”

39. Robert G. Picard, “Pricing in Competing and Monopoly Newspapers, 1972-1982,” LSLi School of Journalism Research Bulletin, 1986.

40. Lacy, “The Effects of Intracity,” and Stephen Lacy and Jon P. Vermeer, “Commentary: Theoretical and Practical Considerations in Operationalizing Newspaper and Television News Competition,” journal of Media Economics 8, no. 1 (1995): 49-6.

41. Hugh J. Martin, “A Study of How a Strategy Creating Clusters of Commonly Owned Newspapers Affects Prices, Quality and Profits” (Ph.D. cliss., Michigan State University, 2001).

42. Barry Litman, “Microeconomic Foundations,” in Press Concentration and Monopoly, eds. Robert G. Picard et al. (Norwood NJ: Ablex Publishing, 1988), 3-34.

43. W. J. Merrilees, “Anatomy of a Price Leadership Challenge: An Evaluation of Pricing Strategies in the Australian Newspaper Industry, ” Journal of Industrial Economics 31, no. 3 (1983): 291311.

44. Robert G. Picard, “The Effect of Price Increases on Newspaper Circulation,” Newspaper Research Journal 12, no. 3 (summer 1991): 64-75.

45. Regina Lewis, “Relation between Newspaper Subscription Price and Circulation, 19711992,” The Journal of Media Economics 8, no.l (1995): 25-41.

46. Randall A. Beam, “How Perceived Environmental Uncertainty Influences the Marketing Orientation of U.S. Daily Newspapers,” Journalism &Mass Communication Quarterly 73, no. 2 (spring 1996): 285-303.

47. David C. Coulson and Stephen Lacy, “Journalists’ Perceptions of How Newspaper and Broadcast News Competition Affects Newspaper Content,” Journalism and Mass Communication Quarterly 73, no. 2 (1996): 354-63.

48. Stephen Lacy, David C. Coulson, and Charles St. Cyr, “The Impact of Beat Competition on City Hall Coverage,” Journalism & Mass Communication Quarterly 76, no. 2 (1999): 325-40.

49. Bogart, Press and the Public.

50. James N. Rosse, “Economic Limits of Press Responsibility,” (paper presented to a conference at the Center for the Study of Communications Policy, Duke University). Studies in Industry Economics No. 56 Stanford University, Department of Economics, January 1975; and James N. Rosse and James Dertouzos, “Economic Issues in Mass Communication Industries,” Proceedings of the Symposium on Media Concentration, vol. 1, (Washington, DC: Bureau of Competition of the Federal Trade Commission, December 1978), 40-192.

51. Janet A. Bridges, Barry R. Litman, and Lamar W. Bridges, “Rosse’s Model Revisited: Moving to Concentric Circles to Explain Newspaper Competition,” The Journal of Media Economics 15, no. 1 (2002): 3-19.

52. Melinda D. Hawley, “Dropping the Paper: Losing Newspaper Loyalists at the Local Level,” (James M. Cox Institute for Newspaper Management Studies, University of Georgia, Athens, GA, 1992),1.

53. Stephen Lacy and Ardyth B. Sohn, “Correlations of Newspaper Content with Circulation in the Suburbs: A Comparative case Study,” Journalism Quarterly 67, no. 4 (autumn 1990): 785-943.

54. Stephen Lacy and Shihka Dalmia, “Daily and Weekly Penetration in Non-metropolitan Areas of Michigan,” Newspaper Research Journal 14, no. 3/4 (summer/fall 1993): 20-33.

55. Stephen Lacy, David C. Coulson, and Hiromi Cho, “Competition for Readers Among U.S. Metropolitan Daily, Non-metropolitan Daily and Weekly Newspapers,” The Journal of Media Economics 15, no. 1 (2002): 21-40.

56. Hawley, “Dropping the Paper.”

57. Bridges, Litman, and Bridges, “Rosse’s Model Revisited.”

58. Hiromi Cho and Stephen Lacy, “Competition for Circulation among Japanese National and Local Daily Newspapers,” The Journal of Media Economics 15, no. 2 (2002): 73-89.

59. Hugh J. Martin, “A Study of How.”

60. Diana S. Tillinghast, “Limits of Competition,” in Press Concentration and Monopoly, eds. Robert G. Picard, et. al. (Norwood, NJ: Ablex, 1988), 71-89.

61. Susnn M. Dovoy, “Umbrella Competition for Newspaper Circulation in the Boston Area,” Journal of Media Economics 2, no. 1 (1989): 31-40.

62. Lacy and Martin, “Profits Up, Circulation Down.”

63. “A Change in Strategy,” Editor & Publisher 126, no.22 (May 29,1993), 14.

64. Stone, Stone and Trotter, “Newspaper Quality’s Relationship.”

65. Stephen Lacy and Frederick Fico, “Newspaper Content Quality and Circulation,” Newspaper Research Journal 12, no. 2 (1991): 46-57.

66. Bogart, Press and Public.

67. “A Decade of Deals,” Presstime 22, no. 2 (February 2000): 33-34.

68. D. Asher, “Who Owns What?” Presstime 21, no. 12 (December 1999), 29-30; and J. Bass, “Newspaper Monopoly,” American Journalism Review, (July/Augusf 1999), 64-68.

69. Stephen Lacy and Todd F. Simon, “Intercounty Group Ownership of Daily Newspapers and the Decline of Competition for Readers,” Journalism & Mass Communication Quarterly 74, no. 4 (fall 1997): 814-825; Martin, “A Study of How;” and Martin, “Do Newspaper Clusters.”

70. John Polich, “Daily News, Its Unions, Newspaper Lose in 1990 Strike,” Newspaper Research journal 16, no. 1 (winter 1995): 71-83.

71. Martin, “Do Newspaper Clusters.”

72. W. J. Fu, “Three Essays on the Economics of Networked and Traditional Information Services” (Ph.D. diss., Northwestern University, 2000).

73. Martin, “A Study of How.”

74. Martin, “A Study of How”; and Martin, “Do Newspaper Clusters.”

75. Martin, “A Study of How.”

76. Martin, “Do Newspaper Clusters.”

77. Lacy, “The Impact of Intercity.”

78. Martin, “A Study of How”; and Fu, “Three Essays.”

79. Stephen Lacy and Stephen Dravis, “Pricing of Advertising in Weeklies: A Replication,” journalism Quarterly 68, no. 3 (summer 1991): 338-344; Martha N. Matthews, “JOAs and Advertising Rates: A Comparison with Monopoly Markets,” (paper presented at AEJMC, Minneapolis, August 1990); Stephen Lacy, David C. Coulson, and Hiromi Cho, “The Impact of Competition on Weekly Newspaper Advertising Rates,” Journalism & Mass Communication Quarterly 78, no. 3 (summer 2001): 450-465; and Lacy and Simon, The Economics and Regulation, 108-109.

80. Lacy and Simon, The Economics and Regulation.

81. Shaver, “A Study of Rate”; J. Frederick-Collins, “Measuring Media Image: Expectations, Perceptions and Attitudes of Local Retail Advertisers” (paper presented at AEJMC, Montreal, August 1992); Glen T. Cameron, Glen J. Nowak, and Dean M. Krugman, “The Competitive Position of Newspapers in the Local Retail Market,” Newspaper Research Journal 14, no. 3/4 (summer/fall 1993): 70-81.

82. Ken Smith, “Intermedia Competition for Advertising in Small Daily Markets,” The Journal of Media Economics 8, no. 4 (1995): 29-45; and Ken Smith, “Advertisers’ Media Selection in Small Newspaper Markets,” Newspaper Research Journal 19, no. 1 (1998): 30-44.

83. James M. Ferguson, “Daily Newspaper Advertising Rates, Local Media Cross-ownership, Newspaper Chains, and Media Competition,” Journal of Law b Economics 26, no. 2 (1983): 635-654.

84. Mary Alice Shaver and Stephen Lacy, “The Impact of Intermedia and Newspaper Competition on Advertising Linage in Daily Newspapers,” Journalism &Mass Communication Quarterly 76, no. 4 (fall! 999): 729-744.

85. Smith, “Intermedia Competition.”

86. Mary Alice Sentman, “When the Newspaper Closes: A case Study of What Advertisers Do,” Journalism Quarterly 63, no. 4 (autumn 1986): 757-62.

87. Leonard N. Reid and Karen W. King, “A Demand-side View of Media Substitutability in National Advertising: A Study of Advertisers’ Opinions about Traditional Media Options,” Journalism & Mass Communication Quarterly 77, no. 2 (spring 2000), 292-307.

88. Ann Maxwell and Wayne Wanta, “Advertising Agencies Reduce Reliance on Newspaper Ads,” Newspaper Research Journal 22, no. 2 (spring 2001): 51-65.

89. James N. Rosse, “The Decline of Direct Newspaper Competition,” Journal of Communication 30, no. 1 (1980): 65-71; and Stephen Lacy and Robert G. Picard, “Interactive Monopoly Power: A Concept for Analyzing the Newspaper Industry,” Journal of Media Economics 3, no. 2 (spring 1990): 27-38.

90. Lacy and Simon, “Intercounty Group Ownership.”

91. Martin, “A Study of How.”

92. Stephen Lacy, David C. Coulson, and Hugh J. Martin, “Ownership and Barriers to Entry in Non-metropolitan Daily Newspaper Markets,” (paper presented to AEJMC, Miami, August 2002).

93. Lacy, Coulson and Martin, “Ownership and Barriers.”

94. Gilbert Cranberg, Kandall I3e/,anson, and John Soloski, Taking Stock: journalism ana Hie Publicly Traded Neivspnper (Ames, IA: Iowa State University Press, 2001); William B. Blankenburg and Gary W. Ozanich, “The Effects of Public Ownership on the Financial Performance of Newspaper Corporations,” Journalism Quarterly 70, no. 1 (winter 1993): 68-75; BIanchard and Lacy, “The Impact of Public”; and Lacy, Shaver and St. Cyr, “The Effects of Public.”

95. Hugh J. Martin, “Measuring Newspaper Profits: Developing a Standard of Comparison,” Journalism & Mass Communication Quarterly 75, no. 3 (summer 1998): 500-517.

96. Lacy and Martin, “Profits Up, Circulation Down.”

Lacy is a professor in the School of Journalism at Michigan State University. He has researched media economics for more than 20 years and has produced more than 80 refereed journal articles and conference papers on the topic. slacy@msu.edu.

Martin is an assistant professor in the Grady College of Journalism and Mass Communication at the University of Georgia, and holds a doctorate from Michigan State University. His research interests include economic and organizational influences on the behavior of newspapers and other media organizations. He worked for 12 years as a reporter and editor at The Tampa Tribune. hjmartin@uga.edu.

Copyright Newspaper Research Journal, Department of Journalism, University of Memphis Winter 2004

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