New study examines problems facing online-only newspapers

Newspapers could lose out by ditching their print editions and going online-only, according to a new study from City University.

The study, focussing on Finnish financial newspaper Taloussanomat which went online-only in December 2007, found that although costs can be cut, revenues could be in danger.

The paper, which went fully online following heavy financial losses, saw costs drop by 50%; however, its readership fell by 22%, with revenues dropping by more than 75%.

The study found that a publication would need its costs to be significantly higher than its income to make online-only a viable option.

It said: “Firstly readers are reluctant to pay for content online; and secondly the law of supply and demand means that the value of advertising space on the web is significantly less than in print – not in itself an insurmountable problem if newspapers making the move from print and online to online-only can increase their visitor numbers, page impressions, and ad sales to make up the difference. This is, however, easier said than done.”

It added: “This study shows that, at least in the case of Taloussanomat, the difference between the loss of income (a minimum of 75%) and the savings made (52%) by ditching the print edition makes such a strategy financially worthwhile only if expenditure is at least 45% higher than income (ie losses are at least 31%).

“If this finding holds true more widely current profit levels – in the mid teens for US newspapers – can sustain newsprint for some time to come.”