The newspaper industry in the United States is in crisis. However, despite a recent worldwide pullback in ad spending, newspapers in other countries are not doing as bad. In fact, newspaper circulation and advertising is rising worldwide.
Much of that push is coming from Asia. According to a 2008 report by the World Association of Newspapers, China is the world's largest market for newspapers with 107 million copies sold daily, while India trails closely behind at 99 million. China newspaper advertising revenue has grown nearly 50% in the last five years.
India's demographics support growing readership over the longterm. That said, in the short term the global crisis has injured Indian newspapers through scaled-back ad budgets and increasing costs for imported inputs. So while we will wait and see on India, this article looks at the factors that are supporting the newspaper business in China, with a mind that these factors can be used to understand India and other developing markets as well.
Factors Behind China's Circulation
The innovation necessary to find a new digital business models for newspapers is going to come from the US newspapers, who have the Darwinian choice of innovating or dying. Then when the newspaper business comes under pressure in Asia, local entrepreneurs will hire inexpensive software engineering labor and copy whatever US-born models worked or showed the most promise.
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Much of that push is coming from Asia. According to a 2008 report by the World Association of Newspapers, China is the world's largest market for newspapers with 107 million copies sold daily, while India trails closely behind at 99 million. China newspaper advertising revenue has grown nearly 50% in the last five years.
India's demographics support growing readership over the longterm. That said, in the short term the global crisis has injured Indian newspapers through scaled-back ad budgets and increasing costs for imported inputs. So while we will wait and see on India, this article looks at the factors that are supporting the newspaper business in China, with a mind that these factors can be used to understand India and other developing markets as well.
Factors Behind China's Circulation
- Maturation. China's newspapers have evolved from 45 publications after the revolution that merely printed party propaganda, to more than 2200 newspapers today. While still strictly regulated and required to adhere to the party line on many issues, they have subjected themselves to the pressure of the market economy (some more than others). While journalism still has its setbacks, the newspaper business has matured, and newsrooms are much more adept than they used to be at creating content that will sell papers in a competitive environment.
- Urbanization. Unlike the USA where people are relatively spread out, Chinese cities are heavily and densely populated, and they are growing, as more people move to cities in search of work. As Chinese newspaper distribution is almost entirely focused on cities, the number of people a single newspaper can reach is growing.
- Digital Divide. While the Web and digital devices have given people more choice in where they go for information, there is no sign that the rapid growth of Internet use in China has come at the direct expense of traditional media the way it has in the West. Part of this is the nature of Internet content and user behavior in China, but more significant is the digital divide between young and old, haves and have-nots, urban and rural, which have created a bifurcated media environment where print, tradition electronic media, and digital are all flourishing.
- Economic Growth. Double digit growth has given advertisers more money to spend on an nascent consumer market. Advertisers frenzy to reach consumers whose consumer habits are not yet established. When you are advertising to a new middle-class that has money and has not yet figured out what to spend it on, you get a better ROI on your advertisement dollar.
- Urbanization. Simple. If more people are concentrated in one place, then you can reach more people through fewer newspaper ad buys.
- Immature Internet Advertising. I assume that in the short term, successful models for online advertising are a threat to newspapers, because they are not yet in the position to take advantage of them. In China, these online advertising models is plagued by problems. The lack of reliable third-party measurement means online ad space is still sold on a "cost-per-time" basis, rather than by CPM, since buyers don't reliably know how many impressions they are paying for. Ad-targeting technologies from companies like Tacoda and Blue Lithium do not exist, with the exception of a few start-ups. High click-fraud has so far made PPC an extremely tough ad model. As a result, when you take the most optimistic projections of 2008 online advertising revenue in China, you still get about one month of the Guangzhou province print market.
The innovation necessary to find a new digital business models for newspapers is going to come from the US newspapers, who have the Darwinian choice of innovating or dying. Then when the newspaper business comes under pressure in Asia, local entrepreneurs will hire inexpensive software engineering labor and copy whatever US-born models worked or showed the most promise.
- MSNBC: Newspaper Circulation on the Rise, Just Not in US
- World Association of Newspapers
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