Magazine article Teaching Business & Economics

Britain's National Daily Newspaper Industry

Magazine article Teaching Business & Economics

Britain's National Daily Newspaper Industry

Article excerpt

With about 60 per cent of people reading a national daily (rising to 70 per cent on Sundays), Britain's newspaper industry can probably be considered as a national institution. However, along with many other national institutions, it is experiencing changes and, arguably, the industry is in long-term decline.

The industry has experienced declining circulation for several decades. Mintel estimates that between 1978 and 2003 annual national newspaper sales, by volume, fell by over 16 per cent. This comprises falls of 19 per cent and 23 per cent for popular and mid-market tabloids but a rise of 12.5 per cent for the quality (previously known as broadsheet) newspapers, though even the latter experienced a decline of 6 per cent between 1998 and 2003. Figure 1 provides information on the ownership of the main national daily newspapers together with recent data on sales figures.

This shrinking of a market dominated by seven companies (the Financial Times is a specialised product) has led to fierce competition. One manifestation of this competition has been intense price wars. For example, in May 2002, the Daily Express reduced its cover price to 2Op, a move quickly matched by the relaunched Daily Mirror, The Sun then joined them at 2Op and The Daily Star was reduced to 1Op. All papers claimed that sales rose as a result but it was difficult for the companies to sustain the price cuts because production costs were largely unaffected. (It is estimated that News Corporation, the owners of The Sun, lost about £7 million in July 2002.) The impact of the cuts proved short-lived, and sales fell back once prices were restored. However later that year, in September, The Independent and The Daily Telegraph showed that it was possible to increase cover prices without an immediate fall in sales.

Newspapers cannot sustain price wars over a long period, although they may break out again in the future. In the meantime, however, newspapers adopt a variety of tactics to boost sales. For example, the dailies operate discount schemes for particular sections of the population such as students, loyal readers and bulk purchasers (like hotel chains and coffee shops). This means it is important to distinguish between the "cover" price and the actual price paid by purchasers.

As well as price, national newspapers employ many incentives designed to attract readers. These include:

* competitions with big-value prizes

* offers for free or heavily discounted meals, holidays, etc. - sometimes requiring the collection of coupons over a period of time

* free gifts such as CDs, DVDs and posters

* serialisation of books before or at publication

* celebrity stories.

These tactics are likely, at best, to provide a short-term boost to sales and make readers less loyal to a particular paper. To halt the longer-term decline in sales, the newspaper companies have deployed a range of strategies and introduced several innovations, such as:

* targeting particular reader groups - the Daily Mail is considered notable for content targeted at a female readership

* using more colour throughout, with high-impact photographs

* producing more supplements - some competing directly with magazines

* introducing new sizes for ease of reading - with The Times and The Independent now publishing in tabloid size and The Guardian launching in Berliner size

* establishing internet sites such as the Guardian Unlimited, providing regular news updates and more in-depth articles.

Long-term social trends are by no means favourable for national newspaper circulation. Television channels and radio stations have long provided an alternative source of news and comment, and have made a major expansion into 24-hour news coverage in recent years. This has been facilitated by technological developments such as satellite communications enabling viewers to see events as they unfold. …

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