Friday, 30 November 2012

Graph(s) of the week: adapting to technology

The Economist produced a great video this week in which it analyzes the US daily newspapers subscriptions and circulation.




What's most interesting here is the analysis behind the recent success of the New York Times (NYT) and the Wall Street Journal (WSJ) and the downfall of USA today and LA Times. The reason in the divergence between these two groups of daily newspapers is in the adjustment of their demand to online subscribers. (see graphs below)

New York Times print and online circulation. Source: The Economist
Wall Street Journal print and online circulation. Source: The Economist
 USA Today and LA Times print and online circulation. Source: The Economist
This is a perfect example of an adaptation to the new technological environment. The technological change in people's behavioral patterns was recognized firstly as a threat to the newspaper industry but after a while it was embraced and adjusted to. Advertising online couldn't be the only source of income. They needed more online subscribers. 

This is also another good example of how it takes an exogenous shock like the crisis and the consequential loss of revenues for a company to realize that it needs to change. It was only after the crisis that NYT and WSJ changed their business model and saw an upsurge of their online subscribers (NYT actually has more online than print readers). This is an upcoming future trend that these companies need to adapt to in order to survive. If USA Today and the LA Times fail to do so, they will find themselves perishing.

Going back to an earlier text on technology and unemployment, this is what the aggregate demand shock implied in most professions. It was a signal that the business model needs to change and adapt. 

As the new generation of readers emerges there will be more and more people who are used to only reading news online. Even books are switching to new technologies like Kindle and it's a matter of time in a not so distant future where online readers will completely take over print readers (of both books and papers, but especially papers).

I'm mixture between the categories, as I read most of the news and commentaries online, but when it comes to books and academic papers I like to read them in print, since I like to write a lot of comments on them as I read. I've been told that things like Kindle have the option of inserting comments, but I still prefer the old-fashioned way. Maybe in 50 years (or less) future generations will find this kind of behaviour weird.

3 comments:

  1. I have also become a mixed reader. When it comes to anything really good or important, I want the actual hard book in my hand. I want to keep it on a shelf. I want to look at the cover art if there is any.

    But for normal reading I am online.

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  2. If I understood it correctly, you claim that if it weren't for the crisis, the newspapers would have never adjusted their labour intake, and would have never responded to the change in technology? That's a bold statement, since it doesn't explain why the other two papers didn't react. In fact I would say that the papers that did react are the exception here. To them I would add the FT in Britain. But everyone else is hardly "adjusting" to the new technologies via online subscriptions.

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    Replies
    1. Not never, since at one point in time some shock would force them to re-adjust not just the labour intake, but the entire business model. If not they would have gone under, not now, but in a few years as the technology would advance further. More rapid advancements in technology, if not being constrained by outside intervention, would have eventually resulted in separating the bad business models from the good ones - this is the effect of not only technological growth, but economic development all together.

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