Impact of the Internet on Australian Newspapers

The increasing range of news and advertising services accessible on the Internet is changing the relative comparative advantages of the established media and the consequential adjustment process is having a significant impact on established industry structures. The paper will look at the impact that the growth of the internet as a source of news and as an advertising medium is having on the daily newspaper industry in Australia. In contrast with traditional media which compel audiences to wade through a bundle of wanted and unwanted content in order to consume what is of interest, the internet allows consumers to get what they want directly. This unbundling of advertising and other content has severely eroded the capacity of newspapers to use the drawing power of their news and other stories to attract viewers to co-located advertisements. In addition, search engines have both simplified and improved the efficiency of the process of bringing together buyers and sellers traditionally performed by the classified sections of newspapers. The consequences on newspapers hve been severe and have brought about major changes to industry structures in many countries. The paper provides an analyssi of the impact of these changes on the Australian newspaper industry. A significant part of the analysis is drawn from a larger paper by the author. Historical trends in newspaper readership and in advertising revenue are used to set the context for recent changes in the industry. Annual advertising market data are used to compare the performance of newspapers with that of other major advertising media, including the internet. Delving more deeply into the relative performance of newspapers and the internet, the paper examines the changes in performance in the main components of advertising expenditure. The paper then discusses how the industry has attempted to respond to these pressures, the effectiveness of the adopted measures, and the nature of the consequential adjustment processes that are underway. In the light of the analysis, the paper concludes with a brief discussion of future prospects for the Australian newspaper industry.