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Good Morning America, Goodbye News Industry?

During its 400 year history, the news industry has evolved in many ways. We’ve seen massive changes from the monopolistic regional markets of the 19th and early 20th centuries to the technology driven, nearly perfect competitive market we see today. We at the Economics of Everything have analyzed the modern news industry using the structure-conduct-performance method and the SWOT analysis method.

Thanks to the internet, the current news industry is a near perfect competitive market. All geographic barriers have been removed and every news provider has global reach. This results in zero marginal cost for distribution of news, in contrast to the historically high cost of entry in the industry. Increased competition has also forced providers’ conduct to target consumer preferences and increase cost efficiency. Providers must create real value for the reader in order to compete with the abundance of free information available to the public. This also impacts paid content to favor methods like the hybrid and metered subscription model to encourage customer loyalty. News providers must also increase the accessibility of their content by consistently integrating with new technology. Long-run economic profits trend towards zero as the industry becomes increasingly more competitive. The abundant supply and easy accessibility of free news produces increased consumer welfare. News providers will be forced to keep costs to a minimum to create an economic advantage over their competitors and allow for greater advertising to build out their brand recognition.

The strengths of the news industry include spreading important information, advertising goods and services, and giving people a voice to share ideas. However, there are also weaknesses within the industry. News organizations have been known to empower the powerful, like when the Washington Post was bought by Jeff Bezos in 2013. In some instances, the news industry can even be used wrongfully to promote violence and hate. Most of the opportunities of the industry involve monetizing the new digital outlet. Digital opportunities become even more crucial as more consumers use social media to find news. Yet social media can also be a threat as younger consumers use these platforms as a substitute to traditional news.



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