Big wave is not here, yet. Do not predict online advertising revenue, yet.

Growth of newspaper industry comes with a development of postal service and infrastructure. Perhaps, it was more expensive to send letters and newspapers via postal service in 1800s and early 1900s. Reflecting from the history of growth of newspaper industry, it is more appropriate to consider a development of broadband services and diffusion of smartphones or tablets when we talk about transformation of newspapers to online edition. However, much discussion narrowly focuses on online revenue and advertising expenditure on online news without consideration of infrastructure for online editions.

Newspaper industry, specifically in the U.S., has multiple layers of market structure; from monopolistic market structure of the community newspapers in rural area to competitive market structure of metropolitan newspaper. Thus, it is hard to generalize general strategy of newspaper in new media environment. In rural area, change of media platform or pricing on online news are actually up to a supplier of news since it is a supplier market where there is no competition. Readers do not have any option, but only follow what supplier drives.

On the other hand, newspapers in a competitive market should consider many factors including readers’ response to their policy change. Individuals in this market have many alternative newspapers, so that they can easily discard their first choice upon the condition that quality of news contents is not much different.  

However, those two different markets might be merged with together at a certain level if cheap broadband services, and smartphone and tabloid are available to the public. Easy access to online editions will abolish clear boundary of readership which is defined by deliberative capacity of newspapers. Upon change of those environmental conditions, some regional newspapers, which struggle a lot, might transform themselves to the online media. The benefit of transformation is saving a lot of cost for printing and delivery system, so those papers will have capacity of reallocating their resources to penetrate into new terrestrial markets. More news coverage on new market will give the public an incentive to switch their news outlets. The public does not need to rely on print version of newspapers to get informed their local news.

In light of this, prediction of online advertising expenditure does not ensure what will come to newspaper industry in the future because the prediction is based on the fixed probabilistic model of current status. Change of newspaper industry is still at an early stage when only minor symptoms are seen at this point. Perhaps, newspaper readers will drastically change their attitude and behaviors when they see a technological revolution. The successful transformation of print editions to online editions depends on the change of infrastructure. Who would think in 1800s and 1900s that everyone could read newspapers in the future? It won’t be surprising to witness that everyone read their news on new medium in 2020.