Study finds more funds should be put into news
Published Feb. 23, 2007
Good news is good journalism, or so a study by two MU professors has shown.
Marketing professor Murali Mantrala and Esther Thorson, associate dean for graduate studies in the School of Journalism, created an economic measurement model for the newspaper industry based on small-to-medium newspapers. This type of model is commonly used in large industries such as General Motors.
Thorson and Mantrala reviewed the economic practices of newspapers and discovered that rather than putting more funds into the news-editorial aspects, companies with less success were effectively taking money away from these sections. Instead, they were investing money into non-news based services such as advertising.
Disinvesting in the practice of gathering news itself leads to a drop in revenues when newspapers decrease staff numbers and attempt to "squeeze more stories out of the same number of people," Thorson said.
Mantrala and Thorson worked with marketing students Hari Sridhar and Prasad Naik during the study, which began with Thorson's ground-level work five years ago.
The researchers looked at proprietary data from 300 newspapers across the United States over the course of four years to form their results. They obtained anonymous information on these newspapers through the Inland Press Association, which is located in Des Moines, Iowa.
"We do a national cost and revenue study every year and send out a survey to 1,500 daily newspapers in the United States," said Donald Kron, financial studies manager for Inland Press. "Last year, we had 323 papers that responded."
The survey covers cost and revenue of newspapers, as well as other characteristics of each paper. For a fee, researchers can view the results directly from the organization.
Thorson said their research demonstrated two particular results.
"This argument has been made for the last five or six years, which is that good journalism equals good business," Thorson said. "Many of us have argued that nationally and have pretty much been ignored."
Thorson said the study's findings showed many newspapers were operating in such a way that was disadvantageous for profit levels.
"It's kind of a smoking gun set of findings about the news business," Thorson said. "If you continue to do this, pretty soon you have no business."
The study will be published in the April issue of the Journal of Marketing.