New Study: Newsroom Cuts Eventually Hurt Profits
University of Missouri press release says:
Newspaper Study: Investing in the Newsroom is Good for Business.
The study was led by Murali Mantrala, the Sam Walton professor of marketing in the College of Business, and Esther Thorson, director of research for the Donald W. Reynolds Journalism Institute and associate dean for graduate studies in the Missouri School of Journalism.
Thorson says:
The most important finding is that newspapers are under-spending in the newsroom and over-spending in circulation and advertising. If you invest more in the newsroom, do you make more money? The answer is yes. If you lower the amount of money spent in the newsroom, then pretty soon the news product becomes so bad that you begin to lose money.
Mantrala says:
By looking at the data, investing in news quality does pay off. It improves circulation and advertising revenues, which are the bulk of a newspaper’s revenues. Better news quality drives circulation, and circulation drives advertising revenues.
The study, “Uphill or Downhill? Locating Your Firm on a Profit Function,” will be published in the April issue of the Journal of Marketing.
