سهم بازار روزنامه ها و نظریه گردش مارپیچ

We consider a model of daily newspapers’ competition to test the validity of the so-called “theory of the circulation spiral”. According to it, the interaction between the newspapers and the advertising markets drives the newspaper with the smaller readership into a vicious circle, finally leading it to death. In a model with two newspapers, we show that, contrary to this conjecture, the dynamics envisaged by the proposers of the theory, does not always lead to the elimination of one of them.

The daily newspaper industry has been the object of several empirical studies documenting a dramatic tendency to concentration (see, for instance, Bagdikian, 1983, Dertouzos and Trautman, 1990, Genesove, 2003 and Kaitatzi-Witlock, 1996, or Rosse (1980)). One explanation of this phenomenon was proposed by the media scholar Furhoff (1973), under the name of the theory of the circulation spiral. The essence of this theory is that a larger readership attracts more advertising, which in turn attracts more readers, which in turn will attract more advertisers… As a consequence, an initial asymmetry in the readership sizes will entail the elimination of the minority newspaper. In turn, the circulation spiral has received two interpretations. The first can be summarized by the following quotation: “the larger of two competing newspapers is favoured by a process of mutual reinforcement between circulation and advertising, as a larger circulation attracts advertisements, which in turn attracts more advertising and again more readers. In contrast, the smaller of two competing newspapers is caught in a vicious circle; its circulation has less appeal for the advertisers, and it loses readers if the newspaper does not contain attractive advertising. A decreasing circulation again aggravates the problems of selling advertising space, so that finally the smaller newspaper will have to close down” (Gustaffson, 1978, p. 1).3 We shall refer to this interpretation as the advertising-driven spiral, in the sense that readers are assumed to be ad-lovers. Another possible interpretation of the circulation spiral is that having more readers means having more ad revenue, which in turn allows a newspaper to attain higher and higher quality, which makes it more and more attractive to its readers compared with the rivals’ newspapers. Thus, there is finally only room for one newspaper in one and the same market. In Furhoff’s words: “The reason for this (…) is that readers make the same demands upon competing newspapers, regardless of their economic resources. Thus, the level of aspiration prevailing is determined by the economically stronger newspaper, which enjoys larger circulation and advertising revenues than does its competitor. It is this newspaper which determines to what standards both will aspire in respect of the scope and quality of editorial control, as well as speed of distribution and technical quality of the product.” (Furhoff, 1973, p. 7). We shall refer to this second interpretation as the quality-driven spiral. 4 In this note we provide a simple duopoly model of the daily press market in order to test whether the dynamics implicit into the circulation spiral leads indeed to the elimination of one of the competitors, as predicted by the theory. From the outset, it is interesting to stress that this model can be adapted to capture either one or the other explanation of the circulation spiral proposed above. Hence both explanations lead to the same dynamics. The bulk of the present paper adopts the first explanation of the circulation spiral and derives its implications, while a special section is devoted to show how to transpose the model formulation to fit the second explanation. In the first explanation, the circulation spiral argument for elimination rests crucially on the implicit assumption that readers are not only interested in reading the news, but also, as noted by Furhoff, into canvassing advertisements in newspapers, in particular classified ads.5 The reader’s taste for one or the other newspaper clearly depends upon the way the news is represented. One element defining a daily newspaper’s attribute can be its political stance. Even if this particular aspect is not so relevant in the United States – where the left wing vs. right wing distinction does not appear to be important in daily newspaper competition –, it constitutes a cornerstone element when explaining competition in European countries newspaper industries. 6 Of course, the reader’s taste for newspapers can be differentiated using alternative criteria, like the proportion of content devoted to entertainment vs. culture, sport vs. news, local vs. national focus, and so on. In what follows we choose to differentiate newspapers and consumers’ tastes according to the political stance criterion, keeping in mind that this choice does not preclude the alternative interpretations. Thus, consumers’ tastes are here distinguished one from each other by their preferences over the political views patronized by the newspapers. On the contrary, we assume that the utility of reading an ad is totally independent from the political color of the newspaper reporting it. Furthermore, a reader can always ignore the ads if he wants to do so. Thus, contrary to what happens for medias like television and radio, ads may not diminish the utility of reading, somewhat supporting the assumption of this theory. The combination of information content and advertisements makes newspapers to be considered as goods with two main characteristics. Buyers are interested in consuming these characteristics rather than the good itself. Thus, it is natural to represent a typical reader, in the political stance interpretation, as endowed with some political opinion, “leftist” or “rightist”, say, and with a desire to learn about buying and selling opportunities through reading ads. The importance attached to the political color of the newspaper, however, varies across readers of both camps. To some extent a reader should be willing to accept to read a newspaper of a different political orientation, provided he gets enough benefit from the amount of advertisements to be canvassed in it. Our model tries to reflect the above elements in the simplest possible way, keeping its ingredients as close as possible to the informal set-up of the theory initially proposed by Furhoff. We find that the conclusions drawn from this informal proposal must be qualified. It is not always true that the circulation spiral leads to the elimination of one of the competitors. Several elements play a role in driving the dynamics of the competitors’ market shares, like the intensity of readers’ preferences for ads, or the proportions of readers who are leftists and rightists in the readership. We find a necessary and sufficient condition on these magnitudes that governs whether the minority newspaper is able to survive when the circulation spiral evolves, granting that elimination never occurs and that the market shares stabilize at a long-run equilibrium level. The two following sections are devoted to analyze the dynamics of the circulation spiral when being advertising-driven while the third is concerned with the transposition of the same dynamics to the case where the circulation spiral is quality-driven.

We have outlined a bare-bones model of the circulation spiral where, according to the corresponding theory, only the crude forces put in motion by pure demand-side effects are analyzed. Our main conclusion is that the elimination of daily newspapers cannot be explained only by these effects when the survival condition is satisfied. This hinges upon the importance of advertising in the utility function of the readers, and upon the size of the minority readership, lower minorities being better apt to survive, all other things equal. However, when the survival condition is violated, the larger the minority the longer the life of the newspaper representing it. In conclusion, other elements should necessarily be taken into account to ground the circulation spiral theory on firmer roots, and improve the understanding of the concentration phenomena in the daily newspaper markets