PEST Analysis for Newspaper Industry

Using the PEST analysis to assess the macro environment of the newspaper industry shows that the technology and recession are two of the major factors that have been affecting the newspaper industry as well as the socio cultural side. Technology The Internet, a powerful and advance technology, has changed the model of mass communication. The Internet has had a major impact on the external environment of the newspaper industry and has been gradually substituting the prints. It has also increased competitiveness with easy entry barriers requiring low capital cost and resources, which has been a threat for many established prints publications. With Internet connection in almost every home, readers open sites that offer nearly everything found in the newspapers. Many newspapers, such as Guardian and Verdens Gang (Times, 2009), have had to compliment their daily prints with online version and further updates throughout the day, instead of waiting for updates till the next days print. Online news medium has also attracted incremental readership from other countries that were not as accessible to news in the days of prints. The technological progress and internet has changed readers habits and their perception of news, reduced readers demand to prints and resulted drop in circulation that has affected newspaper industrys economy and drop in advertisement revenue 23% drop in 2008, according to Newspaper Association of America (The Economist, 2009). According to Levine (Time, 2009), media integration, such as audio, video and text transmissions, is a fresh angle to the traditional communication model. It is an opportunity not only for the newspaper industry, but also for readers as information consumers and citizen journalist. Economic Environment

Technological progress has impacted the economic side of the industrys external environment. It has been a threat for many companies that have failed to keep up or went out of business and lost their market share that resulted in a high rate of unemployment in the U.S. and Europe. The newspaper industry has faced high copy prices, declining advertisement sales, loss of classified advertising, falling margins and drops in circulation, especially during the current financial crisis. The internet weakened the advertising revenue of newspapers and became a convenient medium for classified advertising. Free services, such as Craig's List, have had a negative impact on the classified advertising departments of many newspapers, some of which depended on classifieds for 70% of their ad revenue, according to Fitzgerald (Editor & Publisher, 2009). Despite the threats, such as difficulties facing newspapers in online advertising, shrinking staffs, and declines in readership, circulation and revenue; the Internet is an opportunity to expand a newspaper's reach and increase production and revenue. Socio Cultural Environment The Internet integration into the industry has impacted the social factors a newspapers external environment. It has influenced its customers reading behavior and taken up a significant part of their daily news habits. Low internet subscription cost and search engines have changed readers perception and value of prints, enabled readers to access and scan Internet news faster and in more topical and visual way. Demographical change is another threatening factor to the newspaper industry. The number of news readers has grown between different age groups and noticeably in the age of 18 to 24, as per Pew Research Center (The Economist, 2009); however fewer of them pay. In the next few decades old-school readers of the prints will be replaced by technology driven news consumers and the printed page will become something of the past. Political

The impact of political change on newspaper industry is no less significant than it is on individuals perhaps even more so. An unexpected resignation, a terrorist act, or election can completely transform the political landscape and draw readers interest. According to the Economist (2009), different political parties affect the readership interest based on their political power and beliefs such as readership increased during the 2008 U.S. presidential campaign. The peaks and valleys of the political environment have also had a significant impact on social and economic environments of the newspaper industry.