Groupon is Hastening the Demise of the Newspaper Industry

“Groupon is going to destroy the newspaper coupon business. Unless you are willing to completely transform yourselves, I don’t have a lot to say to you today.” These were the words of Clark Gilbert, President and CEO of Deseret News speaking before more than 470 newspaper executives at the Multimedia Key Executives Conference in St Petersburg Florida earlier this year.

The truth is the US newspaper industry has been in slow decline for since 1987 with circulation hitting an all time low in 2009, its lowest in seven decades when papers lost 10.6 percent of their paying readers from April through September compared to the previous year.

With the development of the internet, newspapers have continued to face growing competition for readers’ attention and advertising dollars. As consumers continue to move in droves from the printed page to the internet, newspapers have created online editions in an attempt to keep pace with the changing habits of their readers. It’s involved a major transformation, not only how print papers have offer up the news but in how they’ve had to compete to maintain those advertising dollars. The problem is that there’s not a lot of money to be made in newspaper ads on the internet as compared to their ink and paper counterpart. The transition has not exactly been a success story.

Now with the proliferation of daily deal and group buying sites such as Groupon and LivingSocial completely changing the way many people shop, newspapers have once again been taking a hard hit in an already very tough market. From News&Tech on Gilbert’s speech:

Gilbert said emerging competitors, such as Groupon, threaten to do a lot more damage to newspapers, much like Craigslist all but evaporated the industry’s classified ad base. To defend their turfs successfully, Gilbert said newspapers have to re-examine every aspect of their operation, including pinpointing the costs of doing business.

This past fall, Paul Beebe of The Salt Lake Tribune talked about Gilbert and how he believed newspapers viewed the internet, at least initially.

Even though newspaper executives saw the Internet coming, most could only think about the damage it would do, Gilbert said.

“The desire to defend the traditional business kept them from seizing a new business. And this was both on the product side and the business model side,” he said. “Protecting the tradition caused them to miss the future.”

“The survival rate of [companies] overcoming a disruptive innovation is about 9 percent. But of the 9 percent that made it through, 100 percent set up a separate group to focus on the digital innovation.”

We once relied on newspapers to not only deliver the day’s local, national and international news but they also told us about local retailers in the form of ads and brought those popular cents off coupons. Now daily deal sites, most notably Groupon, are taking over the landscape that once belonged to the local newspapers. Whether those that survive can reinvent themselves as Gilbert says they need to do is yet to be seen. The internet alone was enough to cause a downward spiral of the newspaper industry but with the arrival of Groupon, the printed paper as we once knew it may be on a slippery slope of no return.