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Groupon is Hastening the Demise of the Newspaper Industry

newspaper-press

“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.

Krissa Ashton

  • http://www.groupbuyingcanada.com Group Buying Canada

    Well, one can also state that Groupon, Living Social and others have and are actually saving the Newspaper industry. Newspaper publishers who are adopting Daily Deal services now have a stream of revenue, healthy revenue, that they did not have 6 months ago. Over the next couple of years, publishers, newspapers and media companies, along with the very large sites like Groupon and Living Social, should and will dominate the Daily Deal industry.

    As Clark Gilbert eluded to in his speech, Newspapers must adapt to survive and compete. One of those ways may just be to launch their very own Daily Deal service. Many newspapers across North America are already doing just that.

  • Tom Clarke

    The loss of the small sliver of merchant categories that Groupon etc. feeds off of is not going the decimate the newspaper industry i.e. yoga, spas, sky diving, failing restaurants, museums, dance classes.
    The major retailers are the bulk of the advertising revenue. They will NEVER participate in a 75% orgy of lost profit.
    Groupon will not kill the newspaper business. The information and news provided by the internet will.

  • Jon

    Over here in the UK Archant http://www.archant.co.uk have only very recently done exactly this by purchasing a stake in an existing group buying proposition called Tickles http://www.tickles.co.uk They are clearly looking to dominate the local markets where they have a prescence through daily and weekly newspapers titles plus a thriving magazine division. Clearly this represents a good fit for them and acts as a complimentary proposition to their core business. A big advantage is that they already have the relationships with local advertisers in place plus a large field sales force to cultivate them. Interesting to see how things progress for them http://www.archant.co.uk/news_article...

  • http://www.facebook.com/krissa88b Kris Ashton

    As one writer said, no one loves knocking the newspaper industry more than newspapers. Ironically a lot of the negative news is coming from the newspaper industry much of which now has a place on the internet, so in essence from what you're saying the newspaper business is killing itself. The facts are there. You just have to search for them.

  • http://www.locoblitz.com locoblitz

    I do not agree. You are soon going to see a major consolidation in daily deal market. You are also going to see a flattening of revenue in many of these companies. Market cannot survive 30 to 50% commissions on top of the discounts.

    We, at LOCOBlitz (http://www.locoblitz.com), believe the market is gravitating towards hyper-local deals. I believe smaller merchants, your pizza shop owners in your neighborhood are soon going to participate in this online deal market. We just launched a beta of our platform for acquiring local merchants and intent to bring the service to our subscribed customers in next 8 to 10 weeks.

    We take pride in protecting our merchants, giving them control and having a transparent and low risk pricing structure. Check us out @ http://www.locoblitz.com.

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