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Political economy of the Internet 129

reading a newspaper on a regular basis (Winseck 2012: 4). We need to
examine specific characteristics in each media system, even if common trends
are evident.
For many critical scholars, the Internet precipitated but did not cause a crisis in
US journalism. US failure is attributed to corporate greed involving short-termism,
short-sightedness and hypercommercialism, traced to the drive for super profits
embarked on from the 1970s. According to Cooper (2011) advertising revenue
net of circulation increased dramatically from 1970 to 2000, faster than GDP.
The resources were available to sustain quality journalism, he argues, but the
commercial model adopted saw profits extracted by stockholders rather than
reinvested in journalism. Yet, Hallin (2000) highlights that alongside a ‘stock-
holder’ theory of corporate greed, must be added a ‘readership’ theory of falling
demand. Newspapers have been described as ‘imperilled media’ as younger
audiences desert them for the immediacy and interactivity of the Internet. In the
UK the number of British adults reading a national daily paper fell by 19 per cent
between 1992 and 2006 (House of Lords 2008: 11). Newspaper circulation
fell by 22 per cent between 1995 and 2007, from 13.2 million to 11.1 million.
However, critics respond that the corporate model has failed to invest to provide
asufficiently attractive product to retain readers (in offline and online formats).
The Internet’s crisis then involves the interaction of different factors and
influences, chiefly the decline in revenue, the actions and responses of corporate
owners, notably disinvestment, and demand-side changes. Yet, most analysts
agree that the Internet’s ‘free’ news inventory and the shift of advertising
and audiences online have accelerated a deepening crisis for newspapers
(Fenton 2009).
For many new competitors such as search engines, news is not core business
and is offered for free as a means of attracting recurring visitors (Küng et al.
2008: 150). This has made it more difficult for newspapers to establish pay-models
and most newspapers launched free online services despite the considerable risk
that this would cannibalise print revenues. Papers like The Guardian justified their
strategy as the best way to reach new, younger readers who would not climb
over pay walls. Other firms have rolled out subscription and charging models,
initially achieving the greatest success in reaching business consumers (time-sensitive
financial information), or high-value services (Times crossword). In June 2011,
News Corporation established a new pay-subscription service for The Times and
the Sunday Times. To date, however, few publishers earn sufficient online revenues
to cover online running expenses let alone to recover online investments or
compensate for declining print revenues.
An important counter-trend to declining paid-circulation has been the growth
of free (usually weekday) papers provided along commuter routes in urban areas,
attracting advertisers to an upscale salaried readership. Their success has led
newspaper groups to shift from paid to free circulation for titles, or to risk can-
nibalising their offer by mixing paid, cheaper short-form papers and free print in
the same market, alongside combinations of free and paid content for