The Impact of the Internet on the French Printed Media – Is a Cover Price Increase a Good Strategy to Improve Profitability?

For nearly half a century and in most OECD countries, the circulation and readership size of printed publications have been decreasing. Consequently, advertisers have gradually shifted their advertising spending to other media, notably toward online competitors, disrupting the traditional two-sided business model of the print media industry and increasing the economic difficulties of press editors. In this paper, we investigate an a-priori counterintuitive strategy to improve profitability and test whether an editor has an interest to increase the cover price of its printed publication. We empirically analyze the French print media market by modeling the existence of a reciprocal effect between the size of the readership and the amount of advertising. According to our price elasticity estimates, some categories of printed press could benefit from this strategy, in particular those dedicated to the following contents: news, women?s interests, technology and society. For art, science or nature magazines, a more profitable strategy would be to increase the price of advertising inserts. JEL codes: L11, L86, M37