The research was based on the analysis of small to medium sized papers (circulation 85,000 or less). Murali Mantrala, who is the Sam Walton professor of marketing in the College of Business, and Esther Thorson, director of research for the Donald W. Reynolds Journalism Institute and associate dean for graduate studies in the Missouri School of Journalism, led the study.

"The most important finding is that newspapers are under-spending in the newsroom and over-spending in circulation and advertising," said Thorson.

 "If you invest more in the newsroom, do you make more money? The answer is yes. If you lower the amount of money spent in the newsroom, then pretty soon the news product becomes so bad that you begin to lose money."

While this is true in principle, there are particularities for each case. Yet the study showed that, in down cycles, newspapers usually focus on advertising and circulation, whose business models have become less dependable with the growth of the Internet. Perhaps it’s time for newspapers to find alternative directions for their investments, without relying on counter-productive staff and newsroom cuts.

"By looking at the data, investing in news quality does pay off," Mantrala said. "It improves circulation and advertising revenues, which are the bulk of a newspaper's revenues. Better news quality drives circulation, and circulation drives advertising revenues," said Mantrala.


Source: Missouri School of Journalism