Lacy: Understanding & serving readers - 55

Understanding
& serving readers:
The problem of
fuzzy market structure
hy Stephen Lacy

Newspapers exist in markets that are difficult to

define and serve. Market structures are beyond their
control, hut not beyond their understanding - and
their survival will depend on how well newspapers
understand.

conomists use the term market structure to describe how competition takes
place within a geographic area. The structure is described with three character-
istics:
•The probability that buyers will substitute products;
•The number of firms in the geographic area; and
•The barriers new firms face when trying to enter the market.

Although market structure models can increase understanding of

many industries,' they are of limited use with the newspaper industry because
continuing societal and technological changes mean newspapers seek readers
in markets with increasingly/wzzy structure. Fuzzy markets exist when one or
more of the three market structure characteristics are difficult to identify,
describe and define.
Newspaper markets have not always been fuzzy, but identifying an
exact time when market structure started to change is difficult. It seems
apparent, however, that the social and technological changes which crystallized
in the 1960s and grew in the 1970s and 1980s have altered newspaper markets
forever.

Lacy is associate professor of journalism at Michigan State University.

56 - Newspaper Research Journal * Vol. 14, No. !• Spring 1993

The causes behind fuzzy structure

Defining the market structure of manufacturing industries is relatively
easy. For example, the automobile industry has a limited number of companies
that sell v^ithin specific geographic areas. Car buyers decide what type of vehicle
will meet their needs and then compare similar models produced by various
automotive companies. Most people will not compare mini trucks with sports
cars because the two vehicles are destined for different needs.
Comparing the newspaper industry market structure to that of the
automobile industry is similar to comparing James Joyce's prose to the prose in
a first grade reader. The difference in complexity is enormous. To start with,
newspapers serve three different markets - the information market, the advertis-
ing market and the intellec-
tual market - with the same
physical product.^ In the in- Comparing the newspaper
formation market, people ex- industry market structure to that
change money or attention of the automobile industry is
for the information they want. similar to comparing James
In the advertising market, Joyce's prose to the prose in a first
businesses and individuals grade reader.
exchange money for space in
the newspaper. The intellectual market is where society finds ideas and infor-
mation to help it function properly. The intellectual market is the same thing as
the marketplace of ideas.
All three of these markets are related and can even overlap. Readers
seek information from advertising. Advertisers buy space because of the
attention they may get from readers who are seeking information. Advertise-
ments, information and the opinion material in newspapers all contribute to the
intellectual market.
Serving three markets with the same physical product obviously makes
the newspaper industry more complicated than most industries, but this tri-
market existence contribu tes only slightly to fuzzy newspaper market structure.
The fuzziness comes mostly from the way readers use and acquire information
and technological change. The vague structure from these two factors can
become even more fuzzy because of newspaper management decisions and
inadequate research.
The role of the reader and content
A newspaper is read because its content has meaning for the reader. It
tells the reader something that she or he wants to know. However, that meaning
is only partially in the content. The individual readers' connotation of the words,
which reflects the selective processes of their personality,^ affects the content's
 Lacy: Understanding & serving readers - 57

meaning as much as the writer's selection of words. In effect, the nature of

language individualizes newspaper content. This is why two people can read
the same political story and one perceive it to be biased against a candidate and
the other perceive it to be neutral toward the same candidate.
Variations in mean- _
ings given to words are a mat- I Individuals combine the
ter of degree. Some words will I variations to produce a multitude
have similar conriotations for I . different and individualized
most readers and some will | >£ ^' *• ^^T.-^^^^
not. At a market level, the | information packages.
more alike readers are in their
values, backgrounds and beliefs, the more likely they are to perceive newspaper
content in similar ways.
In addition to variations in meaning, the variety of information topics,
information formats and the aim of the content in media products add fuzziness
to newspaper markets. The topics, formats and aims vary from medium to
medium, from company to company and even within a particular media
product. Information fopzc refers to the events or issues emphasized in thecontent
and the geographic focus of the content. For example, content can focus on such
types as actions of a city council, a typhoon in India or a high school football
game. Information format is how information is presented. Amongmany options,
information can be presented as words on a printed page, graphics, photo-
graphs, videotapes, audio tapes, words in conversations, and words on a com-
puter screen. Content aim has to do with the purpose of the content. For example,
content can attempt to persuade people on an issue, describe events or interpret
a trend.
These three dimensions of information vary within media products and
across media products. Individuals combine the variations to produce a multi-
tude of different and individu-
alized information packages. The impact of households on
These three content dimen- newspaper demand also has
sions fit under the general changed because of the increasing
heading of the nature of infor-
number of households with
mation. multiple workers,
The nature of infor-
mation sought by people in a
market varies greatly because people have multifaceted needs that vary across
time for the same person. If two readers of the same newspaper were randomly
selected, each would likely give a different description of the content that draws
him or her to the newspapers. One might take the newspaper for local govern-
ment coverage, high school sports coverage, the advice columns and to keep up
with what is happening in Washington, D.C. The other might like the entertain-
ment news, state government coverage, international coverage and letters to the
editor.
58 - Newspaper Research Journal • Vol. 14, No. !• Spring 1993

In effect, newspapers are different products to different people. But

what makes understanding reader demand even more difficult is that the
household influences media decisions. Newspapers usually are bought by a
household. As the number and diversity of members in a household increases,
the number and variety of information products necessary to serve all their
information needs increases.
Theselectionprocessalsobe- I More specialized newspapers were
comes more complicated. I ^ ^ ^ , 7 ^ ^ / ^ ^^^ ^^y,^^^ J^ ,^^,-^j
The impact of house- • . ... ^ , . , .. ^
holdsonnewspaperdemand I minorities, and special sections of
also has changed because of I ^^^ newspaper were designed for
the increasing number of \ ^omen.
households with multiple
workers. The number of traditional families with just one person working
outside the home has declined dramatically. Work patterns influence informa-
tion seeking patterns because work affects the time available for acquiring
information. Household members share information. As the time available for
getting information declines, so does the sharing.
Extrapolating from the household to an entire market can explain how
meaning, the nature of information and complexity of household information
decisions are reducing the clarity of market structure. American society has
diversified greatly during the past 40 years. During the 1950s, the power to
influence media products lay primarily in the hands of white males because they
controlled most of the money and power. More specialized newspapers were
available for ethnic and racial
minorities, and special sections I Jf was considerably less difficult
of the newspaper were de- I fQ produce seccessful newspapers
signed for wonien. It was con- I ^;^^^ ^j^^^ ^ ^ / ^ journalists
siderably less difficult to pro- I ^^^^^ ^^^ ^^-^^ ^^^^^
duce successful newspapers • ^
when white male journalists wrote for white men.
But the relatively homogeneous society of the 1950 with its structured
roles and norms has vanished. The overall ethnic makeup of America, the
structure and work habits of households, and the gender roles and norms in
society continue to change. The distribution of power and wealth, while still
concentrated in the hands of white males, is far more diffused in 1993 than in
1953. That diffusion will continue.
As power has diffused and as society has become more diverse, the
demand for diversity in the nature of information and the diversity of meaning
brought to newspap)er content have increased. Exactly what information is
demanded by the aggregate of people in these increasingly diverse information
markets is difficult to identify or even describe. It is, in a word, fuzzy. Although
the degree of fuzziness varies among types of markets, it is creating problems
and challenges for most newspapers in America.
 Lacy: Understanding & serving readers- 59

The role of technology

The diversity of society is not the only contributing factor to fuzzy
market structure. Even though barriers for starting daily newspapers remain
high, computers and printing technology are lowering barriers for weeklies and
magazines. The number of electronic media outlets also is increasing as a result
of cable and satellite technology and regulatory changes. It is becoming increas-
ingly difficult to enumerate the competitors for any given newspaper.
To a degree, the term newspaper is and always has been a misnomer.
Much of the information in newspapers does not fit the definitions of news, and
much of what is defined as news is often read for diversion. At the beginning of
the 20th Century, newspa- _
pers were a source of infor- I The later development of radio and
mation about current events I movies opened up competition not
and an important source of I f^r news but for entertainment,
entertainment. As entertam- • ^
ment, they competed against magazines and books, but they had the advantage
of having more local stories, being available on a more frequent basis and being
cheaper than most magazines and books.
The later development of radio and movies opened up competition not
for news but for entertainment. Radio and movies, however, had their own
limitations. It was not until television in the 1950s that newspapers, in their
entertainment capacity, competed against a medium that had a comparative
advantage. TV was more accessible than reading and more engaging than radio,
and it could be presented in the home for no apparent cost. The initial compe-
tition between newspapers and television for people's entertainment time
widened into the field of news with the development of television news
operations. Newspapers once held a strong advantage over other media as a
way of checking on what was happening in the world. This surveillance function
has been eroded by television
technology that allows one to The relationahip between
monitor for important stories television and newspapers is
while doing other things around vague. Tew people directly
the house. The ability of televi- substitute television for
sion to provide instant cover-
age around the world also has newspapers in the way that
solidified its position as the margarine can be substituted for
medium of choice for interna- butter.
tional and national surveillance.
The relationship between television and newspapers is vague. Few
people directly substitute television for newspapers in the way that margarine
can be substituted for butter. In fact, many people use them as complements.''
However, during the past 40 years, people moved away from depending
primarily on one or two media or information companies and turned to a media
60 - Newspaper Research Journal * Vol. 14, No. 2* Spring 1993

mix to satisfy basic informational needs.^ The mix includes multiple companies
and media. It is established as habit and based on a wide range of social,
household and personal considerations. The advantages of television and
related technology as a source of entertainment and surveillance explains why
a greater proportion of the mix is coming from something other than newspa-
pers now than was the case 40
years ago. ,, , , I Technology has contributed to
Whatever the factors I ^pj^svaver's fuzzy markets
that determine information- I ^^^^P^P^^f / " j ? ! / marKevs
seeking habits, a person to- I because of the diversity of options
day faces a multitude of me- I « « ^ ^«^ / « ^ * ^««^ people use more
dia options, which are not I than one medium to meet their
direct substitutes when taken I information needs.
two at atime,but when taken
as a mix create a variety of options for fulfilling information needs. For example,
people living in a metrop)olitan area have: national newspapers, metro daily
newspapers, suburban dailies, suburban weeklies, local television news, na-
tional network news. Cable News Network, National Public Radio, local all-
news and all-talk radio, national news magazines, national opinion magazines,
national literary magazines, sp>ecialty magazines, local city magazines, nation-
ally distributed books, regionally distributed books, neighborhood and organi-
zational newsletters, computer databases, computer bulletin boards, govern-
ment newsletters, public meetings, and talking with friends and neighbors.
Even this list is misleading because many markets have more than one
outlet within a given medium. For example, a suburban resident of a large
metropolitan city may have two metro dailies, and two or three suburban
newspapers, as well as four local television shows, three radio news stations,
two city magazines, etc.
Anyone can seek the mixture of these forms of communication that will
serve best their information needs. In addition, the mixture may change with
time as new technologies are adopted at the household level. Technology has
contributed to newspaper's fuzzy markets because of the diversity of options
and the fact that people use more than one medium to meet their information
needs. The numb>er of options available for people's media mixes will continue
to grow and obfuscate newspaf>er markets as computer, sa telli te and fiber optics
continue to develop.

The role of newspaper

management and research
Considering the growing variety of information needs and technologi-
cal options, it is easy to see why newspaper market structure continues to
 Lacy; Understanding & serving readers - 61

become more fuzzy. But newspaper managers and researchers have added to
this fuzziness because little effort has gone toward clarifying markets as they
have changed. The newspaper industry traditionally has invested little in
research and development.^ This lack of research probably reflects the mo-
nopoly or oligopoly positions most newspapers had 30 years ago and the failure
of managers to realize that newspapers sell information and not just news.
In effect, the newspaper industry has not been prepared to deal with the
changes in society and technology because it lacked the competitive pressure
and the foresight to make it prepare. For example, the Kerner Commission said
in 1968 that mass media performance had been inadequate in serving society
and the ethnic diversity of the United States. But it was not until ten years later
that the American Society of Newspaper Editors committed to proportionate
representation by the year 2000.^ Efforts to reach this goal are still inadequate for
several reasons, including disenchantment with journalism.^
Problems with •
managerial adjustment to I The newspaper industry has not
change also can be found out- I heen prepared to deal with the
side the newsroom. For ex- I changes in society and technology
ample, many daily newspa- I because it lacked the competitive
per managers and journalists I pressure and the foresight to make
consider weekly newspapers I ^f^^^^^^^ ^ ^
to be something less than real | prepare.
newspapers. Yet as daily cir-
culation has stagnated, weekly circulation has boomed. Daily circulation de-
clined between 1984 and 1991, but weekly circulation increased from 43 million
to almost 55 million during that period. This growth is interesting in light of a
recent study that indicates some readers in nonmetropolitan areas see weeklies
as substitutes for dailies.^"
Managers are not the only ones who have contributed to a growing
fuzziness about newspaper information markets. Newspaper researchers and
scholars have contributed by concentrating on studies about what readers want
and on correlations between readership and reader psychographics. Research
needs to concentrate on understanding why and how people use information,
all information. Economists have not provided the newspaper industry with
adequate theory for understanding reader demand, but then neither have
media scholars.
Types of newspaper markets
The movement to ward fuzzy market structure has resulted from chang-
ing information needs and technology, but geographic location of newspaperr
markets also plays a role in the movement. Generally, newspaper market
locations can be classified into three types: metropolitan, outstate and isolated.
The degree of fuzziness in market structure varies with these locations.
62 - Newspaper Research Journal * Vol. 14, No. !• Spring 1993

Metropolitan markets encompass central cities and suburbs and have

the most fuzzy structure. They include the most diverse populations and have
the greatest number of media outlets.
Population diversity in metropolitan areas takes many forms. Racial,
ethnic and religious diversity exist, but so does diversity in lifestyle and living
patterns. Living patterns involve the places where people have a home, shop, go
to school and work. In metropolitan areas, people are less likely to do all of these
things in the same city. Diversity of living patterns can affect demand for
information about particular geographic areas and, therefore, the clarity of
market structure."
Metropolitan areas also offer diversity in the number of information
outlets. To a degree, the num- •
ber of media outlets reflects I ^ computer and modem in Hill
the concentration of popula- I County, Montana, will connect to
tion. The greater the concen- I the same databases as a computer
trated population, the more | ^nd modem in Chicago.
available is money for buying
information and the lower is the cost for serving the demand. As a result of the
number of information sellers and the population diversity, metropolitan
newspaper markets can become very fuzzy.
At the other end of the spectrum are the isolated markets. These markets
tend to be far from metropolitan centers. They are characterized by relatively
small populations that tend to be homogeneous compared to metropolitan
areas. These markets are more clear-cut in definition. However, they too are
becoming more fuzzy because media have exposed these markets to a diversity
of ideas and because many of the same technologies that offer diverse sources
in metrof)olitan areas are available in the isolated markets. A computer and
modem in Hill County, Montana, will connect to the same databases as a
computer and modem in Chicago.
In between the two extremes are the ou tstate newspaper markets. These
markets, such as Midland, Michigan, will have their own daily and weekly
newspapers, as well as several radio and television stations. Bu t the numbers of
media outlets will not be as great as in the metropolitan areas. Likewise, the
population diversity will fall somewhere in between the metropolitan and
isolated markets.
At present, a given newspaper market can range from very fuzzy to
fairly clear-cut. However, managers should recognize that the structure of all
newspaper markets will become more vague as society continues to diversify
and communication technology continues to change. Just who competes with
whom and why will be increasingly difficult to determine.
 Lacy: Understanding & serving readers - 63

The implications
As newspaper market structure continues to become more difficult to
define, what will this fuzzy structure mean for the industry? The quick answer
is that fuzzy structure means
readers will be more diffi- Individual newspaper companies
cult to serve. This difficulty will face a hasic decision as to
comes from the complexity whether their newspapers will
of information needs. The
backgrounds, lifestyles and remain a mass medium or whether
living patterns of people af- they will serve smaller segments in
fect their information needs. society.
As the diversity of these three
areas increases, the diversity of information needs will increase.
During the next decade, individual newspaper companies will face a
basic decision as to whether their newspapers will remain a mass medium or
whether they will serve smaller segments in society. Movement toward more
narrow segments will reduce the impact of newspapers in the intellectual
market and will challenge the continued existence of the special treatment given
newspapers under the First Amendment.^^ Such a movement also will affect the
way the advertising and information markets interact.
The implications of fuzzy market structure differ with the two ap-
proaches. If newspapers take a segmented approach, fuzzy market structure
will be less of a problem because the markets will become clearer. It is easier to
serve a homogeneous group of readers because their needs do no t vary as much,
and such a group is easier to re-
search and understand. in addition to perceiving the
If newspapers continue to market as information^ rather
serve the broader needs and wants than news, managers should
of society, fuzzy structure has understand that fuzzy markets
implications for newspaper man- offer opportunity.
agers' perceptions of their mar-
kets, for the adaptation of news-
paper organizations to these markets, and for the cost of running a newspaper.
Because structure has become more vague, managers should change
their perceptions about the content of their newspapers. They need to realize
that they sell information, not just news. Selling information does not mean
journalists should stop publishing news or change the nature of their news
coverage. On the contrary, as the market becomes more fuzzy, the news in a
newspaper may be its comparative advantage. Recognizing the information
market simply means understanding that mass circulation newspapers always
have contained, and always will contain, more than just news. This non-news
64 - Newspaper Research Journal * Vol. 14, No. !• Spring 1993

content is important to most readers. Many managers have come to understand

this during the past decade, but many still have not.
In addition to perceiving the market as information, rather than news,
managers should understand that fuzzy markets offer opportunity. The oppor-
tunity comes because all media face the same fuzzy information market struc-
ture. The characteristic that
can differentiate newspapers • . *. .^
from the growing number of I ^^ newsrooms diversify, managers
media outlets is their First I should remember that race and
Amendment - sanctioned I gender are not the only measure of
role in the community. | diversity.
Rather than trying to become
like other media, newspapers have the opportunity to make themselves even
more of a crucial information source. People still need information about their
governments and each other, even if the forms of presentation change and the
systems of gathering information alter. A newspaper can and should remain
essential reading to those who would understand the community in which it is
located.
The opportunities newspapers face involve expanding into new ways
of distributing information. Fiber optics, telephones, satellite transmission and
computers are creating ways to get information to people at times and in forms
that serve their purposes. The growing efforts of newspapers to diversify
information delivery should continue, but with an understanding that the new
distribution systems are not necessarily substitutes for newspapers, but are
additional options for people's media mixes.
In other words, _
newspaper companies can- I JTj^ increasing need for specialists,
not change the forces push- I ^/^^ increasing need for people who
ing market structure toward I ^^^^ ^ ^ - ^ ^ ^ ^f experience,
fuzzmess,buttheycanadapt. I and the need for more journalists
This means a better under- • . ^.,, .7 » 1 r '11
standing of their diverse I tp fill the larger newshole will
readership and a greater ef- | increase payroll costs.
fort to diversify newsrooms.
Newspapers provided poor coverage of the social movements in the 1960s and
1970s because of the homogeneous nature of their newsrooms. These move-
ments were not important to the people in the newsrooms at the time, but they
continue in modified forms today.
As newsrooms diversify, managers should remember that race and
gender are not the only measure of diversity. Newsrooms can still be homoge-
neous despite the presence of women and minority journalists because of
similarities in education, age, lifestyles, living patterns and any number of
individual characteristics. This is especially true of smaller newspapers that
often serve as training grounds for young journalists who move to bigger papers
 Lacy; Understanding & serving readers - 65

and into public relations. Even smaller communities have variety. This variety
should be present in the newsroom.
In addition, adaptation means using research to understand the needs
of a diverse readership now and in the future. Holding a half-dozen focus
groups every other year will not work. Conducting traditional cross-sectional
readership studies will not work. Research should aim more at understanding
the role of information in the community and for individuals than just asking
what they like and do not like.
Finally, increasingly fuzzy market structure means higher cost for
newspapers. The increase in expense comes from three sources. First, increas-
ingly diverse information requires a large newshole. Adding new content to
meet diversity of information demand will either fill additional space in the
newshole or push out existing content. If new types of information replace old
types, long-time readers will be alienated.
Besides increased cost for newshole, a diverse and well-trained news-
room will increase cost. The increasing need for specialists, the increasing need
for people who have a wide range of experience, and the need for more
journalists to fill the larger newshole will increase payroll costs.
Conducting meaningful research also will be expensive. A stagnant
industry needs more and better research to grow. Newspaper managers must
either spend the money to better serve or they will continue to lose readers who
turn to media mixes that don't include regular newspaper reading.
Because of the nature of its product, the nature of its customers and the
changes in technology, the newspaper industry exists in markets that are
difficult to define and serve. This will continue because market structure is
beyond the control of the newspaper industry. However, it is not beyond
understanding.Newspapersarenotdinosaursheaded for extinction. However,
like the dinosaurs, newspapers face a changing environment. Their su rvi val will
depend on managers understanding the changes and their adaptation to them.
But understanding and adaptation in fuzzy markets will not be easy or inexpen-
sive. It will come as newspaper managers adjust their perceptions, expand their
research and increase the diversity in newspaper staffs and content.
66 - Newspaper Research Journal * Vol. 14, No. 2* Spring 1993

Notes
1. Market structure models come from microeconomic theories such as pure competi-
tion, monopolistic competition oligopolies and monopoly. Such models define
geographic markets based on the number of firms, the homogeneity of products
and the barriers to entry. For more details, see Barry Litman, Microeconomic
Foundations, in Robert G. Picard, James P. Winter, Maxwell F. McCombs and
Stephen Lacy, eds. Press Concentration and Monopoly. Norwood, New Jersey:
Ablex, 1988, pp. 3-34; and Robert G. Picard, Media Economics: Concepts and
Issues. Newbury Park, California: Sage, 1989.

2. For a more complete discussion of the three markets served by newspapers, see
Stephen Lacy and Todd F. Simon, The Economics and Regulation of United States
Newspapers. Norwood, New Jersey: Ablex, 1993.

3. For a discussion of the role of perception in communication, see Werner J. Severin

and James W. Tankard, Jr. Communication Theories: Origins, Methods and Uses
in Mass Media, 3rd. ed. New York: Longman, 1992, pp. 57-71.

4. For a discussion about the role of television and newspapers as complements, see
Leo Bogart, Press and Public, 2nd. ed. Hillsdale, New Jersey: Lawrence Erlbaum
Associates, 1989, pp. 232-233.

5. Uses and gratification research have developed various lists of information needs
and uses. For a review of uses and gratification research, see Severin and Tankard,
op.cit., pp. 269-281. Based on the research and theory. Lacy and Simon suggested
four basic uses of research: decision making, surveillance, social/cultural interac-
tion and entertainment. See Lacy and Simon, op. cit, pp. 26-30.

6. For a discussion of newspaper research and development see, Robert C. Picard,

Research and Development Still Misses Its Mark. Editor & Publisher, December 19,
1992, pp. 56, 46-47.

7. Carol Smith, Models of Social Responsibility for News Media Managers, in Stephen
Lacy, Ardyth B. Sohn and Robert H. Giles, eds. Readings in Media Management.
Columbia, South Carolina: Association for Education in Journalism nnd Mass
Communication, 1992, pp. 241-260.

8. See Ted Pease, Race, Gender and Job Satisfaction in Newspaper Newsrooms, in Lacy,
Sohn and Giles, eds. op.cit., pp. 97-122. Pease found that minority journalists were
less satisfied than white journalists with their opportunities in journalism. Minor-
ity journalists said they were less likely to stay in newspaper journalism.

9. These data came from '91 Facts about Newspapers. Washington, D.C: American
Newspaper Publishers Association, 1991.
 Lacy: Understanding & serving readers- 67

10. See Stephen U c y and Shikha Dalmia, The Relationship Between Daily and Weekly
Newspaper Penetration in Non-Metropolitan Areas, paper presented to the Association
for Education in Journalism and Mass Communication, Montreal, Quebec, August

11. See Clarice N. Olien, George A. Donohue and Phillip J. Tichenor, Metropolitan
Dominance and Media Use. ANPA News Research Report, No. 35, September 24,

12. The Hutchms Commission Report addressed the importance of serving reader
and society m order for the press to retain First Amendment protection. See The
Commission on Freedom of the Press, A Free and Responsible Press. Chicago:
Chicago University Press, 1947.