A Historical View of Newspaper Advertising

A change in 1960s French law provides insight into modern problems with ad revenue.

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Based on research by Charles Angelucci and Julia Cage

It’s not breaking news. Newspapers are in trouble.

In the United States, the average number of journalists employed by newspapers dropped from 30 in 2001 to 23.5 in 2015. The decrease is largely due to total advertising revenues cratering from $50 billion in 2000 to $20 billion in 2019.

The reason is the internet. It changed not only reader habits, but the finances of legacy newspapers.

To research how the internet upended the newspaper business in the 21st century, Assistant Professor Charles Angelucci turned to history and a revolution in French media in the 1960s.

“I’m not a historical economist,” Angelucci says. “But, from a research perspective, we can understand the consequences of the internet by looking at a time when the industry was less complicated.”

Angelucci’s new working paper “Newspapers in Times of Low Advertising Revenues,” co-authored with Julia Cage, assistant professor of economics at Sciences Po in Paris, built a model to analyze the effect that the rise in television advertising had on the quality of “hard” news coverage in daily newspapers in France from 1960 to 1974.

“We wanted to inform the debate about the impact of the internet on journalism,” Angelucci says.

A few years ago, Angelucci and Cage, both of whom specialize in the economics of journalism, were browsing through books on the history of the advertising business in France “just for fun” when they encountered a study that piqued their interest.

“We bumped into this work about how there was no commercial advertising on French television until 1967,” Angelucci says. “Once the government allowed it, there was a dramatic growth in the advertising industry.”

In 1967, to provide revenue for the financially foundering state-run television service, Première chaîne de la RTF (now known as TF1), the French government allowed the channel to sell ads, albeit for about two minutes in the entire broadcast day.

That regulatory change represented what Angelucci calls “a clean break in the advertising industry” in France.

“We then decided to see what the impact would be on newspapers,” he says.

Unlike the American newspaper landscape, which was traditionally dominated by big city dailies and smaller local papers, France, like other European countries, has influential national newspapers such as Le Monde and Le Figaro.

Using a trove of data from the now defunct French Ministry of Information, Angelucci and a team of assistants pored through national newspaper back issues to categorize stories as “hard news,” meaning politics and finance and “soft news,” such as sports, to see if there were any changes to the amount of content after the 1967 legislation.

According the research, the introduction of television advertising led to a 24 percent drop in advertising in national newspaper revenues compared to those of local newspapers, with a 14 to 40 percent decrease in the price of ads.

The loss of revenue resulted in a 21 percent decrease in the number of journalists employed by the national newspapers, but left the “newshole,” the amount of the issue devoted to reporting, the same.

According to Angelucci, this led to a shift in priorities in what kinds of stories were published and hinted at a shift in the quality of journalism, which he admits can be tricky to define.

“You and I may disagree about what constitutes good journalism,” Angelucci says. “As a researcher, we don’t really know how to measure quality because it is so subjective, so ‘hard’ and ‘soft’ news is a useful distinction.”

Angelucci found that newspapers in France between 1968 and 1974 reduced the number of working journalists by 10 percent and shifted their priorities away from hard news, such as foreign reporting, to other kinds of content which is less costly to produce.

According to the research, those countrywide papers, to differentiate themselves, did not rely on cheaper wire service stories and instead reported in-house on nationwide and international stories.

“That is why the loss of advertising revenue was felt so strongly in the French case,” Angelucci says.

As newspapers continue to become online entities, Angelucci thinks their main revenue stream will shift to subscription models "as there is a lack of demand for online advertising through news outlets."

He also thinks there is now a greater recognition of this fact among the public.

“The world and politics matter and we need to inform ourselves,” Angelucci says. “And we need to pay for it.”

About the researcher

Charles Angelucci

Charles Angelucci is an Assistant Professor at Columbia Business School. He received his Ph.D. from the Toulouse School of Economics and focuses on...

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