Will Paid Newspapers Be Substituted by Free Newspaper in the Near Future?

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The emergence of free newspapers has undeniably aroused fierce competitions in the newspaper industry. Until now, there are 6 free newspapers and 15 paid newspapers, included both Chinese and English-language, in the market. Although the social phenomenon shows that people tend to get free newspapers instead of buying the paid newspapers, does this mean paid newspapers will be substituted by free newspapers in the near future? The answer may not be simple as there are 2-sided arguments. First, revenue from advertisements of paid newspapers is declining while that of free newspapers is rising. The income for a company to run a newspaper is mainly from advertisements. In the point of view of marketing, if a newspaper does not have large amount of readership which means cannot attract advertisers to publish advertisements, then why the newspaper should be continued to run? Although free newspapers only have an 8-year history, they have rapidly toke more than 30% of the total advertisements spending budget. In 2005, advertisements of cosmetics and skincare industry (one of the top advertising sector) were wholly dominated by paid newspapers, but in this year, 60% of them went to free newspapers. Moreover, the annual results of Sing Tao News Corporation Limited last year showed that the revenue from advertising had risen around 40% in which was mostly came from Headline Daily, the largest-circulation free newspaper in Hong Kong. Undoubtedly, most of the revenue of paid newspapers has token by free newspapers, which means paid newspapers have already lost its ability to earn money for a corporate. Second, the problem can be examined through the number of readers. According to a governmental study on readership between free and paid newspapers, the readership of paid newspapers has dropped 12% while that of free newspapers has risen 9% during the same period. Even though the free and paid newspapers are both launched by the same company, there is an obvious impact on...