Japanese newspapers

A four-equation structural model of the Japanese newspaper publishing industry supply and demand for subscriptions and advertising is constructed from aggregate data and used to infer the effect of changing demand for newspaper advertising on industry prices, output, and profit. In 2017, Japanese newspaper advertising revenue, adjusted for inflation, was only half as great as at its 1997 mini-peak. Japanese newspaper circulation also peaked in 1997, and in the two decades since then has fallen by about one-fourth (counting a morning-and-evening subscription as two, by one-fifth if counting it as one). Based on the inferences in this paper, underlying these recent changes in Japanese newspaper revenue and circulation is an 83% decrease in the demand for newspaper ads from 1997 to 2017, and a 26% decrease in demand for newspaper subscriptions, measured at the 1997 inflation-adjusted prices of ads and subscriptions. The fall in demand for newspaper ads is here directly linked to the rise of the internet using an autoregressive distributed lag model. A further indirect inference is that Japanese newspaper industry annual economic profit has fallen from 4845 100-millions of 2005 yen in 1997 to 1123 100-millions of 2005 yen in 2017.