Ramen Noodles Theory of online news is still food for thought

A new media researcher shares her insights about newspapers’ print and online editions.

By Catherine Payne, NAA content producer

Journalists might have gotten a taste of the Ramen Noodles Theory years ago. The theory, which suggests that online news, like ramen noodles, is an inferior good, might have been hard for some to swallow, but it is still interesting food for thought. Iris Chyi, an associate professor in the School of Journalism at the University of Texas at Austin, said her theory hasn’t really changed over the years. She answered NAA’s questions via email about how newspapers can use her findings.

Question: In a nutshell, what is your Ramen Noodles Theory?

Answer: Let me start with some background information: Most U.S. newspapers believe that they have to transition from print to online. However, after nearly 20 years of experimentation, the performance of their online ventures has fallen short of expectations. As of 2014, despite dramatic declines on the print side, most local newspapers’ Web edition is still outperformed by the print edition in terms of usage, advertising revenue, and willingness to pay. Industry observers also reported that, even when users pay for the all-access bundled package that includes print, Web, smartphone, tablet, and e-edition, most don’t use the digital products much, if at all. When they do visit a newspaper site, a visit lasts for an average of 4.4 minutes, according to 2012 data released by NAA.

After everything the newspapers have done and undone — investing in online and cutting back on print — why hasn’t the digital edition gained much ground? Why is the online edition not as engaging, less satisfying, less enjoyable, and less useful, and not worth paying for, when compared with the print edition?

Considering the fact that so many newspaper sites have been striving to offer interactivity, convenience, immediacy, and multimedia content, users’ lukewarm response to the Web edition is difficult to interpret. My empirical research conducted since the late 1990s on the economics of online news suggests that online news, like ramen noodles, is an inferior good. In microeconomics, inferior goods refer to things people consume less when income increases, typical examples of which include inexpensive items such as ramen noodles, rice, potatoes, and bus travel. (In contrast, normal goods are things we consume more when income goes up, like steak.) Inferior goods always coexist with more costly alternatives that are considered “better.” So inferior goods (in economic terms) are perceived as inferior (in plain English) when compared side-by-side with such alternatives.

In short, my research, based on national survey data, has demonstrated that online news is an inferior good and users perceive a newspaper’s online edition as inferior compared with its print counterpart.

Q: If online news is ramen noodles, then what is a print newspaper?

A: A print newspaper is like steak, a normal good, and here’s why: Despite declines in print circulation and advertising revenue, the print format has remained competitive in relation to the same newspaper’s online counterpart.

First of all, readers respond to the print edition more favorably. Martin Langeveld in 2009 and 2010 estimated that about 97% of time spent with newspaper content was in print — only 3% was online. Academic research revealed similar findings. Based on 2011 data provided by 12 U.K. newspapers, Neil Thurman figured that at least 96.7% of the time spent with these newspapers by their domestic readers was in print. McKinsey and Company in 2013 also reported that 92% of the time spent on news consumption was on legacy platforms — 41% on TV, 35% on newspapers and magazines, 16% on radio and other audio, 4% on computers, and 2% on smartphones and tablets each. In addition, advertisers also spend most of their ad dollars on the “dead-tree” edition. In 2012, the print edition accounted for as much as 85% of total ad dollars despite the dramatic declines since the recession, according to NAA.

It is clear that the print edition has remained the core product, the cash cow, the golden goose, in most newspapers’ product portfolio.

Q: When did you share your theory with the public?

A: I’ve published about 40 empirical studies on the economics of multiplatform newspapers, some of which were covered by the Nieman Journalism Lab blog, About.com, and other online and offline channels. But, like most academics, I publish through academic outlets, and, as you know, scholarly writings are often scattered in journals and do not reach practitioners in time, if at all. Yet the academic setting allows for more time to design a study, analyze data, and identify long-term trends.

Most importantly, scholarly work benefits from an independent view — one free from the over-optimistic bias that often sways newspaper managers’ judgment in the decision-making process. To make my research more accessible, I am writing a book, which synthesizes all my findings on this topic. The tentative title is Trial and Error: U.S. Newspapers’ Digital Struggles in the Age of Inferiority. The book will come out in a few months and hopefully will help newspaper executives review their multiplatform strategy.

Q: What was the reaction to your theory?

A: Despite support from empirical data, many have found my Ramen Noodles Theory hard to swallow. After all, no news product has ever been labeled as an inferior good before. And most practitioners (and scholars) have high expectations for the Internet as a news platform, which does offer an array of interactive features and multimedia content.

So, “why on Earth would anyone in their right mind perceive it as inferior?” There are actually many plausible explanations. For example, the computer screen is not an ideal reading device — and the smartphone is worse because of its size. In addition, the design of many newspaper sites is not appealing. There may even be a biological reason: A study using fMRI brain scans showed that physical media left a “deeper footprint” in the brain and print ads caused more emotional processing than online ads. Or, people don’t like online news simply because it has been free for too long.

Recent studies by behavioral economists suggest that people perceive something with a higher price as of higher quality. Given the scale of this digital revolution and the fact that no one really knows what’s going to happen, it is easier to get positive reaction if one sounds like a futurist advocating all things digital.

In contrast, by pointing out that print newspapers may not have to die, I may be viewed as a dinosaur. But if you compare online news use with fast food consumption, the similarities become self-evident.

Research has suggested that the value, or competitive advantage, of online news lies in its convenience more than anything else. Most users perceive online news as convenient, just as fast food and ramen noodles are perceived as such, compared with a nice meal in a sit-in restaurant.

Q: Has your theory changed over the years? If so, how?

A: Not really, and it is because users have not changed how they perceive online news products. Almost 20 years into the digital revolution, still no evidence suggests that the future of newspapers is online.

As information oversupply further commodifies general-interest news, to pursue readers (and advertisers) by focusing on digital platforms and to build a business model around them only becomes more difficult. On the other hand, I did notice that, over time, the “print newspapers are dying” narrative has become so prevalent that even users get confused.

For example, a 2010 survey by Harris Polls indicated that 55% of U.S. Internet users believe traditional media as we know it will not exist in 10 years, even though 67% still prefer getting news from legacy media.

This discrepancy between what people believe and what they prefer not only illustrates the gap between industry’s trajectory and what audiences prefer but also signals a self-fulfilling prophecy in the making. When newspaper managers believe the “dead-tree” format is dying, resources allotted for the legacy product would dwindle, resulting in further declines in circulation and advertising revenue, which serves as further evidence that print is dying.

Q: How can newspapers apply what they learn from your findings?

A: It seems to me that most U.S. newspapers entered the digital jungle pretty much unprepared. Honestly, for a revolution that is so profound and moves at such a rapid pace as we’ve witnessed during the past 20 years in digital media, no one, not even experts or the most intelligent visionaries, could have completely foreseen its path.

The best way to learn about what users want is through trial and error and accumulating empirical evidence along the way, hoping that a clearer picture will emerge eventually. But the industry outsourced its homework to theorists such as Clayton Christensen, whose disruptive innovation thesis predicts an all-digital future and has been guiding many newspapers’ technology-driven strategy. For one thing, the print edition’s stronger-than-expected performance is often ignored by newspaper executives.

In 2013, more data documenting the stronger-than-expected appeal of print newspapers were released, and some senior media observers described such findings as “surprising,” indicating how novel this observation appears to the industry. Newspapers should pay more attention to this legacy product, which readers actually prefer. On the other hand, a candid, fact-based review of newspapers’ digital struggles is needed, even if some executives may find the truth embarrassing given all their investments in digital ventures over the years.

Rely on audience research as opposed to wishful thinking or guesswork. We can only change what we understand. So, only when newspapers acknowledge the persistent performance gap between their online and print products can they come up with realistic strategies to better manage their multiplatform products.

In short, based on my findings, newspaper executives may consider the following: 1) User response suggests that the print edition may not have to die, 2) user response suggests that online products may not be your salvation, and 3) ramen noodles should not be marketed as steak.

For another helping of the Ramen Noodles Theory and other findings, go to irischyi.com.

First Published: July 15, 2014

About the Author

H. Iris Chyi, Ph.D. is an associate professor and new media researcher in the School of Journalism at the University of Texas at Austin. Her research interests include the economics of new media, online journalism, and news framing. Her work demystifies the often misunderstood economic nature of digital content, addresses the economic viability of online news, and identifies universal-yet-counterintuitive patterns of user demand for multiplatform newspapers.

Iris Chyi