Posted on 11/09/2003 7:48:17 PM PST by quidnunc
The old broadcast model for online journalism, with free words and blinking banner ads, is heading the way of bankable stock options and the office foosball table.
Stung by a growing drift of readers and advertisers to the Internet, newspaper executives are betting on a bevy of online experiments designed to increase profits. The approaches range from new subscription models to more invasive, targeted advertising. Either way, the free ride that proved so costly for newspapers is coming to an end. Online news junkies will increasingly have to give up money or personal information to get their previously free fix.
"Newspapers are no longer willing to just write the Web site off as a money-losing proposition," says Jonathan Dube, a weekend producer for MSNBC who also runs Cyberjournalist.net. "We already see much less free information." From the Albuquerque Journal to The Columbus Dispatch, this less charitable approach has left nonsubscribers in the lurch, as the local papers of record have made their Web sites subscription-only operations. Meanwhile, many bigger newspaper companies have been investing in database technology that will allow them to track and profile Web visitors. Reader registration, once an experimental technology, has proven itself at many of the largest chains, allowing newspapers to sell specific types of readers to advertisers. And the trend is continuing. Later this year, the Tribune Company may become the first major chain to dramatically expand its pay-for-content services. "We're looking hard at all our options for introducing more subscription services," says David Hiller, president of Tribune Interactive.
At stake is nothing less than the future of print journalism. Several recent studies suggest that print readers are turning to the Web for news. Traffic on newspaper Web sites in seven of the ten largest U.S. markets grew far faster in the first half of 2002 than the total Internet user base, according to comScore, an online market researcher. At the same time, consumers with six years of Web experience are three times more likely than Internet newcomers to decrease their print newspaper reading, according to Forrester Research. Another recent poll of online newspaper readers under the age of thirty found that 31 percent had reduced their print readership because the same material is online, a number that is expected to grow. "Newspaper circulation has been declining for years, and you see an online segment with great increases. One plus one equals two," says Lynn Bolger, executive vice president of comScore.
Meanwhile, classified advertisers are continuing their flight to the Web, where costs are much lower. Between January 2001 and June 2002, U.S. newspaper revenue from help-wanted ads dropped by 40 percent, a $5.4 billion shortfall, according to Borrell Associates. Despite the current economic downturn, many analysts believe that much of that business, along with real estate and automobile listings, will never return to print papers given the rise of less expensive sites like Monster.com, Autotrader.com, and Realtor.com.
This worries many smaller regional newspapers, whose local business base has been slow to commit to online advertising, making online news more of a liability than a profit center. Without the advertising gains, the fear of lost print readership has been enough in recent months for publishers to challenge the overwhelming reader consensus against paying for content. By many accounts, roughly nine of ten Web readers are averse to paying for online news. But in markets where a single newspaper holds a near-monopoly on local news, the price of giving the news away seems greater than chasing away Web readers. "Maybe information wants to be free," quips The Albuquerque Journal's online editor, Donn Friedman, who limits online news to subscribing readers. "But I want to be paid."
This doesn't mean that readers won't pay for some online subscriptions, particularly niche offerings like The New York Times's crossword puzzles or exclusive sports reporting at the Milwaukee Journal Sentinel. "You attach a value to a product and you make it indispensable to the user," explains the Journal Sentinel's vice president and editor of Journal Interactive, Patrick Stiegman, whose football subscription site, Packer Insider, has convinced 14,500 members to pay as much as $5 a month. Such subscriptions work because they provide information that is not available free or services that readers cannot find elsewhere. Newspapers that compete for the same local or national news, however, are destined to have a harder time convincing readers to pay.
That leaves executives with the unenviable task of putting the free-news genie back in the bottle. "It's hard to second-guess history," says Tribune's Hiller. "But if many people could redo history they would prefer that the everything-is-free Internet model had never gained ascendancy."
Doubtful. When the Schenectady Gazette went to paid subscription services their readers declined by 94%. It's just not worth paying for and people won't.
The Albany Times Union still gets read online because they charge what it's worth, nothing.
Conversely, The Schenectady Gazette just went to a paid service and lost 94% of their readers.....they all went to the Times Union.
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