Katharine Seelye at the New York Times reports on the problems newspapers are facing with adapting to news online.
Lucrative print subscriptions are declining. Online sites are "booming", the "fastest-growing source of revenue" for newspapers, but still represent only 2-3% of overall revenues.
Katharine says a few times that online newspapers are free, even claiming online readers are getting a "free ride". This just isn't true. They're not free, they're advertising-supported. Just like with almost all print newspapers and magazines, readers mostly pay for the content by viewing advertising; subscription fees, when they exist, typically represent a small amount of the revenue supporting the newspaper.
The article also takes a defeatist tone toward generating revenue from online advertising. It's true that online advertising is currently a small percentage of overall newspaper revenues, but I don't think that the current amount of revenue is a good indicator of what could be achieved.
Newspapers have barely started to experiment with targeted advertising and content. No one knows what kind of clickthrough rates ultimately can be achieved.
A few years ago, no one would have believed Google could yield $0.09 per search. Google achieved this extraordinary revenue stream using targeted, relevant, useful advertising.
I think newspapers need to learn a lot more about how to deliver highly targeted, relevant advertising and related content before renouncing the online model.