Monday, March 14, 2005

Newspapers struggle with online

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.

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