Wednesday, February 23, 2005

MSM Moving to the Internet

Forbes Magazine has an article about the move of major newspapers online. Link.
Though many publishers can boast of increasing their shareholders' earnings during the past 40 years through acquisitions and cost-cutting, only a few have managed to buck a trend of declining readership. The combined weekday circulation of all U.S. dailies has dropped from 62.8 million in 1985 to 55.2 million in 2002. That gives it the lowest penetration of any medium.

Worse for newspaper publishers, that trend is accelerating as the Internet has become embedded in the daily lives of so many potential readers both young and old. The top 20 news sites drew an average of 5 million individuals each month in early 2002. That figure has risen to more than 8.5 million, with the top sites drawing more than 20 million unique visitors a month. (...)

The Internet has changed the economics of the publishing industry in a way commercial television never did. The price of news and information has irrevocably been pushed way down the supply/demand curve. The Web has also destroyed the functional monopoly of the local daily newspaper with the very high barriers to technical entry. Anyone can be a publisher, and, it seems, these days, most anyone is.

Publishers have long gained from the economic inefficiency of the advertising market. As Lord Leverhulme, the soap baron, is reputed to have said, "I know half the money I spend on advertising is wasted. I just don't know which half."

Not so on the Internet. Advertisers can be sure every ad they buy is seen and track its effectiveness. The measurability of Internet advertising keeps money firmly in the pockets of advertisers that in the past went to publishers and supported shareholder profits or good journalism. (...)

Ten years into the era of publishing via the Internet, most online editions still depend upon newsprint editions for content and financial support. The catch-22 is that those newsprint editions can decreasingly afford to provide it.

It is the sort of problem that new technologies have caused before. The old way of doing business tends to become obsolete long before its replacement emerges. There is a large demand for news, and it will not disappear. We still cannot see how it will be paid for, but if history is any guide (and it usually is), solutions will emerge that few, if any, individuals conceive of today.


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