msolga wrote:So, if many newspapers do go out of business, what happens to these journalists & our access to quality reporting?
It's not going away, it's moving. It's not like the newspaper industry has been making the bulk of their money from their consumers anyway. Their solution has never been to charge for the content, they made their money by selling ads on their content themselves. What is changing is that advertising is increasingly moving online, and the online medium is one they don't get as well as newer companies do and they insist on doing stupid things like trying to charge for subscriptions instead of just figuring out how the internet works.
Old world media is going to have to turn into new world media or they'll be left behind. They are going to have to be more agile companies because the online ad-supported business model is one of lower margins and greater scale. They can't compete with free by trying to wall their gardens. The switching cost for their readers is a mouse click, they need to by hyper-competitive to survive online. The overwhelming majority of them simply are not of sufficient quality to merit paying for versus tolerating ads on. What are they going to do? Cover news that nobody else knows about? Get exclusive interviews? The quality of the writing is something that plenty of free sites are going to be able to match, so only absolute authorities in their niche (e.g. WSJ, trade publications) get away with charging subscriptions.
The bottom line is that most of the ways they made money are things that are much better served online. Their job post classifieds are obsolete when you compare them to online job boards. Heck, any of their classifieds are obsolete when you compare them to online classifieds, their ad rates are insane compared to the ROI you can get online (I'm taking orders of magnitude of difference).
Online they are faced with people who do those things better than them and because the operating costs of online publishing are so much lower there are people willing to operate much lower margin businesses. You have businesses like craigslist, who aren't interested in maximizing their profits and are fine with eating their collective lunch for very little. You have portals like Yahoo who were early to the game and are major news publishers. You have job boards who have already entrenched themselves online. You have a much more efficient ad platform in search and text link ads from folks like Google and Yahoo.
What happened to the old world media was that they resisted this fundamental change for too long. Their first instinct was to wall their online gardens and that let other sites like Yahoo establish the clear lead in online news. The ad-supported business model on the internet is shaking up a lot of industries and you'll get to see this happen to radio and television next.
They must innovate or die. Walling their gardens won't even put off their death and I'd be a very unhappy shareholder to hear them talk about that as their strategy in this day and age. They need to make bold online moves themselves or partner with online giants (see
this article on the Yahoo Ad Consortium) to get through this. Pretending their journalism is so damned good that people are going to line up to pay for it online is to try to fight the tide. This is a fundamental cultural shift (think "Video killed the radio star") that is only just beginning, they need to figure it out or they'll die off to those who do.
