Paying online for news

As I mentioned in my last blog, the newspaper industry is currently in a delicate and precarious situation due to its plummeting ad revenues and swiftly evaporating classifieds market. Since the 1990s when the internet grew in popularity, people chose to get their news information free by just visiting any website to enjoy good quality material. As a result, most of the newspaper companies saw significant drops in most of their advertising revenues because marketing companies did not want to invest in a forum that few people were not reading. Coupled with a near extinction of the classifieds section when craigslist become offered to the public for free, most of the industry's companies became crippled by debt payments.

The move towards a subscription based pay-per-read method to generate revenues for newspaper companies is nothing new. In fact, a partnership called the New Century Network was formed in the late 1990s in order to gather the cooperation from many publishers but unfortunately fell apart after the parties could not agree on almost anything.

The model has worked for a small number of newspapers, most notably New Corp's Wall Street Journal. This works quite well for them considering they are the nation's most prestige and reliable source of news. Charging a small fee to many fortune 500 companies and other powerful businesses in our country in order to gain valuable information about the country's economy was not difficult by any standard. Similarly, companies like the WSJ are making their news accessible through mobile phones and are also starting to charge a small monthly subscription fee to gain access to their content.

To add fuel to the fire, Google's Ad Sense has also collaborated to decimate the revenues which newspaper companies have relied on traditionally. Let's say you search for a the latest advancement on the Health Care Bill, your most likely going to use Google to find your article. If you find the article in a small newspaper and coincidentally click on an advertisement while being on that website, that revenue goes to Google, not the newspaper.

On other example I want to mention is something I personally saw in the Miami Hearld a few days ago. They are now offering a subscription based, $1.99/month to access premium digital content. The Miami Herald Digital Newspaper is the easiest and most convenient way to read the print edition of The Miami Herald on your computer. It allows you to change the size of the page, the font, zoom in and out, and have the ability to search through their vast database. Being a huge advocate of convenience and technology, this business model provides a great value for any reader in the world.

Whatever business model they decide to pursue, newspaper companies need to come up with complete solutions urgently. The future is looking bleak for the newspaper industry as their revenues are plummeting and their debt structure remains the same. Trying to charge subscription fees when the information has been free for years will prove extremely challenging for most companies. Moreover, these subscription fees will probably not resolve all of their issues. I think these times call for drastic measures, particularly for the small to medium companies that will most likely need to merge together to remain afloat similar to what the television industry went through with the period of mergers and acquisitions.