Free news on Net fails as business model for traditional news outlets:insiders

The Canadian Press ~ The News
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Traditional journalism outlets got off to a rough start in the sink-or-swim era of new media, say industry insiders who acknowledge that offering free news on the Internet has failed to generate sufficient revenues.
They warn such outlets risk being boxed out of the new media environment if they don't come up with new revenue models soon.
The idea of offering free online content first appealed to traditional news outlets as a way to generate a readership that would capture advertisers, said Karen Dunlap, head of the Poynter Institute, a Florida-based journalism resource centre.
"Free on the Internet was a rational approach and an optimistic approach," Dunlap, who was attending a conference in Montreal on the future of independent media, said in an interview Friday.
"But what's been shown is that advertisers are not coming there. So we'll have to find something else."
News Corp., the international media giant, charges for online access to its Wall Street Journal and has said it has similar plans for several other high-profile newspapers.
The recent economic downturn only further undermined existing approaches to generating revenue from the Internet. Many had hoped banner ads on the websites of newspapers would compensate for declining advertising revenues from their print editions.
But John Honderich, chairman of the board of the Toronto Star's parent company, Torstar (TSX;TS.B), indicated that such ads have been a disappointment financially even though the daily's website receives more than 80 million hits per month.
"These economic tough times have really taken a beating on traditional media," Honderich said in an interview.
"I think the big difference is that advertisers are finding different ways to get their message to their consumers, and that's the dangerous part."
He added that mainstream media outlets such as his must decide what balance to strike between new digital content and traditional newspapers, which retain a loyal readership among older segments of the population.
The time frame for making such strategic decisions, however, has been shortened because of the current state of the market, according to Dunlap.
"Economically, the time frame for a lot of organizations is six months to two years," she said.
"That means basically if you haven't made some significant changes by then, your fate might be cast."
Part of the rush to offer free content online was spurred by the advent of so-called citizen journalism, touted as a democratic expansion of the media industry to non-professionals.
But some argue citizen journalism won't be able to fill the gap left by mainstream outlets who are reducing their operations or closing down altogether.
Persephone Miel, who authored a major Harvard study on online journalism, said most citizen journalism deals with electoral politics, popular culture, technology, and little else. Ignored are more nuanced and weighty topics such as public policy.
"The question is not the survival of the newspaper," she told an audience at the conference.
"The problem is who is going to produce...the kinds of journalism that aren't getting produced by online publications."
The conference was hosted by Montreal Le Devoir, an independent daily that is celebrating its centenary this year.

Organizations: Poynter Institute, News Corp, Wall Street Journal Toronto Star Torstar TSX

Geographic location: Montreal

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  • John
    July 02, 2010 - 13:22

    Contrary to what's alleged in the article above, survival of the newspaper is in fact a very real consequence of free news online. The local daily paper in Victoria, B.C., for example, does not print a Monday edition any more.

    And look at what's happening south of the Canadian border: Many American newspapers are in dire straits, and some have actually closed down. For some reason, smaller newspapers are faring much better than large city dailies. No doubt -- in addition to offering their product as a freebie -- the loss of Classified Ads is a prime cause of the problem.

  • Gloria
    July 02, 2010 - 13:10

    no one reads or clicks on ads print or online ... i even mute my tv when ads come on and do something else for 2 mins

  • John
    July 01, 2010 - 20:06

    Contrary to what's alleged in the article above, survival of the newspaper is in fact a very real consequence of free news online. The local daily paper in Victoria, B.C., for example, does not print a Monday edition any more.

    And look at what's happening south of the Canadian border: Many American newspapers are in dire straits, and some have actually closed down. For some reason, smaller newspapers are faring much better than large city dailies. No doubt -- in addition to offering their product as a freebie -- the loss of Classified Ads is a prime cause of the problem.

  • Gloria
    July 01, 2010 - 19:46

    no one reads or clicks on ads print or online ... i even mute my tv when ads come on and do something else for 2 mins