Can't help wondering what the future has in store for newspapers? It's telling that even the New York Times are slashing employee benefits and laying off staff. Watch a very interesting interview with investigative journalist Russ Baker putting what's happening at the paper into a broader context:
How long will the print audience exist? Seems the New York Times is safe since, for the US, predictions are that only four major dailies – The New York Times, USA Today, the Washington Post, and the Wall Street Journal – will continue in print form, along with local weeklies
How can newspapers find 90% of their revenues online?
When you look at the newspaper industry you find that they still get 90% of their revenues from ads in the printed paper.
Online ad revenue is on the rise but still only a fraction of the money papers get from printed ads. One huge problem is that studies have shown that most people ignore online ads. And another is psychological in the sense that people prefer to pay for something they can hold in their hands.
Most online advertising not on news sites
In total more money is spent online but search, engines such as Google ,get much of it and news media has come to accept that they are unlikely to get the kind of revenues, or maybe rather profits, that they get from print advertising. They know they need to find new and smarter ways since ads and subsciptions alone will not work online. For some companies even the experimenting required is a bit of a challenge.
But one notable exception is US magazine publisher,Atlantic Media, who reported last year that its online advertising revenue was higher than for their printed magazines. One reason for that could be that it has lower advertising prices than similar publications. Maybe something that could be developed online as well. Provided it doesn't result in too many ads, since that will turn readers away.
Advertisng on videos online increased with 39% in 2010 and that trend is likely to continue. No wonder most media companies online sport more and more videos. Mainly without advertising though. So that seems to be an area that could be more exploited. No wonder Helsingborgs Dagblad, a profitable Swedish local newspaper is moving heavily into video reporting.
Targeted banner ads one possibility
Targeting the interests of the individual with the "right" ads, like on Facebook is also on the rise. Media here, in theory, has the potential to know what their different readers want and display ads that should appeal to them.
Google CEO Eric Schmidt apparently told the New York Times in 2010 that while his company was built around search advertising their next big business is targeted display. Consequently on January 24th this year Google annonced their new online privacy policies that enable them to use information to target online ads at users more accurately. It's not possible to opt out and the new rules will be implemented on March 1st.
Let's see what happens to advertising on Google after that. Not least since revenue from their "pay per click" ads have declined.
Consumers not keen on online subscriptions
More and more of us are reading news online. But despite that, the majority of people are not prepared to pay more than $5 a month for subscribing to online news. So no matter how we look at it, subscriptions will, as always, be a small part of revenues.
The jury is still out on if paywalls, like for instance the New York Times and the Economist use, will work. But it's unlikely a paywall is a viable alternative for smaller, less famous publications.
Sponsorship actually works for some media companies so that may be another source of revenue. Some online media outlet operate as a tax-exempt, nonprofit corporation funded by donations and grants. So we will most likely see more of that as well.
Future journalists freelancing
Unfortunately what just happened to staff at the New York Times is likely to continue for the simple reason that lower advertising revenues means cutting expenses. So in the future most journalists will be independent and work on their own.
It seems to me that the likely way forward are newspapers written mainly by freelance journalists and more news coming to you in video format. And online news may not have to be expensive if you are prepared to accept that newspapers use the information they have on you to target you with the appropriate banner ads.
Very much doubt there will be an outcry from readers about targeted ads. Let's face it, Facebook has been getting away with doing so for a long time, and Google is now going down that route as well. How likely is it that people will suddenly stop using Google and all its services? Can't see why readers would prevent newspapers from doing what Facebook and Google are doing to their privacy?
What's your opinion? How do you see the future of online newspapers? Do you agree with me that video and tageted banner ads will be more prominent in the future? Or do you know better ways for newspapers to make money online? What alternative sources of revenue can you imagine? Print journalism will be around for quite some time since that's still where the money is. But how will newspapers survive – and preferably thrive – once the printing presses stop rolling?
Video: RTAmerica – You Tube