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May 28, 2008

NEWS: Intractable Business Model Conflicts


  1. As the largely fixed cost of print is spread over a smaller base; and advertisers shift budgets to online methods - newspapers will terminate sooner than later, if item 3 is not solved.
  2. Unique User count is inflated for every website. Metric systems have not kept up with browser technologies and use.
  3. Hundreds of ad networks have failed to monetize to support legacy newspapers.
In one sense, the Web is a blessing. Daily circulation for the newsprint Post, now 673,000, may be down from 813,000 in 2000, but we are drawing an eye-opening 9.4 million unique visitors online each month, 85 percent of them from outside the D.C. circulation area. Those readers don’t bring in the cash that print subscribers do — given the gotta-be-free mentality of the Web — but they do expand our reach.The ticking time bomb here is the wholesale abandonment of newspapers by younger people who grew up with a point-and-click mentality. When I was speaking at Harvard recently, a smug graduate student said, “I get everything I need from YouTube. What are you going to do about it?” [From Howard Kurtz - Post Buyouts Come With an Emotional Cost - washingtonpost.com]

What an interesting juxtaposition of thoughts in this column in the Washington Post. Like many manufacturing industries have done in recent decades, the newspaper industry is in the midst of structural reorganization as a consequence of technology and consumer behavior shift.

What Kurtz is observing is an interesting conflict of business models born out of the inefficiency of one and the brutal requirement to be efficient in the other. Print subscriptions are suffering and as a consequence the ad margins that newspapers enjoy for advertising and classified advertising that eyeballs never see is going away...

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