Okay, I get it. There’s a lot of free stuff on the Internet, and what is there free and legally is going to have to stay that way. As an example, we can talk about newspaper stories. And we can talk about what the collapse of the Detroit automobile industry means for those newspaper stories.

There is one newspaper that still charges for access for many of its articles, but I can link to two in today’s paper that you may read for free, “Ad Spending on Auto Web Sites Tapers Off” and “Tribune Co. Files for Chapter 11 Protection.” Most of the online ads mentioned in the first story aren’t on newspaper web sites, although this is an indicator of how in an economic downturn the ad market declines. The reasons for Tribune’s decline in the second article go far beyond the difficulty in earning money online, but it is an important factor and a growing one throughout the industry.

Attend any Digital Hollywood and you’ll hear very bright businesspeople wrestle with one key problem in the digital age — “How can we make enough money off of online advertising to cover the cost of production of the works surrounded by the ads?” This is a problem even when ad spending is flowing, but is critical when ad buyers tighten their wallets. It’s a question that still has no answer, although to all of you who feel a moral right to creative works at no charge and shout that producers should develop new business models, I implore you to put your money where your mouth is and draft up a detailed proposal. Pretend you’re in an MBA class and your grade depends on it. Be specific.

This is ever so important because we know that newspaper circulation is declining, and it is print newspaper advertising that pays the salaries of reporters, editors and copyeditors. At a reception Sunday night I conducted an informal poll of about a dozen people ranging from their 30s to their 50s. It went about as I expected. Most of the older individuals polled love to start their day with newspapers and don’t like news online, with two separately saying “It hurts my eyes.” Most of the youngest ones said they get their news almost exclusively online. Those in the middle did both, with the newspaper perhaps being something to read during lunch. The generation not forming newspaper habits will continue to displace newspaper readers, although I can’t help wondering if the 30-year-old of today will have a hard time reading online news in twenty years with their 50-year-old eyes.

In my Washington Post right now there are multiple full-page ads from retailers looking for holiday sales; there isn’t an option for an ad like that online. Salesmen of print ads also don’t have to worry about click-through rates undermining their rate card. Another question I asked in my informal poll was whether readers of online news ever clicked through any ads they saw on news sites. I could not find a single person who recalled ever clicking on an ad.

(Disclosure: I was CNET News.com’s first Washington editor and reporter. Our company relied almost completely on online ads, and was the first to sell ads beyond banner size. That still didn’t get the job done, and it later was sold to CBS for a tiny fraction of what the Street had rated its worth when I was working there.)

Free online news isn’t going away, and I’m not saying it should. But look at what the WSJ reported in its story on Tribune, noting that the storied owner of the Chicago Tribune and Los Angeles Times (I was a subscriber when I lived there) is in bankruptcy:

* Donald Graham has said The Washington Post, despite its cachet, will not earn a profit this year.
* Newspapers have cut “thousands of jobs” this year.

Shira Ovide, the reporter, is right. Gannett is in the process of eliminating nearly 2,000 newspaper jobs. The New York Times will borrow as much as $225 million against its Manhattan building to stay afloat and is negotiating its debt obligations with its lenders, just as Ovide noted the owners of The Philadelphia Inquirer and The Minneapolis Star Tribune are doing.

So what can we as fans of news do? Well, you could buy newspapers, but I recognize that I’ll get laughed at for saying that. Get with the times, I’ll be told, not the Times. Okay. News online is here to stay, and publishers can’t charge for it. That either leaves the charity approach (how many blogs have you voluntarily contributed to this year?) or advertising, which has worked well for broadcast television and print but simply doesn’t translate well to the online environment.

I don’t have the answers, nor does any attendee of Digital Hollywood, the Tech Policy Summit, or any other such conference I’ve attended. But I hope and pray someone comes up with the answers, because as we just saw today with the governor of Illinois, who was already being investigated by the Chicago Tribune (now in bankruptcy protection) and was asked to hold back by an FBI just catching up, the media has an incredibly powerful role to play in keeping our elected officials honest. (For more on the incredible value of a free press, please visit the Newseum.)

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This entry was posted on Tuesday, December 9th, 2008 at 2:57 pm by Patrick Ross and is filed under advertising, blogging, economy, internet, market forces. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.