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San Francisco Chronicle Struggles as Internet Siphons Readers, Ads

The newspaper's problems are being watched closely in the battle between one and new media.

December 11, 2005|Joseph Menn | Times Staff Writer

Monthly readership at newspaper sites overall is up 11% in the last year to 39 million.

As a result, newspapers are seeing a rapid rise in online advertising revenue, to a projected $2 billion this year from $655 million in 2002, according to media consulting firm Borrell Associates Inc. That's a respectable chunk of all Internet advertising, which is climbing 28% annually and will surpass $12 billion this year, according to Citigroup Investment Research.

But print advertising is stuck at the same $48-billion level as it was in 2000, and the bump in online ads can't fix that, said Borrell's Gordon Borrell: "It's like a helium balloon trying to lift an aircraft carrier out of the water."

Chronicle Publisher Vega, installed this year after leading the combined operations of two Detroit papers, said he wanted to increase SFGate's revenue by charging readers for whatever they value most. "What's our franchise? I've got to figure what that is," Vega said.

Many papers have tried similar experiments but retreated after readers defected. The Los Angeles Times tried charging nonsubscribers for entertainment features from August 2003 to May 2005. The New York Times recently began charging nonsubscribers for access to its archives and columnists, and a better-than-expected 135,000 of them have signed up.

Vega still sees the website as a way to induce more people to buy the paper, even as he cuts the newsroom staff to a projected 400 from 570 five years ago.

Newspaper executives are rooting for him, but Vega is battling against a generational shift that not even he thinks will stop.

"I hate to read the obits because half of those people are our subscribers," Vega said. "But I think newspapers, if they're run properly, still have a lot of legs."

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