Executives from many of America's leading newspaper companies and the head of the Associated Press met quietly in Chicago on Thursday to discuss ways to increase revenues from their online operations -- presumably by charging visitors to their websites -- as well as how to recapture some share of their catastrophically declining classified ad business.
The meeting, whose participants included an antitrust lawyer to make sure the conversation didn't stray into impermissible collusion or price-fixing, was conducted under the auspices of the Newspaper Assn. of America, and its agenda was titled "Models to Lawfully Monetize Content." These guys may be slow on the uptake, but their legal departments have schooled them well in risk management.
Simply put, the reason industry leaders -- a fractious, hidebound and habitually timid group even in the best of times -- finally were willing to come together and discuss the crisis is this: Unless the English-speaking world's newspapers find a way to charge for the content they currently give away free on their websites and allow to be aggregated and sold to advertisers by Internet search-engine companies that pay no fees for the privilege, most papers won't survive very far into the next decade.
The facts are stark: Over the last three years, American newspapers alone have lost 40% of their classified advertising -- $7 billion worth -- to free Internet sites such as Craigslist. Over that same period, display advertising sales have dropped by a quarter, which amounts to an additional $12 billion each year.
Although it's true that newspapers' own online advertising has grown significantly in percentage terms over those 36 months, the annual increase actually amounts to just $445 million, according to the Associated Press.
You don't need a CFO -- or even a calculator -- to know where all this is heading.
There's an additional source of urgency: For nearly a decade now, every new proprietor or publisher who comes on board an American newspaper sensibly announces that they understand that they can't cut their way to success, that they need to find ways to grow revenues. Then, because none of them have been able to do so in any significant way, they go right on cutting because they have investors or creditors to satisfy -- or simply because they can't think of anything else to do.
