ClickZ published a great article on why newspapers can’t make money online, in its November 21, 2011 edition (Sean Carton). This story came to light as the reader ran into a pay wall on The Baltimore Sun‘s website while reading an article of interest.
The story is interesting only in light of the fact that there are so many other sites doing pretty well through an ad-supported model….so it begs the question of why do newspapers have to put up a pay wall to generate revenue. The easy answer of course is to compensate for circulation and advertising revenue losses. Despite increasing readership levels among online newspapers, only 50% of newspapers derive only 9% of their revenue from online editions. Why?
The traditional newspaper model (or any publishing media enterprise) is an expensive one to maintain from an operational perspective. According to the ClickZ it comes down to this…newspaper advertising costs too much…plain and simple.
Throwing up a pay wall is an old school way of trying to fix the problem of stemming the red ink…and in the long run (or maybe short-term) you’ll just drive readers away even faster. Well…that’s the experience of Mr. Carton.
That being said, the points listed in the ClickZ article and later blogged on Mashable.com are very valid points. In a nutshell here is a bullet list of key reasons newspapers fail to make money on their online sites…with a little twist…I am assigning an informal grade to how I think newspapers in general have responded to the challenges outlined. What’s your take?
– Need to pare down operational costs (A)
– Too expensive…pricing themselves out of the market (D)
– Too slow in responding to competitive pressures (F)
– Offer content that’s worth paying for (C)