E-Commerce Law: Will the Internet Kill Newspapers?

From washingtonpost.com:

"With subscribers canceling and ad revenues sliding, editors gathering this week were hunting ways to harness the Internet's power to lure back readers and win over those who've never picked up a print edition. Despite the gloomy statistics, panelists at the American Society of Newspaper Editors' annual meeting insisted that news of the newspaper's imminent demise has been greatly exaggerated."

An increasing number of Americans are getting their news online from sources which are predominantly free. This trend has caused a steady decline in newspaper circulation and a corresponding decrease in newspaper advertising revenue.

If the newspaper industry is to survive, it must modify its predominant business model by:

Serving the Internet news audience. The New York Times appears to be the leader in this effort, having announced two projects designed to provide its content to the Internet news audience. First, the paper announced the testing of an "e-paper" device which will permit users to read downloaded content on a lightweight and easy-to-use electronic device. Second, the paper announced a partnership with Microsoft to develop the Times Reader, Vista-based software which will permit users to read the paper on their PCs.

Finding a way to generate revenue from online news. As the AP reported:

"‘There is no bigger problem today than the fact that we're not getting paid for online news’ said William Dean Singleton, vice chairman and CEO of MediaNews Group Inc., which announced a deal this week to add four newspapers to the 40 it already owns. ‘If we can't get paid for it, we aren't going to be able to continue to afford to do it.’"

A pay-for-online-content model is unlikely to work, given the number of free Internet news sources. However, some papers have begun to recoup lost revenues through the sale of online classified advertisements.

Diversifying. Some newspaper executives have suggested that the industry should partner with Internet search leaders to share revenue or should partner together to compete with existing search engines, particularly in the area of localized search.

It is clear that the newspaper industry cannot thrive unless it adjusts to the changing times. The industry must embrace the Internet as a new means of reaching readers if it is to survive the Information Age as it did the advent of radio and television.

For more information, see Papers Mull Ways to Profit From Internet on washingtonpost.com; Microsoft, NYT partner on newspaper software on CNET News; and One Day Soon, Straphangers May Turn Pages With a Button on nytimes.com.

Update (5/8/2006): Newspaper Web sites up, print circulation down on CNN.com.