Page last updated at 08:01 GMT, Sunday, 3 May 2009 09:01 UK

Making news pay online

Seattle Post-Intelligencer on sale
The last print edition of the Seattle Post-Intelligencer went on sale on 17 March

By Vincent Dowd
Reporter, BBC World Service

In his fifties and still full of energy, Gene Stout may have hoped his job on the Seattle Post-Intelligencer would see him to the end of his career.

For 25 years, he was the pop music critic. But in March, faced with annual losses of $13m, media conglomerate Hearst closed the print publication in March.

Now, some 20 journalists keep the Post-Intelligencer alive online, compared with some 150 previously. The Rocky Mountain News, founded in 1859, also closed in Colorado recently.

And well-known titles such as the Chicago Tribune, San Francisco Chronicle and New York Times all have financial problems. At least 12,500 jobs have gone in US print journalism in two years.

'System collapsing'

Mr Stout said the problem became painfully obvious. "The traditional newspaper model for making money is under duress in America," he said. "It's the loss of readers to the internet plus a drift of classified advertising to the likes of Craigslist.

Income across the board will be far lower than traditionally we sold a page of print for
Steve Swartz, Hearst

"In fact the paper's online readership was through the roof -- but what actually made us profitable was selling print ads. With fewer readers for the physical newspaper, the system was collapsing."

Mr Stout admits a 20-year-old sitting in a Seattle bedroom might prove a great music writer.

"Look at the online music bloggers," he said. "Some are very good and some are awful - but they've changed what we expect journalism to be. And financially those sites can do a lot with very little."

The big question is can online-only sites ever make enough cash to support the hugely expensive business of general journalism - reporting what happens in your local council or in a war half a world away? And if the money isn't there what's going to happen to the journalism we have long taken for granted?

New approach

Hearst is based in an extraordinary Norman Foster-designed tower in Manhattan. It was there that the new president of Hearst Newspapers, Steve Swartz, took the decision to axe the print edition of the Post-Intelligencer.

Hearst Tower
The Hearst Tower in New York City was designed by Norman Foster

"Many big US newspapers now have unsustainable cost structures -- especially if there's more than one newspaper in a given market," Mr Swartz said.

He admits that for now the Post-Intelligencer website has traffic lower than when it was linked to the newspaper -- but he's looking to the future. "The next important wave is the move toward digital subscription products on smart phones, the Amazon Kindle and other digital reading devices," Mr Swartz said.

Currently even the most popular website makes a tiny proportion of the money agencies used to pay for a page in a major paper. The 'eyeballs' just aren't there yet and no one's quite convinced how effective online advertising is.

"So we're constructing a multiple digital approach," Mr Swartz said. "Our sales people aren't just selling the ad inventory on seattlepi.com -- they'll also be selling Yahoo inventory and search engine marketing for Google and MSN. You need a multitude of digital products to make the equation work."

Challenging future

He is clear about the challenge ahead. "Income across the board will be far lower than traditionally we sold a page of print for," Mr Swartz said. "You're talking thousands of dollars, not hundreds of thousands."

In the UK the Guardian is often held to be the great example for how to extend a newspaper's presence online. Janine Gibson, editor of guardian.co.uk, says traffic varies between almost 2 million on a really big news day or "half that on a wet Saturday".

A third of all hits come from the US, with a third from the UK and the remaining from the rest of the world. She said one thing which helped guardian.co.uk internationally (and the likes of The Huffington Post in the US) was the decision by the New York Times in 2005 to put its comment behind a pay-wall.

The policy flopped totally and was abandoned two years later. Ms Gibson said perhaps the Wall Street Journal was the only one to make real money that way.

New York Times building
The New York Times, struggling under debt, sold its flagship building in March

Clicks to profits

So how do you turn a profit from online news?

"Well, until this year we were doing all right with advertising. This year everyone's finding it tough. It's important not to confuse the immediate position with the questions which have always baffled mainstream media around digital -- how can we sustain our organisation in a new world order where people expect content to be free?" Ms Gibson said.

And she suggests that many large media companies have not found any answers because they do not like what they hear.

"It's going to mean much smaller incremental revenues you're going to have to extract from a lot of people -- through advertising or through direct payments," Ms Gibson said. "With new iPhone applications you make a payment and you get a certain amount of stuff. It's part of how journalism will be paid for."

Mr Swartz in Manhattan and Ms Gibson in London share a vision of micro-payments one day sustaining good journalism as readership continues to migrate online.

The cost to the reader would increasingly derive from ease of delivery and less from advertising. It's as if a newspaper had no cover price -- but cost the customer much more to get delivered.

And all of this may one day work. But what if it does not?



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SEE ALSO
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Google addresses newspaper woes
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Life without political cartoons
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Chicago paper threatens to fold
31 Mar 09 |  Business
Crisis in the US newspaper industry
27 Feb 09 |  Americas
Daily Mail group cuts 1,000 jobs
23 Mar 09 |  Business
Seattle paper moves online only
16 Mar 09 |  Business
New York Times set for investment
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