The troubles with online newspapers

Mike Markson of Topix has a Top 10 list of the troubles facing their online counterparts. I’ve written about a few of these in the past: disintermediation by syndicators and advertisers.

I agree with most of Mike’s points, especially the point about cannibalization:

You still have print revenue. This is why you are losing online?? Actually, yes. You make a lot of money from your offline operations. It must be protected, to the degree it can. Shareholders, employees, etc. depend on it. It would be easier if you didn’t have any revenue to protect and didn’t worry about cannibalization. In that case you could make big bets that you can’t make now.

Not only do they have cannibalization issues with print, they also have cannibalization issues with other electronic products. Why do some papers charge $4 to view a single article from their archive? Not because it costs them anything close to $4. Or that a lot of people are willing to pay that. It’s to protect the revenue they get selling their archives to services like Lexis-Nexis. It’s easy to see the lost revenue; much harder to quantify the lost opportunity from having a crippled product.

TimesSelect is another example. If the Times hadn’t walled off some of their key assets, they could have hosted much of the discussion that goes on in the blogosphere.

I disagree with #4:

Display advertising online is a bad deal. It’s poorly priced and less effective than its chief competitor, search advertising. Search ads make all the money because they’re the better deal. They deliver no wasted impressions (only clicks are charged), they’re 100% trackable – so success is measured daily – and are perfectly priced as a result of an auction.

For advertisers who don’t know their business, display advertising can be a really terrible deal. But if you know your clickthroughs and conversions, you can effectively use display.

via Rich Skrenta

About Rakesh Agrawal

Rakesh Agrawal is an analyst focused on the intersection of local, social and mobile. He is a principal analyst at reDesign mobile. Previously, he launched local and mobile products for Microsoft and AOL. He blogs at http://blog.agrawals.org and tweets at @rakeshlobster.
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