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Free Times Select: the rest of the story

The New York Times's decision to make all online content free, starting today, is pretty straightforward: basically, the Times thinks it can make more from online advertising than from the subscription revenues generated by the old Times Select system. As Vivian Schiller, the GM of NYTimes.com, told reporter Richard Perez-Pena: "[O]ur projections for growth on that paid subscriber base were low, compared to the growth of online advertising."

What Perez-Pena's story didn't convey is just how divergent the trajectories of online and print advertising revenues have become. Here's an excerpt from an August 31, 2007 Newspaper Association of America press release touting online ad growth:
Advertising expenditures for newspaper Web sites increased by 19.3 percent to $796 million in the second quarter versus the same period a year ago.... The increase reflects the thirteenth consecutive quarter of double digit growth for online newspaper advertising....

Total advertising expenditures at newspaper companies were $11.3 billion for the second quarter of 2007, an 8.6 percent decrease from the same period a year earlier. Spending for print ads in newspapers totaled $10.5 billion, down 10.2 percent versus the same period a year earlier. [emph. added]

What's next? Will the Wall Street Journal stop charging for online content under new owner Rupert Murdoch? Probably. But here's a better question: What established newspaper will be the first to eliminate its print operations entirely--and when's it going to happen?

Yes, plenty of traditionalists (myself included) feel like something vital is lost when you read a newspaper online. Still, if you were starting a "newspaper" today, you wouldn't worry about buying a printing press or building your (hard-copy) subscription base. You'd just publish on the Web and focus on maximizing your online ad revenues, because that's where the money is.

Sometime, somewhere, an existing paper--say, one that's been struggling and finds itself forced by circumstances to consider a new business model--is going to embrace this line of thinking and take the online-only plunge.

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