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Newspapers face up to online conundrum

Newspapers face up to online conundrum

Following on from the New York Times' decision earlier this week to make its entire online version available for free, Rupert Murdoch has hinted that the Wall Street Journal may follow suit.

Murdoch has told reporters that a free WSJ is likely, and that such a move would not harm the paper's print revenues. It is now the only US paper with a subscription model, charging $99 per year.

The New York Times decided to drop the subscription model in order to increase the amount of traffic to the site from search engines, in the hope that the resultant increase in ad revenue will be anough to make up for the $10m per year it received from subscribers.

The decline of the paid subscription model raises the broader question of whether newspapers can make enough from online advertising to make up for falling print revenues.

Ad revenue for online editions of newspapers in the US has been increasing, but is still dwarfed by print ad revenue. Online ad revenues reached $796m (£395m) in Q2 2007, while print ad revenues fell slightly to $9.8bn.

But the rise in online ad revenues has not been enough to offset the drop in print ad spending, as combined print and online ad expenditure fell almost $1bn over the same period in 2006, a fall of 8.6%.

Analyst group Outsell recently suggested that US newspapers face a $20bn shortfall in revenues as readers and advertisers move online over the next five years.


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