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Newspapers' troubles escalate in recession

Quest intensifies for new revenue streams, but solutions aren't in time to save some.

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When newspapers first migrated to the Net, many experimented with pay models for online content – from subscriptions to one-time payments for archived stories. The New York Times tried TimesSelect, which charged online readers for access to columnists, archives, and early access to some stories. But few of those models succeeded. The Wall Street Journal is the only major newspaper that continues to require a subscription to read it online. The New York Times abandoned TimesSelect last year.

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The current economic downturn, however, is causing the Times to rethink online payments, said Times publisher Arthur Sulzberger Jr. at a March 12 conference on the media at Stony Brook University in New York.

"The trick, of course, is to garner incremental revenue from the user without significantly cannibalizing the high-rate ad pages that now account for a very significant amount of money," he said.

The notion of an iTunes-like micropayment system is not new, and some media analysts dismiss it, arguing that it's already been tried and rejected by readers. But others say it may be possible to generate some revenue from a pay-per-read model, particularly among younger Web users.

"The younger generation, people in their teens and early 20s, are used to a variety of little payment methods, whether they're using TipJoy [a micropayment system] on Facebook or using iTunes," says Walter Isaacson, president and CEO of the Aspen Institute in Washington, D.C. "They're more adaptable than the older ones ..., who grew up with the Web and don't want to see it change."

Other analysts suggest that the media should focus on creating more nonprofit foundations, like ProPublica, to produce high-quality news. But the Project for Excellence in Journalism, in its report, argues that "it is unlikely that there is enough funding to become a general ownership model." The report urges media executives to consider other ideas:

•Adopt the cable model, in which a fee to news producers is built into monthly Internet-access fees consumers already pay.

•Build online retail malls within news sites to create a local search network for small businesses and link them directly with consumers.

•Develop subscription-based niche products for elite professional audiences, which have already proved to be a profitable growth area in journalism.

•Collaborate to challenge aggregators, especially Google, to start sharing more revenue.

"Newspapers have to get through this really difficult time right now," says Rick Edmunds, the Poynter Institute's media business analyst. "But even after this recession ends, they're still going to need additional revenue streams.