Walter Hussman and a ‘Failed Business Model’

Arkansas Democrat-Gazette Publisher Walter Hussman spoke to the National Conference of Editorial Writers meeting late last week at the Peabody Hotel in Little Rock. The topic, of course, was newspapers and the Internet.

Hussman didn’t say much beyond the usual stuff about how bad it is to give away news online (even though he gives it away free in northwest Arkansas), which we’ve covered here before. Max Brantley at the Arkansas Times has a summary here, which includes this critique:

Newspapers have been crippled less by free web content than by the devastating impact of on-line classified advertising. Newspapers’ loss of young readers was well underway long before the Internet came along. Charging for web content now — as a new strategy — would be a risky move. Many simply won’t pay. They’ll turn to the growing list of options. TV stations, for example, are becoming one-stop news sites in many markets, with news, weather, sports scores and, some places, even obituaries.

I’ll go Max one better say that newspapers have been hurt not only by online classifieds, but by all the other stuff the Web can do that newspapers can’t, often in ways that are A) free and B) more relevant to how we use and consume information in a wired world.

The Internet offers online mapping, shopping, social networks, photo sharing, video sharing, music sharing and local directories and search that provide quick, comprehensive and easy-to-use information — all the stuff that newspapers could and should do but don’t, because they let the Web beat them to it.

More on online advertising as a “flop,” as well as some free advice for newspapers, after the jump.

Now back to Hussman, who also told editors last week that online advertising has turned out to be “a flop.” Advertising might be a flop on a Web site that locks down 90 percent of its content. But elsewhere, it’s the only category of advertising that’s seen consistent growth in the last few years. And it’s kept niche sites like our own ArkansasBusiness.com in the black for most of its existence as traffic continues to grow.

(Maybe that’s why Hussman is now in the niche publishing business, printing a free weekly aimed at young adults and a monthly magazine aimed at the rich folks (an answer to our own Soiree magazine) — both with free content offered on the Web.)

That’s not to say cracks aren’t showing in online newspaper advertising. But more and more, as the Internet becomes the dominant source for people to get their news and information, publishers are going to have square off with and meet the challenges the new medium poses. Publishers have little choice.

Hussman’s other point, about free online news being a “failed business model,” isn’t far off the mark, but only insomuch as the industry has yet to find a workable business model to support it. It’s the Holy Grail of the newspaper industry, and I for one am not ready to give up on finding it.

You can read the Democrat-Gazette’s account of Hussman’s speech here — at the D-G’s free northwest Arkansas site.

More

11 Things Newspapers Must Do Online

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4 Responses

  1. The biggest threat to online advertising is finding the right model publishers and advertisers can agree on.

    The first model (pay per impression) isn’t very good for advertisers. A site that causes a lot of repeat visits ends up costing an advertiser a lot of money to get in front of the same people a lot of times or a lot of people very few times before running through the budget.

    The second model that led to internet advertising attracting dollars again is pay per click or pay per action. It’s great for advertisers and lousy for publishers. The advertiser only pays if the user clicks on an ad or takes some action after clicking. If an ad for Diet Mt. Dew pops up and the user leaves the screen and buys a Diet Mt. Dew from the office vending machine the advertiser got exactly the sort of response hoped for but pays the publisher nothing for the ad because there was no click or no one signing up for an email newsletter.

    Creating and adopting a model that is fair for both advertisers and publishers is the only thing missing from the puzzle at this point.

    The problem for the traditional newspaper is that younger readers find the idea of paying for content shocking. They’ll pay for delivery (cable, internet service, cell phone usage charges) but the actual words is another story.

    The bulk of what arrives at the suburban doorstep each morning was widely available hours or even days before on the internet (ever read the tech stories in the ADG on Monday?).

    The old saying is speed kills and in the case of newspapers it will eventually prove true.

  2. […] the newspaper business. No surprises here. Hussman sounded the same notes at this speech as he has in previous comments to other groups. The main message: giving away news for free online is bad […]

  3. […] as it is. Jacobson’s philosophy about the Web makes Arkansas Democrat-Gazette Publisher, and former E&P publisher of the year, Walter Hussman look like Jeff Jarvis, for crying out loud: “Why would I put anything on the […]

  4. what i like about cable internet is that it is almost immune to electrical noise which always degrades DSL lines ,:`

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