• The Economist, Friday, May 15, 2009 1:15 PM

"Most industries are suffering at present, but few are doing as badly as the news business," says the Economist. And unfortunately for newspapers, it's not just the poor state of the economy that's threatening their business; rather, it's a change in the way people consume news. For example, San Francisco, home of the beleaguered San Francisco Chronicle, could become the first major American city without a daily newspaper. "People under 30 won't even notice," says Gavin Newsom, the city's mayor.

Indeed, in many ways, the Internet is better at delivering news content than a newspaper is. It's certainly easier to search through job and property listings online, so classified advertising revenue is migrating to the Web. Some content, like news, share prices, sports scores and weather, are also best delivered in real-time online. Newspapers, as a package of all of these things put together, are now being picked apart.

However, newspapers' demise by no means presages the end of the news business. Publishers may not be reaping hefty rewards for posting their content for free online, but that's because they haven't discovered a model that works yet. The Economist says that placing ads on free content is "unsustainable", because there isn't enough online advertising revenue to pay for it. So, either the amount of news produced must shrink, or readers will have to pay more. Some pubs, like The Wall Street Journal and Financial Times, already charge for content. Others will follow, the report claims, encouraged by the proliferation of new mobile devices that allow content providers to charge for content.

Read the whole story at The Economist »