Newspapers, Magazines Face Challenges In Internet Age, But Will Survive

by David Goetzl, Sep 28, 2006, 9:45 AM

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A top Madison Avenue researcher says that newspaper and magazine Web sites--even those with considerable traffic--face a major challenge in turning users into revenue. Consumers have gotten used to free content, and it's unclear whether an ad-only model will succeed.

"A lot of it is because it's free," said Gerard Broussard, senior partner and director of media analytics at GroupM Interaction. "Ultimately, there are going to have to be pay models." But that could be a challenge, since the younger audiences some advertisers covet--those younger than 25 who like their content gratis--will one day make up the bulk of print consumers.

Meantime, the newspaper industry is going to have to deal with "a major pullback on costs," said Nick Veronis, a managing director at Veronis Suhler Stevenson.

Broussard and Veronis made their comments on a panel Wednesday at the Media magazine Forecast 2007 conference.

One potential growth area lies in developing more robust search capabilities on newspapers' Web sites. For newspapers, that means possibly challenging Yellow Page outlets on the local level, according to Veronis.

Print publications, however, have an opportunity to exploit the Web's interactive functionality. "What makes the Internet so attractive is consumers can communicate with consumers," said Broussard. "And they can communicate with [the publication] in a way they feel comfortable with."

Despite some of the gloomy prospects facing the traditional newspaper and magazine revenue models, there is an upside. History shows that emerging mediums are additive, said Leo Kivijarv, vice president at PQ Media. "When a new medium shows up, the existing media still exist. Like the Energizer Bunny, they keep going and going," he said.

He cited the ancient book-publishing business as an example--where growth has slowed to single digits, but continues nonetheless.

Veronis said newspapers, like network television, hold a major advantage over Internet sites. "They're still reaching the large audiences that the Internet is having a hard time reaching, because the Internet is about fragmentation."

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