And you’re saying to yourself, duh Berg – think of something a bit more original. 

First, check out this article on e-marketer, which predicts newspaper revenue will slide another 15.9% in FY09.  The article goes on to say “The future for print media companies is online, as evidenced by the growth in Web readership of sites such as The New York Times. Small and local businesses that once depended on newspapers to get their ads in front of customers now have other more measurable options such as paid search advertising.”

And I agree with the statement in general… but let’s dig a bit deeper at what the newspaper industry faces and the tough choices they need to make.

ISSUE 1:   CPM’s for online are much lower than CPM’s for print.  So they’re just not going to make as much revenue per CPM for online then they would for print.

SOLUTION:  Either increase the number of the visitors to the site (and make it up in volume of visitors) or provide such unique value they can charge more for an online CPM.  First, make your content free as the NYT.com did a little more than a year ago to boost online visitors.  Second, distribute your content outside your web site to aggregators, etc.  Third, make your content easy for bloggers to utilize, so they can distribute the content for free.

ISSUE 2:  Fixed costs for printing a newspaper.  A big old printer to print those newspapers costs a ton of money to run – labor, electricity, purchase cost, financing, real estate, etc.  Not to mention the variable costs of paper, ink and maintenance.

SOLUTION:  Start making the tough choices – get efficient with those fixed costs, eliminate the ones you can and get much leaner.  Then focus on the “digital” property and invest the savings to make your content the best, web access the easiest, etc.  You still need reporters – but as opposed to having a paper deadline of x time, these folks work a 24 by 7 shift and upload data to a data center.

ISSUE 3:  Provide a better digital product.  Let’s face it… most papers that have a web site… don’t easily migrate to new technology.  If you don’t have an active blogging program, a social community site, robust search programs, widgets, mobile content, etc. then get in the game.

SOLUTION:  Provide the above… but more than that… upgrade and provide new exciting reasons why the consumer and advertiser should continually come back to your site. 

Even if you do all the above, the competition is fierce and much of the financial damage has already been done.  FY09, and I predict first half of FY10, will be extremely difficult for the media industry.  When local newspaper chains begin to file for bankruptcy protection… I think that will be the signal of a bottom.  But it’s going to be a rough and very unpleasant year.  Let’s hope the stimulus package Congress and the President is pushing is the medicine we need to cure the patient.

Scott