Is charity the newspaper industry’s last, best hope?

“WHAT’S black and white and red all over?” the television interviewer asks Bill Keller, editor-in-chief of the New York Times. Having heard this one before, Mr Keller, without a second thought, replies “A newspaper”—and walks into the sucker punch. “No,” says the interviewer, from “The Daily Show”, a satirical news programme, “your balance-sheets.”

Fears that the Gray Lady, as the New York Times is affectionately known, is about to croak have been growing. Print circulation has been falling, as readers switch to the internet, while recession and migration to the internet have caused advertising revenues to plunge. The paper’s increasingly desperate owners, the Ochs-Sulzberger clan, had to turn last year for financial help to a Mexican billionaire, Carlos Slim, and even his money may not do the trick. The New York Times is generally reckoned to be one of the best daily papers in the world, the arbiter of “All the News That’s Fit to Print”, and its problems are no worse than that of the entire newspaper industry.

The search is on for an alternative business model. Internet traffic to newspaper websites sites is soaring, but is proving fiendishly hard to monetise in amounts that will support an extensive network of reporters and editors. Maybe the Huffington Post, a popular online rag, is profitable; but as Mr Keller told the man from “The Daily Show”: “Last time I was in Baghdad I didn’t see a Huffington Post bureau or a Google bureau or a Drudge Report bureau.”

One approach is to work out ways to start charging online, beyond collecting a standard annual subscription charge—from which so far only the Wall Street Journal has managed to make much money. Walter Isaacson, a former editor of Time magazine, has triggered a lively debate over his proposal that publications introduce “micropayments” whereby readers purchase one article at a time. Lionel Barber, editor-in-chief of the Financial Times (which part-owns The Economist), last week predicted that “almost all” news organisations will be charging for online content within a year. The FT currently allows online readers a certain number of free articles before starting to charge.

Three media-industry veterans, Steve Brill (a publisher), Gordon Crovitz (a former Dow Jones executive) and Leo Hindery (an investor), recently launched a website, journalismonline.com, which is intended to be a sort of iTunes for newspapers. Readers will be able to set up a simple account through which they can make purchases ranging from individual articles to annual subscriptions to multiple publications.

Many news publications also hope to persuade readers to switch from print to an electronic reading device, such as the Kindle, rather than to the internet. The idea that news should be free is deeply entrenched on the internet, whereas paying for content is the norm on the Kindle. The Economist recently made itself available by monthly subscription on the Kindle, with a fee (which is shared with Amazon) that works out slightly higher than our cheapest (two-year) print subscription.

Yet the fear remains that, despite these initiatives, revenues from electronic distribution will not make up for the money lost as print declines. Increasingly, the talk in the industry is that the best hope for newspapers is charity. Indeed, in a recent essay on the Cato Institute’s website, Clay Shirky, a consultant, predicts a coming “great age of patronage” in the newspaper industry.

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Tags: business model, declines, Economist, financial times, Google, Guardian, Innovation, micropayment, new york times, newspaper, wall street journal

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