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Newspapers:
Mass  automatic ad $ FREE AS A BUSINESS MODEL
Free or Not Free?
A large number of users does not automati-
cally translate into an El Dorado of advertising
revenues, as the social networking service
Facebook has demonstrated. The company
claimed over 200 million active users as of May 93
2009, and said more than 100 million log on
to its site daily. Those fi gures make Facebook One industry crumbling under the impact of for articles when readers can view similar con- PATTERNS
the world’s largest social network. Yet users are FREE is newspaper publishing. Sandwiched tent for free on Web sites such as CNN.com or
less responsive to Facebook advertising than between freely available Internet content and MSNBC.com. Few newspapers have succeeded
to traditional Web ads, according to industry
experts. While advertising is only one of several free newspapers, several traditional papers in motivating readers to pay for access to pre-
potential Revenue Streams for Facebook, clearly have already fi led for bankruptcy. The U.S. news mium content online.
a mass of users does not guarantee huge adver- industry reached a tipping point in 2008 when On the print side, traditional newspapers
tising revenues. At this writing, privately held the number of people obtaining news online for are under attack from free publications such
Facebook did not disclose revenue data. free outstripped those paying for newspapers as <Tca^. Though <Tca^ offers a completely
or news magazines, according to a study by the different format and journalistic quality and
Facebook Pew Research Center. focuses primarily on young readers who previ-

Traditionally, newspapers and ously ignored newspapers, it is ratcheting up
magazines relied on revenues from three the pressure on fee-for-service news providers.
mass sources: newsstand sales, subscription fees, Charging money for news is an increasingly
customized
and advertising. The fi rst two are rapidly diffi cult proposition.
ad space on
high traffi c advertisers declining and the third is not increasing Some news entrepreneurs are experiment-
social network global web
free social audience quickly enough. Though many newspapers ing with novel formats focused on the online
network have increased online readership, they’ve space. For example, news provider True/Slant
ad sales force
failed to achieve correspondingly greater (trueslant.com) aggregates on one site the
facebook.com advertising revenues. Meanwhile, the high work of over 60 journalists, each an expert in a
fi xed costs that guarantee good journal- specifi c fi eld. The writers are paid a share of the
ism—news gathering and editorial teams— advertising and sponsorship revenues gener-

free accounts remained unchanged. ated by True/Slant. For a fee, advertisers can
fees for ad space on facebook Several newspapers have experi- publish their own material in pages paralleling
mented with paid online subscriptions, the news content.
with mixed results. It is diffi cult to charge

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