The newspaper business' traditional business model was a fairly simple one: you created a newspaper with content that people found compelling, and you sold advertising space in that newspaper to businesses who wanted to reach the people reading your newspaper. In most cases, it didn't really matter if people actually bought your newspaper, as the revenue from advertising absolutely dwarfed the subscription revenue. In fact, it was common for all the subscription revenue to go to third-party distribution services (e.g., the paperboy and his supply chain) and not to the newspaper at all.
The advent of online advertising (can you spell Google?) and the concurrent decline in newspaper readership has drastically changed all this. Now comes word that in the first quarter of this year, the group of newspapers whose flagship is the New York Times has passed a significant milestone: they now make more money from subscriptions than they do from advertising. This change is almost entirely due to declining advertising revenuel; subscription revenue (including online subscription revenue) has inched up but slightly. This is the brave new business world the newspapers are trying – and largely failing – to navigate. Much gnashing of teeth occurs amongst the progressivati over this. Personally, I just take some satisfaction in the fact that the marketplace is working...
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