There's a lot of upheaval in the print publishing world as the web continues to erode old business models faster than putting up workable new ones. The Seattle Post-Intelligencer recently closed its print publication after 146 years to make a go as a complete online publication (they even slipped their own death notice into the obituaries!). Colorado's Rocky Mountain News shuttered at the end of February, with former staffers banding together to create a new online home for the former publication at Iwantmyrocky.com (now moved to the URL indenvertimes.com). Michigan's Ann Arbor News recently announced it will follow Seattle-PI's lead. In April, the Christian Science Monitor will be the first national U.S. newspaper to replace its daily print edition with frequently updated online content.

The magazine world is feeling the heat as well. Ziff Davis Media announced the shuttering of PC Magazine after 27 years of publication, with a transition to full digital content on the PCMag Digital Network. Shortly thereafter they closed down Electronic Gaming Monthly, the oldest multi-platform magazine for gamers in the US, after a 20-year run for the enthusiast publication; Games for Windows magazine had been closed down the year before.

 

There's no mystery about what's causing this world of hurt characterized by falling subscription numbers, declining revenue and waning audience attention for print publishers: progress. As the perfect storm of the internet's "as good as free" distribution cost meets deep broadband penetration and a host of portable devices with shiny, readable screens meets high-speed 3G cellular networks (and Wi-Fi flows ever more like wine), consumers have many more options to choose from when consuming the written word, and most of them are faster, cheaper, more transparent and more convenient than buying written words printed on dead trees.

Publishers are scrambling to figure out how they can fit into this new landscape and survive, especially when "cheaper" is one of the primary benefits to consumers so far in the digital content age. At first, it was assumed the subscription model might carry over to the online world to supplant the lost revenue from print, but those paywalls started coming down in 2007. The Wall Street Journal remains a famous counterexample, but ultimately a paid subscription model inevitably cuts into potential revenue from online advertising.

Nevertheless, the dream of paid content has been resurfaced of late, both via subscription model and with the oft-looked to potential savior, micropayments, in which customers are charged a nominal fee to access small bits of a la carte content. Recent announcements from Hearst, Cablevision's Newsday, and Time Inc. indicate major publishers are again reconsidering what they've once tried and failed. Media industry veterans are reportedly pressuring the New York Times to consider the same. This pig is going to need a lot of lipstick.

 

Time Inc. EVP John Squires waxes poetic on how to "get a payment from a consumer"

Clay Shirky has one of the clearest explanations I've seen on why exactly this won't work. The key is that the internet destroyed the economics of publishing, completely and irrevocably. Whereas printing presses were once incredibly expensive to set up, the cost of publishing on the internet keeps falling asymptotically towards zero. This removes both the competitive advantage and the positive returns to scale print publishers once enjoyed. However, even if society no longer needs newspapers, we still need journalism — and in that seed still lies promise for publishers who can figure out how to come out kicking on the other side of this digital revolution.

Some companies are wisely looking at portable devices as an emerging new content market. E-readers like the recently updated Amazon Kindle and the Sony Reader use a technology called E Ink to produce low power consuming page turns on displays that are about as easy on the eyes as a printed page. As the most popular online retailer, Amazon is in a unique position to galvanize the book industry into the digital age. Based on the sellout success of the original Kindle, it's clear there's consumer interest in the incredible convenience and portability of an electronic reader; what isn't clear is whether or not Hearst's announced plan to release its own wirelessly-updated e-reader will be a compelling enough offering to do for the newspaper world what the Kindle is starting to do for books. Still, it's a smart idea to be thinking about digital delivery — even subsidizing digital readers for subscribers may end up being cheaper than the cost of printing on paper and physically distributing it.

Yet it remains to be seen whether a dedicated electronic reader will be the ideal distribution platform for digital content. What is in many ways equally as interesting as the recently updated Kindle is the Kindle application for the Apple iPhone (see our review here). The app itself is free, digital books can be purchased through Amazon at the same price as for the Kindle, and if you own both devices your reading can even be synchronized across the two. E-readers face the problem of slogging uphill to attain the same level of ubiquity cellphones, and increasingly smartphones, already enjoy. Those of us who are gadget lovers by nature don't think twice about throwing an extra gadget (or seven...) into a bag while on the go, but the average consumer faces some activation energy there and "gadget fatigue" may be a real threshold faced by the market.

With the recent announcement from Apple about the new iPhone 3.0 operating system featuring in-application payment support (smells like micropayments, anyone?), there are even more new possibilities for digital content business models on Apple's disruptive mobile platform. After the wild, unbridled success of the App Store, every other major mobile platform has announced plans to follow suit with application storefronts of their own (Windows Mobile Marketplace, Google Android Market, BlackBerry App World, Nokia Ovi, Palm Software Store). Steve Jobs and co. did it once already with music and movies via the iTunes Music Store, proving that given the right conditions consumers will pay for the convenience of digital content delivery; it's not impossible they could perform the same death-defying feat for the publishing industry. Consumers are conditioned to pay for mobile applications and soon, to pay incrementally for updates, enhancements and additional content for those apps. Time, Hearst, NYTimes, et al — are you listening? This is a market worth exploring. It's probably more promising than trying to develop your own portable device ecosystem.

Let's also not forget that the reports of advertising's death are greatly exaggerated. Though they protest much, it's a stretch to imagine that subscriptions made up the bulk of newspaper revenue even in the days of print; the real money came from advertising there too. The paucity of online advertising spending has as much to do with the dismal state of the economy as it has to do with advertisers simply not taking the online world seriously enough yet. For whatever reasons, advertisers seem to almost completely discount the effect of brand recognition as a valuable outcome of display inventory. The shift to cost-per-click over cost-per-impression is puzzling, considering we could never click on an ad in a newspaper or a magazine or on the side of a bus before. Eventually advertisers will have to become less skittish about the prospect of paying for brand recognition online, or face themselves in the same situation they once were in with print, where there simply weren't any other places to go. They too will have to figure out how to reach their potential customers where they are — online — or waste larger and larger margins on smaller and smaller audiences still picking up print publications.

It is true that the internet breaks a lot of the old advertising assumptions. Eric Clemons makes some good points about the erosion of trust (if it was ever there) and decreased utility of online display advertising as currently implemented in his recent TechCrunch screed. The ad industry faces perhaps just as many tough challenges as its strange bedfellows in publishing, but with so many technological opportunities available to start serving better ads to more interested parties less obtrusively, we hope to see some more creative experiments in this sector as well. For both Madison Avenue and Silicon Alley, the challenge will be in figuring out how to stay relevant in a rapidly-shifting digital landscape. This will probably have to involve a shift away from the "extract maximum value" management approach that mainstream media appears to still have gripped tightly in its aging, complacent fists, which could all too easily turn into cold dead hands if these old giants don't tap into the creative well and figure out how to serve customers by presenting good value in compelling new ways.