Online ads are a good options for these failing newspapers.

The News papers need to sort out how they are going to make a business out of the 'free' internet information age.

Bang on target.

I think that this plan might work. Am I right?

well, i'd lend fine more credence if her track record were stronger. check out this 2001 quote where she proclaims that the downside risk to newspapers was limited. LOL

http://www.thestreet.com/markets/analystrankings/1340260.html

One quibble, Lauren. You write: "Years ago, the Chicago Sun-Times probably had it right when it tried to offer very-low-cost web-site creation and hosting for local small businesses. It could still be done."

Having been involved with newspapers trying to do web site development and hosting for small businesses, it's a nightmare.  There is a natural conflict of interest in trying to sell ads to local advertisers and running their web sites.  The conflicts over how best to handle the site are numerous, and any technical difficulties or hiccups in the development process can soil the relationship.  The risk of losing, then, and advertiser are enormous. When you consider the lifetime value of an advertiser, especially with multiple up sell opportunities, the relative small amount of monthly hosting and inconsequential amount small advertisers will pay for development, the risk just isn't worth it.

As for current newspaper sales forces: Totally inadequate.  The right sales force is more likely to be found with shoppers or radio.

As I commented on a similar post on Adage, I do believe that newspaper simply had it too easy for two long.

"...unfortunately, the current trend is to customization which explained in part the agony of the actual newspaper format as we know it. Solutions are out there and I believe there is a way for newspaper to charge a premium for their content as long as the reader sees enough value with no possible substitute to it. That unfortunately, will require some dedication and hardcore creativity. MEDIA PEOPLE, STOP BEING LAZY! You had it too easy and made ridiculous money with an outdated product, and now the party is over. Remember that music industry just went through a similar crisis until a visionary entrepreneur named Steve Jobs came into play with an out-of-the-box enough idea for which people found no substitute for and save an entire industry. There's an adage in advertising that says "Don't expect the solution to come from the inside." Apple proved it."

Lauren:

First, you're absolutely right about coupons. The number of sources nowadays is so great as to essentially make them a commodity, which means that newspapers have no real advantage over others in offering them.

The biggest advantage for newspapers lies is the fact that they offer Sunday delivery, which coupon advertiser can't get through the post office. And since Sunday is still the day most coupon and preprinted insert advertisers want….well, guess who gets the lion's share of that business?

However for advertisers wanting other days of the week, direct mail, depending on how much of it one purchases, has the potential for far better saturation, since most newspapers reach less than 50 percent of households (below 30 percent in most California markets).

And yes, most newspapers offer the potential for advertisers to reach higher penetration levels through their TMC programs. However the quality of delivery of many of these is so suspect that advertisers don't trust that they ever reach potential consumers—which is why most newspaper TMC programs lose money.

And downloading coupons right to one's printer has better ability to customize and target without waste. Finally, consumers today know that if all else fails, they can simply get the coupons at the store when they go shopping.

As for creating local ad networks by using newspaper sales staffs to sell very low price web site creation and hosting to small retailers, it's a terriffic idea. Most small retailers still don't have websites, so there's certainly a huge untapped market there.

My only point was that providing such a service to that end of the market is very costly. And while doing so could certainly become a new source of revenue (providing, of course, one did retrain local ad staffs to sell it effectively), given the high costs, the marginal rate of return of those dollars would be minimal at best.

So, unless newspapers also come up with something in the way of a new advertising product to replicate, say, national ad dollars, which are generally the most profitable ad dollars newspapers generate, they won't be able to subsist on small retail website revenue alone.

But I certainly take your point, which is that newspapers have to start somewhere. And tapping into the relationships that their ad sales staffs have with small retailers in their respective markets is as good a place as any.

I think the discussion on coupon distribution misses the key issue here.  If you are going to successfully distribute coupons, serve ads or collect fees, you must first produce a core product that appeals to people - to get them to engage in the first place.  If your whole raison d'tre is to deliver coupons, you're not in the news business.  If you want to come up with a way to survive as a news organization, you need to focus on THAT first.

I'm glad someone else identified the distinction between coupons distributed (print)  vs. coupons accepted (online).  How media planners still have blind acceptance that they're actually buying every circulation eyeball for ads placed in newspapers/magazines is beyond me.

Great analysis. Right on target.

I blogged about an off-the-wall idea - collapse the industries of Yellow Pages and Newspapers into one.  YP have a scaling business model centered on an "agency role" in search traffic, but poor consumer content/site positions. Newspapers sales models are collapsed, but their content pull is real, even if not sufficiently scalable to justify display ad break-even. 

http://www.evansink.com/2009/02/hail-marriage/

i appreciate all of the feedback. i never intended to suggest newspapers weren't good at distributing coupons; they are. i was however, noting that the value to the consumer isn't as great as it once was given all of the other venues for coupons. as one commenter noted, newspapers are really in dire straits; ok, their language was a bit harsher, but ultimately i think there is still a business there. i agree with the last comment, they need to redeploy their assets which is why i was suggesting a local ad network. their current sales force is underemployed; perhaps they are untrainable, which could be a whole other issue, but there are a lot of qualified unemployed folks who would take the job.

Particularly insightful regarding the mistakes at both Journal Register and Philly. I also agree with the assessment of the iTunes model for attempting to get people to pay for content which they download. It's apples and oranges and won't work for local news content.

As to one of the final points, however, that newspapers could be the local ad network for local small businesses, that's a little off the mark in my opinion.

Yes, they could. The problem is that the cost of servicing that end of the market, since it's heavily labor intensive, either makes it unprofitable, or only marginally so.  It's correct that there is certainly a need for such a service. It’s just that the retailers at that end either can’t afford—or are unwilling—to pay an acceptable rate for it.

It’s similar to the problem newspapers always faced in trying to create local restaurant guides comprised of paid restaurant ads. A good idea, but most local restaurants were so cash starved that they couldn’t afford to pay even marginal ad rates to be included in one.

The fundamental issue for newspapers today is not a journalistic one. At least not solely. It's a business issue, and it's that, thanks to the Internet, they are rapidly going out of the “aggregator-of-printed-mass-market-advertising” business. They must now work to identify some new group of businesses— both online and print—in which they can engage that will allow them to continue to provide local journalism and still earn acceptable returns.

Essentially, the question they must answer is:  How to best redeploy the many assets they have in place—strong local brands, printing presses, sales forces, daily distribution systems, marketing, research and creative departments, etc. to create those new businesses?

I do actually present a fully fleshed out new business model for journalism. The gist? That there's latent value between journalists and their readers to be unlocked in the form of trust when readers pay not for content but for increased access to and interaction with journalists. It's freemium news: free content, premium services on top.

http://networkednews.wordpress.com/2009/02/11/no-micropayments-maybe-charity-yes-freemium-news/

Lauren: I must disagree with your view about the paper's JRC put out. They were not decent. They were horrid. JRC shed readers at a higher rate than darned near anyone. Take the paper in Torrington, Connecticut. When I worked there circulation peaked in the 18,000s. That may not seem like much, but we had the highest penetration in New England—in excess of 75 percent. When JRC took over in October 1993, The Register Citizen began shedding readers at a dramatic pace. Today, circulation is in the 7,000 range. That's a decline since 1993 of more than 60 percent. JRC worked the same magic elsewhere in Connecticut. Yes, everyone's circulation is down, but JRC is in a class by itself.

The title of this blog post is "Micropayments? Won’t Work. Here’s A Better Plan For Newspapers" and yet 90% of it is spent talking about what hasn't worked and what won't work. I see no solutions here.

The last paragraph mentions a brief hodgepodge of miscellaneous and uncompelling "other" things newspapers can do, but it's far from anything that would support the title of this blog post.  If you just wanted to say "newspapers are f'd", just say it.  Many would agree.

Interesting discussion. I would like to add that while all of us journalists and bloggers are discusiing news business and its future for a while now, there are only a few people doing anything about it. But I guess I am digressing here.

On a related note, we have been working on a comprehensive guide for online journalists at Bighow. As a part, we have put up a list of 14 news business models.

Hope that is useful for your readers.
http://bighow.com/poll/Which-among-these-is-the-best-news-business-model-

Yeah, well the actual terms were 92mm newspaper coupon users vs. 36mm online coupon users. Numbers are about a year old.

the problem w/ 'frymaster's' claim that newspapers deliver "3x as many coupons as online sources" tends to distort reality.

newspapers distribute ALL coupons, whereas frugal online shoppers will only accept the ones they want.

of course, those of the mass-market cloth will never get this… but it may explain why advo/vci is now trading @ $1.50 (down from ~$20).

no concept of the 'new' consumer.

The online version of the newspaper (soon the only version) needs to keep its focus on doing the stuff it knows best (producing news products) rather than flailing away at non-news activities.  To start, it should organize its (potentially valuable) archives into a collection of special reports, and cross-reference current articles into that collection (thus providing the context that the market needs and will appreciate).  Plus, provide filtered news channels (addressing the many niche markets that are out there).  If it can do that, it will add the value and differentiation it needs to survive.  Once it has a plan to do that, it can turn its attention to the best monetization scheme (though it should decide on that at the same time the new offerings are published).

PS: On the last comment - by all means encourage debating.  However, people will appreciate focusing their debating activities on the themes that underlie the individual articles rather than on the (highly perishable) articles themselves.  The themes should correspond to the topics of the special reports I mention above.

Not to let facts get in the way or anything, but I don't think you can support your claim that newspapers aren't effective for distributing coupons. Here's a fairly recent piece of research that show newspapers delivering 3x the coupons as online sources.

http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=87649

PaidContent - HTML not allowed? Nice.

#7 - Hyperlinks subvert hierarchy. (Who said that?)

I feel newspapers need to become conduits for public debate on news stories. People wish to interact with the news and the most open well designed debate platforms would be capable of maintaining and developing audience..